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Abstract
Certificate of need (CON) laws restrict the supply of medical services, from nursing home beds to the number of dialysis machines per hospital. These restrictions have the potential to lower the standard of care people receive. This paper empirically investigates how CON laws affect emergency department wait times and finds that CON laws have a statistically significant impact on increasing the median wait time for medical examination, pain medication administration, hospital admittance, and hospital discharge. These findings support the idea that movement toward a freer market for health care services through a reduction in CON laws could improve patient outcomes.
JEL Codes: 111, 118, D04
Keywords: certificate of need, regulation, health care markets
I.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...