Are you not familiar with how governments do this?

1. Power companies have a state enforced monopoly over a geo area. The state requires licenses and approvals to operate
2. Hospitals: Many if not all states in the US have boards that decide and approve or deny when a company wants to build a hospital.
3. Law enforcement: Only government entities are allowed to operate as law enforcers. Private security exists but is extremely limited.

In general the governments (local, state, national) are gate keepers for almost every business sector. In some sectors they restrict the free market creating monopolies. Its central planning. In some cases like your example a dentist in a small town may be the only dentist the market would support. No need for the state to restrict it.

I'm not suggesting regulation is not of benefit. It is. But we have a monopoly on regulation instead of a free market for governance and regulation. The state is the "invisible" monopoly.