Hawaii Certificate of Need
An analysis of the state's healthcare regulations and their effects on market competition and patient care.
The Verdict
Hawaii's score reflects a restrictive regulatory environment that stifles competition and limits consumer choice.
Governor
Josh Green
Democrat
Key Stats
- CON Enacted: 1975
- Dominant System: Hawai‘i Pacific Health
- Largest Insurer: HMSA (BCBS)
- Reform Status: Law remains in force
Scope of Regulation
What requires a state permission slip?
Regulated Services
Hawaii's CON law applies to a broad range of healthcare facilities and services, effectively controlling market entry and expansion.
- Hospitals
- Extended-care and rehabilitation centers
- Skilled nursing facilities / Intermediate care facilities
- Hospices
- Kidney dialysis centers
- Outpatient clinics and ambulatory care facilities
- Emergency care centers
- Home health agencies
- Health Maintenance Organizations (HMOs)
The Application Process
The path to approval is lengthy and provides ample opportunity for established players to block new competition.
Market Concentration
Who benefits from the lack of competition?
Dominant Provider
Hawai‘i Pacific Health
Annual Revenue: ~$1.7 Billion
Largest Insurer
HMSA (BCBS)
Market Share: ~60-70%
Market Power
Highly Concentrated
Most communities have only one hospital system.
The Human Cost
Notable disputes and their consequences.
Malulani Hospital Proposal (2006)
A proposal to build a new hospital in Kihei, Maui was denied by the state CON board. The agency cited a failure to prove "public need" and ability to staff the facility, effectively blocking a new competitor from entering the market. This decision left Maui residents with fewer healthcare choices and reinforced the dominance of the existing hospital system.
Reform Status
Has there been any progress?
Reform Progress
Stalled
Despite criticism from free-market advocates, Hawaii's CON law has not been repealed and remains one of the strictest in the nation.
Evidence of Harm
The state's regulatory framework creates a protectionist moat around incumbent providers.
- Blocked Competition: The Malulani Hospital denial is a clear example of CON laws preventing new market entry.
- Entrenched Monopolies: Dominant systems like HPH and HMSA face little competitive pressure, leading to higher costs and less innovation.
- Limited Consumer Choice: In many parts of the state, residents have no alternative to the single, dominant hospital system.
The Rojas Report Take
Hawaii’s Certificate of Need law is a textbook case of regulatory capture, a relic from the 1970s that serves no one but the islands' entrenched healthcare giants. With a CON score of 65, the state maintains a formidable barrier to entry, protecting dominant players like Hawai‘i Pacific Health, with its $1.7 billion in revenue, from the inconvenience of competition. The state insurance market is no better, with HMSA controlling up to 70% of the market.
The denial of the Malulani Hospital on Maui in 2006 wasn't an anomaly; it was the system working as designed. State planners decided there was no "public need," a vague and malleable standard that conveniently aligns with the interests of existing hospitals. The result is a market where most communities have only one hospital system, a de facto monopoly. This isn't about planning; it's about protectionism. Hawaii’s CON regime is a quiet tax on every patient, paid in higher prices and fewer choices.