Ordinarily, if you want to start a new business or offer a new service there is a simple test to find out whether your new business is needed: You open the doors and tell the world. If people need your business, you will have customers. If they don’t, you won’t. That experience—of learning what people need and how new types of services can fit in—is familiar to anyone who has ever been an entrepreneur. Indeed, it is familiar to anyone who has ever been a customer.
It is also an experience that the state of Virginia turns entirely on its head for people who want to offer new healthcare services. If you want to offer new healthcare services, even something as routine as opening a private clinic, you have to obtain special permission from the state government. And permission is not easy to come by: Would-be service providers have to persuade state officials that their new service is “necessary”—and they have to do so in a process that verges on full-blown litigation in which existing businesses (their would-be competitors) are allowed to oppose them. Not surprisingly, this process can be incredibly expensive, and it frequently results in new services being forbidden to operate at all.
To be clear, this requirement (called a certificate-of-need or CON program) has nothing to do with public health or safety. Separate state and federal laws govern who is allowed to practice medicine and what kind of medical procedures are or are not permitted. Virginia’s CON program only regulates whether someone is allowed to open a new office or purchase new equipment; it is explicitly designed to make sure new services are not allowed to take customers away from established healthcare services.
In short, Virginia’s CON program is nothing but a government permission slip to compete. It ensures that more money flows into the pockets of established, politically connected businesses, and it accomplishes this by trampling entrepreneurs’ economic liberty and reducing Virginians’ choices for medical care.
But patients and doctors—not state officials—are in the best position to decide what healthcare services are needed. That is why Colon Health Centers of America, headed by Dr. Mark Baumel, MD, and Washington Imaging Associates Maryland, LLC, headed by Dr. Mark Monteferrante, MD, have joined forces with the Institute for Justice to challenge Virginia’s protectionist CON program. The Constitution protects individuals’ right to earn an honest living free from unreasonable government interference, and it prevents states from putting up unnecessary barriers to interstate commerce. The Virginia CON program does both, and that is why the federal courts should strike it down.