It’s HHS that can do that not the hospital itself. The intent is to avoid oversupplying an area with hospital services. Because individual demand is inelastic and the government directly pays for half of care (Medicare, Medicaid) adding more supply means increased aggregate healthcare spending. Of course existing firms take advantage of this regulatory process to hobble competition.

This is an emergent problem of third party payment. Normal supply and demand mechanisms are not at play.

It’s not just HHS, it’s typically at the state level where they ask the hospitals — https://reason.com/2020/02/26/these-state-level-health-care-...

I’ve seen first hand hospitals “justify” not letting competitors as local hospitals always give input (they need to pull records). What happens is the hospitals generate projected reports and showing they’d be bankrupt if another hospital is allowed.

Certificates of Need are absolutely not issued without input from current hospitals and facilities in that area.

The group responsible for lobbying for them to be introduced in the first place?

Hospitals.