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

33 Pages Posted: 7 Jun 2018

See all articles by Thomas Stratmann

Thomas Stratmann

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

Christopher Koopman

Mercatus Center at George Mason University

Date Written: 02/18/2016

Abstract

Certificate-of-need (CON) laws disallow hospitals, nursing homes, ambulatory surgical centers (ASCs), and other healthcare providers from entering new markets, expanding their practice, or making certain capital investments without first receiving approval from state regulators. These laws are currently in effect in 36 states. Over the past 40 years, CON laws have been justified as a way to achieve numerous public policy goals, such as controlling costs, increasing charity care, and protecting access to health care in rural communities by shielding hospitals from increased competition. However, the effects of CON laws on rural health care are not well understood. We examine the effect of entry regulation on ASCs and community hospitals and find that there are both more rural hospitals and more rural ambulatory surgical centers per capita in states without a CON program regulating the opening of an ASC. This finding indicates that CON laws may not be protecting access to rural health care, but are instead correlated with decreases in rural access.

Suggested Citation

Stratmann, Thomas and Koopman, Christopher, Entry Regulation and Rural Health Care: Certificate-of-Need Laws, Ambulatory Surgical Centers, and Community Hospitals (02/18/2016). MERCATUS WORKING PAPER. Available at SSRN: https://ssrn.com/abstract=3191476 or http://dx.doi.org/10.2139/ssrn.3191476

Thomas Stratmann (Contact Author)

George Mason University - Buchanan Center Political Economy ( email )

4400 University Drive
Fairfax, VA 22030
United States
703-993-2330 (Phone)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Christopher Koopman

Mercatus Center at George Mason University ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

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