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From Antitrust Law Daily, January 11, 2016

Federal antitrust agencies urge repeal of South Carolina’s certificate-of-need laws

By Michael Menzhuber, J.D., LL.M.

The Department of Justice Antitrust Division and the FTC have recommended that South Carolina repeal its certificate-of-need (CON) laws regulating the building of hospitals and other health care facilities and the provision of health services, the agencies announced today.

The agencies’ joint statement was made in response to a request by South Carolina Governor Nikki R. Haley for views on South Carolina House Bill 3250, which would narrow the application of and ultimately repeal South Carolina’s CON laws. The joint statement recommends that South Carolina consider whether its CON program best serves the needs of its citizens.

Although they vary by state, CON laws, including South Carolina’s CON laws, typically require certain health care providers to obtain state approval before expanding, establishing new facilities or services or making certain large capital expenditures.

According to the joint statement, these laws prevent the efficient functioning of the health care markets, and thereby harm consumers by creating barriers to entry and expansion, limiting consumer choice, denying consumers the benefit of an effective remedy for antitrust violations, facilitating anticompetitive agreements, and stifling innovation. For these reasons, the Department of Justice and the FTC have historically suggested that states repeal or narrow their CON laws and now suggest that South Carolina repeal its CON program.

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