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Association of State Certificate of Need Regulation With Procedural Volume, Market Share, and Outcomes Among Medicare Beneficiaries

Educational Objective
To understand the limitations of certificate of need laws.
1 Credit CME
Key Points

Question  Is there an association between certificate of need laws, which regulate health system spending and expansion, and markers of hospital procedural activity and quality of care?

Findings  In this cross-sectional study of 1 545 952 Medicare beneficiaries aged 65 years or older who underwent a broad range of hospital-based surgical procedures from January 1, 2016, through November 30, 2018, there were no significant differences found between states without and with certificate of need regulation for overall hospital procedural volume; hospital market share; county-level procedures per 10 000 persons; or risk-adjusted 30-day postoperative mortality, surgical site infection, or readmission.

Meaning  Policy makers should consider reevaluating whether certificate of need regulations are having their intended effect.


Importance  Certificate of need laws provide state-level regulation of health system expenditure. These laws are intended to limit spending and control hospital expansion in order to prevent excess capacity and improve quality of care. Several states have recently introduced legislation to modify or repeal these regulations, as encouraged by executive order 13813, issued in October 2017 by the Trump administration.

Objective  To evaluate the difference in markers of hospital activity and quality by state certificate of need status. These markers include hospital procedural volume, hospital market share, county-level procedures per 10 000 persons, and patient-level postoperative outcomes.

Design, Setting, and Participants  A cross-sectional study involving Medicare beneficiaries aged 65 years or older who underwent 1 of the following 10 procedures from January 1, 2016, through November 30, 2018: total knee or hip arthroplasty, coronary artery bypass grafting, colectomy, ventral hernia repair, lower extremity vascular bypass, lung resection, pancreatic resection, cystectomy, or esophagectomy.

Exposures  State certificate of need regulation status as determined by data from the National Conference of State Legislatures.

Main Outcomes and Measures  Outcomes of interest included hospital procedural volume; hospital market share (range, 0-1; reflecting 0%-100% of market share); county-level procedures per 10 000 persons; and patient-level postoperative 30-day mortality, surgical site infection, and readmission.

Results  A total of 1 545 952 patients (58.0% women; median age 72 years; interquartile range, 68-77 years) at 3631 hospitals underwent 1 of the 10 operations. Of these patients, 468 236 (30.3%) underwent procedures in the 15 states without certificate of need regulations and 1 077 716 (69.7%) in the 35 states with certificate of need regulations. The total number of procedures ranged between 729 855 total knee arthroplasties (47.21%) and 4558 esophagectomies (0.29%). When comparing states without vs with certificate of need regulations, there were no significant differences in overall hospital procedural volume (median hospital procedure volume, 241 vs 272 operations per hospital for 3 years; absolute difference, 31; 95% CI, −27.64 to 89.64; P = .30). There were no statistically significant differences between states without vs with certificate of need regulations for median hospital market share (median, 28% vs 52%; absolute difference, 24%; 95% CI, −5% to 55%; P = .11); procedure rates per 10 000 Medicare-eligible population (median, 239.23 vs 205.41 operations per Medicare-eligible population in 3 years; absolute difference, 33.82; 95% CI, −84.08 to 16.43; P = .19); or 30-day mortality (1.17% vs 1.33%, odds ratio [OR], 1.04; 95% CI, 0.93 to 1.16; P = .52), surgical site infection (1.24% vs 1.25%; OR, 0.93; 95% CI, 0.83 to 1.04; P = .21), or readmission rate (9.69% vs 8.40%; OR, 0.80; 95% CI, 0.57 to 1.12; P = .19).

Conclusions and Relevance  Among Medicare beneficiaries who underwent a range of surgical procedures from 2016 through 2018, there were no significant differences in markers of hospital volume or quality between states without vs with certificate of need laws. Policy makers should consider reevaluating whether the current approach to certificate of need regulation is achieving the intended objectives and whether those objectives should be updated.

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Article Information

Corresponding Author: Karl Y. Bilimoria, MD, MS, Surgical Outcomes and Quality Improvement Center (SOQIC), Department of Surgery, Feinberg School of Medicine, Northwestern Medicine, 633 N St Clair St, 20th Floor, Chicago, IL 60611 (

Accepted for Publication: October 8, 2020.

Author Contributions: Drs Bilimoria and Yuce had full access to all of the data in the study and take responsibility for the integrity of the data and the accuracy of the data analysis.

Concept and design: Yuce, Barnard, Bilimoria.

Acquisition, analysis, or interpretation of data: All authors.

Drafting of the manuscript: Yuce, Barnard, Bilimoria.

Critical revision of the manuscript for important intellectual content: All authors.

Statistical analysis: Yuce, Bilimoria.

Obtained funding: Bilimoria.

Supervision: Chung, Barnard, Bilimoria.

Conflict of Interest Disclosures: None reported.

Funding/Support: Dr Yuce was supported by a postdoctoral research fellowship (AHRQ 5T32HS000078).

Disclaimer: Views expressed in this work represent those of the authors only.

Meeting Presentation: This work was presented at the Academic Surgical Congress on February 5, 2020.

Additional Contributions: We thank Bridget Orth, BS, Northwestern Memorial Health Care, for her assistance with this work, for which she was not compensated.

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