Certificate of Need (CON)

How It Works

Certificate of Need laws exist in 35 states and Washington, D.C. Under CON, a hospital that wants to build a new wing, add an MRI machine, or establish a new cardiac surgery program must apply to the state and demonstrate that the community needs the additional capacity. Proponents argue CON prevents overbuilding and keeps costs down. Critics argue CON protects incumbent hospitals from competition, limits patient choice, and may actually increase prices by reducing supply. States without CON laws have not experienced the cost explosions that CON proponents predicted, and several states have repealed their CON laws in recent years.

Related Terms

• Centers for Medicare & Medicaid Services (CMS) — The federal agency that administers Medicare, Medicaid, and the ACA marketplace — setting hospital payment rates, quality standards, and the data that HospitalCostData uses.
• Nonprofit Hospital — A hospital organized as a tax-exempt entity — making up about 56% of U.S. community hospitals — that reinvests revenue into the community in exchange for federal, state, and local tax exemptions.