Why the Need for a Certificate of Need?

Despite progress in recognizing the need for cost-efficient, readily available care like that found in the urgent care setting—and data demonstrating that they don’t help mitigate healthcare costs anyway—certificates of need (CONs) continue to exist. Typically, states view urgent care centers as “physician offices” that would not be subject to a CON. As healthcare markets become more saturated (ie, competitive), however, there is growing concern that those threatened by the boom in urgent care could seek to erect entry barriers like CONs to discourage further growth. Since their inception at the behest of the federal government in 1974, CONs have been intended to reduce overutilization of healthcare resources, duplication of services, and other misuse that can drive up health costs. Basically, they require healthcare providers to justify major capital projects and service changes to state regulators, who then decide whether a project is “economically sustainable” and benefits the community by meeting meets an actual medical need. Clearly, that could have a chilling effect on the growth of the urgent care marketplace. While federal CON legislation was repealed in 1987, 34 states still have CON laws. Critics continue to argue that they stifle competition, which actually can drive healthcare costs up while serving to diminish the quality of care available. With growing evidence that healthcare consumers make choices based on criteria beyond cost—convenience being chief among them—the whole rationale for CONs appears more antiquated than innovative or productive.