FTC Prepared Statement Before the Florida Senate Concerning Florida Certificate of Need Laws

PREPARED STATEMENT OF
THE FEDERAL TRADE COMMISSION
Before the
Florida State Senate
on
Committee Substitute for Senate Bill 2326, which would amend, e.g., s. 408.036,
F.S., removing certain hospitals from required certificate of need review, and
s. 408.043, F.S., removing osteopathic acute care hospitals from required
certificate of need review.
April 2, 2008
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I. 	Introduction
The Federal Trade Commission (FTC) is pleased to have the opportunity to
discuss health care competition, Florida’s certificate of need (CON) laws, and the
Committee Substitute for Florida Senate Bill 2326 (S.B. 2326 or the Bill), which would
repeal certain of Florida’s CON laws. In particular, and subject to certain exceptions, the
Bill would eliminate CON requirements for the establishment of hospitals generally, as
well as special CON requirements regarding acute care hospitals in “low growth”
counties and osteopathic hospitals.1 At the same time, the Bill would leave general
licensing requirements for hospitals and other health care facilities in place and would
impose certain new licensing requirements.2 The Commission believes that CON laws
such as Florida’s can be a barrier to entry to the detriment of health care competition and
health care consumers. Therefore, the Commission generally supports the repeal of such
laws as well as steps, such as those taken in S.B. 2326, to reduce significantly the scope
of CON laws.
The Commission’s conclusion is based on the joint FTC/Department of Justice
(DOJ) report, Improving Health Care: A Dose of Competition (Report or FTC/DOJ
1 Hospital facilities generally – but not, e.g., long-term care hospitals, skilled nursing facilities, or hospices
– would be exempted from CON requirements under proposed Fla. Stat. § 408.036(1)(b); existing special
CON requirements for acute care facilities in low growth counties under § 408.036 would be repealed, as
would existing CON requirements for Osteopathic Acute Care Hospitals under § 408.043.
2 See, e.g., Section 1 of the Bill, which would add new subsections 11-19 to Fla. Stat. § 395.003 (regarding
Licensure; denial, suspension, and revocation). Licensing requirements for hospital facilities are found
throughout the United States, including those states that have eliminated all CON requirements for
hospitals and other health care facilities. See, e.g., 35 P.S. § 448.801a et seq. (2007) (licensing of health
care facilities in Pennsylvania). Although various licensing requirements can raise competition issues, the
Commission is not here presenting an analysis of extant or proposed Florida licensing requirements.
2

Report),3 its underlying research, and recent work by FTC staff and the staffs of our sister
agencies, such as DOJ and the Centers for Medicare & Medicaid Services (CMS) of the
Department of Health and Human Services. As noted in the FTC/DOJ Report, “[t]he
Agencies believe that, on balance, CON programs are not successful in containing health
care costs, and that they pose serious anticompetitive risks that usually outweigh their
purported economic benefits.”4
Congress has charged the Commission with preventing unfair methods of
competition and unfair or deceptive acts or practices in or affecting commerce.5 Pursuant
to its statutory mandate, the FTC seeks to identify business practices and regulations that
impede competition without offering countervailing benefits to consumers. For several
decades, the FTC and its staff have investigated the competitive effects of restrictions on
the business practices of health care providers.6 Included in that general body of health
care competition work have been hearings, studies, and reports addressing issues raised
by CON laws.
Specifically, the FTC/DOJ Report discusses critically the role of CON laws in
health care competition, both as a distinct policy issue and as an important component of
other health care competition issues, such as entry problems in hospital markets. The
Report broadly examined the state of the health care marketplace and the role of
competition, antitrust, and consumer protection in satisfying the preferences of
3 F EDERAL TRADE C OMMISSION & THE D EPARTMENT OF J USTICE, I MPROVING H EALTH C ARE: A D OSE OF
COMPETITION (July, 2004) [hereinafter “I MPROVING H EALTH CARE”].
