LUGPA Policy Brief
Certificate-of-Need (CON) Laws: Outdated Barriers to Access, Competition, and Innovation

September 2025

Certificate-of-need (CON) laws were created in the 1970s to control healthcare costs and avoid duplication of services. In practice, they have become barriers to competition and innovation. By requiring government approval before opening or expanding facilities, CON laws often delay care, inflate costs, and give incumbent hospitals the ability to block new entrants — even when communities clearly need additional options.

For independent urology practices and ambulatory surgery centers (ASCs), CON laws limit the ability to invest in new facilities, expand services, or adopt modern technology, especially in fast-growing or underserved areas.

Recent State Actions

States across the country are recognizing the harm caused by outdated CON frameworks and are moving toward reform:

• Alabama: Sen. Larry Stutts will introduce legislation to limit the authority of the CON Review Board, citing high costs and regulatory burdens on providers.
• North Carolina: Full repeal being considered for January 2026. Since Nov. 1, 2023, ASCs in counties with over 125,000 residents are already exempt from CON review.
• New York: Proposed amendments raise thresholds to reflect inflation and construction costs.
• Tennessee: Phasing down CON requirements through 2025, reducing regulatory scope.
• Georgia: Raised spending thresholds and relaxed rules for rural projects but retained the overall CON framework.

Why CON Laws Hurt Patients and Providers

Higher Costs:

• States with CON laws covering 10+ services have per-capita healthcare costs about 8% higher than states with fewer restrictions.
• Reduced competition allows incumbents to maintain higher prices for procedures and services.

Fewer Facilities and Less Access:

• CON states have fewer ASCs and hospitals per capita, resulting in longer waits for procedures and fewer local care options.
• Restrictions disproportionately harm rural and underserved communities that need new points of care.

Worse Outcomes:

• Delays in care can lead to higher readmission rates, more preventable ER visits, and poorer long-term health outcomes.
• Patients have fewer choices for specialized care, limiting the ability to find providers best suited to their needs.

Competitor’s Veto:

• Existing providers can use the CON process to challenge and block competitors.
• Reviews are often subjective and influenced by political and market relationships rather than patient needs.

LUGPA’s Reform Priorities

1. Eliminate or Scale Back CON for Outpatient Care
   Remove requirements for ASCs, imaging centers, and other outpatient services.
2. Raise Capital Expenditure Thresholds
   Modernize and index thresholds to inflation so routine, low-risk investments are exempt.
3. Limit Competitor Standing
   Restrict objections to those demonstrating measurable harm to community health access.
4. Streamline Timelines
   Impose fixed review deadlines and automatic approval if the state fails to act.
5. Preserve Narrow Protections for Rural Communities
   Tailor policies to safeguard access in areas dependent on a single hospital or facility.

Evidence is clear: CON laws do not lower costs or improve quality. Instead, they create regulatory hurdles that protect incumbents, limit competition, and reduce patient access to timely, affordable care. States modernizing or repealing CON requirements — particularly for ASCs and outpatient services — are taking important steps toward a more competitive and patient-focused healthcare system.

LUGPA supports targeted reforms that eliminate unnecessary barriers while preserving access in truly underserved areas. By aligning policy with today’s healthcare realities, states can empower independent providers to deliver more efficient, innovative, and patient-centered care.