Are Certificate-of-Need Laws Barriers to Entry? How They Affect Access to Mri, Ct, and Pet Scans

32 Pages Posted: 7 Jun 2018

See all articles by Thomas Stratmann

Thomas Stratmann

George Mason University - Buchanan Center Political Economy; George Mason University - Mercatus Center; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: 01/12/2016

Abstract

Certificate of need (CON) laws in 21 states restrict acquisition of imaging equipment, including resonance imaging (MRI), computed tomography (CT), and positron emission tomography (PET) scans. We compare the effect of CON regulations for imaging services provided by hospitals and other providers to determine whether CON laws affect use of imaging services across provider types. We find that services by nonhospital providers, but not by hospital providers, are negatively associated with CON laws. We also find that CON laws reduce the overall number of medical providers, suggesting less availability of imaging services in CON states. We provide evidence consistent with this result showing that residents of CON states are more likely to travel out of state to obtain imaging services than are residents of non-CON states. These results imply that the effect of CON is heterogeneous on hospitals and nonhospitals, affecting the market structure for imaging services.

Suggested Citation

Stratmann, Thomas, Are Certificate-of-Need Laws Barriers to Entry? How They Affect Access to Mri, Ct, and Pet Scans (01/12/2016). MERCATUS WORKING PAPER, Available at SSRN: https://ssrn.com/abstract=3191452 or http://dx.doi.org/10.2139/ssrn.3191452

Thomas Stratmann (Contact Author)

George Mason University - Buchanan Center Political Economy ( email )

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George Mason University - Mercatus Center ( email )

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HOME PAGE: http://www.mercatus.org/scholars/thomas-stratmann

CESifo (Center for Economic Studies and Ifo Institute)

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Munich, DE-81679
Germany

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