4 Id. at Executive Summary, p. 22.
5 Federal Trade Commission Act, 15 U.S.C. ' 45.
6 See Federal Trade Commission, FTC Antitrust Actions in Health Care Services and Products (Oct. 2003),
available at http://www.ftc.gov/bc/hcupdate031024.pdf.
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Americans for high-quality, cost-effective health care. The Report was based on, among
other things, joint FTC/DOJ hearings that took place over 27 days from February through
October 2003, following a Commission-sponsored workshop on health care issues in
September 2002. The FTC and DOJ heard testimony from about 240 panelists, including
representatives of various provider groups, insurers, employers, lawyers, patient
advocates, and leading scholars on subjects ranging from antitrust and economics to
health care quality and informed consent. Together, the hearings and workshop elicited
written submissions from interested parties. Almost 6,000 pages of transcripts of the
hearings and workshop and all written submissions are available on the Commission
website, www.ftc.gov. In addition, FTC and DOJ staffs undertook independent research
for the Report.
In this testimony, the Commission focuses specifically on a few of the issues
discussed in the Report that address CON laws and new entry into competition among
health care facilities. Three main points require attention:
• 	First, vigorous competition among healthcare providers, such as hospitals,
clinics, and nursing homes, usually benefits consumers through better and
more varied services and, in some cases, lower prices. CON laws were
designed to create barriers to entry for new healthcare facilities or providers to
contain the costs of healthcare services. CON laws, however, have not been
particularly effective in controlling healthcare costs, while posing significant
risks to competition. In particular, CON laws can retard the provision of
higher quality services or the setting of lower prices by entrants relative to
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incumbents, depress consumer choice between qualitatively different
treatment options or settings, or reduce the pressure on incumbents to improve
qualitative aspects of their own offerings. Policymakers would be wise to
consider reviewing all of the actual costs, benefits, and consequences –
intended and unintended – of a regulatory system when assessing that
system’s future.
• 	Second, the CON regulatory system creates both the incentive and means by
which an incumbent healthcare provider can use the regulatory system itself to
delay effective competition, independent of the demand for additional
healthcare services. This additional loss of competition is another regulatory
cost that must be weighed in the balance when assessing the public interest.
• 	Third, Florida’s CON requirements are among the broadest remaining in the
United States. The Bill’s elimination of CON requirements for many hospital
facilities would thus reduce barriers to entry for a wide and important range of
health care facilities, while leaving intact Florida’s general licensing
requirements for hospital facilities.
These points are addressed more fully below.
II. 	Discussion
A. 	Provider Competition Generally: Competition has important benefits in
health care services markets, just as it has in the multitude of markets in the U.S.
economy that rely on competition to maximize the welfare of consumers. Competitive
pressures can lead hospitals and other entities to lower costs, improve quality, and
5

compete more efficiently. In particular, competitive pressure may spur new types of
competition. In some hospital markets, new entrants specialize and provide only a
limited portion of the in-patient and out-patient services that general hospitals tend to
provide.7 Elsewhere, health care services once delivered only in large hospitals – and
requiring overnight stays – may be performed more conveniently and less invasively, at
lower cost, in outpatient settings. In addition, both traditional providers and new entities
have explored new means to expand access to basic health care by, for example,
establishing limited service clinics that can provide more convenient and lower cost care
and bring more consumers into contact with the larger health care system.8
Although new strategies for lowering costs and enhancing quality are emerging,
competition is not as effective as possible in most health care markets, because the
prerequisites for competitive markets are not fully satisfied. Of particular concern for
today’s purpose is the extent to which state regulations can create barriers to entry in
health care markets, without conferring countervailing benefits in quality of care or cost
containment.9
7 See generally Prepared Statement of the Federal Trade Commission, Before the S. Subcomm. On Federal
Financial Management, Gov’t Information and Int. Security of the S. Comm. on Homeland Security and
Governmental Affairs, on New Entry Into Hospital Competition (May 24, 2005) (regarding new specialty
hospital entry), available at http://www.ftc.gov/os/2005/05/052405newentryintohospitalcomp.pdf; see also
U NITED S TATES D EPT. OF H EALTH AND H UMAN S ERVICES , F INAL REPORT TO THE C ONGRESS AND
S TRATEGIC I MPLEMENTING P LAN REQUIRED UNDER S ECTION 5006 OF THE D EFICIT REDUCTION A CT OF 2005
(2006) [hereinafter “HHS F INAL R EPORT”], available at
http://www.cms.hhs.gov/PhysicianSelfReferral/06a_DRA_Reports.asp.
