Washington’s Certificate of Need program limits competition and discourages innovation
Certificate of Need (CON) programs in Washington State, regulatory processes administered by the Washington Department of Health, grant a limited number of service providers exclusive rights to practice within a region, aiming to control healthcare costs and ensure efficient use of resources. Their intent was to make health care delivery more efficient, but have instead limited the availability of medical services, slowed innovation and exacerbated equity issues by imposing barriers to small firms.
Originally created by Congress in 1964, nearly all states had CON programs by 1980. By 1987 Congress realized that CON programs were causing more problems than they solved and stopped encouraging their use. Many states have reduced or eliminated CON regulations since then.
Some of the results of Washington’s CON programs include:
- Charity care has fallen below the state’s legal minimum, resulting in consent decrees in some cases
- Medical costs have risen
- Providers have little incentive for innovation and can’t react quickly to changes in the market such as the COVID pandemic
- Costly application processes and the requirement for legal representation have blocked small firms from CON success
Washington’s healthcare marketplace has been further constrained by its Certificate of Public Advantage (COPA) regulations in place. COPA laws allow healthcare providers to merge in ways that might otherwise be prohibited by antitrust laws. Created in the 1990s, such regulations were aimed at speeding innovation by allowing anticompetitive mergers and other collaboration with oversight of service quality from state agencies. The Federal Trade Commission has since recommended such laws be removed as they have instead concentrated medical systems within a few national corporations.
The CON process administered by Washington’s Department of Health continues to renew certificates to a handful of providers and has never challenged their renewal – even when the conditions under which they were granted were not met.
What you can do
During the 2023-2024 Washington legislative session, House Bill 2128 called for a review of the Certificate of Need process. It passed the House and made progress toward passage in the Senate, but was instead converted at the end of the session to a budget item within the Governor’s Office. Subsequently, the task of reviewing CON was left to the Department of Health. Not surprisingly, the DOH review process ignored the testimony of professionals and members of the public to reconsider CON itself; instead, they recommended that the program be expanded into additional areas of medical service.
Reform of the CON process must begin with legislative efforts. Please contact your representatives and make them aware of this issue.
More Information
Certificate-of-Need Laws: How They Affect Healthcare Access, Quality, and Cost
Mecatus Center, George Mason University
https://www.mercatus.org/economic-insights/features/certificate-need-laws-how-they-affect-healthcare-access-quality-and-cost
Health Care Certificate-of-Need (CON) Laws: Policy or Politics?
National Institute for Health Care Reform
https://www.nihcr.org/analysis/improving-care-delivery/prevention-improving-health/con-laws/
How CON Laws Affect Healthcare Access, Quality, and Cost in Washington
Mecatus Center, George Mason University
https://www.mercatus.org/publication/washington-and-certificate-need-programs-2020