FTC Letter to Rhode Island Governor McKee on Proposed Reforms to R.I.’s Certificate of Need Process

April 16, 2025
UNITED STATES OF AMERICA
Federal Trade Commission
WASHINGTON, D.C. 20580
Office of Policy Planning
Bureau of Economics
Bureau of Competition
Governor Dan McKee
Office of the Governor of Rhode Island
82 Smith Street
Providence, RI 02903
Re: 	Proposed Reforms to Rhode Island’s Certificate of Need Process
Dear Governor McKee,
The Directors of the Federal Trade Commission’s (“FTC”) Office of Policy Planning,
Bureau of Economics, and Bureau of Competition are pleased to respond to your March 25, 2025,
inquiry about the competitive implications of proposed amendments to Rhode Island’s Certificate
of Need process. Promoting competition in the healthcare sector—which spurs innovation, lowers
prices, and improves quality and access for healthcare services—is among Chairman Andrew
Ferguson’s highest priorities for the FTC. We write this letter to advance these objectives.
We understand that the Rhode Island General Assembly is considering your recommended
appropriations for fiscal year 2026, House Bill 5076 (“H-5076”), which includes proposed
amendments to R.I. General Law § 23-15 to reform Rhode Island’s Certificate of Need (“CON”)
process.1 We write to highlight the FTC’s prior work regarding CON laws that the General
Assembly may find informative as it considers these amendments. This work reflects the FTC’s
and the U.S. Department of Justice Antitrust Division’s (“the Agencies”) consistent, bipartisan
advocacy that states can improve health care competition “by repealing or curtailing their
certificate of need laws.”2
The FTC has studied the competitive effects of CON laws for several decades.3 Indeed, as
part of their competition advocacy programs, the Agencies have consistently reviewed states’ CON
1 Rhode Island House Bill 5076, Article 10, Section 1 – Certificate of Need Reform (General Assembly January
Session 2025), https://webserver.rilegislature.gov/BillText/BillText25/HouseText25/H5076.pdf. This article would
amend various sections of R.I. General Law § 23-15, entitled “Determination of Need for New Healthcare Equipment
and New Institutional Health Services,” including §§ 23-15-2, 23-15-4, 23-15-4.1, 23-15-4.2, 23-15-4.4, 23-15-5, 23-
15-6, 23-15-6.1, 23-15-10, and 23-15-11.
2 Letter from Bilal Sayyed, Dir., Office of Policy Planning, Fed. Trade Comm’n, and Daniel Haar, Acting Chief,
Competition Policy & Advocacy Section, Antitrust Division, U.S. Dept. of Justice, to The Honorable Martin Daniel,
Tennessee House of Representatives (Mar. 7, 2019), https://www.justice.gov/d9/pages/attachments/ 2019/03/20/
363812.pdf. See also infra note 4.
3 See, e.g., Joint Statement of the Federal Trade Commission and the Antitrust Division of the U.S. Department of
Justice Regarding Certificate-of-Need Laws and Alaska Senate Bill 62 at 2–3 (Apr. 12, 2017) [hereinafter FTC-DOJ
Alaska Statement], https://www.justice.gov/archives/opa/press-release/file/957186/dl, for more information about the
FTC’s experience and interest regarding CON laws.

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laws and encouraged them to consider the competitive impact of those laws.4 Below we summarize
the main conclusions from this prior work, and suggest that you review CON comments submitted
to other states, as cited herein, for detailed information that may be relevant for Rhode Island.
These comments describe how states enacted CON laws in the 1960s and 70s in an attempt
to control healthcare costs and block so-called wasteful expenditures by mitigating the incentives
created by a cost-plus based reimbursement system. Although this type of reimbursement system
has mostly gone away, CON laws remain in force in many states.5 After considerable experience,
it is apparent that CON laws prevent the efficient functioning of healthcare markets in several ways
that may undermine their intended goals.6 CON laws create barriers to entry and expansion, limit
consumer choice, and stifle innovation. Incumbent providers may also leverage CON laws to
thwart or delay entry and expansion by potential competitors and other market participants. Most
of the evidence to date suggests that CON laws have not been successful in controlling costs or
improving quality. For these reasons, the Agencies have consistently suggested that states repeal
or retrench their CON laws.