8 See, e.g., FTC Staff Comment Before the Massachusetts Department of Public Health Concerning
Proposed Regulation of Limited Service Clinics, 1-2 (Oct. 2007).
9 In discussing competition concerns raised by CON requirements, the Commission does not mean to
suggest that state CON regulations are the only regulatory impediments to competitive forces in health care
markets.
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At the same time, the empirical evidence generally does not indicate that CON
laws control health care costs.10 Recent broad studies analyzing both national and state
data reveal “little evidence that CON results in a reduction in costs and some evidence to
suggest the opposite.”11 Studies also fail to show any consistent increase or surge in
health care spending when states remove or modify their CON requirements.12
10 I MPROVING H EALTH C ARE, supra note 3, at C. 8, at pp. 1-6. Although the larger body of CON literature
– including anecdotal reports and small, uncontrolled studies – presents somewhat mixed conclusions on
cost savings, the conclusions of the FTC/DOJ Report and staff research have substantially been borne out
by more recent, sophisticated large-scale data analyses and literature reviews: “[O]n balance, the most
methodologically sound studies have found that CON has no effect or actually increases both hospital
spending per capita and total spending per capita.” CHRISTOPHER J. C ONOVER & F RANK A. S LOAN,
EVALUATION OF CERTIFICATE OF N EED IN MICHIGAN , CENTER FOR H EALTH P OLICY , LAW AND
MANAGEMENT , TERRY S ANFORD I NSTITUTE OF P UBLIC P OLICY, D UKE U NIVERSITY , A REPORT TO THE
MICHIGAN D EPT. OF C OMMUNITY H EALTH, 30 (May 2003) (reviewing literature and discussing national and
Michigan-specific material regarding acute care [hospitals, MRI services, cardiac services] CON laws)
(hereinafter “CONOVER & S LOAN , REPORT TO MICHIGAN ”); W ASHINGTON S TATE J OINT L EGISLATIVE
A UDIT AND R EVIEW C OMMITTEE (JLARC), EFFECTS OF C ERTIFICATE OF N EED AND I TS P OSSIBLE REPEAL, 1
(Jan. 8, 1999) (“The study found that CON has not controlled overall health care spending or hospital costs.
The study generally found either conflicting or limited evidence about the effects of CON on the cost of
non-hospital services, and on the quality and availability of the various health care services.”) DANIEL
S HERMAN , F EDERAL TRADE C OMMISSION , T HE EFFECT OF S TATE CERTIFICATE- OF -N EED LAWS ON
H OSPITAL COSTS : AN ECONOMIC P OLICY A NALYSIS , iv, 58-60 (1988) (concluding, after empirical study of
CON programs’ effects on hospital costs using 1983-84 data on 3,708 hospitals, that strong CON programs
do not lead to lower costs but may actually increase costs); MONICA N OETHER , F EDERAL TRADE
COMMISSION, COMPETITION A MONG H OSPITALS 82 (1987) (empirical study concluding that CON
regulation led to higher prices and expenditures); K EITH B. A NDERSON & D AVID I. K ASS , F EDERAL TRADE
COMMISSION, CERTIFICATE OF N EED REGULATION OF ENTRY INTO H OME H EALTH CARE : A MULTI-
P RODUCT C OST F UNCTION A NALYSIS (1986) (economic study finding that CON regulation led to higher
costs, and that CON regulation did little to further economies of scale). But c.f., COMMONWEALTH OF
V IRGINIA , R EPORT OF THE J OINT C OMMISSION ON H EALTH CARE, H OUSE D OC . N O. 82, STUDY OF
V IRGINIA ’ S C ERTIFICATE OF P UBLIC N EED (COPN) P ROGRAM PURSUANT TO HB 1302 OF 1996 (1997),
(“There is little evidence of significant COPN impact on aggregate health expenditures, but there is
evidence of savings for specific services covered by COPN”). Id. at 1, available at
http://leg2.state.va.us/dls/h&sdocs.nsf/By+Year/HD821997/$file/HD82_1997.pdf?bcsi_scan_129F6A3CD
B83467E=xLesgwMDZ3sPV18TFUnlHEQAAAD+Q30W&bcsi_scan_filename=HD82_1997.pdf (last
checked 1/31/08).
