A 2016 Mercatus working paper argues that “certificate-of-need (CON) laws restrict healthcare institutions from expanding, offering a new service, or purchasing certain pieces of equipment without first gaining approval from regulators.” Drawing on data from the Standard Analytic Files and the American Health Planning Association, the authors review the 21 states with CON requirements “for at least one of three regulated imaging services: MRI (magnetic resonance imaging) scanners, CT (computed tomography) scanners, and PET (positron emission tomography) scanners. Medicare claims provide an estimate of the utilization of these different services and allow their utilization and accessibility to be compared between CON and non-CON states.”
The results?:
- CON Regulations Have a Negative Effect on Nonhospital Providers
- The association of a CON regulation with nonhospital providers is substantial, ranging from −34 percent to −65 percent utilization for MRI, CT, and PET scans. Nonhospital providers in CON states experience significant decreases in the utilization of imaging services compared to hospital providers.
- CON Regulations Have No Effect on Hospitals, Thus Increasing Their Market Share
- CON regulation has no measurable effect on hospitals’ utilization of imaging services. The volume of services provided in hospitals is not affected by CON regulation. This may explain why hospital providers have a stronger market presence in CON states than in non-CON states.
- Consumers Are Driven to Seek Imaging Services in Non-CON States
The researchers conclude,
CON laws act as barriers to entry for nonhospital providers and favor hospitals over other providers. In consequence, consumers of MRI, CT, and PET scanning services are driven to seek these services either out of state or in hospitals. More research is needed to determine whether additional costs and barriers in the healthcare industry restrict specific market providers and affect where procedures occur.