State Licensure: Quality Assurance or Trade Barrier?

When I moved to Washington from Maryland, it was a difficult transition. The worst part was getting to my new job earlier than anyone thought I could, but then having to sit around and wait for my license. I worked hard trying to familiarize myself with the organization as best I could. But it made me think … this post was written in 2008.


It is hard to believe that The Physician Executive has not yet received his new state license. It has been over six weeks, but physician readers will not be surprised. Fortunately, our insurers have already assured us that the moment the license is verifiable online, they will honor charges in his name.

In Maryland, the Board of Physicians says it takes 120 days to obtain a license (it usually goes faster). The last time I looked into California, it was over six months. States that decide they are over-doctored typically take longer than other states. There may be something to that, since I have heard of some primary care physicians having a hard enough time finding work that they are considering leaving California. But to be fair, I don’t know if a couple of anecdotes are worthy of calling it an established trend; I will be watching.

The reason it takes so long is something known as primary source verification. Licensing boards are diligent in verifying every employment situation, every hospital affiliation and every training site. Sometimes they go so far as to verify every locum situation as well. If a physician has worked for a single weekend covering a rural hospital, someone will want to verify it. Even thirty years later.

This needs to be done.

But it generates an awful lot of paperwork.

Since some of my former employers are closed, it creates challenges in identifying the correct individual to provide important verifications. Unsurprisingly, many Canadian residencies are less concerned with American credentialing than I am. My former internship site is apparently renovating and having trouble finding documents for some guy who left the country ten years ago.

Such is life.

The trail is long and I am a bit of a Donabedian groupie, so I don’t have a problem with primary source verification. However, there is an awful lot of overlap. There is the National Practitioner Database and the AMA, which offer some degree of triangulation, even though they are primarily a method of identifying complaints, lawsuits and other problems. Employers also do their own primary source verification, that way employers do not need to stay familiar with their state board’s processes. In one instance, the state board was able to obtain verification and the employer was not. The employer insisted on a signed affidavit.

Then there are the insurers. One company I am familiar with refuses to begin a credentialing process until everything is in the file. Then it takes them four months to review. Then they do not pay for any services provided during the credentialing process. I understand the importance of credentials verification, but this sounds a little like manipulating a process to their financial advantage. Yes, I am talking about you, Amerigroup. (Gratuitous stock advice: consider buying the stock, but never the insurance.)*

I would never advocate the elimination of licensing requirements (if I hear someone quote Milton Friedman on the subject one more time, I will subject them to the merciless ridicule reserved for followers of cults, star energy, homeopathy and other quackery), but there are certainly some implications for a free market in health care. There isn’t one.

We could streamline licensing procedures and credentials verification across the country. The CAQH already has electronic tools to facilitate the credentialing process. It would open up interstate competition in health care. (In a subsidized environment, heath care is driven by practitioners, so the competition is between jurisdictions and employers to attract them, not between practitioners to attract customers.) The problem of mal-distribution of physician resources would likely continue, but there are a very few examples of regulatory incentives to encourage physicians not to settle in cities or suburbs. Physicians flock to nice places to live until they start going belly-up. Or working for MinuteClinics.

As it stands, as a CMO, I am competing with much wealthier jurisdictions and facilities and then faced with an outsized regulatory burden to verify my practitioner’s credentials and facilitate our payer’s verifications. Moreover, the barriers to interstate movement of the medical labor force is at a level that makes me think of protectionist trade barriers.

I hope to see my first patient next week.

*I suppose there should be a disclaimer about the fact that my comment is meant sarcastically and not intended to represent real stock advice etc etc, but I assume that my readers are intelligent enough to figure that out for themselves. Caveat emptor.

The Economics of Mid-Levels

Another old post from¬†The Physician Executive with currency in today’s environment.¬†


I was once a family physician delivering babies in an East Coast big city.

No, I am not a masochist, I was a family practice residency faculty.

Given the intense turf wars caused by an oversupply of competing specialists, it was an unpleasant environment to work. The concentration of specialty providers in big cities and urban areas poses some problems when it comes to costs. Frequently, one looks to mid-levels as a way of addressing problems in health care. Indeed Physician Assistants and Nurse Practitioners have a potentially important role to play in health care, but where?

Jason Shafrin at the Health Economist takes a look at midwives (included in the ranks of nurse practitioners for most of the latter part of the past century.)

I like midlevel providers like nurse practitioners and physician assistants because of their ability to bolster the ranks of primary care, the main engine of cost containment in health care. They can be invaluable in rural areas where it is difficult to entice specialists, even where there is a critical mass of demand for their services.

On the other hand, Jason’s post appears to be looking at midwives as a less costly alternative to obstetricians. A commenter on my site reminded me of Milton Friedman’s assertion that licensing leads to higher costs without assuring quality. In medicine, we have established a complicated and lengthy licensing process in the secure belief that the alternative was the chaos of snake-oil salesman that populated the United States at the turn of the last century. In other words, there was a compelling societal reason to limit and license people delivering health care.

I’m not sure what we accomplish by looking at mid levels as alternatives to established specialty providers. Moreover, specialists and midwives are equally maldistributed, being over-represented in metropolitan areas, where competition finds a way of increasing costs. Yes, health care acts strangely and higher concentrations of specialists tends to increase costs rather than reduce prices as one would expect.

On the other hand, finding an incentive to better distribute physicians may be a subtle way of improving physician incomes and health outcomes and reduce costs.

I want to make it clear once again, this is not a tirade against nurses or midwives. Nurses have saved my backside too often not to be collaborative and old school midwives working in labor and delivery taught me everything I know about delivering a baby.

I am questioning how we make policy in the face of a web of data and mess of potential starting points from which to approach the data.