Testimony Before the Tennessee Senate Commerce and Labor Committee in Favor of SB 853
Tim Benson, Senior Policy Analyst
Heartland Impact
March 25, 2025
Chairman Bailey and Members of the Committee:
Thank you for holding this hearing on SB 853, which is aimed at increasing access to health care across the Volunteer State.
My name is Tim Benson, and I am the senior policy analyst with Heartland Impact. Heartland Impact is the advocacy and outreach arm of The Heartland Institute. Both organizations are independent, national, nonprofit organizations working to discover, develop, and promote free-market solutions to social and economic problems. Heartland Impact specializes in providing state lawmakers the policy and advocacy resources to advance free-market policies towards broad-based economic prosperity.
SB 853 would remove burdensome and counterproductive Certificate of Need (CON) requirements for health care facilities across Tennessee, except for nursing homes. This reform would greatly improve access to health care in Tennessee while putting beneficial pressures on costs and quality by allowing greater investment in new facilities and improvements of existing ones.
CON laws are intended to reduce costs and improve access to health care by controlling the availability of medical facilities through state-level regulation. Unfortunately, CON laws decrease health care access, raise costs, lower quality, and stifle innovation by giving competing health care providers veto power over the construction or improvement of facilities or other capital improvements such as advanced imaging devices.
A recent study in the scientific journal JAMA Network Open has found hospitals across the United States are facing an upcoming shortage of facilities. Noting that “a national hospital occupancy of 85% constitutes a hospital bed shortage (a conservative estimate),” the researchers write, “our findings show that the US could reach this dangerous threshold as soon as 2032, with some states at much higher risk than others.”[1] Failure to replace facilities that close down is the culprit, the study authors conclude: “This persistently elevated occupancy appears to be driven by a 16% reduction in the number of staffed US hospital beds rather than by a change in the number of hospitalizations.”
This is a particular danger for states with growing populations, such as Tennessee. A coalition of “representatives of patients, healthcare providers, and taxpayers across Tennessee” sent a letter to the Tennessee Legislature and Gov. Bill Lee earlier this month urging repeal of the state’s CON laws. “We strongly believe Tennessee’s remaining Certificate of Need (CON) laws continue to significantly slow the necessary expansion of healthcare services across the state—limiting access to affordable, high-quality care, including by preventing the building of new hospitals in communities that need them,” the coalition wrote. “Repealing Tennessee’s remaining CON laws is essential for increasing access to care.”[2]
Both individual patients and the public health at large benefit when states reduce regulatory barriers to the construction and expansion of new health care facilities and purchases of new and improved equipment. Years of evidence show the free market does a better job of controlling costs and at least as good a job at ensuring people have access to health care as CON laws do. “A review of 20 peer-reviewed academic studies finds that CON laws have worked largely as economic theory predicts and that they have failed to achieve their stated goal of cost reduction,” notes the Mercatus Center at George Mason University in a 2016 Working Paper.[3] “The overwhelming weight of evidence suggests that CON laws are associated with both higher per-unit costs and higher expenditures.”[4]
As the research shows, CON laws do the opposite of what they are intended to do. In 1987, federal mandates requiring CON were removed. Since then, states have begun to reform and repeal their CON laws as many legislatures have correctly determined that rationing health care in this way has done more harm than good.
Currently, 35 states and the District of Columbia require care providers to go through a CON approval process before constructing a facility or in some cases even buying certain equipment such as imaging machines.[5] As of 2024, 12 states had completely repealed their CON laws.
Patients, health care providers, and the public health all benefit from the greater investment in health care facilities and equipment improvements that CON reform allows. Tennessee lawmakers can contribute to that positive outcome in this state by supporting SB 853.
Thank you for your time.
Heartland Impact can send an expert to your state to testify or brief your caucus; host an event in your state; or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact Cameron Sholty, at csholty@heartlandimpact.org or 312/377-4000.
[1] Richard K. Leuchter, Benjo A. Delarmente, Sitaram Vangala, et al., “Health Care Staffing Shortages and Potential National Hospital Bed Shortage,” JAMA Network Open, February 19, 2025, https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2830387.
[2] Center for Individual Freedom, “Coalition Letter Calls for Full Repeal of Tennessee’s Remaining Certificate of Need Laws This Legislative Sesson,” March 11, 2025, https://cfif.org/v/index.php/press-room/7172-coalition-letter-calls-for-full-repeal-of-tennessees-remaining-certificate-of-need-con-laws-this-legislative-sesson.
[3] Matthew D. Mitchell, “Do Certificate-of-Need Laws Limit Spending?,” Mercatus Working Paper, Mercatus Center at George Mason University, September 29, 2016, https://www.mercatus.org/research/working-papers/do-certificate-need-laws-limit-spending.
[4] Ibid.
[5] National Conference of State Legislatures, “Certificate of Need State Laws,” February 26, 2024, https://www.ncsl.org/health/certificate-of-need-state-laws.