11 CONOVER & S LOAN, R EPORT TO M ICHIGAN , supra note 10 at vii (discussing national and Michigan-
specific material regarding acute care [hospitals, MRI services, cardiac services] CON laws); id. at 30-31.
12 CONOVER AND S LOAN also report that, “[i]n most states that lifted CON, per capita spending on hospital
and physician services (relative to the US) has remained below the U.S. average following removal of
CON.”) Id. at 50; see also Christopher J. Conover and Frank A. Sloan. Does Removing Certificate-of-Need
Regulations Lead to a Surge in Health Care Spending?, 23 J. H EALTH P OL ’ Y & LAW 455 (1998) (“no
evidence of a surge in acquisition of facilities or in costs following removal of a CON.”) 458.
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Barriers to entry can affect qualitative competition as well. As the Report noted,
state CON laws can retard the entry of firms that could provide higher quality services
than those offered by incumbents.13 That may tend to depress consumer choice between
qualitatively different treatment options or settings,14 or it may reduce the pressure on
incumbents to improve qualitative aspects of their own offerings.15
B. 	Incumbent Lobbying and Petitioning Protections: When new firms
threaten to enter a market, incumbent firms may seek to deter or prevent that new
competition. Such conduct is by no means unique to health care markets; it is a typical
reaction of incumbents to possible new competitors. In certain circumstances, such
conduct may violate the antitrust laws.16 Certain anticompetitive conduct may, however,
be shielded from antitrust scrutiny. The Noerr-Pennington doctrine immunizes from
antitrust liability conduct that represents petitioning the government, even when such
13 I MPROVING H EALTH C ARE, supra note 3, at C. 8, p. 4 (citing Hosp. Corp. of Am., 106 F.T.C. 361, 495
(1985) (Opinion of the Commission) (stating that “CON laws pose a very substantial obstacle to both new
entry and expansion of bed capacity in the Chattanooga market” and that “the very purpose of the CON
laws is to restrict entry”).
14 With regard to hospital markets, see, e.g., HHS F INAL REPORT, supra note 7, at 10 (reporting “quality of
care at least as good as, and in some cases better than, care provided at local competitor hospitals” for
cardiac care, as well as “very high” patient satisfaction in cardiac hospitals and orthopedic specialty
hospitals) (citations omitted). In addition, specialty hospitals appear to offer shorter lengths of stay, per
procedure, than peer hospitals. See MEDICARE P AYMENT A DVISORY COMMISSION , R EPORT TO THE
CONGRESS : P HYSICIAN -O WNED S PECIALTY H OSPITALS , 15-17 (Mar. 2005) (hereinafter MEDPAC REPORT).
MedPAC was directed to report to Congress on certain issues regarding specialty hospitals under the
Medicare Prescription Drug, Improvement and Modernization Act of 2003. Id. at vii.
15 See, e.g., MEDPAC REPORT at 10-11 (“Some community hospital administrators admit that competition
with specialty hospitals has had some positive effects on community hospitals’ operations”).
