‘CON laws hurt our community more than they might help’

by Malia Hill, Grassroot Institute

Hawaii’s health care shortages weren’t created overnight, and there is no quick fix to the problem.

But removing the state’s burdensome “certificate of need” requirements should be a part of any strategy aimed at making health care in Hawaii more available and less costly.

Certificates of need are granted by the State Health Planning and Development Agency, which has final say over whether health care entrepreneurs can build new facilities, provide a new service or even simply add more hospital beds to an existing facility.

Indeed, Hawaii has one of the most restrictive CON environments in the country, with certificates of need being required for 87 out of a possible 109 different medical categories, including facilities unlikely to be used unnecessarily, such as dialysis centers and burn units.

The application process for medical certificates of need can be expensive, time-consuming and costly. For those who are not discouraged from applying at all, it can at least frustrate their ability to respond quickly to the changing needs of the community.

The rationale for CON laws, first introduced in the 1970s, is that they guarantee access to care and help keep health care prices low. But as the Grassroot Institute of Hawaii explains in a new white paper, “Improve health care access in Hawaii by reforming medical certificates of need”, decades of studies conducted across the country have shown that requiring certificates of need actually reduces health care access and increases costs.

Additionally, states with CON regulations have fewer hospital beds, fewer facilities such as hospitals and dialysis clinics, decreased access to imaging technology and longer wait times for care. They also have greater disparities in care for vulnerable populations such as the elderly and minorities.

Rural areas fare especially poorly in states with heavy CON regulations. With fewer rural hospitals, residents have to travel farther for care, sometimes even out of state — a situation with which many Hawaii residents are all too familiar.

Faced with widespread evidence that CON laws hurt our communities more than they might help, many states have begun to repeal or liberalize such regulations — and Hawaii policymakers should follow suit.

There are many ways they could do so, beginning with creating exemptions for certain services, such as dialysis centers and psychiatric facilities.

They could also exempt services related to maternal and pediatric health. And they could target rural health care disparities by exempting rural areas from CON requirements, as several states have done.

Perhaps the best option would be to repeal Hawaii’s CON regulations completely, as it is more properly the domain of an applicant’s investors rather than government officials to determine whether a product or service is truly needed.

In effect, these government officials are being called upon to act as business analysts rather than supporters of expanded health care options for the people of Hawaii.

But whether they choose reform or repeal, state lawmakers would do well to reduce the preponderance of state regulations that have negatively affected the health of Hawaii’s health care system.