Rural health dollars: Trump dangles funding to push states to change hospital laws

Funding tied to hospital rules

Certificate of need laws require healthcare providers to show a community needs a proposed service. They were designed to limit monopolies and rising costs, but opponents say they can raise prices, delay facilities and keep rural patients from accessing new technology.

More than 30 states and Washington, D.C., have some form of these laws, according to the National Conference of State Legislatures. The Rural Health Transformation Program, created under President Trump’s One Big Beautiful Bill Act, is intended to modernize healthcare in remote areas.

In guidance for states seeking program funding, the Centers for Medicare & Medicaid Services described the rules as a burden on rural facilities. Its scoring system gives higher marks to states with fewer certificate of need requirements.

States weigh the trade-offs

Hensley-Quinn said added federal financing can influence state decisions, especially when budgets are tight, but urged officials to weigh the costs of adopting a voluntary federal policy. South Carolina Republican state senator Wes Climer backed repeal there in 2021, saying agreement between Obama and Trump suggested the idea had merit.

South Carolina lawmakers voted in 2023 to end most of the state’s rules. In January, applications will no longer be required for new hospital construction or expansion; the requirement will remain for nursing homes.

Concerns over oversight and access

Hensley-Quinn warned that repeal can reduce records that help states monitor hospital ownership. She said officials in states that have removed the rules later reported limited insight into the finances and management of health systems and facilities, even when licensing remained in place.

Certificate of need applications require companies seeking to enter a state to provide extensive information. After repeal, fewer regulations may require transparency, leaving states less aware of arrangements such as health systems contracting with private equity firms to provide hospital services.

In Tennessee, hospital association leaders opposed a repeal effort in 2024, but the more limited legislation passed. Chaney argued that ending the rules would not expand opportunities for all residents and could widen rural access gaps; Williamson Health board member Judy Herbert warned that smaller hospitals could lose money, close or sell as larger systems dominate.

Williamson Health’s board voted in late July to sell its clinics, diagnostic centers and a hospital with more than 330 beds to Ascension St. Thomas in a $900 million deal. The article does not say the sale resulted from changes to certificate of need laws.