16 See I MPROVING H EALTH C ARE, supra note 3, at 15-16, ch.1, at 31-33, ch.3, at 22-27.
8

petitioning is done “to restrain competition or gain advantage over competitors.”17
Moreover, the state action doctrine shields from antitrust scrutiny many of a state’s own
activities when a state government is acting in its sovereign, legislative capacity.18
In the context of health care competition, the combination of these two doctrines
can offer antitrust immunity to providers that wish to lobby state officials to impede the
entry of potential competitors, by denying or delaying the CONs required for operation.
State CON programs generally prevent firms from entering certain areas of the health
care market unless they can demonstrate to state authorities an unmet need for their
services. Because that demonstration can be time-consuming and costly, it may delay or,
at the margin, prevent the introduction of certain needed facilities and services.19 Indeed,
limiting competitor entry and raising competitors’ costs may both be incentives for
incumbents to seek to abuse the regulatory process. The FTC/DOJ Report concluded that
“incumbents can too easily use CON procedures to forestall competitors from entering an
incumbent’s market.”20 To the extent they are successful in doing so, incumbents may
17 Andrx Pharm. V. Biovail, 256 F.3d 799, 817 (D.C. Cir. 2001), cert. denied, 122 S. Ct. 1305 (2002). The
doctrine is named for the seminal cases that treated it: Eastern R.R. Presidents Conference v. Noerr, 365
U.S. 127 (1961), and United Mine Workers v. Pennington, 381 U.S. 657 (1965).
18 Parker v. Brown, 317 U.S. 341, 351 (1943). The state action doctrine also immunizes from antitrust
scrutiny the actions of other entities and individuals if they are acting in furtherance of a clearly articulated
state policy and are actively supervised by the state. See, e.g., California Retail Liquor Dealers Assn. v.
Midcal Aluminum, 445 U.S. 97, 105 (1980).
19 See, e.g., I MPROVING H EALTH CARE, supra note 3, at C. 4, p. 25 (noting that approval of a CON “can
take anywhere from 18 months to several years,” and that regulatory delays from CON approval are in
addition to those imposed by, for example, traditional licensing requirements).
20 Id. at Exec. Summ., at 22.
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preserve their market shares and revenue streams without enhancing their own operating
efficiency or providing health care savings to the state or its consumers.21
C. 	The Scope of Florida CON Law: Florida’s current CON law – as it
deals with health care facilities generally – appears to be among the broadest of such laws
in the United States.22 Many CON programs trace their origin to a repealed federal
mandate, the National Health Planning and Resources Development Act of 1974,23 which
offered states powerful incentives to enact laws implementing CON programs.24 By
1980, all states except Louisiana had done so.25 Congress repealed the federal law in
1986, however, and many states have repealed or revised their CON laws in the years
since. Fourteen states have eliminated their CON requirements altogether26 and,
although a substantial number of states continue to maintain CON programs,27 they do so
21 See, e.g., MEDPAC REPORT at 10-11 (“Some community hospital administrators admit that competition
with specialty hospitals has had some positive effects on community hospitals’ operations”).
22 See generally, Fla. Stat. § 408.031 et seq. (requiring CON for health care projects generally, subject to
certain exceptions).
23 Pub. L. 93-641, 88 Stat. 2225 (1975) (codified at 42 U.S.C. §§ 300k-300n-5), repealed, Pub. L. 99-660, §
701, 100 Stat. 3799 (1986).
24 See JOHN MILES, 2 H EALTH CARE & A NTITRUST LAWS : P RINCIPLES & P RACTICE § 16:1, at 16-2 (2003)
(noting that the federal Health Planning Act required providers to “obtain state approval – a ‘certificate of
need’ – before spending set amounts on capital investments or adding new health care services.”)
25 See, e.g., On Certificate of Need Regulation: Hearing on H.B. 332 Before the Senate Comm. On Health
and Human Services (Ohio 1989) (Statement of Mark D. Kindt, FTC Regional Director).
