There was a recent article in a North Carolina newspaper about a local surgeon, Dr. Gajendra Singh, who wanted to offer transparently priced, low-cost services to assist patients that are candidates for general or laparoscopic surgeries.

What was fascinating about the article wasn’t that the surgeon was still practicing independently (which seems very rare these days), or that he posts the cost of an x-ray on his front door (which is also rare, and admirable). The intriguing part was that he wanted to purchase an MRI machine and the State of North Carolina wouldn’t permit it.

The reason for this is the state’s Certificate of Need (CON) laws. You may be aware of such legislation that exist in your own state. As the article describes, “providers have to demonstrate annually that there is a need for such machines and tests in a particular area” to “spread out the availability for such services.”

While laws like this may have once seemed well intentioned, are guidelines like this now creating a barrier to healthy competition? When first conceived, CON laws were put in place as a deterrent to medical arms races between hospitals and health systems intent on making duplicate purchases of the newest, most expensive technology and passing the cost on to patients.

But how has that worked out? We have what many consider a bloated healthcare system continuing to grow at an unbridled pace. As we’ve discussed in the past, hospitals now control the pricing for consumers and the discounts passed to employers. While recently proposed federal legislation requiring providers to post their prices may make it easier for consumers to shop around for services, it’s possible hurdles like CON laws may still restrict real competition and keep prices artificially high.

Are we effectively managing supply and demand or are we stifling the ability of individuals like Dr. Singh and other entrepreneurial organizations outside the major health systems to offer lower cost options to healthcare consumers?