4 See, e.g., FTC-DOJ Alaska Statement; FTC Press Release, FTC Staff Testifies in Favor of Repealing Laws that Limit
Competition 	in 	the 	Health 	Care 	Sector 	(Mar. 	28, 	2019), 	https://www.ftc.gov/news-events/news/press-
releases/2019/03/ftc-staff-testifies-favor-repealing-alaska-laws-limit-competition-health-care-sector 	(FTC 	staff
testified before the Alaska Senate in 2018 and 2019, reaffirming the 2017 FTC-DOJ Alaska Statement). See also
Statement of the Antitrust Division, U.S. Department of Justice Regarding the Proposed Repeal of Alaska’s
Certificate-of-Need Laws (May 23, 2023), https://www.justice.gov/d9/2023-08/415865.pdf; Joint Statement of the
Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice on Certificate-of-Need Laws
and South Carolina House Bill 3250 (Jan. 11, 2016) [hereinafter FTC-DOJ South Carolina Statement],
https://www.justice.gov/atr/file/812606/download; Joint Statement of the Federal Trade Commission and the Antitrust
Division of the U.S. Department of Justice to the Virginia Certificate of Public Need Work Group (Oct. 26, 2015)
[hereinafter FTC-DOJ Virginia Statement], https://www.justice.gov/atr/case-document/file/788171/dl; Letter from
Marina Lao, Dir., Office of Policy Planning, Fed. Trade Comm’n, et al., to The Honorable Marilyn W. Avila, N.C.
House of Representatives (Jul. 10, 2015) [hereinafter FTC North Carolina Letter], https://www.ftc.gov/system/
files/documents/advocacy_documents/ftc-staff-comment-concurring-comment-commissioner-wright-regarding-
north-carolina-house-bill-200/150113ncconadv.pdf; Prepared Statement of the Federal Trade Commission Before the
Florida State Senate (Apr. 2, 2008), https://www.ftc.gov/sites/default/files/documents/advocacy_documents/ftc-
prepared-statement-florida-senate-concerning-florida-certificate-need-laws/v080009florida.pdf; 	Statement 	of 	the
Antitrust Division, U.S. Department of Justice Before the Florida Senate Committee on Health & Human Services
(Mar. 	25, 	2008), 	http://www.justice.gov/atr/comments-competition-healthcare-and-certificates-need; 	Prepared
Statement of the Federal Trade Commission Before the Standing Committee on Health, Education, & Social Services
of the Alaska House of Representatives (Feb. 15, 2008), https://www.ftc.gov/sites/default/files/documents/
advocacy_documents/ftc-written-testimony-alaska-house-representatives-concerning-alaska-certificate-need-laws/
v080007alaska.pdf; Statement of the Antitrust Division, U.S. Department of Justice, Before a Joint Session of the
Health and Human Services Committee of the State Senate and the CON Special Committee of the State House of
Representatives 	of 	the 	General 	Assembly 	of 	the 	State 	of 	Georgia 	(Feb. 	23, 	2007),
http://www.justice.gov/atr/competition-healthcare-and-certificates-need.
5 Statement of the Federal Trade Commission to the Alaska Senate Committee on Health & Social Services on
Certificate of Need Laws and SB 1 at 3 (Mar. 27, 2019), https://www.ftc.gov/system/files/documents/advocacy
_documents/statement-federal-trade-commission-alaska-senate-committee-health-social-services-certificate-
need/v0800007_commission_testimoney_re_alaska _senate_committee_032719.pdf. See also, e.g., FTC-DOJ Alaska
Statement at 1, 9.
6 See, e.g., FTC-DOJ Alaska Statement at 1; FTC-DOJ South Carolina Statement at 1; FTC-DOJ Virginia Statement
at 1–2; and FTC North Carolina Letter at 1.

