State slaps down doctor who wants to cut patients' imaging costs

The state of North Carolina has decided to protect the revenue stream for a Winston-Salem hospital by preventing a competitor who planned to offer imaging services at a lower cost from obtaining the necessary equipment.

The complaint has been filed in Superior Court for Wake County by the Institute for Justice on behalf of Dr. Gajendra Singh.

The institute said Singh opened Forsyth Imaging Center in 2017 to give patients an option for lower-cost medical imaging services.

But he's not even allowed to purchase an MRI scanner – a key component for his business – because the state has a "certificate of need" law requiring that medical-business operators get permission to compete with existing businesses.

And, the institute said, the board that makes those decisions is "dominated by regulators and health care industry insiders" who say the hospital's profits need to be assured and there is no "need" for competition.

"As a medical doctor, Dr. Singh took an oath to help people in need, yet the state is standing in his way to protect established medical providers from competition," said Renée Flaherty, an attorney at IJ, which represents Singh. "That's plainly unconstitutional. Dr. Singh knows first hand how hard it is for many of his patients to afford expensive medical services like MRIs and other scans. He's made it his mission to provide affordable treatment with up-front prices."

But North Carolina's "outdated" CON law, or "certificate of need," has made it "an uphill battle for him to deliver on that promise," Flaherty said.

The institute pointed out Singh started his business because, under Obamacare, high deductibles are common for patients, and one of the items that typically is paid out of pocket is medical scans.

So he opened his business advertising prices that are "as low as one-half or even one-third the costs of the nearby hospital."

He's already purchased or leased a number of scanning devices such as X-ray and ultrasound machines, but because of the CON law, he cannot purchase an MRI scanner, the report said.

"Instead, he has to pay another provider to bring a costly mobile MRI to his office on a trailer for two days per week (the law requires that it be moved at least once per week). The mobile MRI is a costly loophole that allows Dr. Singh to provide a small number of patients the MRIs they need, but it only serves to drive up costs and drive down availability."

The defendants are the North Carolina Department of Health and Human Services, Gov. Roy Cooper, Health and Human Services chief Mandy Coehn and others.

"Competition is the lifeblood of American entrepreneurship," said Singh. "There is nothing special about the medical imaging field that should exempt it from basic economic principles like competition, and instead put in place a monopoly dominated by established medical providers."

The certificate of need laws mostly were adopted a half a century ago. Since then, about one-quarter of the states have eliminated them.

North Carolina, however, has not.

"By stifling competition and medical innovation, CON laws only serve to preserve existing providers' monopolies and prevent startups from competing," said Josh Windham, a lawyer for the institute.

The organization already is engaged in other similar lawsuits.

"Under North Carolina's CON law, the only reason Dr. Singh cannot purchase an MRI scanner is that certain established providers in Forsyth County already have them," the lawsuit charges. "That is unconstitutional."

He charges only $70 for X-rays, $299 for most echocardiograms, up to about $500 for CT scans and $600 for MRIs.

All of his prices are posted online.