In recent weeks, Alabama’s laws impacting the health care market were proven to be onerous and costly for taxpayers. It was reported that the Hoover Health Care Authority spent over $1 million in legal fees to fight back against a competitor opposing Hoover’s bid to open a new ambulatory surgery and medical diagnostic center. The day after the exorbitant legal fees were revealed to the public, Hoover was awarded their certificate of need (CON) and given permission to begin development.
In a 2024 report published by the Commonwealth Fund, Alabama consistently ranked in the bottom quartile for health care quality and outcomes. Alabamians need health care, so why did Hoover need to spend $1 million to find that out? For that, the state’s CON law can be blamed.
A CON is essentially a government-mandated permission slip that providers must obtain before opening health care facilities and caring for patients. Thirty-five states have CON laws on their books, but a growing number are reforming and repealing their programs. In the last several years, Georgia, Tennessee, and Florida passed significant reforms to their respective CON programs to encourage health care innovation in their states. South Carolina went so far as to repeal its CON law entirely.
It is estimated that in the absence of a CON program, Alabama would have more than 178 hospitals compared to the current 126. Patients would also expect to save over $200 a year in total health care spending if CON were no more. The research shows that CON laws make health care scarcer and more expensive, and many state legislatures are finally coming to their senses and getting rid of these outdated barriers to care.
Unfortunately, Hoover’s case isn’t unique. Alabama requires CONs for 47 types of health care facilities and services, covering a vast range of medical services from complex open heart surgery to simply adding more beds to a hospital.
For the application alone, providers can expect to pay anywhere from $3,500 to $12,000, with the maximum fee for a CON capped at a sizable $25,276. But there is no telling just how much they will be spending in legal fees when incumbent providers inevitably challenge any threat to their health care monopoly. For the people of Hoover, it was over $1 million.
The CON system heavily favors large health care providers that are already established in the market. Incumbent providers have a so-called “competitor’s veto” that allows them to challenge CON applications and tie up the applicants in costly litigation until they inevitably withdraw from the process or their application is denied.
And that is exactly what happened to Hoover and so many other applicants in Alabama. Hoover’s CON case included months of hearings, 10 days in court, 2,593 pages of testimony, 42 witnesses, and salacious allegations of blackmail. The long legal battle became so expensive that the Hoover city council had to amend their budget multiple times to cover the rising costs. Taxpayers are now rightfully concerned that these city expenses will come out of their pockets.
But after 10 months, the Alabama Certificate of Need Board eventually unanimously approved Hoover’s CON application. In a recently released statement, Hoover city officials claimed that the fierce opposition they received from their competitor was “unwarranted and politically motivated.”
It’s never been clearer — Alabama’s CON program wastes taxpayer money while holding much-needed health care investment hostage for the monetary advantage of entrenched business interests. When the Alabama Legislature reconvenes at the beginning of February, Alabamians need to keep this question at top of mind: Is our state’s health care market any better off after taxpayers were left with a $1 million legal bill?
Adam Thompson is the State Director of Americans for Prosperity-Alabama and Sofia Hamilton is a Policy Analyst for Americans for Prosperity.