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I. 	Proposed Amendments to Rhode Island’s CON Process Under H-5076
The stated mission of Rhode Island’s CON program is “[t]o prevent unnecessary
duplication of medical services, facilities, and equipment; and promote access, safe and adequate
treatment, 	and 	quality 	improvement 	in 	healthcare 	facilities.”7 	The 	Governor’s 	proposed
amendments to the CON process include:
• 	Removing certain services and facilities—such as home health, hospice, outpatient
rehabilitation, substance use disorder treatment facilities, outpatient surgical centers, and
independent surgical practices—from review;
• 	Raising the capital expenditure threshold for review from $5–$7 million to $50 million;
• 	Eliminating reapproval for minor cost increases for capital projects and including
additional CON exemptions for state capital projects; and
• 	Restricting procedural delays by potential competitors/other market participants after the
Rhode Island Department of Health’s approval.8
State officials testified that these proposed changes to Rhode Island’s CON process will
“align Rhode Island’s [CON] policies with other states, encourage new entrants into the healthcare
market, reduce regulatory burdens for cost-effective care alternatives, and expand access to
underserved communities.”9
II. 	Benefits of Competition and Concerns with CON Programs
Competition in health care markets benefits consumers by containing costs, reducing
prices, improving quality, and encouraging innovation. Indeed, empirical evidence demonstrates
that competition generally results in lower prices for, and broader access to, health care products
and services. Non-price competition promotes higher quality care and encourages innovation.10
CON laws may suppress these substantial benefits of competition by limiting the entry of new
healthcare providers, as well as the availability of new or expanded healthcare facilities and
services.
A. 	CON Laws Create Barriers to Entry and Expansion, Which May Suppress
More Cost-Effective, Innovative, and Higher Quality Health Care Options
CON laws require new entrants and incumbent providers to obtain state-issued approval
before constructing new facilities or offering certain healthcare services. By interfering with the
market forces that normally determine the supply of facilities and services, CON laws can suppress
supply, misallocate resources, and shield incumbent healthcare providers from competition by new
entrants.
7 Rhode Island Department of Health, Office of Health Systems Development, https://health.ri.gov/health-
systems/ridoh-programs/health-systems-development-office.
8 See Presentation of the Governor’s Proposed Amendments to Certificate of Need by the Rhode Island Office of
Management & Budget and the Rhode Island Department of Health at the Rhode Island Senate Committee on Finance
Hearing (Mar. 27, 2025), https://capitoltvri.cablecast.tv/show/11034?site=1.
9 Id.
10 See, e.g., FTC-DOJ Alaska Statement at 5, 10–11, for discussion of the benefits of competition.

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Specifically, prior FTC advocacies explained that CON laws can,
• 	Raise the cost of entry and expansion—by adding time, uncertainty, and the cost of the
approval process itself—for firms that have the potential to offer new, lower cost, more
convenient, or higher quality services;
• 	Remove, reduce, or delay the competitive pressures that typically incentivize incumbent
firms to innovate, improve existing services, introduce new services, or moderate prices;
and
• 	Prohibit entry or expansion in the event that a CON is denied.11
As the Rhode Island General Assembly reevaluates its CON program, we hope it will
consider how CONs can harm healthcare consumers and limit access to care.
B. 	Incumbent 	Providers 	May 	Exploit 	the 	CON 	Process 	to 	Prevent 	New
Competitors from Entering the Market
Incumbent providers may exacerbate the potential competitive harm by taking advantage
of the CON process to protect their entrenched market position and revenues. For instance, prior
FTC advocacies noted that an incumbent firm may file challenges or comments to a potential
competitor’s CON application to thwart or delay competition.12 In fact, CON programs facilitated
anticompetitive agreements among competitors in West Virginia and Vermont to thwart expansion
and to allocate services and territories.13 Misuse of the CON process by incumbents can also divert
scarce resources away from health care innovation as potential entrants incur legal, consulting, and
lobbying expenses responding to incumbents’ challenges (and as incumbents incur expenses in
mounting such challenges).14
III. 	Evidence on the Effects of CON Laws
Proponents of CON programs contend that CON laws contain healthcare costs by
preventing “overinvestment” in capital-intensive facilities, services, and equipment.15 They also
have argued that CON laws improve the quality of healthcare services and enable states to increase
access to care for their indigent residents and in medically underserved areas.16 As described more
fully in prior FTC advocacies, however, the evidence on balance suggests that CON laws have
11 See, e.g., FTC-DOJ Alaska Statement at 5–6; FTC-DOJ South Carolina Statement at 6–7; FTC-DOJ Virginia
Statement at 6–7; and FTC North Carolina Letter at 3.
