Research & Commentary: How Missouri Should Handle Transitional Care Facilities

Published September 25, 2015

As the health care market has evolved over time, a popular type of facility has emerged to fill a growing need for temporary post-surgical care. Senior citizens have longer recovery rates after surgery, and the market has responded with transitional care facilities (TCF), which offer an alternative many seniors use for post-acute and rehabilitation health care needs. 

A transitional care facility is a comprehensive health care institution, licensed as a skilled nursing facility, offering services such as short-term rehabilitation and therapy. The average length of stay in a TCF is less than 28 days, with 75 percent of patients returning home afterward. TCFs provide an option for seniors who might not consider a traditional nursing home for their short-term needs. Missouri is now considering applying its certificate of need (CON) laws to this new group of health care facilities. 

Since 1980, Missouri has required CON commission approval for a wide range of expenditures, including construction and modification of health care facilities, the purchase of major pieces of medical technology, and offering of new inpatient care beds, services, and medical procedures. Missouri’s CON program regulates 14 medical services, devices, and procedures, which is the national average. In a study published by the Mercatus Center at George Mason University, Thomas Stratmann, Christopher Koopman, and Mohamad Elbarasse ranked Missouri’s certificate of need program as the 21st most restrictive in the United States. 

The authors found there are 131 fewer beds per 100,000 people in Missouri compared to the rest of the nation. They estimate Missouri, with a population of approximately 6.1 million, may have 7,943 fewer hospital beds because of its CON program. Missouri may also offer fewer advanced health care services, including 12 to 24 fewer hospitals offering MRI services and 41 to 52 fewer hospitals offering CT scans, because of its CON law. The authors conclude the state’s CON law limits health care competition and leaves fewer options for everyone, especially the poor. 

Missouri’s CON system currently designates TCFs as skilled nursing facilities, which not only ignores the distinct differences between the two but also imposes the bed and technology limits that are strangling the rest of the health care industry. TCFs provide a unique service, and they should not be treated the same as traditional nursing facilities. Although neither service should be shackled by CON laws, at the very least TCFs should not be grouped with facilities providing full long-term care. 

Current providers often use the CON process to block potential competition. Thus, CON laws raise the cost of medical care by preventing new medical providers from competing with existing hospitals. The unintended consequences of CON laws have led many experts to call for repeal or at least reform of these policies. Missouri lawmakers should not add TCFs and other facilities to the state’s CON program and should instead look to reduce burdensome regulations that increase the cost of health care while limiting access. 

The following articles examine certificate of need laws from multiple perspectives.

Certificate of Need Meeting Touches on New Type of Care Facility for Seniors
Travis Zimpfer of the Missouri Times reports on a recent certificate of need (CON) meeting where members discussed a new health care development that could affect how senior citizens recover from surgical care and the future of transitional care facilities in the state. 

Certificate of Need Laws: Implications for Missouri
Examining Missouri’s certificate of need laws, Thomas Stratmann, Christopher Koopman, and Mohamad Elbarasse of the Mercatus Center at George Mason University argue CON laws do not control costs and instead decrease the supply and availability of health care services by limiting entry and competition. They recommend legislators repeal these laws and open markets for greater entry, more competition, and ultimately more options for those seeking care. 

Do Certificate-of-Need Laws Increase Indigent Care?
Thomas Stratmann and Jacob Russ of the Mercatus Center at George Mason University examine certificate of need laws and their effects on prices and health care access. “While certificate of need laws significantly reduce available health care services for everyone, they do not lead to an increase in care for the needy,” Stratmann and Russ write. 

The Great Healthcare CON
Jordan Bruneau of the Foundation for Economic Education says CON laws powerfully distort the health care market. He advises, “Rather than pinning our hopes on grand plans to overhaul the system, we should first look at where we can make changes on the margin that would move us in the right direction. Abolishing CON laws—a barrier to entry that drives up prices, restricts access, and is maintained by cronyism—would be a great place to start.” 

Certificate of Need: State Health Laws and Programs
The National Conference of State Legislatures outlines various state CON laws and the positions of CON law proponents and critics. 

Ten Principles of Health Care Policy
This pamphlet in The Heartland Institute’s Legislative Principles series describes the proper role of government in financing and delivering health care and provides reform suggestions to remedy current health care policy problems. 

CON Job: State “Certificate of Necessity” Laws Protect Firms, Not Consumers
Writing in Regulation magazine, Timothy Sandefur of the Pacific Legal Foundation argues certificate of need laws are not intended to protect the public but instead are designed to restrict competition and boost prices existing companies can charge. 

You Shouldn’t Have to Ask Your Competitors for Permission to Start a Business
Ilya Shapiro of the Cato Institute argues CON laws make it more difficult and expensive for companies to create new jobs and innovate. Even more troubling, Shapiro says, is the use of CON laws by existing businesses to bar newcomers from competing against them. 

Certified: The Need to Repeal CON: Counter to Their Intent, Certificate-of-Need Laws Raise Health Care Costs
Jon Sanders of the John Locke Foundation says CON laws fail to lower health care costs and in many instances actually increase costs. Sanders says state leaders could best honor the intent behind CON programs – preventing unnecessary increases in health care costs – by repealing those laws. 

The Failure of Government Central Planning: Washington’s Medical Certificate of Need Program
John Barnes of the Washington Policy Center describes the history of the certificate of need concept, summarizes how the Washington State CON law works, compares its stated goals with actual performance, and offers practical policy recommendations for improving access to affordable health care for the people of Washington. 

Certificate-of-Need Laws: It’s Time for Repeal
Roy Cordato of the John Locke Foundation (JLF) examines certificate of need regulations in the first of a series of annual research papers from JLF devoted to explaining the principles of free markets and applying them to current controversies in North Carolina. 

Certificates of Need: A Bad Idea Whose Time Has Passed
In a policy analysis from the James Madison Institute, Peter Doherty notes certificate of need laws arose largely in response to federal incentives adopted in 1974 and have stifled competition, raised existing providers’ profits, and given “little or no benefit to consumers.” Doherty writes, “Despite all the good intentions and despite the federal government strengthening the role of state authorities in the late 1970s, it was clear by the early 1980s that the design was not working. Not only were costs failing to come down as a result of CON reviews by health care planning bureaucrats, but they were increasing.” He concludes CON programs should be abolished. 

Health Care in the States
Michael Tanner compares health care reform among the states. Without a universal model to follow, states are creating their own reforms. Tanner examines how cost-effectiveness, insurability, and affordability vary between states.

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Health Care News at, The Heartland Institute’s website at, and PolicyBot, Heartland’s free online research database at 

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