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State blocks doctor from offering low-cost MRIs

Written by Diane Archer

Could it be possible that a state would block a doctor from offering low-cost MRIs? Dylan Scott reports for Vox that North Carolina is doing just that to Dr. Gajendra Singh. The state law effectively gives hospitals a monopoly over MRIs and other services.

Dr. Singh opened a clinic at which he tried to offer MRIs for as low as $500. But, a state “certificate of need” law keeps Dr. Singh from buying an MRI machine. He needs a government permit to do so, and he cannot get one. Presumably, North Carolina believes that the hospitals in Dr. Singh’s area already meet the community’s need under the state’s certificate of need law. But, as a result of this law, the hospitals have no meaningful competition, and they charge high prices for their MRIs.

The certificate of need law permits hospitals to sue any business that applies for a permit to buy an MRI, essentially contesting the need for another business to buy this medical equipment. The legal defense process for the new business is so costly and lengthy that it is generally not worth it for the business to try to buy the medical equipment. The certificate of need law undermines competition and is not working as intended–to deter unnecessary medical investments.

North Carolina is far from the only state with a certificate of need law. At one point all but one state had such a law. And, today, 35  states still have them.

Because of a loophole in North Carolina’s law, Dr. Singh is allowed to rent an MRI machine. But, that costs him more to operate than buying the machine. And, the state only allows him to use it two days a week.

Dr. Singh has sued to overturn the North Carolina certificate of need law on the ground that it is anti-competitive and blocks the establishment of new businesses.

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