CON Quarterly: New papers and shared resources
Welcome to the Second Edition of the CON Quarterly.
As a reminder, in markets where the government requires a certificate of need or CON, those who wish to offer a new service or expand an existing service must first prove to a regulator that the service is needed. As the name suggests, the regulator’s primary task is to determine if the service is needed, not to determine whether the provider is qualified or if his or her safety record is adequate.
CON laws can be found in a handful of industries, including rail transport, taxi service, and moving services. But their most prominent application in the U.S. is in healthcare. In about two-thirds of states, healthcare providers may not open or expand their services without first proving that the community needs the new or expanded services. This process often requires healthcare providers to overcome their competitors’ complaints that their service is not needed. As we will explore in this newsletter, CON laws tend to reduce patients’ access to low-cost, high-quality healthcare.
In today’s newsletter, we will update you on a couple newly published CON papers, as well as share resources you may find helpful.
New Papers
In our last newsletter, we summarized several papers published in 2024. Since that time, two more papers have been published.
1. Economist Moiz Bhai looked at the effect of CON laws on labor markets. Using data from the American Community Survey between 2005 and 2019, he found that physician earnings were 2.5%–3% less in CON states compared to non-CON states, despite no differences in hours worked. He also found physicians in CON states were less likely to be self-employed.
Bhai also reviewed the effect of Medicaid expansion through the Affordable Care Act on the physician labor market, finding higher rates of self-employment and lower rates of part-time work in CON states that opted in for Medicaid expansion.
2. Economists Charles Courtemanche and Joseph Garuccio reviewed the existing literature to determine “How Do Certificate-of-Need Laws Affect Hospitals?” The authors find certain outcomes favorable to hospitals, like reduction in competition and increase in surgical volume. Other effects on hospitals, including length of patient stay, access in rural areas, prices, and efficiency, have mixed results. They also find that CON laws increase hospital expenditures and decrease hospital revenues.
Courtemanche and Garuccio note that “hospitals appear to respond to increased competition from CON law repeal by finding ways to deliver care at a lower average cost.” They conclude that “the available evidence is inconsistent with the contention that hospitals obtain substantial financial benefits from CON laws” and question if CON laws add value to hospitals.
Shared CON Resources
1. License to care reports. Despite the breadth of academic literature on CON laws, these papers don’t typically give many details about the specific harms on the ground. Through its series, Permission to Care, Americans for Prosperity (AFP) has been working to fill this void.
AFP has published profiles on 12 states, with its latest on Alabama. Sofia Hamilton and Thomas Kimbrell find that from January 2014 through October 2024, the average cost to file a CON application was $17,262.70. This is only the application fee and doesn’t represent the cost of preparing the application or the legal costs required to overcome competitors’ objections. During this time, the Alabama Certificate of Need Review Board denied only four applications out of 448, calling into question the efficiency or purpose of CON in Alabama.
This profile highlights the inefficiencies of the CON process by describing one city’s battle to open a hospital. Hoover is the sixth-largest city in Alabama but has no hospital. In November 2023, a division of the City submitted a CON application. The CEO of a local nursing home was able to weaponize the CON application process and delay Hoover’s application for several months and at great expense. Hoover ultimately received a CON, but fighting back cost over $1 million in legal fees. It’s hard to see any benefit from this system. Hoover’s $1 million in legal fees could have gone toward opening its hospital.
These stories are invaluable in helping others explain how the CON process functions.
2. New CON dataset. In other data news, the Cicero Institute recently shared a new CON dataset. This dataset stretches back to 1965 and catalogs whether a state had CON laws each year between 1965 and 2025. Cicero correctly noted that existing datasets did not include data prior to 2000. It does not show which types of facilities, equipment, or services were subject to CON in a given year. Best of all, Cicero made this dataset public.
3. Forthcoming CON law panel database. Sriparna Ghosh, Justin Leventhal, James Bailey, and Conor Norris are working on a draft titled “Building a Comprehensive Database of Hospital Certificate of Need Law Changes,” which focuses on compiling a database of CON laws for hospital beds in all 50 states. There is currently no centralized panel database available for CON laws, and determining which services are covered generally requires reading and interpreting individual state statutes. Finding the exact date of a policy change can be challenging, and identifying when laws were repealed is often even harder than determining when they were enacted, as statutory sections are removed after repeal.
States’ repeal of CON laws occurred gradually, beginning in the 1980s and continuing today. Despite these challenges, a few single-year snapshots of CON laws are available for 20201, 20212, and 20243. The most comprehensive publicly available resource is the American Health Planning Association4 (AHPA), which publishes surveys of state CON programs covering 28 standardized categories. However, AHPA provides snapshots only for the years 2004, 2008, 2012, and 2016, and its “matrix of service coverage” does not cite state statutes or other sources explaining how the CON status for each service and state was determined.
The authors’ forthcoming database currently contains information on CON laws for hospital beds in all 50 states, including the year the relevant statute was enacted and, when applicable, the year it was repealed. It also documents the statute location and key statutory language. Details such as application costs, expenditure thresholds, and board structures are excluded, as they fall outside the scope of this dataset. The dataset was compiled using Westlaw, which provides access to prior versions of state statutes and allows users to track statutory changes over time.This feature makes it possible to identify and locate repealed CON laws.
The data will be offered in two formats. The first is a cross-sectional file with three variables: state name, state FIPS code, and the year the CON law was repealed (defined as the year the repeal bill was passed). This structure allows researchers to identify policy changes easily and generate year-based variables or geographic maps with minimal data cleaning. The second is a panel dataset with a binary variable indicating the presence (1) or absence (0) of an active CON law for a given service in a given year. This format is designed for straightforward merging with other datasets, enabling researchers to estimate the effects of CON law repeals on various outcomes with minimal preprocessing.
We will send out the dataset when it is available. It will be hosted by the Knee Center.
That’s all for now. Please let us know what you think about these updates and what you’d like to see in our next installment.
Best,
Jaimie and Sriparna
Jaimie Cavanaugh is state policy counsel at Pacific Legal Foundation, where she works with legislators across the country to end CON laws. She is a CON policy expert and regularly testifies at state capitols in support of bills to repeal or reform CON laws. She also helps behind the scenes by drafting bill language, gathering data for legislators, and building coalitions on the ground. Previously, she represented Nepali immigrants who challenged Kentucky’s CON laws in court after they were prevented from opening a needed home health agency. in court after they were prevented from opening a needed home health agency.
Sriparna Ghosh is an associate professor of economics at the University of Cincinnati (UC) Blue Ash College and also a research affiliate at the Knee Center for Studies of Occupational Licensing Regulation (CSOR). She received her PhD in economics from West Virginia University in 2017. As a trained applied microeconomist, she focuses on health, labor, and entrepreneurship economics in her research. More specifically, she focuses on understanding access and barriers within labor markets and health outcomes of underserved communities. In her current research project(s), she is investigating mechanism(s) of occupational licensing and certificate of need policies in understanding the relationship between public policy and health outcomes.
