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Observations | Federal Action and Certificates of Need

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There are often barriers for our clients to pursue new projects whether it be funding, timing, or government regulation. In Illinois, hospitals are required to produce a Certificate of Need for new construction approvals on healthcare facilities. This regulation is used as a way to combat healthcare price inflation. When a hospital has excess rooms that aren’t filled, prices typically rise due to the larger fixed costs associated with running a large facility. Furthermore, the regulation is used to make sure that hospitals are using their funding appropriately and encourages planning. However, Certificates of Need (CON) also reduce the number of projects a hospital can complete, can reduce competition between facilities which can leave prices high, and are not consistently administered.

Recently, the Trump administration announced their desire to get rid of the CON regulation to reduce barriers for competitors of providers who want to enter the market. The administration is calling on states to reevaluate their current CON structure and loosen restrictions on the provider side. It is still unclear whether or not this desire to end certificates of need will come into fruition, and if so, be a positive change for the hospital systems.

It will be interesting to see if States readily accept the rejection of certificates of need, but it would likely change the way hospitals renovate and expand. Either way, we’re excited to see how healthcare design evolves in the coming years. Take a look at some of our previous healthcare experience.