Patients win when independent doctors open shop. More choice means improved service and lower costs for everyone. Yet states often intervene to shut down health care competition.
Virginia regulators blocked Maryland-based radiologist Mark Monteferrante when he tried to expand his independent practice across state lines. Alabama regulators stopped family physician Nancy White when she tried to offer residential drug treatment at a 16-bed facility. And Iowa regulators stalled ophthalmologist Lee Birchansky for 20 years when he tried to open an outpatient surgery center next to his office.
None of the government interference involved concerns about health or safety. Licensed doctors would have provided medical care using state-of-the-art equipment and techniques in all three cases. Regulators objected instead to doctors working for themselves in a system that tilts increasingly toward multibillion-dollar conglomerates.
Consolidation of independent practices has continued for decades, hitting a milestone in 2018 when employed physicians outnumbered self-employed physicians for the first time in U.S. history. Many factors contribute to the trend, which accelerated during the COVID-19 pandemic.
Regulatory compliance and medical billing, for example, have grown increasingly complex. But the hinderance for Monteferrante, White and Birchansky was something else: a monopoly-making tool called a “certificate of need” or “CON.”
Overall, 38 states and Washington, D.C., enforce CON laws or close variations.
Before health care providers can launch or expand services in these jurisdictions, they first must prove to the government’s satisfaction that a need exists. All too often, this means they must prove they won’t poach talent or take revenue from established providers.
To protect the status quo further, many states allow established providers to participate in the CON process—ensuring they receive the government permission slips for themselves while denying would-be rivals.
Something similar would happen if states allowed The Home Depot to block mom-and-pop hardware stores from opening nearby. Innovation would suffer. But CON advocates claim the government favoritism is necessary in health care to prevent redundant investment and keep costs under control. They argue, for example, that too many MRI machines or surgery centers in the same region would waste money and raise prices—flipping the principle of supply and demand upside down.
Such arguments suggest the normal laws of economics do not apply in health care, a public trust removed from ordinary concerns like profit. Big hospitals promote this thinking when they warn about aggressive business tactics and “stealthy” private equity takeovers. Yet they undercut their arguments when they defend CON laws, which are all about money—more for them and less for everyone else.
Predictably, the promised CON benefits never materialize. Academic research, federal reviews, and decades of real-world experience expose CON laws as a failed experiment. The Antitrust Division of the U.S. Department of Justice and the Federal Trade Commission sounded the alarm as far back as 2008: “By their very nature, CON laws create barriers to entry and expansion to the detriment of health care competition and consumers.”
Many governors acknowledged the harm during the early weeks of the COVID-19 pandemic. “Conning the Competition,” a nationwide review of CON laws from our public interest law firm, the Institute for Justice, finds that 24 states and Washington, D.C., suspended CON enforcement in 2020 so health care providers could respond more nimbly to the crisis. Despite the evidence, many states embrace the protectionism anyway.
Ophthalmologist Jay Singleton knows firsthand. He owns a vision center near Fayetteville, North Carolina, where he can treat patients for thousands of dollars less than big hospitals. But the state won’t let him use the space for most of the procedures he performs. He lacks a CON, so he must drive to a competitor’s facilities two miles down the road.
Costs go up, scheduling options go down, and patients suffer.
New Hampshire finally had enough and repealed its CON laws in 2016, joining California, Texas, and nine other CON-free states—representing about 40 percent of the U.S. population. The next battleground for CON reform is South Carolina. Palmetto State lawmakers have debated full repeal since at least 2015 and renewed their efforts in 2023 with Senate Bill 164.
Independent doctors would benefit from an end to the protectionism. So would consumers. Nobody wins when government bureaucrats come between licensed physicians and their patients.
Jaimie Cavanaugh is an attorney. Daryl James is a writer.
