But they came about to protect the consumer from high prices.
If I own a hospital and buy a $300,000 MRI machine I need to make that money back over the 10 year life of the machine. I charge one price if it's used by 10 people a day; I need to charge double if it's only used by 5 people a day. The extra supply reduces demand and thus increases prices to the customer.
And it's unethical to just scan more and more people, because of the problems of overtesting and overdiagnosis.
> The basic assumption underlying CON regulation is that excess capacity stemming from overbuilding of health care facilities results in health care price inflation. Price inflation can occur when a hospital cannot fill its beds and fixed costs must be met through higher charges for the beds that are used. Bigger institutions generally have bigger costs, so CON supporters say it makes sense to limit facilities to building only enough capacity to meet actual need or demand.
Sure, in theory. In practice it just means that hospitals that do not have local competition use them as a revenue center (MRIs in the US often cost $1000-$2000...paying off your 10 year machine in a few months with 5 patients a day).
The US Federal government tried them in the 1980s and quickly decided they were counterproductive.
You are literally creating a monopoly (one hospital) to justify that will produce lower prices.
Please give me one other example in an unregulated market where your MRI machine example makes sense. It sounds good on paper, but that doesn't happen in any other market in the western world.
If there are two competing gas stations, prices get cheaper. Two competing airlines, prices get cheaper.
But they came about to protect the consumer from high prices.
If I own a hospital and buy a $300,000 MRI machine I need to make that money back over the 10 year life of the machine. I charge one price if it's used by 10 people a day; I need to charge double if it's only used by 5 people a day. The extra supply reduces demand and thus increases prices to the customer.
And it's unethical to just scan more and more people, because of the problems of overtesting and overdiagnosis.
EDIT: Citation that CONs came about to reduce prices: http://www.ncsl.org/research/health/con-certificate-of-need-...
> The basic assumption underlying CON regulation is that excess capacity stemming from overbuilding of health care facilities results in health care price inflation. Price inflation can occur when a hospital cannot fill its beds and fixed costs must be met through higher charges for the beds that are used. Bigger institutions generally have bigger costs, so CON supporters say it makes sense to limit facilities to building only enough capacity to meet actual need or demand.