Grassroot Institute white paper suggests repealing ‘certificate of need’ process for improved healthcare

A new white paper released by the Grassroot Institute of Hawaiʻi suggests that state lawmakers should ease or repeal “certificate of need” regulations to improve healthcare access, particularly in rural and Neighbor Island communities such as Maui County.

The report, titled “Improve healthcare access in Hawaiʻi by reforming medical certificates of need,” argues that existing regulations hinder the expansion of medical facilities and services. Hawaiʻi’s laws are among the most restrictive in the nation, covering 87 of 109 identified medical services and facilities.

Malia Hill, policy director for the Grassroot Institute of Hawaiʻi and author of the report, said that efforts to address the state’s lack of facilities are hampered by the requirement that providers obtain a certificate of need, known as a CON, before making procedural changes, upgrading facilities or offering certain services.

“Even changing the number of beds or reclassifying their usage within a facility requires a certificate of need,” Hill wrote.

Proposed reforms for healthcare access

The white paper outlines several specific actions for lawmakers to consider. These include eliminating CON regulations entirely or exempting:

• Rural areas and Neighbor Islands like Maui from the regulations.
• Medical services or facilities unlikely to be used unnecessarily, such as dialysis centers, hospice facilities, neonatal intensive care units and burn-care units.
• Services for vulnerable populations, including substance abuse treatment, psychiatric facilities and intermediate-care for those with intellectual disabilities.

The State Health Planning and Development Agency currently administers these laws. The report describes the application process as costly and time-consuming, noting that it allows potential competitors to testify against new projects.

“If Burger King had to get permission to build a restaurant and McDonald’s were permitted to testify, that permission could be denied because it could be argued that the burger needs of the community were already being met,” Hill wrote. “This, of course, would be an absurd way to determine the number of restaurants in a community.”

Impact on rural communities

The report cites data from the Mercatus Institute at George Washington University estimating that without these laws, Hawaiʻi could have at least 11 more hospitals — including four in rural areas — and more than two additional ambulatory surgical centers.

Decades of national data suggest that such regulations do not ensure availability or affordability as originally intended, according to the white paper. Instead, the report argues that limiting competition has led to higher costs and reduced access for remote populations.

“The studies document the fact that CON regulations have a chilling effect on healthcare expansion, thereby restricting healthcare access and contributing to an overall inability to cope with health emergencies,” Hill wrote. “It is time that we re-examine Hawaiʻi’s CON requirements and consider how they could be repealed or reformed to better serve the needs of Hawaiʻi residents.”