The Effect of State Certificate-of-Need Laws on Hospital Costs: An Economic Policy Analysis

Authors:
Daniel Sherman

Study evaluates the effects of CON regulation on hospital costs using 1983-1984 data for a national sample of 3708 hospitals. Study finds no evidence that CON programs have led to the resource savings they were designed to promote, but rather indicates that reliance on CON review may raise hospital patient treatment costs. Study also finds that among independently-operated hospitals, state and local government hospitals and for-profit hospitals have costs between 5.5 and 13 percent lower than those of voluntary hospitals. However, costs of for-profit and government hospitals appear to be higher than those of system voluntary hospitals when these hospitals are either owned, leased, or managed as part of a hospital system.