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The Effects of Certificate-of-Need Laws on the Quality of Hospital Medical Services

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  • Thomas Stratmann

    (Economics Department, George Mason University, 4400 University Drive, MSN 1D3, Carow Hall, Fairfax, VA 22030, USA)

Abstract

Certificate-of-need (CON) laws restrict entry into health services by requiring healthcare providers to seek approval from state healthcare regulators before making any major capital expenditures. An important question is whether CON laws influence the quality of medical services in CON law states. For instance, if CON laws actually lower the quality of medical services, they fail to achieve their intended effect. This paper tests the hypothesis that hospitals in states with CON laws provide lower-quality services than hospitals in states without CON laws. Our overall results suggest that CON regulations lead to lower-quality care for some quality measures and have little or no effect on other quality standards. The results remain consistent across several robustness tests.

Suggested Citation

  • Thomas Stratmann, 2022. "The Effects of Certificate-of-Need Laws on the Quality of Hospital Medical Services," JRFM, MDPI, vol. 15(6), pages 1-29, June.
    • Handle: RePEc:gam:jjrfmx:v:15:y:2022:i:6:p:272-:d:841395
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    References listed on IDEAS

    as
    1. Baker, Matthew C. & Stratmann, Thomas, 2021. "Barriers to entry in the healthcare markets: Winners and Losers from certificate-of-need laws," Socio-Economic Planning Sciences, Elsevier, vol. 77(C).
    2. Matthew Mitchell & Thomas Stratmann, 2021. "The Economics of a Bed Shortage: Certificate-of-Need Regulation and Hospital Bed Utilization during the COVID-19 Pandemic," JRFM, MDPI, vol. 15(1), pages 1-18, December.
    3. Stratmann, Thomas & Wille, David, 2016. "Certificate-of-Need Laws and Hospital Quality," Working Papers 06927, George Mason University, Mercatus Center.
    4. Robert L. Ohsfeldt & Pengxiang Li, 2018. "State entry regulation and home health agency quality ratings," Journal of Regulatory Economics, Springer, vol. 53(1), pages 1-19, February.
    5. Suhui Li & Avi Dor, 2015. "How Do Hospitals Respond to Market Entry? Evidence from a Deregulated Market for Cardiac Revascularization," Health Economics, John Wiley & Sons, Ltd., vol. 24(8), pages 990-1008, August.
    6. Chiu, Kevin, 2021. "The impact of certificate of need laws on heart attack mortality: Evidence from county borders," Journal of Health Economics, Elsevier, vol. 79(C).
    Full references (including those not matched with items on IDEAS)

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