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Florida just repealed most of its CON law. Here's how to thrive amid increased ambulatory competition.

July 25, 2019

    Just last month, Florida approved a law to repeal significant portions of its long-standing certificate of need (CON) program. This law will eliminate the CON requirement for general hospitals, complex medical rehabilitation beds, and tertiary hospital services starting July 1, 2019, removing major regulatory barriers to commencing or expanding many health care services in Florida.

    Access the quick-hit strategy guide to services shifting to ASCs

    In states that have repealed or reformed CON laws, markets—particularly urban—have historically experienced an influx of ambulatory surgical centers (ASCs) shortly thereafter. For example, Ohio phased out most of its CON laws in 1998, and within three years, 133 new ASCs opened, along with dozens of radiology centers and added hospital beds. This increased competition can pose significant risk to your hospital volumes.

    How to respond

    Hospitals or health systems in markets that have repealed CON laws, like Florida, or that have bills working their way through the legislative process, such as North Carolina and Tennessee, must think about expanding their ambulatory presence. Expansion can prevent losing volumes to freestanding providers who are more prepared to appeal to payers and to capture patients. Here's what to consider:

    1. Ensure that supply is set to meet market demand

      Many ASCs end up closing in markets that see a massive proliferation in ambulatory facilities post-CON law repeals, as demand is often insufficient to meet new supply. As a result, planners must determine if their markets need additional ambulatory providers to support the market's population. Consult our Market Scenario Planner to estimate the demand for ambulatory procedures in your market, such as ASC-eligible gastroenterology and ophthalmology cases, and customize estimates for varied factors, such as market specific demographics and disease prevalence.

      Use our Market Scenario Planner

    2. Identify services rapidly shifting to ASCs

      Hone in on the top ASC service opportunities in your market. If you're unsure of which services to build out, our ASC Services Outlook Primer outlines specialties that are growing, and new services emerging in the ASC setting. National ASC volume drivers have included orthopedics, gastroenterology, and ophthalmology.

      Download the Primer

    3. Consider a joint-venture ASC

      A joint venture (JV) ASC can be an avenue to keep volumes within a health system while avoiding the burden of new ASC construction. A JV can also help retain some of the revenue associated with procedures performed in the ASC. To succeed, incentivize ASC vendors in CON states with access to additional financial and administrative resources, as well as reduced competition for referrals with employed groups.

    In response to CON law repeals and reforms, it's important that health systems monitor competition for other ambulatory-located services too, such as radiology and post-acute care. This is especially true for freestanding EDs (FSEDs). In Texas, where they have removed CON laws around FSEDs, Independent Freestanding Emergency Centers (IFECs) grew from zero in 2010 to 156 in 2015.

    If you are in a market with CON laws or other restrictions on ambulatory site construction, you can prepare for a possible repeal or reform in the future by scenario planning now—and by joining us in monitoring what happens in Florida as limitations are removed.


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