Certificate of Need (CON)

Key facts

Level of government

State law; no current federal CON requirement

First state law

New York, 1964

Federal push

National Health Planning and Resources Development Act of 1974

Federal mandate repealed

1986

Commonly reviewed

Hospital and nursing home beds, surgery centers, imaging equipment, cardiac services

What is a certificate of need?

CON programs require a provider to show a state agency that a proposed project, such as a new hospital, an ambulatory surgery center, additional nursing home beds or an MRI scanner, is needed in the community. The agency weighs projected demand, existing capacity, cost and access, often with public comment where competitors can object.

New York passed the first state CON law in 1964. The National Health Planning and Resources Development Act of 1974 tied federal funding to states adopting CON programs, aiming to prevent duplicative capital spending that raised costs. Congress repealed the federal mandate in 1986, and states have since kept, narrowed or repealed their programs. Massachusetts calls its program Determination of Need.

How CON programs work

Although every state program differs, most share these elements:

• Scope: states choose which projects need review, commonly acute care and psychiatric beds, long-term care beds, ambulatory surgery centers, imaging such as MRI and PET, cardiac catheterization, open heart surgery, home health and hospice.
• Thresholds: many states review only projects above set capital spending or equipment cost levels.
• Process: the applicant files a need analysis, a state agency or board decides, and competitors can often contest the application.
• Moratoriums: some states freeze new nursing home or other beds regardless of individual applications.

Why certificate of need laws matter

CON laws shape where and how quickly providers can grow:

• CON review limits new entrants, so opening an ambulatory surgery center, imaging center or home health agency can hinge on state approval rather than demand alone.
• Investors and health system strategy teams screen states by CON scope before planning acquisitions or new sites.
• Capital equipment sales cycles can lengthen in CON states when purchases such as MRI or PET scanners require approval.
• Research on CON effects on cost, quality and access is mixed, and federal antitrust agencies have urged states to repeal or narrow CON laws, so rules continue to change.