Table of Contents
Based on the Bluegrass Institute policy brief "Certificate-of-Need Laws in Kentucky: Current Status and Opportunities for Evidence-Based Reforms" by Liam Sigaud and Edgar Orozco.
1. What is a certificate-of-need law?
A certificate-of-need, or CON, law requires health care providers to obtain state approval before starting certain projects, such as opening a facility, adding beds or services, or buying major medical equipment. The state must determine that the project is "needed" before it can move forward.
2. Why were CON laws created?
CON regulations were intended to lower health care costs by preventing the unnecessary duplication of medical services and ensuring equitable access to care. The policies were well-intentioned, but the evidence overwhelmingly indicates they have not achieved those goals.
3. How restrictive are Kentucky's CON laws compared with other states?
Kentucky retains some of the country's most restrictive CON rules. Its laws constitute one of the most extensive regulatory gatekeeping systems in the nation, covering 19 specific types of facilities. On a measure comparing Kentucky with its seven bordering states, Kentucky scored 100 out of 100, indicating CON barriers in every category measured. Only two bordering states received the same maximum score, while Indiana and Ohio have eliminated most of their CON regulations and received the lowest, or best, scores.
4. What kinds of facilities and activities does Kentucky's CON law cover?
Kentucky's CON law covers 19 types of facilities, ranging from hospitals and psychiatric facilities to highly specialized facilities such as kidney disease centers, hospices and home health agencies. Existing providers must also obtain a new CON for a range of activities, including capital expenditures above certain thresholds, substantially increasing bed capacity or services, acquiring major medical equipment, or altering a location designated on a previous CON.
5. What does it cost and take to apply for a CON in Kentucky?
Depending on the proposed project's capital expenditure, CON application fees can reach $25,000. The process is so bureaucratic and convoluted that applicants often find it necessary to partner with expensive law firms that specialize in CON law.
6. How often are CON applications approved?
An analysis of every CON application submitted in Kentucky from 2019 to mid-2023 found that 98 complete applications underwent substantive review, of which 71% were approved. But when would-be competitors opposed an application, the approval rate fell to 43%, and the average time to a final decision nearly doubled, from 5.4 months for unopposed applications to 10.2 months for opposed ones. Still more applications were likely never submitted because of the costly, time-consuming process.
7. How do CON laws let competitors block new providers?
Incumbent providers are given broad latitude to challenge CON applications from potential competitors or to demand additional hearings to delay entry. This lets existing businesses use the process to protect their market share rather than serve patients.
8. What is the connection between CON laws and Kentucky's provider shortages?
Shortages of critical providers, made worse by CON laws that make it costly to expand services, have lengthened wait times and forced patients to drive long distances for specialty care. Of Kentucky's 120 counties, 114 are classified as primary care health professional shortage areas and 115 as mental health shortage areas, with rural counties hit hardest. Kentucky needs more than 420 additional primary care and mental health professionals to resolve these shortages.
9. Are there real examples of Kentucky's CON laws denying care?
Yes. In 2017, two Nepali immigrants tried to open a Louisville home health agency serving Nepali-speaking residents who could not find care in their native language; the application was opposed by one of Kentucky's largest home health providers and rejected because existing supply already met the state's numeric standard of "need." In 2019, a $24 million ambulatory surgical center in Fort Mitchell was derailed after more than two years of litigation by a rival hospital system, depriving about 170,000 Kenton County residents of additional outpatient surgical options. In 2022, the state denied a UofL Health application to convert 33 acute care beds into 33 adult psychiatric beds, even though the hearing officer acknowledged the formulas used to determine community need were likely flawed.
10. Do CON laws actually improve access to care?
Research consistently finds that CON laws restrict supply and protect existing providers, with little evidence that they expand access. States that repealed hospital CON laws saw hospital facilities increase by about 3.8% in rural areas and 3.9% in urban areas over the following two decades, a pattern consistent with stronger competition and broader patient choice.
