The department shall have the power to establish reasonable standards under this chapter which it finds to be necessary and in the public interest and may rescind or modify such regulations from time to time as may be in the public interest, in so far as such action is not in conflict with any of the provisions of said chapter. No standards, rules or regulations of the department pursuant to this chapter shall be adopted or enforced which would have the effect of denying a license to any hospital or other institution required to be licensed, solely by reason of the school or system of practice employed or permitted to be employed by physicians therein, provided such school or system of practice is recognized by the laws of this State.