South Carolina ends certificate of need laws in healthcare industry

Certificate of Need (CON) laws have long been a ball-and-chain around the ankle of South Carolina’s healthcare industry.

But thanks to the passing of new legislation, these regulatory shackles have been removed and competition will soon return to the healthcare market across the state.

CON laws are essentially permission slips that prevent new players from entering the healthcare market. For an entrepreneur to, for example, open a new imaging facility that offers MRIs at affordable costs, he has to first seek permission from other established entities—entities that have perverse incentives to keep him out of the industry and protect their own businesses from new competition.

Unless an entrepreneur gets granted a certificate from the industry veterans proving that his new businesses is absolutely needed in the community, he will be prohibited from entering the market. This is why CON laws are sometimes referred to as a “competitor’s veto,” because they strike down any form of burgeoning competition.

The result? Higher costs, poor accessibility to healthcare facilities statewide, and countless snuffed entrepreneurs. Not to mention all the consumers, in this case patients in need of medical care, are robbed of choices and thus, more affordable care.

Thankfully, Governor Henry McMaster just signed S.164, eliminating all Certificate of Need regulations for healthcare besides nursing homes across the state. The bill was unanimously approved by the state senate after it had made its way through the house. The South Carolina House Republican Caucus applauded the bill, highlighting that it puts an end to “cumbersome and anticompetitive” CON laws and by “removing unnecessary barriers to entry for new providers, will allow for more innovative and cost-effective approaches to delivering healthcare services.”

The legislation will go into effect in 2027, hopefully signaling a changing temperament nationwide regarding CON regulations. South Carolina State House Representative Kathy Landing, after speaking on the House floor in favor of S.164, stated the following:

“Yesterday in the State House we passed S.164 which repeals the Certificate of Need Requirements in SC, except for nursing homes. This is a move back to a more free market solution, and with the cost of healthcare spiraling higher every year, we need more competition.”

This is excellent news for South Carolina, but there is still a lot of work to be done across the country, and Pacific Legal Foundation is committed to fighting CON laws and empowering entrepreneurs to do what they do best: create innovative ideas that give us more options in the marketplace at more affordable prices.

In Legacy Transport, LLC and Philip Truesdell v. Adam Meier, et al., PLF is representing Philip Truesdell and his right to provide his ambulance service to the Kentucky community, despite the devastating local CON regulations that threaten to end his career.

In Katie Chubb and Augusta Birth Center v. Boyd, PLF represents Katie Chubb to protect her right to open Augusta Birth Center (a nonprofit birth center) in the face of Georgia’s restrictive CON laws.

In Des Moines Midwife Collective v. Iowa Health Facilities Council, PLF represents Caitlin Hainley and Emily Zambrano-Andrews of the Des Moines Midwife Collective as they too face unfavorable odds against Iowa’s all-powerful CON laws.

Pacific Legal Foundation assisted with testimony in South Carolina’s legislative battle, but this win belongs to Americans for Prosperity-South Carolina, the Palmetto Promise Institute, and all of the local organizations and individuals, particularly those in the healthcare industry, who came out in support of this reform. After suffering a tough defeat last year, Americans for Prosperity and others laid the groundwork to get the governor’s signature on the bill, and make it look easy.

Pacific Legal Foundation understands the value of competition within the free market and is fighting for freedom from unjust CON regulations on many different fronts. While the victory in South Carolina is an important milestone, there is much more work to be done to stop cronyism from stifling access to opportunity in this country.