On Wednesday June 26, 2013, South Carolina lawmakers enacted reform by sustaining Governor Nicky Haley’s veto of funding for the state’s Department of Health and Environmental Control’s (SCDHEC) Certificate of Need (CON) program. The reform will have a huge effect on the state’s community of health care providers. The CON program imposes regulations on the building and expanding of healthcare facilities, and costs the state approximately $1.7 million each year. As a result of the veto, the CON program in the state will be suspended from July 1, 2013 through June 30, 2014.

According to Governor Haley, cutting the program eliminates the need for restrictive state approvals for new healthcare facilities. The Governor said in a statement, "[t]he certificate-of-need program does three things: restricts access, drives down quality and drives up costs, [and w]e’re for competition, and since taking office, have fought for better health for all South Carolinians—that’s what this is all about." Prior to the veto, South Carolina was one of 36 states with a CON program. The CON programs in Virginia and Washington are currently being challenged in federal appeals courts, and there are efforts in Maine and New Hampshire to eliminate laws which establish similar programs. The CON programs started in 1964 and were operated with federal funding; however, those funds were eliminated in 1987. Since then, 14 states have discontinued their CON programs.

Two days after Governor Haley’s veto, the Director of SCDHEC, Catherine Templeton, suspended the CON program due to the lack of funding. The decision was made despite the fact that 32 CON applications, worth more than $86.4 million, remain pending and awaiting action by the SCDHEC. On Monday, July 1, 2013, SCDHEC officials turned to the state’s Supreme Court by filing a lawsuit challenging whether Governor Haley had legal grounds to suspend the state’s CON program. Whether the state’s high court will hear the case is not certain.

Despite the elimination of funding, SCDHEC will continue to license and inspect healthcare facilities, and state construction and licensing programs were not affected by the veto. "With these protections in place, we do not believe the suspension of the Certificate of Need program presents any threat to the health, safety and welfare of the public," Ms. Templeton wrote in a letter sent last week, shortly after the Governor’s veto. She added that hospitals and other organizations awaiting CON approval could still proceed with breaking ground on new projects. However, there is still confusion with projects that move forward with a CON, as South Carolina lawmakers, not SCDHEC, would be responsible for any enforcement. As pointed out in a statement from the South Carolina Medical Association, "of course, there is a possibility that the General Assembly could come back in January and reinstate the program immediately, requiring even projects that started since the July 1 suspension of the program to stop until CON is approved." The Medical Association is joined by the South Carolina Hospital Association in opposing Haley’s veto, and has threatened a lawsuit.