Entry Regulation and Rural Health Care: Certificate-of-Need Laws, Ambulatory Surgical Centers, and Community Hospitals | Mercatus

Certificate-of-need (CON) laws in 36 states and the District of Columbia restrict competition in healthcare facilities markets by requiring healthcare providers to obtain permission before adding or expanding any regulated facilities or services. One such CON program, currently implemented by 26 states, regulates the establishment and expansion of ambulatory surgical centers (ASCs), “hospital substitutes” that provide select out-patient surgeries and procedures.

Proponents of regulating ASCs through a CON program express concern that ASCs will engage in “cream skimming,” selectively treating more profitable, less complicated, well-insured patients and leaving hospitals to treat the less profitable, more complicated, and uninsured patients. Under these circumstances, ASCs might cause hospitals to close, especially rural hospitals with slim profit margins—thus depriving rural populations of important medical services.

In a new empirical study for the Mercatus Center at George Mason University, scholars Thomas Stratmann and Christopher Koopman evaluate the impact of ASC CON regulations on the availability of rural health care. Their research shows that, despite the expressed goal of ensuring that rural populations have access to health care, CON states have fewer hospitals and ASCs on average—and fewer in rural areas—than non-CON states.

Source: Entry Regulation and Rural Health Care: Certificate-of-Need Laws, Ambulatory Surgical Centers, and Community Hospitals | Mercatus

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