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.