CON laws
For more than two decades, health care cost containment has been at the forefront of the health policy agenda. However, the approaches used to achieve cost containment have changed. One of the first policies adopted by states (and that for a time was required by federal statute) was certificate-of-need laws (CON). Such laws, which focused on hospitals and nursing homes, were adopted to curb needless duplication of services and consequent excess capacity. At the time, retrospective reimbursement provided guaranteed reimbursement even if facilities operated at well below capacity. Also, given nearly complete insurance coverage for hospitals, competition for patients occurred on a non-price basis (Robinson and Luft 1987; Dranove, Shanley, and Simon 1992). The hospitals that could offer the most sophisticated range of services and equipment were most attractive to patients and their physicians. The price of such care did not matter, or at least it mattered much less. Competition by service expansion and proliferation of new technology has been termed the "medical arms race." At least in principle, CON regulations could control the medical arms race by requiring that organizations demonstrate need for a facility, service, or eq
"There's a consensus that the law needs to be streamlined, but there's been no major agreement on what needs to be done. The effectiveness of CON programs has been debated over the years, and strong disagreement persists over whether they have in fact reduced expenditures and encouraged more efficient use of resources. However, that's far easier said than done. First they were imposed by a few states. During the deregulatory 1980s, the federal CON mandate was repealed, and a number of states abolished their programs or allowed them to sunset. To sum up the problem facing hospitals these days, you can't fight technological innovation; you can't fight the desire of physicians for more economic security. Among those, there is considerable variation in the types of capital expenditures, major medical equipment, and institutional health services subject to review. Second, there is concern that without restraint by CON regulations, market forces will exacerbate an existing maldistribution of facilities, thus placing a greater burden on the disadvantaged. Some studies have shown this to be so, but other studies indicate that the contribution to uncompensated or indigent care is about equal, whether measured in terms of the self-pay share of patients, the bad debt-charity care share of charges, or the share of revenue accounted for by Medicaid . The study suggested that CON applications be eliminated in Montana's urban areas-where it concluded that competition among all providers is relatively healthy-and strengthened in rural areas to protect more-vulnerable providers from competition. 5 million or the addition of services with annual operating expenses of more than $150,000. Currently 37 states and the District of Columbia have CON programs in operation. However, since 1989, the state has exempted from CON review virtually all construction and expansion involving acute-care hospitals and clinics. Current law requires state approval for the construction and most expansions of nursing homes, home health agencies, ambulatory surgery centers, rehabilitation hospitals and drug treatment facilities.
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Acceptance Essays
