Abstract

North Carolina maintains one of the nation’s most restrictive Certificate of Need (CON) systems, requiring state approval before medical providers can open new facilities, expand services, or purchase major equipment. This decades-old framework limits competition by constraining the supply of clinics, imaging centers, surgical facilities, and behavioral-health resources at a time of rapidly growing demand. As research and real-world experience repeatedly show, reduced competition leads to higher prices, fewer options, and longer wait times—impacts felt acutely in both fast-growing areas like Wake County and underserved rural regions. Evidence from other states, past North Carolina reforms, and the COVID-19 suspension of CON requirements all underscore that expanded capacity improves access and lowers costs. Current bipartisan proposals (HB 434 and SB 316) aim to modernize CON by making it easier for essential services to open while preserving safeguards for vulnerable communities, offering a pragmatic alternative to full repeal. Updating the CON system responsibly is one of the clearest pathways to improving affordability, expanding access, and strengthening North Carolina’s health-care landscape.

Introduction

Most North Carolinians don’t realize that our state still relies on a system called Certificate of Need (CON)—a regulatory framework that requires state approval before certain medical facilities can open or expand. Whether it’s a new surgery center, an imaging clinic, a rehabilitation hospital, or even additional hospital beds, providers must first obtain permission from Raleigh.

North Carolina doesn’t just have CON laws—it has one of the strictest CON systems in the nation. That makes it significantly harder for new medical providers to enter the market and compete. When it’s difficult for new facilities to open, competition shrinks. And when competition shrinks, patients pay the price.

The Cost of Limited Competition

Less competition in health care leads to higher prices, fewer choices, and longer wait times—and North Carolina’s strict CON laws are a major reason why. Put simply, CON laws restrict supply, while demand is growing.  That gives the entrenched providers incredible pricing power.

Under this system, medical providers must ask a state board for permission before building new facilities, expanding services, or even purchasing major medical equipment. That means new clinics, imaging centers, rehabilitation hospitals, and outpatient surgery centers can be blocked or delayed not because a community lacks the need, but because the CON process says the “need” has not been centrally approved.

As the John Locke Foundation notes,[1] CON laws were originally created in the 1970s as a federal effort to control rising costs by limiting new capacity. But the policy failed to control inflation, and the federal CON requirement was repealed in 1987. Since then, 15 states have eliminated their programs entirely. North Carolina, however, still maintains one of the most restrictive CON systems in the country, regulating 24 different services, from kidney dialysis units to rural ambulatory surgical centers.

Decades of research show what North Carolinians have experienced firsthand: limiting supply drives up prices and reduces access. The John Locke Foundation highlights that states with CON laws have, on average, 30% fewer rural hospitals and 13% fewer rural ambulatory surgical centers than states without them. This has real implications for North Carolinians—especially the elderly, low-income families, and patients with urgent needs who cannot afford long travel times.

These barriers show up across the state:

• Growing suburbs like Wake County face months-long waits for basic imaging because too few MRI or CT centers are allowed to open. Independent facilities often face objections from existing hospital systems, delaying projects for years.[2][3][4]
• Rural counties such as Halifax, Robeson, and Avery struggle to attract specialty services because new providers are routinely denied entry. If the one local hospital does not offer a service—like inpatient rehab—residents must travel far outside their community.[5][6][7]
• In mental health and addiction care, CON laws have been especially harmful. New research shows that states with CON requirements for psychiatric services have 20% fewer psychiatric hospitals and are less likely to have facilities that accept Medicare. Applied to North Carolina, this means the state would be expected to have about 18 psychiatric hospitals instead of 15, with more accepting Medicare, if CON rules were lifted. This underscores how CON limits behavioral-health capacity at a time when the state urgently needs more psychiatric and addiction-treatment options.[8]

Past reforms illustrate the difference that competition makes. When North Carolina allowed gastroenterologists to open their own endoscopy units in 2005, prices went down and access improved. More recently, selective rollbacks have allowed rural hospitals to convert unused beds into behavioral-health beds without going through CON. These small steps demonstrate the obvious: when providers are allowed to expand, patients benefit.[9]

The system’s failings became unmistakable during the COVID-19 pandemic. As hospitals prepared for surging demand, Governor Roy Cooper suspended the CON process entirely so that facilities could quickly add beds or move essential equipment.[10] Only by removing these restrictions—temporarily—could the state meet urgent medical needs. If a regulatory regime must be waived to function during a crisis, it raises a clear question: is it serving patients at all during normal times?

Despite these well-documented problems, North Carolina continues to enforce one of the most burdensome CON programs in America. The result is predictable: higher prices, longer waits, and fewer options. Communities from Charlotte to Wilmington to rural Appalachia feel these effects every day.

