Certificate of Need
Healthcare: Unlike Other Industries
Our healthcare system operates very differently from other types of industries.
| In Most Industries: | In the Healthcare Industry: |
| The consumer pays directly for the product or service. | Government and insurance companies pay most of the bill. |
| Purchasers and sellers establish pricing. | Government and insurance companies establish the cost of services. |
| Businesses can refuse to serve customers who can't pay. | Hospital ERs are required to provide care, regardless of the patient's ability to pay. |
| Demand typically rises when prices fall. | Price is not the deciding factor for demand – physician recommendations often determine where services are provided. |
| Excess supply tends to cause prices to drop. | Supply is not deciding factor when it comes to costs because, again, physician recommendations typically determine which services are demanded. Studies have shown that in cities where there is an oversupply of a medical service (such as MRI) the demand for those services goes up — physicians order more of the services — and overall healthcare costs rise. |
| Businesses are not required to offer any specific product or service. | Insurance companies are required to offer certain provisions for the good ofstate residents. |
| Businesses choose not to operate non-profitable services. | Hospitals continue to operate non-profitable services in communities (including emergency rooms, trauma centers and mental health services) and must offset losses with more profitable services (such as orthopaedics and cardiology) |
| Consumers generally have time to compare prices/quality. | Immediate/urgent need for services prohibits the consumer (the patient) from shopping around |
| Businesses chose to locate where their customers are located. | With the CON process, residents throughout a state have medical facilities and services within a reasonable distance. Without CON, facilities and services would likely locate mainly in population centers due to staff availability. In South Carolina – where one-third of residents live in rural areas - facilities and services would not choose to locate in rural (or unprofitable) counties. |
Learn how the CON process helps contain healthcare costs.
For questions regarding the Certificate of Need process and program, please contact us at (803) 545-4200.