Centrally planned economies create oligarchies and restrict choices virtually everywhere they are tried. The clearest example of this today is in Russia, where powerful oligarchs control vast swaths of the national economy. This situation restricts the supply and delivery of goods and services, producing less-than-optimal choices for the general public, at higher-than-necessary prices.
Central planners have never devised a plan that delivers efficiency, innovation, and the lowest cost to consumers. Only the free market can do that.
Yet North Carolinians tolerate a centrally planned healthcare economy, a legacy of its obsolete Certificate of Need, or CON, law. The state determines which healthcare providers may add medical equipment, surgical rooms and hospital beds, and where and when they may be added.
The result of central planning? North Carolina now ranks at the bottom — 50 out of 50 states — in healthcare affordability in the United States.
The NC Department of Health and Human Services, or DHHS, pretends to know the answers. To convince us, it publishes a thick “scientific” report on its opinion every year, but the evidence contradicts its alleged wisdom. For 2024, DHHS decided that the state needed 407 additional hospital beds. For 2025, it decided we needed 1,042 additional beds — more than twice as many. The rationale? Their “methodology” changed. Which methodology is correct? No one knows. Central planners never get it right.
It’s clear that sorely needed healthcare facilities are routinely disallowed by the state apparatchik. In a February Carolina Journal article, Theresa Opeka reported that from September’s round alone, DHHS denied applications for six projects encompassing a total of 11 surgical/procedure rooms and 176 acute care beds. That’s nearly $1 billion dollars of new capital investment DHHS denied the local community, just this year, in Wake County alone. That’s just one example.
The CON central planners have created a healthcare oligarchy in the state, as central planners always do. Huge NC healthcare oligarchs thrive by shutting out competition. “The law very much favors entities that are already in the market,” UNC law professor Joan Krause told the Carolina Public Press in November.
By approving small numbers of beds each year, DHHS makes it virtually impossible for any new company to construct a complete, functioning hospital. For example, DHHS awarded UNC Health 40 additional beds for Durham County in 2021. Then it approved 34 more in 2022, and 38 more in 2023. Now a new 112-bed hospital is on the drawing boards, but no outside company could have competed for these beds in the early rounds.
Even for a smaller ambulatory surgery center, the NCSHCC usually determines that only the largest, most established entity should build it, because somehow — perhaps magically — they can do it most efficiently. DHHS decides that.
Smaller, more nimble competitors don’t get a chance to show how they can serve patients in NC. I have personal experience with such a competitor in Pennsylvania, which eliminated its CON law for acute and ambulatory care in 1996. I received a hip replacement years ago at a small, independent ambulatory surgery center in my hometown. It was started by a group of surgeons who broke off from the huge, not-for-profit hospital system to profitably provide state-of-the-art care to local patients at affordable prices. Electing this facility for my surgery saved my health insurance company half of what they would have paid at the big hospital, and the surgical experience was excellent. Now as a North Carolinian, neither I nor my insurance company have that option, due to CON.
In vigorously growing state like NC, new healthcare facilities are needlessly delayed by the convoluted CON appeal process. In the Durham County example above, Duke Health appealed each of the three bed allocations — the last one all the way to the state supreme court. That particular appeal was settled, but such appeals can add millions of dollars in legal costs and sometimes delay the delivery of urgently needed healthcare facilities for up to a decade.
Eliminating CON would allow new healthcare facilities to be delivered faster at lower cost. It would open a locked door to more nimble competition, and NC’s needlessly high healthcare costs would start to come down. The federal government rescinded national CON requirements nearly 40 years ago. Since then, 21 states have abandoned these outdated requirements. NC is overdue for a CON healthcare cost overhaul.
