The Trump administration is offering states a stronger chance of securing part of a 50 billion-dollar rural healthcare fund if they weaken or abolish laws controlling the construction and expansion of hospitals.
The five-year Rural Health Transformation Programme includes policy conditions that favour states prepared to revisit so-called certificate of need laws, under which healthcare providers must demonstrate a community need before opening new facilities or offering certain services.
Six states – Alaska, Connecticut, Delaware, Iowa, Mississippi and Tennessee – indicated in their applications that they would consider changing the rules. Tennessee has already taken the most substantial action, with lawmakers voting to dismantle most of its remaining restrictions over the next four years.
The programme was created under President Donald Trump’s One Big Beautiful Bill Act and is intended to modernise healthcare in remote areas. Federal guidance described certificate of need requirements as an added cost and burden for rural facilities, while giving higher scores to applications from states with fewer such rules.
More than 30 states, as well as Washington DC, retain some form of certificate of need legislation. Supporters say the laws can prevent hospitals from competing only in the most profitable areas and help protect existing services. Critics argue that they have increased costs, delayed new facilities and restricted access to medical technology.
States weigh funding against healthcare safeguards
Maureen Hensley-Quinn, a researcher at the National Academy for State Health Policy, said using federal money to encourage state policy changes was not unprecedented. She pointed to performance bonuses introduced during Barack Obama’s presidency for states that made it easier for children to enrol in federally funded health insurance.
She said the funding offered states an opportunity to examine whether certificate of need laws were effective, but warned that additional federal finance could influence decisions during periods of tight budgets.
South Carolina has already voted to end most of its certificate of need requirements, with applications for new hospital construction or expansion due to be dropped in January. The rules will remain for nursing homes.
In North Carolina, a hospital project that had secured approval was held up in a legal dispute for three years before construction began in 2026, illustrating the delays critics associate with the system.
Hensley-Quinn also warned that abolishing the laws could make it harder for state officials to monitor who owns hospitals and how healthcare organisations are managed. She said officials in states that had repealed the rules later found they had less information about the financial condition of providers and transactions involving private equity.
Tennessee becomes a test case
Tennessee lawmakers had debated changes for years, but passed a sweeping measure after the state faced the prospect of losing out on federal funding. Every state is due to receive an equal share of half the programme’s grants, while the remaining 25 billion dollars depends partly on policy commitments.
The state’s hospital association previously opposed repeal, warning that it could harm vulnerable patients by increasing costs and weakening staffing at existing hospitals. Martin Chaney, chief executive of Maury Regional Health, said providers could concentrate on profitable communities, leaving rural areas with fewer services.
“The premise that eliminating CON regulations will expand health care opportunities by increasing competition is not true for ALL Tennesseans,” Mr Chaney wrote. “Instead, it would result in cherry-picking and increasing the gap in access to medical care in rural areas.”
His concerns intensified after TriStar Health, owned by HCA Healthcare, applied to build a hospital around 20 minutes north of Maury Regional Medical Centre. The proposal was approved despite brief opposition from Maury Regional Health.
Some local officials have welcomed the prospect of greater choice. Maury County commissioner Kevin Markham said competition was beneficial and that patients should be able to decide where they receive hospital care.
Others fear that larger hospital groups will dominate rural markets and draw away lucrative procedures from smaller providers. Judy Herbert, a Williamson County commissioner and board member at Williamson Health, said the changes could lead to hospital closures as independent non-profit organisations came under greater financial pressure.
Williamson Health’s board later approved the sale of its clinics, diagnostic centres and more than 330-bed hospital to Ascension St Thomas in a 900 million-dollar deal.
