The Impact of Certificate of Need Laws on Emergency Department Wait Times.

Author:Myers, Molly S.
  1. Introduction

    Certificate of Need (CON) laws have been relevant in health care and American politics since their national implementation in 1979. These laws' stated goal is to decrease health care spending by requiring prospective health care firms to petition for proof that substantive need for a facility exists where the facility intends to enter. Under CON laws, prospective firms face a rigorous approval process to enter the market, resulting in a reduced supply of facilities and, consequently, a decrease in the health care supplied. The CON law regulation reduces the amount of health care available.

    Lawmakers believed that reducing health care supply would reduce extraneous spending for hospitals, decreasing health care costs. However, several studies have already tackled the notion that CON laws do not reduce costs, do not limit spending for specific procedures, and do not increase quality of care (Lanning, Morrisey, and Ohsfeldt 1991; Khanna et al. 2013; Stratmann and Wille 2018). CON laws are not meeting their stated goal of cost reduction, and they are having unintended consequences in other areas of health care--in particular, in emergency departments. Until now, the impact of CON laws on emergency department (ED) wait times has not been studied.

    In the United States, emergency department overcrowding has become a serious problem and is impacting health outcomes. Patient volume has increased significantly since 1993, which has resulted in overcrowding and can manifest in hallway hospital bed use, extended wait times, and high walk-out rates (Moore, Stocks, and Owens 2017). Overcrowding tends to result from a shortage. Normally, the market would correct itself by increasing supply. However, CON laws provide a tangible barrier to entry by requiring incoming health care firms to spend, at a minimum, thousands of dollars and months of effort just to testify for entry: to begin the process of receiving permission to build a facility (DC Health, n.d.).

    In addition, other CON law restrictions may increase ED utilization by encouraging patients to move lower-urgency care to a higher-urgency setting such as the ED. CON laws appear to increase wait times in emergency departments by both restricting the number of EDs and restricting lower-urgency supply, which causes increased usage of the ED. This outcome can explain why CON laws are correlated with reduced quality and efficiency of care, leading to worse health outcomes. While CON laws have been repealed nationally, thirty-five states and the District of Columbia still have CON laws in place, negatively impacting health care in these states.

    Analyzing emergency department wait times as impacted by CON laws is a multistep process. Prior literature demonstrates how CON laws do not reduce costs, how sharply ED volume has risen, and how lack of supply leads to overcrowding. CON laws are a barrier to increasing supply and thus increase overcrowding and hurt people's health. By exploring specific examples of how CON laws may increase ED utilization and overcrowding, the impacts on patients will become clearer. Overcrowding, especially in terms of hallway beds and wait times in emergency situations, is correlated with worse and more expensive health outcomes. The regulation of health care facilities is harming the very consumers it is purported to help. Through this multifaceted analysis of the current market, it will become clear how urgently the United States must repeal CON laws and address emergency department crowding for patients' financial and physical well-being.

  2. Background

    This section discusses certificate of need laws and emergency departments, including background and the current landscape of the two.

    1. Certificate of Need Laws

      CON laws have regulated health care facilities since 1964 when New York State first instituted its CON program (Burt 2012). In 1974, Congress enacted the National Health Planning and Resources Development (NHPRDA) Act, which required all states to implement CON regulations or lose Medicaid and Medicare funding. This act effectively expanded CON laws to the entire United States (Mitchell 2016). CON law proponents said the laws would limit spending, arguing that increased costs from expanded health care facilities did not provide health care access for all and instead created "costly surpluses" of health resources (Health Planning and Resources Development Act of 1974). The argument was that CON laws would limit the overutilization of hospital beds and thus limit cost increases from unnecessary hospital stays. Legislators also argued that CON laws would help exploit economies of scale through individual hospital specialization, providing expensive services at a lower cost due to increased volume and utilization.

      However, recent research has not shown CON laws to be cost saving. At best, CON laws appear to not impact costs when looking at specific treatments (Khanna et al. 2013) and they either maintain or increase costs when comparing CON to non-CON states (Mitchell 2016; Bailey 2018). For example, hospitals in monopolistic environments, such as those sometimes created by CON laws, have 15 percent higher costs than hospitals with four or more competitors (Mitchell 2016). In the case of nursing homes, Medicare spending was 1.6 to 1.8 times higher in states with CON regulations (Rahman et al. 2015). CON laws, therefore, have not been found to reduce costs, contrary to the laws' stated goal.

      CON laws haven't just failed to reduce health care costs. By limiting supply, they have made attaining care more difficult for patients. CON laws reduce the supply of both hospitals and ambulatory surgery centers: the Mercatus Center finds that states with CON requirements have 30 percent fewer hospitals and 30 percent fewer rural hospitals (Stratmann and Koopman 2016). In the case of freestanding EDs, states requiring a certificate of need had fewer EDs than those without restraints (Gutierrez et al. 2016). Restricting gross supply of health care can increase health disparities, especially in rural areas. However, the effects of an unnecessary supply restriction can also harm other areas of public health. To understand how reducing supply can harm the health care environment, it is important to understand the framework under which CON law restrictions may result in higher ED utilization.

    2. Emergency Department Utilization

      Emergency departments have witnessed an upward trend in patient volume in recent decades. From 2006 to 2014, the number of ED visits increased by 14.8 percent (Moore, Stocks, and Owens 2017). Lower copays, convenience, and required treatments all factor into this statistic and likely impact ED utilization and overcrowding. Supply-side failures from CON laws also contribute to ED overcrowding. Although overcrowding can resemble increased patient volume, it also results in hallway bed usage, increased wait times, and patient dissatisfaction. Specifically, hallway bed usage, or "outlying," has been shown to negatively impact patient outcomes: outlying patients have longer hospital stays, at eight days versus seven days, and 27 percent of outlying patients are readmitted to the hospital within 28 days, compared to 17 percent of nonoutlying patients (Stowell et al. 2014).

      Although many health care facilities and legislators strive to minimize health care expenditures, the impacts of supply restrictions on health care can surface in more alarming ways. Patients are finding it harder to obtain convenient care appointments as wait times for office visits skyrocket (Merritt Hawkins 2017). For example, a patient in need of cardiac services can expect to wait three weeks for a visit, a phenomenon not isolated to cardiac care. Restrictions in supply such as these can cause patients to put off seeing a doctor or to not go altogether. By avoiding preventative care, patients ultimately must go to hospitals, generally to emergency departments, with acute, more urgent, and more costly conditions (Enard and Ganelin 2013).

      Perhaps the most relevant...

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