Certificate of Need and Inpatient Psychiatric Services

J Ment Health Policy Econ. 2021 Dec 1;24(4):117-124.


Background: Certificate of need (CON) laws require would-be healthcare providers to obtain the permission of a state board before opening or expanding. 35 US states operate some type of CON program, though they vary widely in the specific services or equipment they target, with 25 states requiring CON for psychiatric services.

Aims of the study: We provide the first empirical estimates on how CON affects the provision of psychiatric services.

Methods: We use Ordinary Least Squares regression to analyze 2010-2016 data on psychiatric CON from the American Health Planning Association together with data on psychiatric facilities and services from the National Mental Health Services Survey.

Results: We find that CON laws targeting psychiatric services are associated with a statistically significant 0.527 fewer psychiatric hospitals per million residents (20% fewer) and 2.19 fewer inpatient psychiatric clients per ten thousand residents (56% fewer). Psychiatric CON is also associated with psychiatric hospitals being 5.35 percentage points less likely to accept Medicare. Our estimates for CON's effect on the number of inpatient psychiatric beds per ten thousand residents and the likelihood of psychiatric hospitals accepting Medicaid, private insurance, or charity care (no charge) are negative but not statistically significant.

Discussion: CON laws may substantially reduce access to psychiatric care. A limitation of our study is that there is almost no variation in which states have psychiatric-related CON laws during the time period of our data (New Hampshire is the only state to change its psychiatric services CON requirement in this period, repealing its CON program entirely in 2016). This precludes the use of preferred econometric techniques such as difference-in-difference.

Implications for health policies: Our results indicate that CON laws may reduce access to inpatient psychiatric care. State policymakers should consider whether CON repeal could be a simple way of enhancing access to psychiatric care.

Implications for further research: While hundreds of articles have examined the effects of CON laws, we believe ours is the first to provide empirical estimates of their effects on mental health care specifically. We hope it is not the last.

MeSH terms

  • Aged
  • Certificate of Need*
  • Humans
  • Inpatients
  • Medicaid
  • Medicare
  • Mental Health Services*
  • United States