If there’s no state regulation, could Mebane end up with two hospitals?
State senator Amy Galey, a Republican who represents Alamance County and portions of Randolph County, recently filed a bill with two other Republican sponsors to repeal the state’s Certificate of Need (CON) law that requires healthcare providers to get state regulators’ approval before expanding or building new facilities.
A provision in the state budget proposal that the senate voted 31-16 to pass last week also contains a provision that would repeal the state CON law. Passed by the General Assembly in 1978, the law requires healthcare providers to obtain a Certificate of Need from the North Carolina Department of Health and Human Services (DHHS) before acquiring certain medical equipment and/or expanding their facilities.
A companion bill was also filed in the state house in March, seeking to repeal the CON law; that bill was referred to the house rules committee.
Cone Health and Duke University Hospital System (in partnership with Novant Health) are at loggerheads over which healthcare provider will be allowed to open a 46-bed hospital in Mebane, which would be the city’s first full-service hospital (see related stories, this edition).
The CON law was intended to control health care costs by restricting “the unnecessary duplication of existing or approved health care services,” according to DHHS. The law currently applies to all new hospitals, nursing homes, adult care homes, kidney disease treatment centers, intermediate care facilities for individuals with intellectual disabilities, home health agencies, rehabilitation facilities, diagnostic facilities, hospices, and outpatient surgery facilities, according to the state health department.
The CON law requires healthcare providers seeking to expand or build new facilities to show that their proposal would meet needs determined by the annual State Medical Facilities Plan developed by DHHS. The latest State Medical Facilities Plan, which took effect on January 1, 2025, shows that Alamance County would have a deficit of 46 hospital beds by 2027.
Republican state senators Brent Jackson, Ralph Hise, and Michael V. Lee, who chair the appropriations/base budget committee, issued a news release last week, praising the provision that “repeals the state’s archaic certificate of need laws that drive up costs for patients by stifling competition.”
Repeal of the CON law would result in a reduction of $4.5 million in state funding over both years of the 2025-27 biennial budget.
Approximately $1.5 million in state funding and 10 positions would be eliminated in 2025-26; and just under $3 million in state funding and 20 positions would be eliminated for the 2026-27 fiscal year, according to a separate report that the appropriations/base budget committee released last week. The Statewide Health Planning Section within the Division of Health Services Regulation, which oversees the CON application process, would be dissolved, effective January 1, 2026, the report states.
Nearly two dozen similar bills, aiming to repeal all or part of the CON law, have been filed since 2015, according to the legislative reporting service within the School of Government at UNC.
The CON law has also been the target of several legal challenges that have reached the state’s highest courts.
In 1973, the state Supreme Court ruled that an earlier version of the CON law was unconstitutional, on grounds that it violated monopolies clauses codified in the state Constitution, according to a November 2024 analysis by the law school at the University of California at San Francisco.
In October 2024, the N.C. Supreme Court remanded a constitutional challenge to the CON law filed in 2020 by an ophthalmologist in New Bern, Dr. Jay Singleton. Singleton claimed that the law prevented him from adding a surgical facility at his practice, instead forcing him to perform surgeries at Carolina East hospital in New Bern.
The fees to use the hospital’s surgery facilities were three times what a typical surgery would cost if Singleton had been allowed to build a surgical facility at his practice, ultimately driving up his patients’ costs, multiple news outlets have reported. Singleton’s case was reopened on March 31, 2025 and currently remains pending in Wake County superior court, according to the state’s online (eCourts) filing system.
Subsequent federal legislation required states to adopt a CON law in order to be eligible for Medicare and Medicaid reimbursements but was repealed by Congress in 1986, according to a November 2024 analysis by the N.C. Chamber of Commerce, which didn’t explicitly outline its position on the CON law.
The N.C. Healthcare Association (NCHA), which represents hospitals, health systems, and other providers, supports the CON law, according to its 2024 legislative brief. The organization claims that other states that have repealed their CON laws have experienced diminished access to healthcare, particularly for rural and underserved patients. The NCHA also claims that repeal “will likely raise healthcare costs” in the state. “States with strong CON programs, including North Carolina, have lower hospital prices” than states without one, pointing to “net prices for inpatient discharges” that are $1,000 less than the median price for states without such laws.
The NCHA also contends that the CON program has helped the state to build a strong healthcare industry that supports more than 500,000 jobs and more than $40 billion in state gross domestic product. (The legislative brief doesn’t indicate whether the $40 billion state GDP is annual.)
Meanwhile, opponents – such as the John Locke Foundation, a conservative public policy organization in Raleigh – contend the CON law has the opposite effect of what was intended. The opponents instead believe that the state’s CON law creates barriers to competition that would lower costs and ultimately improve healthcare quality. (The John Locke Foundation also filed a friend-of-the court brief in the original suit that Singleton, the eye surgeon in New Bern, originally filed in Wake County superior court.)
It is now up to state house to develop its own budget proposal; whether the repeal of the CON law remains intact is unlikely to be known until the General Assembly passes a final budget bill.
