Certificate of need laws are state rules that require healthcare providers to get government approval before building a new facility, adding beds or services, or making a large capital investment. Thirty-five states and Washington, D.C. run these programs, and each one sets its own dollar thresholds, covered services, and review procedures. The common thread is that a provider must prove a project fills a genuine gap in the community’s healthcare infrastructure before spending the money to build or expand.
Which States Have CON Programs
Twelve states fully repealed their CON programs or let them expire, so if you are working in one of those states, none of what follows applies to you. The remaining 35 states and D.C. keep programs, but the scope varies widely. Some review nearly every type of healthcare construction and equipment purchase. Others regulate only long-term care facilities or a handful of specialty services. The most commonly regulated categories are hospitals, outpatient facilities, and long-term care facilities.
At least 13 states also maintain moratoriums on specific healthcare activities, particularly expanding long-term care beds. In a moratorium category, the state will not approve new capacity regardless of what the application says, so confirming whether your project category is under a moratorium is the first thing to check.
The landscape keeps shifting. South Carolina repealed all CON requirements in 2023 except those tied to nursing homes and a narrow set of hospital services. Montana exempted everything except long-term care facilities from CON review in 2021. At least four states created CON exemptions specifically for psychiatric facilities in 2024. Before assuming a rule from a neighboring state applies, check the current statute in the state where you plan to build.
What Triggers CON Review
A project falls under CON review when it crosses a dollar threshold or involves a service category the state has chosen to regulate. Four broad triggers appear across most programs.
- New facilities. Building a new hospital, nursing home, psychiatric unit, ambulatory surgery center, or similar facility almost always requires approval in states that regulate that facility type.
- Changes to existing capacity. Adding or reducing licensed beds, relocating services to a new site, or converting one type of bed to another (acute care to psychiatric, for example) typically triggers review.
- Capital expenditures above a threshold. Construction, renovation, or other capital projects are reviewed once their cost crosses a state-set dollar amount. Thresholds run from roughly $1 million in Alaska and Montana to $15 million for non-hospital facilities in Virginia, with many states landing in the $2 million to $10 million range.
- Major medical equipment. Buying or leasing expensive diagnostic or therapeutic equipment such as MRI machines, CT scanners, or linear accelerators requires review when the cost exceeds the state’s equipment threshold. Massachusetts sets that threshold at $250,000; other states set it several million dollars higher.
Introducing a new clinical service such as open-heart surgery, organ transplantation, or a cardiac catheterization program is another common trigger, even when the capital cost falls below the state’s dollar threshold. The state wants to control the service itself, not just the spending.
Common Exemptions
Not every healthcare project requires a full CON application. Most states carve out exemptions for projects that don’t meaningfully add capacity or change the competitive picture. Frequent exemptions cover replacing existing equipment with the same or similar technology, correcting building or fire code violations, upgrading facilities to meet accreditation standards, and spending solely for research purposes.
What Goes Into a CON Application
Assembling the application is often the most expensive and time-consuming part of the process. Expect to provide:
- Detailed cost estimates for construction or equipment, revenue forecasts for the first several years, and evidence that the project is financially viable without unsustainable pricing.
- Community need analysis with demographic data, utilization rates for existing services in the area, population growth projections, and evidence that current providers cannot adequately serve the target population.
- Architectural plans or at least conceptual designs, evidence of site control through ownership or a binding lease, and details showing the facility will meet applicable building and safety codes.
- A staffing plan showing the number and qualifications of personnel needed to operate the service, along with evidence that the applicant can recruit and retain those staff.
- An impact assessment analyzing how the project will affect existing providers, including whether it will draw patients away from facilities that are already underutilized.
Incomplete applications get sent back. In competitive markets, a weak application also hands ammunition to rivals who will argue against it during public comment. Healthcare consultants who specialize in CON work are a near-universal part of any serious application.
How the Review Process Works
The process typically starts with a Letter of Intent filed with the state agency, signaling that a formal application is coming. Filing fees vary by state and project type, running from a few thousand dollars for small projects to tens of thousands for hospital applications. Agency staff review the submitted application for completeness and request additional information if anything is missing.