11. How do CON laws affect behavioral health and substance use treatment?
CON restrictions on substance use disorder treatment facilities are associated with higher emergency department use and worse outcomes for vulnerable populations, and substance abuse CON laws can reduce facilities' acceptance of private insurance, shaping who can access care. Kentucky has about 70 residential substance use disorder treatment beds per 100,000 residents, one of the highest rates in the country, roughly 3 to 4 beds in a community of 5,000. Policymakers continue to debate whether CON rules help maintain that capacity or limit how quickly providers can expand when demand rises.
12. Do CON laws improve health care quality?
Supporters argue CON laws improve quality by concentrating procedures in high-volume facilities, but the evidence offers little support. Comparisons of CON and non-CON states find worse outcomes on several measures: the 30-day mortality rate for heart failure is about 0.2 percentage points higher in CON states (about two more deaths per 1,000 discharges), the pneumonia rate is about 0.38 points higher (about four more deaths per 1,000), and mortality among surgical inpatients with serious treatable complications is about six deaths per 1,000 discharges higher.
13. What did the COVID-19 pandemic reveal about CON laws?
During the pandemic, states with bed-specific CON requirements had higher hospital bed utilization and were more likely to operate near or at full capacity. In states with high bed utilization, temporary CON reforms were associated with reductions of roughly 20 COVID-19 deaths and 30 deaths from natural causes per 100,000 residents, plus about 3 fewer deaths per 100,000 from other respiratory conditions needing similar resources. Kentucky issued temporary emergency orders easing some requirements to expand capacity.
14. Do CON laws reduce health care spending?
No. The literature concludes that CON laws have not reliably reduced health care spending and may instead limit competition without delivering clear cost savings.
15. Don't CON laws protect rural hospitals?
Supporters say limiting entry protects thin-margin rural hospitals and preserves their ability to cross-subsidize uncompensated care. But the empirical evidence on whether CON laws prevent cost shifting or strengthen financial stability is mixed, and the literature does not clearly show these laws protect access for vulnerable populations. Because states that repealed CON laws saw hospitals increase in both rural and urban areas, entry restrictions may not be necessary to preserve rural facilities.
16. Is there a link between CON laws and mortality?
On average, states with CON programs have 8% higher premature mortality than states without them. Premature mortality measures the gap between a person's age at death and their life expectancy, reflecting early deaths from causes such as unmanaged chronic disease and drug overdoses that better access to care could prevent. On this measure, Kentucky ranks seventh worst in the United States.
17. What reforms does the brief recommend?
The brief proposes six evidence-based reforms, none of which requires immediate, full repeal: raise the project review thresholds so intensive review is reserved for high-dollar projects; streamline the review, hearing and appeal process with clear guidance and firm timelines; prevent conflicts of interest by limiting who can trigger hearings and basing decisions on patient needs rather than incumbents' market share; exempt high-need services such as mental health and substance use treatment, as well as rural providers, from CON review; eliminate CON requirements for lower-cost alternatives to hospital care such as ambulatory surgical centers, dialysis centers, home health agencies and hospice; and codify emergency flexibility through an automatic suspension of CON requirements during declared public health emergencies.
18. Has Kentucky made any progress on CON reform?
Yes. Kentucky has already taken an important step by easing CON restrictions on birth centers, which the brief cites as an example of the kind of targeted exemption that can expand access to high-need services.
19. Why does this issue matter for Kentuckians?
Kentucky's CON laws are among the most restrictive in the nation and have reduced access to vital health care services. The real impact is not just inconvenience or higher costs but a lower quality of life. A large body of evidence indicates that straightforward, incremental reforms would reduce the power of entrenched interests, encourage entrepreneurship and investment, and better align Kentucky's health care rules with its population's needs, all while maintaining safety oversight.
Based on the Bluegrass Institute policy brief "Certificate-of-Need Laws in Kentucky: Current Status and Opportunities for Evidence-Based Reforms" by Liam Sigaud and Edgar Orozco.
