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The Economics of a Bed Shortage: Certificate-of-Need Regulation and Hospital Bed Utilization during the COVID-19 Pandemic

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  • Matthew Mitchell

    (Mercatus Center, George Mason University, 3434 Washington Blvd., 4th Floor, Arlington, VA 22201, USA)

  • Thomas Stratmann

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

Abstract

Certificate-of-need (CON) laws are intended to restrain health care spending by limiting the acquisition of duplicative capital and the initiation of unnecessary services. Critics contend that need is difficult to objectively assess, especially considering the risks and uncertainty inherent in health care. We compare statewide bed utilization rates and hospital-level bed utilization rates in bed CON and non-bed CON states during the COVID-19 pandemic. Controlling for other possibly confounding factors, we find that states with bed CONs had 12 percent higher bed utilization rates and 58 percent more days in which more than 70 percent of their beds were used. Individual hospitals in bed CON states were 27 percent more likely to utilize all of their beds. States that relaxed CON requirements to make it easier for hospitals to meet the surge in demand did not experience any statistically significant decreases in bed utilization or number of days above 70 percent of capacity. Nor were hospitals in states that relaxed their CON requirements any less likely to use all their beds. Certificate-of-need laws seem to have exacerbated the risk of running out of beds during the COVID-19 pandemic. State efforts to relax these rules had little immediate effect on reducing this risk.

Suggested Citation

  • 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.
  • Handle: RePEc:gam:jjrfmx:v:15:y:2021:i:1:p:10-:d:715725
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    References listed on IDEAS

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    1. Paul L. Joskow, 1980. "The Effects of Competition and Regulation on Hospital Bed Supply and the Reservation Quality of the Hospital," Bell Journal of Economics, The RAND Corporation, vol. 11(2), pages 421-447, Autumn.
    2. 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).
    3. Molly S. Myers & Kathleen M. Sheehan, 2020. "The Impact of Certificate of Need Laws on Emergency Department Wait Times," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 35(Spring 20), pages 59-75.
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    Cited by:

    1. 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.

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