BY Ron Shultis

Beacon Center of Tennessee

Imagine it’s always been your dream to own your own business, let’s say a Chick-Fil-A. Honestly, who wouldn’t want access to those nuggets at any time of the day? For years, you’ve pinched pennies, delayed vacations and hobbies, and worked multiple jobs to build up enough cash to invest in a franchise. You’ve been chosen to start a franchise and traveled to Atlanta, learned how they magically get the heat into the breading for the spicy sandwich, trained yourself to say “my pleasure” to every request, and even how to keep your ice cream machines from breaking (I’m looking at you, McDonald’s). After all that, you’re finally ready to open your own Chick-Fil-A franchise.

Then you find out there’s one more hurdle. Shockingly, you discover that you have to go before a government board and request permission to open your restaurant. We’re not talking about a simple business license, but to prove how your community suffers from a shortage of fried chicken providers and needs your restaurant. After spending tens—or even hundreds—of thousands of dollars on filing fees, you arrive at the hearing only to discover that bad blood from the recent “Chicken Wars” has spilled over. The local Popeyes and KFC owners testify how your restaurant isn’t needed; they argue that they can easily meet the local demand for chicken sandwiches. Even a local Taco Bell owner shows up. He says even though he doesn’t sell fried chicken, he might someday put it in a burrito so you shouldn’t be allowed to open your restaurant. Your application is denied, and your dream squashed.

This story seems utterly ridiculous and undeniably unfair. Yet, it’s very real in the healthcare market. Some states, like Tennessee, have what are called Certificate of Need laws (also fittingly known as “CON” laws). Under a CON law, a healthcare provider must get the government’s permission to open or expand its business, or even add new machines in some cases. Let’s say a small medical practice wants to help its patients save time and money with its own MRI machine. It has to prove to the government that its area needs one, and its competitors can easily stop it.

Congress originally pushed CON laws on the states in 1974. The idea was that they would control costs by making sure facilities and companies didn’t purchase unnecessary equipment and then go belly-up. Naturally, restricting the supply had the opposite effect, and in a rare moment of learning from its mistakes, Congress repealed the mandate in 1987. Yet to this day, Tennessee and 35 other states still have numerous CON laws on the books.

CON laws have little to do with ensuring quality, as training and licensing requirements already exist to serve that purpose. Yet, restricting the supply of providers ultimately reduces access and raises costs for patients. Studies have shown that states with CON laws have 30 percent fewer hospitals and even 30 percent fewer rural hospitals, as well as more patient complications after surgery. A 2017 estimate by the Mercatus Center found that by eliminating CON laws, Tennessee would save $223 in healthcare spending per person per year.

With healthcare as expensive and complex as it is, the government shouldn’t arbitrarily limit access for patients by protecting current providers from competition. Reducing the costs and burden to apply for a CON—or better yet, eliminating them outright—would be a simple and cost-effective way of making our healthcare system cheaper, more efficient, and more patient-centered. Come on, Tennessee. If Congress realized these were a bad idea, what’s our reason for keeping the con alive?

(Ron Shultis is the Director of Policy and Research at the Beacon Center of Tennessee, the state’s premier think tank.)