North Carolina’s certificate‑of‑need (CON) law, first enacted in 1971, continues to shape the state’s health‑care landscape. The law requires providers to obtain state approval before adding new beds, services or facilities, a safeguard originally intended to curb unnecessary spending after World War II’s hospital boom.
History and legal backdrop
Modeled after a 1960s New York program, the CON law was struck down by the North Carolina Supreme Court just two years after its passage, when the court found it granted “exclusive privileges” that violated the state Constitution’s anti‑monopoly clause. The decision halted the program, but Congress’s 1974 incentive legislation encouraged states to revive CON programs. North Carolina reinstated its law in 1978 with revised language to address the court’s concerns.
Current scope and criticism
Today, North Carolina is the only state where a legal challenge succeeded, yet the CON program remains active and among the most restrictive in the country, covering 23 health‑care services. Critics argue the law artificially limits supply, driving up prices. Donald Bryson, CEO of the libertarian John Locke Foundation, told the Carolina Public Press that “CON artificially restricts supply, which just means that prices are artificially inflated over time.”
Industry perspective
Hospital advocates push back. Josh Dobson, CEO of the North Carolina Healthcare Association, said repealing the law would destabilize hospitals already operating on thin margins. He warned that without CON protections, non‑hospital providers could “cream‑skim” profitable patients, leaving hospitals to bear the cost of charity care for 20‑30 % of admissions.
Academic findings
Wake Forest Law professor Mark Hall noted that CON laws have not succeeded in controlling health‑care costs. “The laws haven’t succeeded in controlling costs as much as we’d like,” he said, adding that hospital expenses have outpaced inflation for years. Hall cautioned that a wholesale free‑market shift could threaten rural hospitals, which rely on limited patient volume and Medicaid funding.
Economist Stephen Slivinski of the Cato Institute reviewed the research and found that states that have repealed CON laws generally did not experience the catastrophic outcomes predicted by hospital lobbyists. “The academic research is fairly strongly in favor of the proposition that the sky won’t fall if you liberalize or get rid of CON laws, and in fact, the opposite often occurs,” Slivinski said.
Local impact
In Asheville, the legacy of the CON debate is evident. Aston Park, a 50‑bed nonprofit hospital, sued after the state denied its request to replace an aging facility with a 200‑bed hospital, citing insufficient physician staffing. The Supreme Court’s anti‑monopoly ruling halted the project, and Aston Park later transferred its acute‑care beds to Memorial Mission Hospital, which now operates under for‑profit HCA and enjoys a de facto monopoly in the region, largely protected by the current CON framework.
Looking ahead
The ongoing investigative series “Battling for Beds” will examine reform proposals, including loosening CON restrictions or eliminating the program altogether. Stakeholders on both sides agree that the ultimate goal is to ensure affordable, high‑quality care for North Carolina’s growing population, but they differ sharply on the path forward.
Original reporting: Carolina Public Press — read the source article.
