Hawaii ‘certificate of need’ laws have ‘chilling effect’ on healthcare access

A new Grassroot Institute of Hawaii white paper highlights the need for state lawmakers to reform or repeal the state’s CON regulations

News Release from Grassroot Institute

HONOLULU, Dec. 11, 2025 >> A new white paper issued by the Grassroot Institute of Hawaii outlines specific actions Hawaii lawmakers could take to ease the state’s medical “certificate of need” regulations that hinder healthcare expansion in Hawaii, especially in rural areas.

The white paper, titled “Improve healthcare access in Hawaii by reforming medical certificates of need,” suggests actions ranging from various reforms to outright repeal. They include:

>> Exempting medical services or facilities that are highly unlikely to be prescribed or used unnecessarily, such as dialysis centers, hospice facilities, natal intensive care units and burn-care units.

>> Exempting medical services aimed at Hawaii’s most vulnerable populations, such as substance abuse facilities, psychiatric facilities and intermediate-care facilities for those with intellectual disabilities.

>> Exempting rural areas, especially Hawaii’s neighbor islands.

>> Eliminating Hawaii’s certificate-of-need regulations entirely, whether gradually or in one fell swoop.

Grassroot Policy Director Malia Hill, author of the report, writes in the introduction that any effort to address the state’s overall lack of accss to facilities is currently hampered by the state’s requirement that healthcare providers obtain a certificate of need before they can make any procedural changes, add or upgrade facilities, or offer certain services that fall under Hawaii’s CON regulations.

Moreover, Hill adds, Hawaii’s CON laws are among the strictest in the nation, covering 87 of 109 identified medical services and facilities, including acute-care hospitals, NICUs and children’s hospital beds, psychiatric hospitals, substance abuse and mental health centers, diagnostic testing facilities and ground ambulances. 

“Even changing the number of beds or reclassifying their usage within a facility requires a certificate of need,” she writes. 

Hawaii’s medical CON laws are administered by the State Health Planning and Development Agency, which is part of the state Department of Health. The process of reviewing and accepting or denying CON applications is costly and time consuming for applicants, and offers third parties — including potential competitors — to submit testimonies for or against the proposed service or facility. 

“If Burger King had to get permission to build a restaurant and McDonald’s were permitted to testify, that permission could be denied because it could be argued that the burger needs of the community were already being met,” Hill writes. “This, of course, would be an absurd way to determine the number of restaurants in a community.”

The white paper cites a study from the Mercatus Institute at George Washington University which estimates that without CON laws, Hawaii could have at least 11 more hospitals, with four of those being in rural areas, and more than two additional ambulatory surgical centers. 

The report also cites decades of data from across the country that demonstrate CON laws do not ensure availability and affordability of healthcare as intended. Instead, limiting competition and medical resources has resulted in higher costs, fewer facilities and reduced access to care, especially for remote or other vulnerable populations. 

Hill writes:

“The studies document the fact that CON regulations have a chilling effect on healthcare expansion, thereby restricting healthcare access and contributing to an overall inability to cope with health emergencies.

“It is time that we reexamine Hawaii’s CON requirements and consider how they could be repealed or reformed to better serve the needs of Hawaii residents.”

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