A Regulation That Protects Big-Hospital Monopolies: By restricting construction of new medical facilities, certificate-of-need laws drive up health-care costs

By Hal Scherz in the WSJ. Dr. Scherz is an Atlanta urologist and the founder and secretary of the Docs 4 Patient Care Foundation. Excerpts:

"The National Health Planning and Resource Development Act of 1974 gave states with certificate-of-need programs additional federal health-care dollars. By 1982 every state except Louisiana was on board. Certificate-of-need laws eventually expanded to cover not only hospitals but a wide range of facilities, including imaging centers and outpatient surgery centers.

It didn’t take long for Washington to realize that certificate-of-need laws weren’t bringing prices down. The federal program was abolished in 1986, and 14 states subsequently scrapped their certificate-of-need programs. But hospital associations across the country work hard to maintain the market advantage that certificate-of-need laws provide, spending millions of dollars to lobby state legislators to block reform."

"Virginia, which has a certificate-of-need law, has 131 fewer hospital beds per 100,000 people than those without such laws. Certificate-of-need states also have 30% fewer rural hospitals and 13% fewer rural ambulatory surgery centers.

Big hospital associations in certificate-of-need states falsely claim that limiting competition improves access to care. In fact, according to Mercatus the quality of care in these states is worse. In particular, deaths from treatable complications following surgery, as well as mortality from heart failure, pneumonia and heart attacks are higher in certificate-of-need states."

"the claim that hospitals will be financially ruined by their obligations to charity without the protections afforded by certificate-of-need laws is unsupportable. There is no difference in the provision of charity care between states with and without such programs."