The state of Maryland recently denied approval for a company looking to expand its business and serve its customers better. It’s an amazing situation where some companies in the state must seek state approval to open their doors, move, or expand, but for health care providers it’s the law. They must seek a “certificate of need” (CON) from the Maryland Health Care Commission, whereby regulators, not business owners, investors, or consumers, get to decide what this business does. It’s a system that leads to lower quality care, less access to doctors, and higher costs.

For any hospital or acute care service in Maryland, the MHCC website outlines the circumstances that force them to seek state approval:

<> A new health care facility is built, developed, or established.

<> An existing or previously approved, but unbuilt, health care facility is moved to another site.

<> The bed capacity of a health care facility is changed.

<> The type or scope of any health care service is changed, if the health care service is offered by a health care facility.

<> Capital expenditures are made by or on behalf of a health care facility.

So, essentially, most efforts to expand services to better serve patients must go through an expensive and cumbersome regulatory process. And even though a hospital may believe there is a demand for new services a certain area, if regulators don’t agree, the hospital can’t be built. That’s what happened to Adventist Health Care in Montgomery County earlier this month.

It’s difficult to see how having more health care providers is a bad thing. More providers mean more access to care. More providers can mean lower cost. More providers can mean new, innovative services or higher quality services. But in Maryland the presumption is that more providers is a bad thing.

This is backwards thinking that hurts patients. The empirical evidence is pretty clear on this point. A Department of Justice and Federal Trade Commission report summarizes the various problems with CON laws:

Where CON programs are intended to control health care costs, there is considerable evidence that they can actually drive up prices by fostering anticompetitive barriers to entry. Other means of cost control appear to be more effective and pose less significant competitive concerns….

This process has the effect of shielding incumbent health care providers from new entrants. As a result, CON programs may actually increase health care costs, as supply is depressed below competitive levels….

Empirical studies indicate that CON programs generally fail to control costs and can actually lead to increased prices.

You often hear those supporting more government intervention in our health care system saying that the free market just doesn’t work for health care. They point to the myriad failures of our current system as proof. But for anyone who looks at the thicket of regulations and laws at both the federal and state levels that envelope health care providers, it’s clear that there is no free market in health care. This CON law is only one example of that.

For the sake of patient care and as a way to lower health care costs, the CON law needs to be repealed.