Certificate Of Need?

We have to be honest, we had never heard of this one before.


John Stossel points out that in 35 states, laws block new businesses from operating unless they get their competitors’ permission. One such law prevents Phillip Truesdell from operating ambulances in Kentucky.

“You’re going to tell me that I’m not fit to work in your town?” he asks.

He and his daughter Hannah Howe run Legacy Medical Transport, an ambulance service, in Ohio.

When they tried to expand into Kentucky, which is just a few minutes away from them, they learned it would be illegal.

It’s illegal due to Certificate of Need laws, also called “CON” laws. In Kentucky and three other states, you have to get a Certificate of Need to run an ambulance service.

Truesdell doesn’t think this is right.

He tells Stossel, “Anybody that draws breath ought to be allowed to work. Who gives the big man the right to say, ‘You can’t work here?'”

“The government. The law,” Stossel responds.

Then “Kentucky ought to change that law,” says Truesdell. To do that, he and his daughter are working with the Pacific Legal Foundation, which filed a lawsuit with the goal of getting CON laws declared unconstitutional.

Kentucky authorities and established companies resist. One ambulance provider told us, “When saturating a community with more [Emergency Medical Services] than it can financially support, all agencies become watered down.”

Truesdell’s attorney, Anastasia Boden, calls that “absurd.” She tells Stossel, “It is an abuse of government power to restrict somebody’s right to earn a living. [It’s] just as a handout to the other businesses.”

“It’s not a handout. It’s protecting a vital service,” Stossel pushes back.

“It’s protecting a vital service for the current operators only,” she responds.

Boden says we need competition, “because competition has been the driving force of innovation, lower prices, and better services.”

Stossel agrees: “Competition works! CON laws are a bad deal for both consumers and entrepreneurs. No one should have to ask permission to compete.”

It boggles the mind that there are laws that prevent people from offering services because competitors don’t want the competition. Anyone who has ever seen a bill from a medical transport company knows that the cost is outrageous but if you are one the only game in town, or one of the of the only few games in town, you can charge whatever you want.

Competition generally leads to better quality services at a cheaper price. CON laws (appropriate acronym) hurts consumers. In an age where people are screaming about healthcare and associated costs, shouldn’t the government look at all options in lowering prices including the most obvious and easiest one? That option would be “getting out of the way and stop protecting companies?”

While this story is from the bluegrass state of Kentucky, Florida is not immune to the same type of chicanery with our own set of CON laws.

That’s the bad news.

The good news is that on June 26, 2019, Governor DeSantis signed a bill that ends some CON law provisions, and will sunset others in the future.

Repeal of Florida’s Certificate of Need Requirement

Under the new Florida law, beginning July 1, 2019, general hospitals, complex medical rehabilitation beds and “tertiary hospital services,” including neonatal intensive care units and organ transplant centers (collectively, the Non-Restricted Facilities) will no longer be required to receive CON approval prior to opening new facilities or expanding their services. Therefore, starting July 1, anyone seeking to open a new, or expand services at an existing Non-Restricted Facility may do so subject only to AHCA’s licensure requirements. Those seeking to establish, or expand services at a Non-Restricted Facility will no longer need to demonstrate that the new facility or additional services fulfill an unmet need in the area. Further, this repeal will also eliminate the opportunity for established providers to oppose any new facilities or services that may interfere or compete with their current business.

“Specialty hospitals” will become Non-Restricted Facilities two years later, on July 1, 2021. Fla. Stat. § 395.002 defines “specialty hospitals” as any “hospital” (as defined under Fla Stat. § 395.002 (12)) that “regularly makes available either:

The range of medical services offered by general hospitals, but restricted to a defined age or gender group of the population;

A restricted range of services appropriate to the diagnosis, case, and treatment of patients with specific categories of medical or psychiatric illnesses or disorders; or

Intensive residential treatment programs for children and adolescents as defined in [Fla. Stat. § 395.002 (15)].”

HB 21 does not repeal the CON requirements for nursing homes, skilled nursing facilities, hospice programs and intermediate care facilities (Restricted Facilities). Those seeking to establish, or expand services provided at Restricted Facilities will continue to be subject to the CON burdens, including required demonstration of an unmet need, and the ability of competitors in the marketplace to oppose their plans.

Another key aspect of HB 21 includes requiring the Office of Program Policy Analysis and Government Accountability to study and make recommendations to the legislature for licensure standards for tertiary hospital services by November 1, 2019, which may alter licensing requirements for such facilities in the future.

Key Takeaways

General hospitals, complex medical rehabilitation beds and providers of tertiary services will be free of the CON requirement beginning in July 1, 2019. Specialty hospitals will also no longer be subject to the CON requirement starting July 1, 2021.

Parties seeking to establish, or expand services at nursing homes, skilled nursing facilities, hospice programs and intermediate care facilities for the developmentally disabled will still require a CON.

Certainly the new provisions are a step in the right direction, but the bill does not go far enough. Businesses – any business – should only be subject to licensing requirements only that protect the health and well being of people. In this case, if licensed Dr. John Doe and a few of his friends want to open up a small hospital or a nursing home or whatever, they should be able to do so even if there is a hospital or nursing home a block away. The new facility should be subject to the same licensing and safety regulations as the established facilities, but the new facility should not have to get the approval of anyone to actually open the doors.

We have to say that we are stunned that we had no idea that the lunacy of CON laws were out there. Governmental protectionism of businesses has no place in this country.

Maybe someone can open up an insane asylum for legislators.

Nah. There could never be enough space for all the lawmakers that would be taken in.

One Response to “Certificate Of Need?”

  1. Thomas Gaume says:

    This explains why existing hospital’s and large medical conglomerates are buying up land and building new facilities as quickly as possible.

    If they don’t have the CON laws to protect them, they can squeeze out new competition by saturating the market themselves.

  2. […] Here’s but one example of how government hurts directly hurts health care costs and is based on the “certificate of need” law we talked about earlier in another post: […]