South Carolina’s Certificate Of Need Repeal Is The Largest In Almost Three Decades

This piece was co-authored by Oran Smith, Ph.D. a senior fellow at Palmetto Promise Institute in South Carolina.

Long-time talk show host Joey Hudson had to wait an excruciating three weeks for a hernia operation in South Carolina. To add insult to injury, his friend in Florida who had the same diagnosis was able to receive surgery in just three days.

Why the difference? South Carolina has had barriers called Certificate of Need (CON) laws, which are government permission slips needed to start or expand a healthcare business. These laws restricted how many care options he had. With certain hernias, everyday counts, and the pain can be unbearable. But these laws are difficult to repeal with powerful special-interest groups like hospitals fighting to keep them, and those who would benefit from a repeal—patients—are not organized.

South Carolina’s 2023 CON repeal is the most comprehensive in the United States since Pennsylvania’s repeal in 1996. We believe this repeal campaign provides valuable lessons for how to tackle bigger reforms that have concentrated benefits, but diffused costs which impact patient access. Under CON in South Carolina, 30 percent of counties have no OB/GYNs and eight counties have no hospital.

So, how did South Carolina achieve the broad success of a state like Florida without first passing incremental legislation like Georgia, Tennessee, and North Carolina?

It was a series of factors. During the run-up to repeal (2020-23), policymakers benefited from solid research, articulate legislative champions paired with effective governmental relations professionals, powerful grassroots organizing with statewide townhalls, and digital media. At least two transformative intervening election cycles made a difference as well as it resulted in new committee leadership in the South Carolina House that was committed to reform.

Leadership turned to solid research during the debate. In a 2022 review published by Palmetto Promise Institute, Dr. Matthew Mitchell analyzed more than 100 peer-reviewed studies comparing CON states to non-CON states. He found that requiring CON in order to build a healthcare facility or to offer a new healthcare service meant higher prices, less access, and often lower quality.

Therefore, it is high praise that Mitchell rates the recent South Carolina repeal as one of the most significant in the country. Montana’s 2021 full repeal was impressive, but it regulated only nine services and technologies at the time of its reform, whereas South Carolina had one of the most extensive programs in the country, requiring a CON for 18 different services and technologies. Montana (2021), New Hampshire (2106) and Florida (2019) have been the most recent leaders since 2015, but South Carolina’s repeal is more significant than that impressive troika.

A coalition of policy, grassroots, and healthcare professional groups came together in South Carolina to chart a path forward on reform. Americans for Prosperity spearheaded townhalls on the topic, and Convention of States encouraged their supporters to show up to political meetings to talk about CON. The Coalition to Repeal CON, along with the Charleston Medical Society, SC Medical Association, SC Orthopedic Association, along with some insurers and medical device firms, helped build support for repeal. And a number of groups talked to candidates for state office about CON, so they were familiar with the issue before entering office.

Like other recent repeal states, South Carolina leaves CONs in place for nursing homes. And there is a three-year sunset for hospital buildings, but there are exemptions to allow new hospitals to be built in the counties without one now, or for a hospital to relocate if they don’t increase the number of beds.

Hospitals opposed any reform at the start of the session, but when legislators added a repeal of do-not-compete contract clauses to the legislative package that hospitals force medical providers to sign when they are hired to the CON bill, hospitals refocused their attention to defeat that provision. As the debate continued, as a compromise, the do-not-compete contract prohibition was removed as policymaker consensus settled on moving CON repeal.

Another factor was essential to CON repeal: personal relationships. The repeal movement was ultimately successful because legislators heard from patients and providers how they were harmed by lack of access. For example, Dr. Dion Franga of Orangeburg wanted to open a surgery center in a rural area but was delayed for years because of CON. Dr. Rob Brown of Greenville wanted to open a surgery center at his medical practice but was told by hospital administrators: “you can’t exist in private practice in a CON state.” Additionally, COVID only served to emphasize how CON laws do not allow for flexible or competitive responses to community health needs.

South Carolina’s CON repeal shows that with an organized, strategic campaign, even if it takes a few years of tedious research and complex policy discussions, change is possible. The message of healthcare anywhere, or that your healthcare geography should not determine your medical destiny, resonated. Lawmakers eventually saw opposition for what it was: protectionism and anti-patient. Repealing CON barriers is step one towards helping patients like Joey Hudson get timely and affordable care.