Once the application is deemed complete, the agency publishes public notice, often in a local newspaper or the state register, and opens a public comment period. Public hearings are common, and this is where competing providers weigh in. A nearby hospital that believes the proposed project will siphon its patients has standing to object, and those objections carry real weight with reviewers.
About two-thirds of CON programs use some form of batching, grouping similar applications and reviewing them together on a set schedule rather than first-come, first-served. When multiple applicants want to provide the same service in the same area, the agency runs a comparative review, scoring each application against the review criteria and approving the strongest one, or sometimes none.
Most states aim to decide within 90 to 150 days of deeming an application complete. Contested applications, meaning those with competing applicants or significant public opposition, take considerably longer. Some states offer expedited tracks for smaller projects or projects that don’t generate opposition.
What Reviewers Look For
The review criteria differ from state to state, but the core questions are remarkably consistent.
- Community need. This is the threshold question. The applicant must show that existing services are inadequate, inaccessible, or insufficient to meet current or projected demand. Low utilization at existing facilities makes this harder; long wait times or patients traveling long distances for care make it easier.
- Consistency with the State Health Plan. The project has to align with the benchmarks and priorities in the state’s planning document. If the plan says a region already has enough hospital beds, adding more is an uphill fight.
- Financial feasibility. The agency wants the project to be economically viable without destabilizing existing providers. A new surgery center that would push an existing hospital into the red raises serious concerns.
- Quality of care. The applicant must show it can deliver high-quality services, with adequate staffing, appropriate credentials, and quality improvement systems.
- Access for underserved populations. Many states evaluate the applicant’s track record of serving Medicare and Medicaid patients and its commitment to caring for low-income and uninsured populations.
- Alternatives considered. Some states require applicants to show that less costly alternatives, such as sharing arrangements with existing providers or renovating instead of building new, were considered and found impractical.
Community need and financial feasibility are where most applications succeed or fail. Strong demographic data showing population growth and underserved demand puts an applicant in a fundamentally different position than one trying to enter a market where existing providers have empty beds.
After Approval: Deadlines, Transfers, and Amendments
Getting the CON is not the finish line. Every approval includes an implementation deadline, typically requiring the applicant to complete construction or begin operating within a set number of years. If the project stalls or the deadline passes, the CON can be automatically terminated, and the provider has to start over.
Approvals attach to the project, not the applicant. Before the project is fully operational, most states prohibit transferring, assigning, or selling the CON to another entity unless the buyer is under common ownership or control. Once the facility is built and licensed, the CON generally vests in the facility itself and survives future changes in ownership, though the new owner must notify the state agency of the change.
If the project changes significantly from what the application described, whether through a major cost increase, a change in scope, or a different location, an amendment to the original CON is usually required. Some amendments trigger their own mini-review, adding months to the timeline.
Penalties for Operating Without a CON
Running a regulated healthcare service or facility without required CON approval carries serious consequences. State agencies can issue cease-and-desist orders that halt construction or shut down an operating service. They can deny, suspend, or revoke the facility’s operating license. Noncompliant providers also risk losing eligibility for state Medicaid programs, which for most healthcare facilities would be financially devastating.
Many states also impose civil fines. Some levy daily fines for continuing violations; others impose lump-sum penalties that can reach into the millions of dollars in egregious cases. Beyond the direct penalties, operating without a CON tends to poison the relationship with the state agency, making future applications from the same provider significantly harder to get approved.
States don’t station inspectors at construction sites. Violations typically come to light through complaints from competing providers, licensing inspections, or Medicaid enrollment audits. Competitors have strong financial reasons to report unapproved activity, which makes self-policing more effective than it might sound.
If Your Application Is Denied
A denied CON application is not necessarily the end of the road. Most states provide a formal appeal mechanism. The typical path starts with requesting an administrative rehearing before the same agency, where the applicant can present additional evidence or challenge the factual basis of the denial. If that fails, the applicant can usually appeal to an independent administrative law judge or review board, and ultimately to the state court system for judicial review.
Success rates on rehearing are not encouraging. Agencies tend to stand by their original decisions, and applicants who receive a denial are often better served by addressing the specific deficiencies the agency identified and resubmitting a new application rather than litigating the old one. Appeals are worth pursuing, though, when the denial rested on a factual error or a misapplication of the review criteria, because courts will overturn agency decisions that lack a reasonable basis in the record.