Common sense meets implementation: Certificate-of-need regulation in the States

In the United States, as in Europe, the increasing costs of hospital care are the central component of rapidly rising health care bills. In response, the United States adopted in the 1970s several new regulatory approaches, all aimed mainly at hospitals: professional standards review organizations (PSROs) to monitor physicians' decisions on admissions and length-of-stay; prospective rate setting bodies to review and determine hospitals' budgets, revenues, and rates; health systems agencies (HSAs) to make hospital growth conform to areawide and statewide plans; and - the subject of this paper - certificate-of-need (CON) programs to constrain capital expenditures by hospitals. In general CON labors under heavy burdens as a cost-constraining technique, but that under specific and favorable conditions it may rise above its liabilities. Neither the general burdens it bears, nor the special circumstances that surmount them, may be derived from aggregate data. In order to understand either or both, a qualitative examination of the politics of CON implementation is necessary. The argument to be developed here is that the politics of implementation in CON derive from a fundamental fact of organizational character: unique among health regulatory programs, CON is simultaneously and equally an exercise in regulatory bureaucracy and in regulatory democracy.