RESEARCH

How Tennessee’s Outdated Certificate-of-Need (CON) Laws Limit Healthcare Access and Threaten the State’s Future

January 11, 2023 4:42PM

Healthcare can be expensive and complex. But Tennessee’s rules and restrictions are making it worse, often for those who can least afford care. Adopted in the 1970s, certificate-of-need (CON) laws require a government permission slip before providing most healthcare services, such as opening a new hospital or purchasing high-tech medical equipment. Imagine if every new restaurant had to get permission from other food establishments to open its doors or even buy a new fryer or drink machine.

As absurd as it sounds, this is exactly what would-be healthcare providers must do—often with little public input or transparency. Over the last 20 years, approximately 1 in 5 healthcare innovations that require CON approval were rejected in the state of Tennessee.

As a result, many facilities have never opened their doors or expanded to serve some of the state’s most vulnerable communities. They were outright rejected, their permits expired, or they never risked the enormous investments of time and money to navigate this onerous and risky application process. In fact, if we repealed all of Tennessee’s current hospital CON laws, there could be up to 63 more hospitals in the state, with 25 located in rural areas.

CON laws also protect existing hospitals from new competitors. While Tennessee is home to world-class medical facilities, some residents have been denied access to the same care available in other parts of the state because of these arcane restrictions.

Sadly, more than 5.5 million Tennesseans were denied increased access to one or more types of healthcare services. This is equivalent to more than five times the amount of people who live in Nashville. Additionally, these regulations have led to an overall lack of investment in the state’s healthcare infrastructure all while the state has experienced unprecedented growth.

Unfortunately, the data suggests that the expensive and time-consuming CON has had a chilling effect on healthcare expansion and access. Over the last 20 years, there has been more than a 70 percent reduction in healthcare CON applications.

Meanwhile, in recent years, Tennessee has become a global tourist destination and magnet for people seeking to relocate. The state’s relatively low cost of living, great music, world-class restaurants, zero income tax, outdoor recreation, and natural beauty make it hugely desirable. And it isn’t just average Americans looking to relocate to Tennessee, but businesses and job creators as well. Companies like Amazon, ICEE, Ford, Oracle, and Smith & Wesson, just to name a few, have relocated or expanded here. Since CON laws were first adopted, Tennessee has transformed from a sleepy Southern state known for country music to a national hub for shipping and logistics, auto and other advanced manufacturing, and a growing tech sector. 

However, Tennessee’s place as an economic leader is in danger if Tennesseans are unable to live healthy lives and access the care they need. Just as growing communities make investments in infrastructure, healthcare providers should be free to grow and invest in services and facilities to meet the needs of a growing community—but they are currently prohibited from doing so due to CON laws. 

Government shouldn’t arbitrarily limit access for patients by protecting current providers from competition. Reducing the costs and burden of applying for a CON, preventing denials in areas deemed to have a lack of access to care—or better yet, eliminating CON laws outright—would be a simple and cost-effective way of making our healthcare system cheaper, more efficient, and more patient-centered.

After all, Congress and 11 states have realized CONs were a bad idea, eliminating them entirely. What is the rationale for keeping them alive in Tennessee?

The fundamental question at stake is: Should doctors, medical professionals, and communities be forced to beg Nashville for permission to provide healthcare options that are legal and have already been deemed safe? Government should be freeing up healthcare providers to give more patients access to better care, not supporting policies that give them less.

Tennessee needs to begin putting patients first so that every Tennessean, especially the most vulnerable, can have access to the care that best meets their needs. And that the best technology and innovation are available at the best cost. Tennesseans need to be freed from CON restrictions now. It’s time to get unelected bureaucrats and entrenched interests out of these important healthcare decisions. Let’s put patients first.

To read our full report, click the button below.

If you want to see a full breakdown on CON denials, click here

To view an interactive map of denied CON applications by combined statistical area in Tennessee, click here.

To view an interactive map of CON applications that were denied by county in Tennessee, click here.