Certificate of Need Changes and Implications for Healthcare Leaders

Certificate of Need Changes and Implications for Healthcare Leaders

The healthcare sector is about to undergo another significant transformation with the recent and upcoming changes to Certificate of Need (CON) laws — especially in the Southeast.  


It’s vital for healthcare leaders to stay ahead of the curve and understand the implications of these regulatory shifts. The relaxing of CON regulations in some states will revolutionize the industry, presenting both opportunities and challenges for organizations operating in the region.”


What Is Certificate of Need (CON) and Why Was It Created?

Certificate of Need (CON) laws are state regulations that mandate government approval for healthcare providers. This approval is required before building new facilities or expanding existing ones. Expansions include adding inpatient beds, operating rooms, or introducing new services. The laws aim to control healthcare costs and enhance outcomes. They achieve this by limiting the distribution of expensive resources and preventing unused capacity development. Additionally, they promote the establishment of higher volume regional centers.

Map showing states where CON law is in effect.

 

Who Is Leading CON Reform Efforts?

In recent years, there has been a growing movement to reform Certificate of Need laws. Critics argue these laws allow regional monopolies and stifle healthcare innovation, leading to higher prices and worse care. Approximately one-third of US states have repealed their CON laws. 

In the Carolinas and Georgia, there have been recent significant efforts to review and change CON laws.

  • South Carolina passed legislation in 2023 that effectively eliminated CON except for nursing homes and MUSC. This repeal is in effect in 2027 for most hospitals. The repeal takes effect immediately for the eight counties without a hospital, and all other health services throughout the state.
  • North Carolina’s 2023 Medicaid expansion legislation also brought CON reforms. While not a repeal on the scale of South Carolina, this will lead to more MRI machines and ambulatory surgery centers. The legislation also eliminated the need for a CON for certain medical equipment, psychiatric facilities, and chemical dependency treatment.
  • Georgia Senate Resolution 279 established a committee to explore CON reform opportunities and present recommendations for State Senate consideration in the 2024 legislative session. 

(Additional exceptions are available on the state’s legislative sites.)

What Impacts Will Changes in CON Laws Bring?

These Certificate of Need changes aim to increase competition, foster healthcare innovation, and expand patient access. With population growth rates in these three states more than triple the national average, this region will likely experience significant inpatient and outpatient healthcare service development through the 2020s.  Southeast healthcare leaders must adapt to this new regulatory landscape, continuously monitor market dynamics, and identify collaboration and partnering opportunities. 

Implications and Challenges for Healthcare Leaders

  • Increased competition: The relaxation of CON regulations in these states will intensify competition among healthcare organizations. Leaders must prepare for a more competitive market by enhancing marketing and branding strategies, improving patient and staff experience, and improving operational efficiency.
  • Strategic planning: Healthcare leaders should evaluate their organization’s strategic goals and assess how the CON changes align with their long-term vision. This may involve identifying new service lines and underserved regions to stay ahead in the changing landscape. 
  • Quality of care and patient access: While increased competition can have positive effects, healthcare leaders must not lose sight of the Quintuple Aim and ensure that quality of care, patient experience, and access to essential community services are not compromised.
  • Collaboration and partnerships: Healthcare providers continue to struggle with long-term unsustainable margins. Increased competition may drive collaboration and resource-sharing opportunities. Leaders should explore potential collaborations to maximize operational efficiency and expand services. 

As a healthcare leader in North Carolina, South Carolina, Georgia, and elsewhere in the Southeast, it is crucial to understand the changes in CON regulations. These modifications provide new possibilities for organizations to innovate and expand, but they also bring increased competition and challenges.  

By staying informed, strategically planning, and prioritizing patient care, healthcare leaders can successfully navigate this evolving landscape. Adapting to the changing dynamics will position healthcare organizations for success in a more competitive and patient-centric healthcare environment. 

Navigating regulatory shifts can be challenging. It helps to have an experienced Advisory Services team chart a course for strategic, operational, and facility solutions.

For more healthcare industry insights, listen to our podcast, IdeaXchange, Ideas Shaping Healthcare.

If you need a trusted partner to help you stay ahead of regulatory shifts, schedule a discovery call with our team today. 

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