Department of Justice and Federal Trade Commission Support Reform of Virginia Laws that Curb Competition, Limit Consumer Choice, and Stifle Innovation for Health Care Services

Agencies Submit Joint Statement Regarding Virginia Certificate-of-Need Laws for Health Care Facilities

The Department of Justice’s Antitrust Division and the Federal Trade Commission have recommended that Virginia reform its laws regulating the building of hospitals and the process of health care services.

In response to a request by Kathy Byron, a Virginia state delegate, the joint statement submitted to the Virginia Certificate of Public Need Work (COPN) Group suggests the state consider whether its COPN program best serves the needs of its citizens.

“The evidence suggests that certificate-of-need laws have not served consumers well,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “They raise the cost of investment in new health care services and can shield incumbents from competition that would benefit consumers and lower costs.  By reexamining the certificate-of-need process state policymakers have an opportunity to invigorate competition in this important sector, to the benefit of patients, employers and other health care consumers.” 

Although Certificate-of-Need (CON) laws vary considerably by state, these laws, including Virginia’s COPN laws, typically require certain healthcare providers to obtain state approval before expanding, establishing new facilities or services or making certain large capital expenditures.

According to the joint statement, the Department of Justice and FTC historically have urged states to consider repeal or reform of their CON laws because they can prevent the efficient functioning of health care markets that may harm consumers.  CON laws have created barriers to expansion, limited consumer choice and stifled innovation.

Incumbent providers may use CON laws when seeking to stop or delay entry by new competitors.  CON laws can also deny consumers the benefit of an effective remedy for antitrust violations and can facilitate anticompetitive agreements.