Improving Value

Certificate of Need

Certificate of need (CON) laws - also known as determination of need (DON) laws - have a long history as a potential cost control solution. CON requires health care providers - primarily hospitals - to demonstrate to a public body the clinical need for a capital expense, for example, a new building or major piece of equipment, prior to making these investments.

CON was originally introduced to combat the medical "arms race" that was occurring with the introduction of new technology in hospitals. This led to sophisticated and expensive medical technologies being present in nearly every hospital. Studies show that increased availability of hospital beds and equipment can lead to increased use - perhaps over and above what patients need.¹ 

Evidence of the effects of CON on hospital expenditures and resources are mixed. One approach that appears to control costs and resources are use-review boards that include a variety of stakeholders, including consumer representation. However, the evidence suggests that there may be even more beneficial ways to address the policy problems targeted by CON.

The Hub's Easy Explainer on Certificate of Need discusses the mixed evidence for CON. 

 

Notes

1. Meesa, Indu R., Robert A. Meeker and Suresh K. Mukherji, "Certificate of Need," Neuroimaging Clinics of North America, Vol. 22, No. 3 (August 2012). 

More on this Topic

• Sage Journals: The Association of Hospital Cost-Inefficiency with Certificate-of-Need Regulation (January 22, 2014).
• The Commonwealth Fund: Health Care Market Concentration Trends in the United States: Evidence and Policy Responses (September 6, 2017).