Anderson Economic Group Work

The Effects of New Hospital Facilities on Health Costs in Michigan

In 2014, Michigan policymakers discussed the state’s Certificate of Need (CON) system for construction of new hospital facilities. One of the primary justifications for this state-level regulation is that hospitals are extremely expensive, long-lived institutions that have long-term effects on both quality and cost of health care in Michigan. While recent developments, such as the implementation of the Affordable Care Act (ACA) affect the entire health care sector, the debate over the use of a CON system to balance capacity and costs remains relevant.

The purpose of this report is to analyze the effects of the construction of new hospital facilities on health care costs, and the implied effect on employment, in the surrounding area.

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