Florida Frees up Hospital Market, at Least a Little

One of the dopiest rules that states impose on competition in health care is Certificate of Need (CON) laws for hospitals. Basically, CON allows entrenched hospitals to use political power to prevent new ones from opening up, in a futle attempt to contain costs.

Roy Cordato of the John Locke Foundation wrote about this in a book that I edited in 2006. Also, the burden of CON regulation is an (inverse) measurement of the state of hospital competition in the U.S. Index of Health Ownership, for which I used research from the Washington Policy Center. As you can see Florida ranks in the middle of the pack, but a handful of states have no CON at all!

Governor Crist has promised to sign a bill that will impose a greater bureaucratic burden on an incumbent hospital that wants to stall a potential competitor by using CON. Even better, the incumbent will have to pay up to a million dollars if it loses its challenge. (“Loser pays” is a principle that the U.S. needs to adopt more widely, to avoid time-wasting obstacles to innovation.)

Sure, a milion dollars is nothing for most American hospitals, and this law does not abolish CON. Still, “let not the perfect be the enemy of the good.” It will have some effect at the margin.

Alongside the insurance reform noted today by Marc Kilmer, that’s two cheers (albeit small ones) for Florida’s health care.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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