Certificate of Need (CON)

A Certificate of Need is a regulatory approval required in many states before a healthcare facility can be established, expanded, or relocated, or before major equipment is added. The purpose is to control healthcare costs and avoid duplication of services by requiring providers to demonstrate a genuine community need. CON laws vary widely by state — some have extensive programs, others have repealed them entirely. Illinois maintains an active CON program administered by the Health Facilities and Services Review Board, which affects hospitals, ambulatory surgical centers, and certain other facilities. For real estate planning, the CON process has real consequences: it can add months to a timeline and its outcome is not guaranteed, so a provider should confirm CON requirements before committing to a site or signing a lease. Building CON approval into the transaction — as a contingency or a milestone — protects a practice from committing to space it cannot yet legally use.

In states with CON laws, regulatory approval can gate whether a facility can open at all. Confirming requirements before signing prevents committing to real estate that cannot be used as intended.

A surgical group planning an ambulatory surgery center in Illinois must obtain a Certificate of Need before construction. The group makes its lease contingent on CON approval, avoiding commitment to a space it could not legally operate without it.