Certificate of Need Law Reform Could Save Lives

CON laws have decreased competition in Iowa’s healthcare field, resulting in higher medical costs and reduced healthcare access.

The news has recently been telling stories about Iowa nursing homes closing and rural hospitals at risk. Iowans are facing higher healthcare costs and fewer options, and one reason is an extremely burdensome regulation called Certificate of Need, or CON. Healthcare providers are forced to get special permission from the government before adding or expanding services or facilities.

Healthcare Services that require a CON in Iowa

(As of January 2020)

  • Ambulatory Surgical Centers (ASCs)
  • Cardiac Catheterization
  • Computed Tomography (CT) Scanners
  • Gamma Knives
  • Hospital Beds (Acute, General Licensed, Med-Surg, etc.)
  • Intermediate Care Facilities (ICFs) for Individuals with Intellectual Disabilities
  • Long-Term Acute Care (LTAC)
  • Magnetic Resonance Imaging (MRI) Scanners
  • Mobile Hi Technology (CT/MRI/PET, etc.)
  • New Hospitals or Hospital-Sized Investments
  • Nursing Home Beds / Long-Term Care Beds
  • Obstetrics Services
  • Open-Heart Surgery
  • Organ Transplants
  • Positron Emission Tomography (PET) Scanners
  • Psychiatric Services
  • Radiation Therapy

This isn’t one of those dry, abstract questions of public policy. Real stories show how this law has and continues to hurt Iowans.

An autistic man in Tama County was locked in jail or chained to a hospital bed for over a week before his family could find a mental health facility able to take him. Had a company that wanted to build a 72-bed inpatient mental health facility in Bettendorf been granted its CON, that man would have had a place to go.

An eye doctor in Cedar Rapids built his own surgical center but was denied permission to operate on patients because a neighboring hospital didn’t want such a nearby competitor. Mercy Hospital in Dubuque wanted to build a new radiation therapy program to treat cancer patients but was denied its CON to prevent competition with the Wendt Cancer Center. Only with the power of 230 letters of support from patients, families, care providers, and government and community leaders, as well as personal testimony from others, did Mercy overcome Wendt’s objections and open the facility.

The most-recent story comes from midwives in Des Moines who want to open a birthing center as an alternative to the traditional hospital maternity ward. The group is having to sue the Iowa Healthcare Facilities Council, the state board that issues CONs, in the hopes a court will declare the law unconstitutional.

When Iowa’s CON law was implemented in the 1970s, supporters thought it would reduce healthcare costs by preventing unnecessary medical facility expansions. To the contrary, basic economics teaches that if supply is increased, cost goes down, and vice versa. Sure enough, this law of supply and demand proved true, and CON laws have decreased competition in Iowa’s healthcare field, resulting in higher medical costs and reduced healthcare access. Multiple studies by policy groups, government agencies at the state and federal levels, and academics have all shown that CON laws harm patients and stifle healthcare innovation.

The Kaiser Family Foundation, for one, found states with CON laws had 11 percent higher healthcare costs than states without them. Studies by the Mercatus Center at George Mason University have found that the presence of a CON program in Iowa is associated with 51 fewer hospitals, 30 of which would serve rural areas, and 4 fewer ambulatory surgical centers. CON laws are limiting access for rural residents, harming people and threatening entire ways of life.

The studies and the stories show that 45 years of CON law have not made healthcare in Iowa better or less expensive. Costs have skyrocketed and access has decreased, particularly in rural areas, putting miles between Iowans and the care they need.

Although some are repealing them, currently, 35 states and Washington, D.C., still have CON laws on the books. The most recent state to repeal its version was New Hampshire in 2016.  Iowa could be the next to take a step, as lawmakers are considering a bill in the legislature that would address our CON law, making it less burdensome. Complete repeal would offer even more opportunities for providers and patients, but any reduction would be a win for Iowans.

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