Covered with sweat and your legs cramped, you finally turn off your computer and rise from your seat. You have spent the last five hours trying to explain to a government bureaucrat why there is a “clear public need” for the services your firm provides while a party with a financial interest in your failure tries to prove that no such need exists, all within a system explicitly designed to prevent firms like yours from expanding their services.

With the conclusion of the hearing, you have now done all you can. All that remains is for the hearing officer to deliver his verdict. If he approves your application, great. If not, tough luck.

Such is the situation in which many people in the healthcare system find themselves in those states where Certificate of Need (CON) laws are still on the books, including Connecticut. These laws require healthcare providers to prove that there is a “clear public need” before they introduce or expand their services in an area, on the theory that this will prevent unnecessary capital expenditures by hospitals and thus contain healthcare costs. certificate-of-need laws are also often justified as a means to promote access to healthcare. Unfortunately, the weight of the evidence is that certificate-of-need laws have no measurable impact on healthcare costs, and a recent study, while not finding a statistically significant relationship, suggested that these laws considerably decrease healthcare access.

I do not have the means to replicate studies myself. I do, however, have access to the dockets for every certificate-of-need application in the state of Connecticut filed within the last few years. I spent some time over the summer looking through a few of them to gain a more complete picture of the certificate-of-need system beyond that given by the numbers. One case in particular stood out to me as putting every negative aspect of the system on full display.

Encompass Danbury

On August 29, 2025, Encompass Health opened the doors of a new rehab hospital in Danbury to care for patients who had suffered from strokes or bone injuries and could not receive adequate treatment elsewhere in Connecticut. Danbury’s mayor, Roberto Alves, was pleased to announce the occasion, and Sen. Richard Blumenthal thanked Encompass and remarked that such care has “helped save money because it prevents injuries and illnesses from recurring.”

Left unmentioned was the fact that Encompass could have opened its doors two years earlier, had it not been for the Office of Health Strategy (OHS), the state agency responsible for administering Connecticut’s certificate-of-need program.

On August 14, 2020, Encompass filed a certificate-of-need application asking for permission to open a new rehab hospital in Danbury. Among other things, their application included multiple studies indicating the absence of this type of care in western Connecticut, plentiful testimony from doctors lamenting that they had been forced to send patients to Massachusetts for treatment, and supportive letters from the mayor and from two state representatives. Under these circumstances, the granting of a certificate of need should have been all but guaranteed.

Unfortunately for Encompass, while the public welcomed their services, the Nuvance-owned Danbury Hospital did not.  Nuvance alleged that there was, in fact, no gap in care in western Connecticut, that competition from Encompass would somehow increase the cost of rehabilitative care, and, worst of all, that allowing Encompass to operate would create an “unnecessary duplication of services.” Rather then expressing good-faith concern for patients’ pocketbooks, Nuvance was really worried that many patients would choose Encompass over them, thus hurting their bottom line.

That Nuvance’s allegations were without merit did not matter: OHS had to give them time to testify and present evidence, turning an ordinary hearing into an informal bench trial. This “trial” was held in October 2021, over a year after filing, over a Zoom call lasting from 10 in the morning to five in the evening. Over the course of the hearing, Nuvance tried to prove that it had enough bed capacity to service the rehab patients, while Encompass countered that it provided more intensive care than Nuvance and pointed to evidence that less intensive care was not a substitute for more intensive care.

After the hearing, there was silence for nearly a year. OHS finally released a proposed decision in 2022, denying the certificate of need. The reasoning was extensive, but boiled down to failure to demonstrate “clear public need” and failure to demonstrate that there would be no “unnecessary duplication of services.” Encompass appealed to then-Commissioner Deidre Gifford. Among other things, they pointed out that the author of the decision was inexperienced, committed numerous errors when stating the facts of the case, and improperly discounted Encompass’ methodology for determining the existence of a gap in rehab services.

While not relevant to the adjudication of the case, but a good indicator of the soundness of the certificate-of-need system, Encompass noted that Nuvance had pressured physicians to not voice support for the new facility and that, while OHS was dragging its feet, another firm had filed a certificate of need asking to open an intensive rehab facility in the same area. Thankfully for everyone (except for Nuvance’s corporate management), Gifford entered a final decision determining that Encompass’ services were needed and granting the certificate of need.

General problems with CONs

The Encompass case reveals many problems with certificates of need, the first of which is that they take too long. While there has been significant improvement over the past few years, the typical certificate-of-need case still takes over six months to process. These are six months where nothing can be done until the fate of the application is decided. Not only does the firm requesting a certificate of need pay the monetary cost of construction delays, but patients that could have been treated during that time pay with their health.

In addition to costs created by the delay, the firm must spend time and money producing the application and compiling the required information, as well as retain an attorney to guide them through the process and represent them at the hearing. While exact numbers are hard to come by, the typical certificate of need must cost over a $100,000.

Even so, if compliance costs were the only problem with certificates of need, I would probably not be writing this article. But certificate-of-need laws do evil by many means, the most pernicious of which is the intervenor system. By this system, established providers are allowed to weaponize the state government to protect their profits from competition by forcing applicants to fight both OHS and the intervenor and by convincing OHS to condition its approval on the applicant’s acceptance of unfavorable terms. If we despise officials who corruptly use their power to pick winners and losers, we ought to abhor a system that is designed to benefit one party at the expense of the other.

Finally, certificates of need are, to put it mildly, economic nonsense. Even those unfamiliar with the subject are aware that, when the supply of a good or service increases, its per-unit cost decreases. Most are also aware that, with a greater abundance of firms in a given field, competition between these firms will drive down the cost and raise the quality and specialization of care. Certificate-of-need laws flip this logic on its head: they purport to contain costs by reducing the supply of healthcare in a region. Worse, certificate-of-need laws deride competition— the lifeblood of capitalism and the essence of what makes America great— as nothing more than an “unnecessary duplication of services.”

The path forward is clear: certificate-of-need laws ought to be ended, not mended. There is little evidence that certificate-of-need laws lower the cost of or increase access to healthcare and considerable evidence that they have the opposite effect. At best, they pose an unnecessary hurdle for new health care projects in Connecticut; at worst, they reduce the availability of care in the state and harm patients’ health. As the legislature goes into session, they will be primarily concerned with addressing housing prices and federal funding cuts.

They should consider abolishing certificates of need as well.

Michael Chuchev lives in Waterford.