Modernizing CON is not about eliminating oversight—it’s about replacing outdated, ineffective central planning with a system that allows more clinics, imaging centers, and treatment facilities to open where people actually need them. In a state as fast-growing and diverse as North Carolina, maintaining the status quo is not just inefficient—it is costly, inequitable, and unsustainable.

Bipartisan Steps Toward Modernization

This legislative session, lawmakers introduced two bipartisan proposals—HB 434 and SB 316—that take practical steps to update the system. These bills would make it easier for rehabilitation centers, diagnostic facilities, and other essential services to open. They also aim to curb certain insurance practices and hidden fees that quietly drive up costs for families and employers.

These reforms don’t fix every problem in our health-care market, but they represent meaningful progress. They move North Carolina toward a more open, competitive environment where additional providers can operate and patients finally have more options.

Some lawmakers have introduced full-repeal bills—SB 370 and HB 455—that would eliminate CON entirely. While the goal of expanding access is commendable, these bills were advanced strictly along partisan lines and lack safeguards for rural communities, where local hospitals often operate on razor-thin margins. A sudden, unrestricted repeal could unintentionally destabilize those areas.

North Carolina can and should push for greater competition and lower costs—but we must do it responsibly, with reforms that recognize the needs of both high-growth regions and vulnerable rural communities.

Conclusion

The message should be simple: health care in North Carolina is too expensive because it’s too hard for new facilities to open. Modernizing our Certificate of Need laws—carefully, responsibly, and with bipartisan support—is one of the clearest ways to lower costs, shorten wait times, and expand access for patients across the state. By embracing practical reform instead of partisan overreach, North Carolina can build a health-care system that works better for everyone.

References

[1] John Locke Foundation. North Carolina Policy Solutions 2024-25. 2024. chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.johnlocke.org/wp-content/uploads/2024/01/Amended-Policy-Solutions.1-1.pdf

[2] Christopher Koopman & Thomas Stratmann. Certificate-of-Need Laws and North Carolina: Rural Health Care, Medical Imaging, and Access. Mercatus Center Policy Brief, May 17, 2016. https://www.mercatus.org/students/research/policy-briefs/certificate-need-laws-and-north-carolina-rural-health-care-medical

[3] Carolina Journal. “Top NC Court Rules Against DHHS, Duke in Wake County CON Dispute.” Carolina Journal, October 17, 2025. https://www.carolinajournal.com/top-nc-court-rules-against-dhhs-duke-in-wake-county-con-dispute/

[4] Raleigh Radiology, LLC. Petition for Special Need for One Fixed MRI Scanner in Wake County (2026 SMFP), July 23, 2025. North Carolina Department of Health and Human Services, Division of Health Service Regulation. chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://info.ncdhhs.gov/dhsr/mfp/pets/2025/summer/T06_Fixed_MRI_Scanner_Solution_for_Wake_County_Raleigh_Radiology.pdf

[5] Jaimie Cavanaugh & John Sweeney, “Rural communities in NC have little access to health care, overregulation is to blame,” Carolina Journal, May 23, 2025. https://www.carolinajournal.com/opinion/rural-communities-in-nc-have-little-access-to-healthcare-overregulation-is-to-blame/

[6] Jaymie Baxley. “Disparate issues shape rural health in North Carolina.” North Carolina Health News, May 19, 2023. https://www.northcarolinahealthnews.org/2023/05/19/disparate-issues-shape-rural-health-in-nc/

[7] North Carolina Institute of Medicine. Issue Brief: Recruitment and Retention of the Rural Health Workforce. Morrisville, NC: NCIOM; June 2018. chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://nciom.org/wp-content/uploads/2018/06/Issue-brief_FINALv2.pdf

[8] Bailey, James. Certificate of Need in North Carolina: Cost, Access, Treatment. John Locke Foundation, January 25, 2021. https://www.johnlocke.org/research/certificate-of-need-north-carolina/

[9] French, David J. Cost Savings and Justification for Changes to CON Law to Allow Single-Specialty Ambulatory Surgery Centers. Strategic Healthcare Consultants for the North Carolina Orthopaedic Association, October 25, 2012. chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://webservices.ncleg.gov/ViewDocSiteFile/43430

[10] North Carolina Department of Health and Human Services. “Governor Cooper provides emergency flexibility to expand hospital beds, equipment, and personnel during COVID-19 pandemic.” Press release, April 8, 2020. https://www.ncdhhs.gov/news/press-releases/2020/04/08/governor-cooper-provides-emergency-flexibility-expand-hospital-beds-equipment-and-personnel-during