26 See, e.g., National Conference of State Legislatures, Certificate of Need: State Health Laws and
Programs (updated Nov. 2007) (CON laws repealed or not in effect in CA, AZ, NM, TX, KS, CO, UT,
WY, ID, SD, ND, MN, IN, and PA), available at http://www.ncsl.org/programs/health/cert-need.htm (last
checked 01/25/08).
27 MILES, supra note 24, § 16:2, at 16-9 (stating that “CON laws remain in many states and the District of
Columbia”). Quite recently, Florida exempted from CON requirements new adult open-heart surgery and
angioplasty programs at general hospitals and the addition of beds to existing hospital structures. Fla. Bill
SJ 01740 (effective July 1, 2004), amending FLA STAT. ch. 408.036, .0361 (2003).
10

“often in a loosened form compared to their predecessors.”28 Remaining CON laws may
address only specific types of health care facilities – such as hospitals or nursing
homes, 	e
in
n. 32
29 – exempt certain types of health care facilities,30 or apply broadly to health car
facilities improvements, but only those of a substantial magnitude.31 In addition, certa
CON laws may be pending repeal according to a sunset provisio
Subject to certain exceptions, Florida law requires a CON for the establishment of
health care facilities generally, the establishment of tertiary health services, and any
increase in acute care beds in any hospital in a “low growth county.”33 In so doing, it
places significant regulatory burdens on the development or improvement of a very broad
class of health care facilities, which might otherwise develop dynamically in response to
market needs. The scope of current Florida law thus stands in contrast not only to the
laws of those states that have eliminated their CON requirements altogether, but the laws
of the many states that have more limited CON requirements. The fact that many such
28 MILES, supra note 24, § 16:1, at 16-2 to 16-3. See also Len M . Nichols et al., Are Market Forces Strong
Enough to Deliver Efficient Health Care Systems? Confidence is Waning, 23 H EALTH A FFAIRS 1, 11
(Mar./Apr. 2004) (noting that CON programs “eroded through the 1990s”).
29 See, e.g., OAC Ann. 3701-12-05 (2007) (regarding only certain activities by "long-term care" facilities in
Ohio); R.R.S. Neb. § 71.5829.03 (2007) (CON covers only certain activities related to long-term care and
rehab beds in Nebraska); ORS § 442.315(1) (2005) (regarding "any new hospital or new skilled nursing or
intermediate care service or facility” in Oregon, subject to certain exclusions).
30 For example, Connecticut law exempts critical access hospital beds and related equipment from the
State’s CON laws. See Conn. Gen. Stat. § 19a-487a (2007); see also Fla. Stat. § 408.0361 (2007)
(regarding cardiovascular services and burn unit licensing), Fla. Stat. § 408.036 (2007).
31 For example, Connecticut health care facilities must obtain a CON prior to developing, expanding or
closing certain services and expending more than $3 million on a capital project. Conn. Gen. Stat. § 19a-
638(a)(4) (2007); Delaware requires a CON for the establishment of a new facility, but only for capital
expenditures by existing facilities in excess of $5.8 million (or a higher amount based on inflation
adjustments to the $5.8 million baseline). See 16 Del. C. § 9304 (2007).
32 See, e.g. 16 Del. C. § 9311 (2007) (sunset provision).
33 See, e.g., Fla. Stat. § 408.036(b), (c), (f), and (g) (requiring CONs for new construction or establishment
of health care facilities, conversion of one type of health care facility to another, tertiary care services, and
acute care beds in low growth counties, respectively).
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CON requirements are imposed independent of any particular financial threshold itself
may be a special burden to the State’s health care spending, as low CON thresholds have
been observed to increase costs – relative to higher thresholds – rather than decrease
them.34
Because the Bill would eliminate current CON requirements for a broad range of
hospital facilities,35 it could enable Florida consumers to enjoy the benefits of much
needed competition in hospital markets throughout the State. These benefits could
include qualitatively different options in underserved areas, qualitative improvements at
existing hospital facilities, and reduced pressure to substitute less desirable facilities and
treatments.
