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by riahi 776 days ago
I’ll actually push back against this narrative.

A large problem is that people are coming out with insurmountable debt burdens from professional school and are simply unable to balance that and the start up costs of a new practice.

Combine that with states having adopted certificate of need requirements since the late 1980s, it is literally illegal for some doctors to even try to open their own practice.

In my state, I legally cannot open a radiology imaging center without spending thousands of dollars on a petition to the department of community health begging “please approve my imaging center” which then is posted publicly on a tracker website where in-house counsel for every single health system / competitor can sue to block you from ever opening.

They can also sue to block you from upgrading your equipment when it’s long out of date.

It’s untenable. While I agree there are many problems with poor financial savvy amongst highly trained professionals, I also realize that the average debt burden is over 250k and practice start up costs are not getting cheaper.

A PET or MR or CT could easily cost 500k-1million alone, without including real estate costs, building/renovation costs, or bribes/legal fees battling for the right to open your doors.

1 comments

True, but even in states with certificate-of-need laws those only apply to certain types of facilities. A new physician doesn't need a certificate to open a regular medical office.
For a pure cognitive specialty, sure. But watch out if they want to do any procedures outside of a hospital. The capital / regulatory heavy specialties are getting PE-roll-upped and that’s the same story as Veterinarians.

The new world is that we are becoming bound to hospitals / private equity in a way akin to sharecroppers on a plantation, mostly because of regulatory uncertainty which requires tremendous capital to overcome.

Some states are making it easier for surgeons to open surgicenters, but those are still very tightly regulated. Same with freestanding ERs, birthing centers, radiation therapy treatment centers, or freestanding imaging centers. Even if I wanted to raise the capital myself, the regulatory uncertainty makes the playing ground so unfair that it is functionally impossible without bringing in PE money to fund the legal fight for approval.

——— I trawled the approvals this year in my state.

Hospital joint venture with PE-backed imaging chain gets approval to open new freestanding imaging centers. They have the funds to fight back against the other systems’ legal challenges.

Radiologist owned 20 year old magnet who literally charges cash price of $499 (compared to above hospital planning to charge $1911 vs $6000 in hospital) was denied permission to upgrade to a newer magnet.

Physician practice request to buy a PETCT blocked by a competing hospital for 2 years of litigation, now referred to state Supreme Court…

——————- It doesn’t make sense that I can open a medispa and offer laser dermabrasion and other cosmetic services easier than I can open an imaging center. My options are join a hospital or join PE (rad partners or USRS).

Honestly I should move.

What’s the justification for such laws requiring permission for technical upgrades? Looks purely anti-competitive from my non-US view.
Certificate of Need laws are absolutely anti-competitive. The Wikipedia article has a pretty good summary.

https://en.wikipedia.org/wiki/Certificate_of_need?wprov=sfla...