12 See, e.g., FTC-DOJ Alaska Statement at 6–7; FTC-DOJ South Carolina Statement at 7–8; FTC-DOJ Virginia
Statement at 7–8; and FTC North Carolina Letter at 3.
13 See FTC-DOJ Alaska Statement at 6–7.
14 See, e.g., FTC-DOJ Alaska Statement at 6–7; FTC-DOJ South Carolina Statement at 7–8; FTC-DOJ Virginia
Statement at 7–8; and FTC North Carolina Letter at 3.
15 See, e.g., FTC-DOJ Alaska Statement at 9; FTC-DOJ South Carolina Statement at 14; FTC-DOJ Virginia Statement
at 11; and FTC North Carolina Letter at 1.
16 See, e.g., FTC-DOJ Alaska Statement at 12–13; FTC-DOJ South Carolina Statement at 14–16; and FTC-DOJ
Virginia Statement at 14–16.

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failed to produce cost savings, higher quality health care, or greater access to care for indigent or
underserved populations.17
CON laws are instead likely to increase, rather than constrain, healthcare costs. Consistent
with this, evidence suggests that repealing or narrowing CON laws can reduce the per-patient cost
of healthcare.18 Studies have also found that repealing or narrowing CON laws is generally
unlikely to lower quality—instead, such action is more likely to improve the quality of certain
types of care.19
Finally, proponents of CON laws have argued that such laws increase access to indigent
care by limiting competition and allowing incumbent healthcare providers to earn greater profits,
which they can then use to cross-subsidize indigent care. But the evidence shows otherwise. Some
research suggests that safety net hospitals are no stronger financially in CON states than in non-
CON states.20 And an empirical study found no support for the contention that hospitals insulated
from competition use their increased market power to fund more charity care.21
IV. 	Conclusion
The FTC recognizes that states must weigh a variety of policy objectives when considering
healthcare legislation. But, as the FTC has consistently advocated, CON laws raise significant
competitive concerns and generally do not appear to have achieved their intended benefits for
healthcare consumers.
We hope that the FTC’s research and findings concerning CON laws are valuable as the
General Assembly assesses the proposed CON amendments in Rhode Island. Please do not hesitate
to contact us if we can be of further assistance.
Sincerely,
/s/ Clarke Edwards 	/s/ Ted Rosenbaum 	/s/ Daniel Guarnera
Clarke Edwards 	Ted Rosenbaum 	Daniel Guarnera
Acting Director 	Acting Director 	Director
Office of Policy Planning 	Bureau of Economics 	Bureau of Competition
Cc: 	Senate President Dominick J. Ruggerio, House Speaker K. Joseph Shekarchi
17 See, e.g., FTC-DOJ Alaska Statement at 9–13; FTC-DOJ South Carolina Statement at 11–17; FTC-DOJ Virginia
Statement at 11–17; and FTC North Carolina Letter at 4. Because this letter summarizes the FTC’s prior work
regarding CON laws, it does not incorporate any empirical studies that have been published since the FTC’s most
recent advocacy.
18 See, e.g., FTC-DOJ Alaska Statement at 9–12; FTC-DOJ South Carolina Statement at 11–14; and FTC-DOJ
Virginia Statement at 11–14.
19 See, e.g., FTC-DOJ Alaska Statement at 12–13; FTC-DOJ South Carolina Statement at 14–15; and FTC-DOJ
Virginia Statement at 15.
20 See, e.g., FTC-DOJ Alaska Statement at 13–14; FTC-DOJ South Carolina Statement at 16–17; and FTC-DOJ
Virginia Statement at 16–17.
21 Christopher Garmon, Hospital Competition and Charity Care, 12 FORUM FOR HEALTH ECON. & POL ’ Y 1, 13 (2009).