Many states even have Certificate of Need (known as CON in the industry) laws where incumbent medical providers, including whole hospitals, can effectively veto new entrants. Add in limited licensing for doctors (the number of medical spots in schools as not kept up with population) among other things and you've got a problem.
This is part of the reason why I distinguish between free-market economics and capitalism, where the people with capital make the rules (including social capital, like current doctors).
At the level of persuasion, I don't understand why people use and defend "capitalism" rather than "free-market economics".