Tennessee Legislature Continues Its Piece By Piece Unwinding Of Hospital Certificate Of Need Law

Image Credit: John Partipilo/Tennessee Lookout

***Note from The Tennessee Conservative – this article posted here for informational purposes only.***

By Adam Friedman [Tennessee Lookout -CC BY-NC-ND 4.0] –

Tennessee lawmakers passed their second bill in three years to unwind part of the state’s hospital competition law, this time removing restrictions related to hospitals designed for short-term care. 

Starting in July 2028, new acute care hospitals will no longer be required to go before the state’s healthcare facility commission to receive a certificate of need, CON, before opening. 

The move follows a multi-year effort to remove aspects of Tennessee’s CON law, which required healthcare providers to show community need before establishing or expanding certain healthcare services. Lawmakers first reformed the CON law in 2016, and in 2024, a working group released a report on its impact and recommendations for new areas to repeal. 

The CON law has helped nonprofit hospitals by allowing limited competition, so they can use revenue from high-demand services like heart and knee surgeries to subsidize the cost of mandatory charity care, often at their emergency rooms. The Tennessee Hospital Association has been the chief advocate for maintaining CON restrictions. 

Opponents of the law have claimed it restricts competition and therefore reduces access to healthcare. HCA Healthcare and the dark-money Center for Individual Freedom advocated for the complete repeal of the certificate-of-need program in 2024. The Center for Individual Freedom, a 501(c)(4) organization,  is legally able to keep its donors anonymous.

Tennessee enacted a partial CON reform law in 2024, removing restrictions on satellite emergency rooms in counties with existing hospitals. The law also made it easier to open a hospital in rural counties where none already existed.

This year’s effort was boosted by a demand from President Donald Trump’s administration, tying the repeal of the state’s CON law to receiving a portion of Tennessee’s $1 billion rural health transformation grant. 

Federal lawmakers created the rural health program after enacting almost $800 billion in Medicaid cuts as part of the One Big Beautiful Bill, according to the Congressional Budget Office.

Over the past 10-15 years, Tennessee has seen at least 14 of its rural hospitals close, and many others have reduced services. Tennessee is also one of 10 states that haven’t expanded Medicaid under the Affordable Care Act, which policy experts say has contributed to Tennessee’s rural hospital closures.

The CON bill passed with bipartisan votes in the state House, 84-11, and the state Senate, 28-1.