A degree of controversy may remain about particular issues addressed by certain
CON laws. These include, for example, efficiency and possible conflicts of interest
concerns about certain categories of physician-owned specialty hospitals and access
issues for rural or other underserved areas.36 However, the sweep of Florida’s CON law
34 See S HERMAN , supra note 10, at 58-60 (1.4 percent decline in costs associated with doubling of all
thresholds).
35 Hospital facilities generally – but not, for example, long-term care hospitals, skilled nursing facilities, or
hospices – would be exempted from CON requirements under proposed Fla. Stat. § 408.036(1)(b); the
special CON requirements for acute care facilities in low growth counties would be struck from proposed §
408.036; and the CON requirements for Osteopathic Acute Care Hospitals under § 408.043 would also be
eliminated.
36 See, e.g., Testimony of Mark B. McClellan, M.D., Ph.D., Administrator, Centers for Medicare &
Medicaid Services, Before the H. Comm. on Energy and Commerce Hearing, “Specialty Hospitals:
Assessing Their Role in the Delivery of Quality Health Care,” (May 12, 2005), available at
http://www.hhs.gov/asl/testify/t050512.html; see also Testimony of Mark B. McClellan, M.D., Ph.D.,
Administrator, Centers for Medicare & Medicaid Services, on Physician-Owned Specialty Hospitals Before
the S. Finance Comm. (May 17, 2006), available at http://www.hhs.gov/asl/testify/t060517b.html.
(regarding CMS studies of physician-owned specialty hospitals, implementation and termination of limited
moratorium on new specialty hospitals). The Commission does not here intend to analyze the details of
ongoing regulatory reform at CMS designed to address special concerns about certain limited types of
specialty hospitals (and related physician self-referral issues) or the various bodies of research on which
those reforms are based. The FTC notes, simply, that most of the actual and potential health care entities
12

is much broader than required to address any of those more narrow and complex issues
and is likely to be detrimental to Florida’s health care consumers. The Commission
recommends that Florida carefully consider the evidentiary basis of these issues as they
may relate to Florida health care consumers. If the evidence and public policy
considerations warrant some legislative action, the Commission recommends that Florida
consider regulation that is narrowly tailored to achieve focused health policy goals
instead of broad regulation of entry into the market for health care facilities.
III. 	Conclusion
CON laws were adopted throughout most states under particular market and
regulatory conditions substantially different from those that predominate today and were
intended to help contain health care spending. The best available research does not
support the conclusion that CON laws actually reduce such expenditures. As the FTC
and DOJ have said, “on balance, CON programs are not successful in containing health
care costs, and … they pose serious anticompetitive risks that usually outweigh their
purported economic benefits.”37 CON laws tend to create barriers to entry for health care
service providers who may contribute to qualitative competition and provide consumers
with important choices in the market, but CON laws do not, on balance, tend to suppress
health care costs or aggregate health care spending. Moreover, CON laws may be
especially subject to abuse by incumbent providers, who can seek to exploit a state’s
CON process to forestall the entry of competitors in their markets.
subject to Florida CON law are not such specialty hospitals and appear to fall outside the concerns driving
those studies and reforms.
37 I MPROVING H EALTH C ARE, supra note 3, at Executive Summary, p. 22.
13

Florida’s current CON requirements – which the Bill seeks to curtail – appear to
be among the broadest of such laws in the United States. As a consequence, Florida
CON law creates a barrier to entry for a very wide range of health care facilities,
including almost all hospital facilities. The Commission believes that both the breadth of
Florida’s CON law and its lack of a financial threshold are of special concern, as they
may work to the detriment of Florida health care consumers. Accordingly, the
Commission supports steps, such as those taken in S.B. 2326, that reduce significantly
the application of CON laws, as well as the ultimate repeal of such laws. In the event that
adequate evidence develops to support more narrow policy priorities, the Commission
believes that Florida should consider regulations narrowly tailored to meet those
priorities, while minimizing the general costs to Florida health care consumers.
14