Freedom Line Blog

The Tennessee General Assembly recently passed important legislation to repeal the state’s Certificate of Need (CON) requirements for acute care hospitals and other critical healthcare services. Pending Governor Bill Lee’s signature, the bill paves the way for more choices and better-quality care for patients across the state.

CON laws compel hospitals and other healthcare providers to demonstrate a “need” for and to receive special government permission to build new facilities and offer certain new healthcare services. Not only is that approval process governed by a government board unaccountable to voters, but incumbent providers also get a say in whether new facilities are permitted to open or new services can be offered by competitors in their geographic footprint.

Simply put, CON laws empower a board of unelected government bureaucrats to insulate incumbent healthcare providers from competition and limit access to care for patients.

The detrimental effects of CON laws have been felt across the Volunteer State. According to a recent report by the Beacon Center of Tennessee, which examined the impact of the state’s CON laws over a more than two-decade span from 2000 to 2022, as many as 5.5 million Tennesseans were denied increased access to healthcare services and Tennessee communities lost over $700 million dollars in direct investment as a result of the state’s CON denials during that time period.

Given the sizable negative impact CON laws have, the efforts of numerous legislators from across the state to pass significant reform, including phasing out Tennessee’s CON requirements for acute care hospitals, merits significant praise.

CFIF, therefore, joins countless Tennessee patients, community leaders, healthcare providers and other leaders in expressing appreciation for the General Assembly’s passage of critical CON reform this session. Tennessee patients can now look forward to increased access to the affordable, high-quality care they depend on closer to home.

Specifically, CFIF would like to thank the following members of the Tennessee General Assembly for their thoughtful leadership and many years of hard work on this issue:

• House Speaker Cameron Sexton (R-Crossville)
• Senator Bo Watson (R-Hixson)
• Representative Johnny Garrett (R-Goodlettsville)
• Senator Rusty Crowe (R-Johnson City)
• Representative David Hawk (R-Greeneville)
• Senator Brent Taylor (R-Memphis)
• Senator Shane Reeves (R-Murfreesboro)
• Senator John Stevens (R-Huntingdon)
• Senator Paul Bailey (R-Sparta)
• Senator Kerry Roberts (R-Springfield)
• Senator Bobby Harshbarger (R- Kingsport)
• Representative William Lamberth (R-Portland)
• Representative Jeremy Faison (R-Cosby)
• Representative Clark Boyd (R-Lebanon)
• Representative Mary Littleton (R-Dickson)
• Representative Esther Helton-Haynes (R-East Brainerd)
• Representative Ron Travis (R-Dayton)
• Representative Lowell Russell (R-Vonore)
• Representative Mike Sparks (R-Smyna)
• Representative Jay Reedy (R-Erin)
• Representative Jody Barrett (R-Dickson)
• Representative Bud Hulsey (R-Kingsport)
• Representative Tim Rudd (R-Murfreesboro)
• Representative Sabi Kumar (R-Springfield)
• Representative Tim Hicks (R-Gray)
• Representative Jake McCalmon (R-Franklin)
• Representative John Crawford (R-Bristol/Kingsport)
• Representative Paul Sherrell (R-Sparta)
• Representative Rick Eldridge (R-Morristown)
• Representative Aron Maberry (R-Clarksville)
• Representative Rebecca Alexander (R-Jonesborough)
• Representative Justin Lafferty (R-Knoxville)
• Representative Timothy Hill (R-Blountville)

Last week was National Hospital Week, when we recognized and expressed our gratitude for hospitals, health care facilities and caregivers who provide vital health care services across the nation. National Hospital Week also serves as a reminder that antiquated and burdensome Certificate of Need (CON) laws create government red tape and needlessly empower unelected bureaucrats to limit access to care.

Recently, the Beacon Center of Tennessee released a report showing how, in the last two decades, CON laws have prevented up to 63 new hospitals in Tennessee and deprived Tennessee communities of $733.6 in direct investment. The report also found that Tennessee has seen a 70 percent decrease in applications for new health care facilities and expanded services since 2004 due to the state’s CON laws.

Florida has seen a rapid increase in new hospitals and other healthcare facilities since its Certificate of Need requirements were dropped a couple of years ago.

It’s no wonder that South Carolina in recent weeks repealed its CON laws and Georgia is working to follow suit.

CON laws limit patient access to care and increase health care costs by preventing new health care facilities from opening, particularly in rural communities that desperately need health care infrastructure.

Lawmakers in states where CON laws still exist should recognize the obvious harm they cause and move to fully repeal them.

The South Carolina Legislature voted last week to repeal the state’s Certificate of Need (CON) laws. The legislation, which immediately eliminates CON requirements for the majority of health care facilities and establishes a three-year CON “sunset” period for existing hospitals, serves as a massive victory against unelected bureaucrats who have been unnecessarily empowered to block patients’ access to new healthcare facilities and services.

In Tennessee, similar antiquated CON laws continue to stifle the free market, limit access to affordable health care choices and deprive communities across the state of critical jobs and investment. Tennessee’s CON laws require health care providers in the state, even private ones, to receive government permission slips approved by unelected government bureaucrats prior to opening new facilities or offering new health care services.

CFIF has been actively advocating full repeal of Tennessee’s CON laws.

The Beacon Center of Tennessee outlined the devastating impact CON laws have on the state in a report released earlier this year. Over the last twenty years, CON laws have:

• Cost the state more than 60 additional hospitals – many in underserved or rural areas.
• Denied 5.5 million Tennesseans increased access to much-needed new health care services.
• Deprived local communities of $733 million dollars of direct investment.

Florida, a conservative state that prioritizes free-market solutions and medical freedom, has experienced a rapid increase in new health care facilities since repealing its Certificate of Need requirements.

Tennessee should follow its Southern neighbors’ example and eliminate its remaining CON laws during next year’s legislative session. Doing so would remove burdensome and unnecessary government red tape that currently serves as a barrier to new health care choices, restore medical freedoms and increase access to affordable, high-quality health care for Tennesseans across the state.

Steve Forbes, chairman and editor-in-chief of Forbes, recently released a video calling for citizens and local groups to “demand their legislators get rid of” Certificate of Need (CON) laws. Currently, 35 states and Washington, D.C. still have CON laws on the books.

Forbes outlines the flawed CON approval process that requires special government permission for private health care providers to build new hospitals or expand the services they offer. Additionally, Forbes explains how CON laws disrupt competition in the healthcare market and limit access to care while increasing costs for consumers.

In Tennessee, where CFIF has been actively advocating full repeal of the state’s remaining CON laws, such laws continue to stifle the free market, limit access to health care choices for Tennesseans and deprive communities of critical investment. A recent Beacon Center of Tennessee report found that over the last two decades, the state’s CON laws have cost Tennessee up to 63 hospitals, many of them in underserved rural areas. In total, 5.5 million Tennesseans have been denied increased access to health care services and local communities have lost out on over $700 million dollars in direct investment as a result of the state’s CON laws.

KEY EXCERPTS FROM THE VIDEO:

• “CONs restrict competition and promote regional and local monopolies, which means higher prices and restricted access to medical care. After all, approval boards are often loaded with personnel tied to existing facilities. It’s like a panel of people from McDonalds passing judgment on an application for a new Wendy’s. To obtain a certificate of need is not cheap, what with unavoidable outlays for lawyers and consultants, not to mention unnecessary time delays.”
• “CONs are costly. The Kaiser family Foundation found that states with CON laws have higher health care costs than states that don’t. A study from the Mercatus Center at George Mason University confirms that CON states have fewer hospitals, fewer beds and fewer service centers per capita than CON-free states.”

Watch the Video Here