Benefits of Market Determination

Question

Description

Discussion Post Response For:

Regulatory environment has a direct impact on program design, timelines, and success. Some states have repealed their Certificate of Need (CON) regulations previously set by the federal government, but most (35) have held on to such laws (Fernando, 2020). CON law requires providers to prove the need in the community for a particular new or expanded service offering (Fernando, 2020).

Benefits of CON

CON law was initially intended to prevent unnecessary expenditures on facilities and services and would help direct such funds and initiatives towards underserved regions (Mitchell, 2019). This is definitely a matter that requires attention as there are many underserved populations and healthcare inequities across the country. Approval of applications and the criteria by which this is determined varies by state.

Benefits of Market Determination

In reality, CON law has received significant backlash and there is significant research supporting the idea that CON should be repealed in more states. Though its intention was good, it has led to access barriers for providers wishing to offer services. This is because it takes tremendous time and hundreds to thousands of dollars to apply for and obtain a CON (Mitchell, 2019). In essence, CON restricts the supply of services and many believe this approach only benefits well established providers and healthcare institutions while preventing competition, which is good not only for patients to have more options but also can indirectly increase quality of care (Mitchell, 2019). Five years after the repeal of CON laws in certain states, many studies have shown decreased expenditures by 5.5%, better healthcare access, and higher quality of care at lower costs (Mitchell, 2019). Allowing the market to drive healthcare program implementation and design has led to success in the face of the Covid-19 pandemic. While many states requiring CON applications for expanding care offerings, the states that repealed CON were able to respond more effectively and quickly to spikes in patient care demands (Lawrence & Erickson, 2020). Beyond Covid-19, studies have shown that patients with pneumonia, heart failure, heart attacks, and other severe diagnoses had higher mortality rates in CON states than in states that have repealed CON (Lawrence & Erickson, 2020). Relying on market forces and reduced regulatory restrictions allows providers to treat more patients without as much red tape (Lawrence & Erickson, 2020).

References

Fernando, J. (2020, May 1). Certificate of Need (CON). Retrieved from Investopedia: https://www.investopedia.com/terms/c/certificate-of-need.asp

Lawrence, M., & Erickson, A. C. (2020, August 19). States that suspended Certificate of Need laws saved lives. Retrieved from Pacific Legal Foundation: https://pacificlegal.org/states-suspended-certificate-of-need-laws-saved-lives/

Mitchell, M. D. (2019, September 3). Do Certificate-of-Need Laws Still Make Sense in 2019? Retrieved from Managed Healthcare Executive: https://www.managedhealthcareexecutive.com/view/do-certificate-need-laws-still-make-sense-2019