The research finds that regulatory requirements delay the expansion of services, restrict competition, and hinder the health-care system’s ability to respond to the population’s needs.
The Institute for Economic Liberty (ILE) and Pacific Legal Foundation published the report How Certificates of Need and Convenience Limit Health-Care Investment and Access in Puerto Rico, which finds that the Certificate of Need requirements delay the expansion of services, restrict competition, and hinder the health-care system’s ability to respond to the population’s needs. (Shutterstock)
The Institute for Economic Liberty (ILE) and Pacific Legal Foundation published the report How Certificates of Need and Convenience Limit Health-Care Investment and Access in Puerto Rico, a study by Dr. Ángel Carrión-Tavárez and Jaimie Cavanaugh that examines Puerto Rico’s Certificate of Need and Convenience law and its implications for investment, competition, and the availability of health-care services on the Island.
Puerto Rico’s Certificate of Need and Convenience (CNC) regulatory framework requires prior government authorization for a wide range of activities related to the provision of health-care services. The research identified 80 types of actions that require authorization or intervention by the Department of Health, ranging from establishing a new health-care facility or expanding services to acquiring specialized medical equipment and relocating operations.
The authors argue that these restrictions should be evaluated considering the characteristics and challenges currently facing Puerto Rico’s health-care system. For example, although health-insurance coverage reaches approximately 94 percent of the Island’s population, health-care spending amounts to approximately $5,400 per person, considerably less than the approximately $15,400 spent per person in the United States.
Similarly, recent studies cited in the report indicate that between 365 and 500 physicians left Puerto Rico each year during the past decade. In addition, 69 percent of physicians are concentrated in just 10 metropolitan areas, while more than 28 percent of active physicians are over the age of 60, and more than 40 percent of specialists are projected to have reached or exceeded retirement age by 2027.
Specific data on health professional shortage areas demonstrate that Puerto Rico’s access problem extends beyond physicians. In fiscal year 2024, the federal Health Resources and Services Administration identified 42 primary-care shortage areas, 99 dental-health shortage areas, and 75 mental-health shortage areas in Puerto Rico.
“Puerto Rico faces shortages of health-care professionals and services, and needs to attract investment, expand system capacity, and improve access for its population. In that context, we must ask whether it makes sense to maintain regulatory barriers that can delay or discourage the entry of qualified new providers or the expansion of existing services,” said Dr. Ángel Carrión-Tavárez, ILE’s Director of Research and Policy.
The study also examines the effects of certificate-of-need laws in the United States. Taken together, more than 128 studies reporting more than 450 empirical tests find that these regulations are associated with higher health-care costs, reduced access to services, and mixed or adverse effects on quality. The literature identifies these laws as entry barriers that protect incumbent providers from new competitors.
The report also highlights a trend toward reconsidering this regulatory model in the United States over the past several decades. To date, 12 states have completely repealed their certificate-of-need programs or allowed them to expire, while at least 12 other states have narrowed the scope of their requirements or reformed their review processes.
“This report reveals it is time for Puerto Rico to reform or repeal its certificate of need laws. They are reducing access to care, increasing health-care costs, and decreasing health-care quality. This isn’t hypothetical. It’s a matter of life and death,” said Jaimie Cavanaugh, senior state policy counsel at Pacific Legal Foundation.
“The data on CON laws is clear. Study after study and test after test show that CON laws harm patients by decreasing access to care and increasing health-care costs. Patients deserve more options for health-care and antiquated laws that limit competition in health care benefit only incumbent providers at the expense of everyday Puerto Ricans,” Cavanaugh added.
The report recommends a substantial transformation of Puerto Rico’s Certificate of Need and Convenience regulatory framework. “Puerto Rico should move from a model of discretionary restrictions on entry toward a modern oversight framework that protects patient safety, service quality, fraud prevention, and transparency without unnecessarily obstructing investment, innovation, and competition,” Carrión-Tavárez concluded.
Contact
Dr. Ángel Carrión-Tavárez | carriona@ilepr.org • 787.478.1000
About the Puerto Rico Institute for Economic Liberty
The Institute for Economic Liberty (ILE) is a 501(c)(3) non-profit, non-partisan, non-governmental organization created with a genuine desire to ensure that everyone on the Island has equal opportunities to reach their full potential and build their own success. We believe that effort and merit should be rewarded, and that prosperity should be driven by people’s creativity, entrepreneurship, and innovation. We envision a Puerto Rico where everyone is empowered to achieve their goals and thrive in a free and open society. You can learn more about ILE at institutodelibertadeconomica.org, and follow us on Facebook and Instagram @ilepuertorico.
