Lifting Doctor-Licensing Restrictions Could Drive Competition, Lower Costs

Nurse Julie Ahn checks the arm of Aaliyah Clark,4, after she received an immunization shot at the city of Newark's 'School Bus Express' free immunization program for Newark youth on August 28, 2013 in Newark, New Jersey. The program is being held at the Department of Child and Family Well-Being and seeks to highlight the importance of childhood immunizations before the school year gets started. Newark, where some 30% of residents live in poverty, provides immunizations for all residents.
National Journal
Darius Tahir
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Darius Tahir
Oct. 14, 2013, 7:46 a.m.

Doc­tors are shiel­ded from the com­pet­i­tion that an­im­ates much of the eco­nomy. A num­ber of over­lap­ping reg­u­la­tions re­strict the num­ber of for­eign doc­tors, bar nurse prac­ti­tion­ers from per­form­ing tra­di­tion­al doc­tor du­ties, and keep telemedi­cine from re­pla­cing in-per­son doc­tor vis­its. Ad­voc­ates of these rules say that lim­it­ing med­ic­al care to doc­tors with the best train­ing en­sures qual­ity. The prob­lem, crit­ics say, is that it raises costs and lim­its ac­cess to doc­tors in cer­tain re­gions. It’s an is­sue of sup­ply and de­mand.

Loosen­ing those re­stric­tions could help push down health care costs by in­creas­ing the sup­ply of med­ic­al ser­vices. Such a move would mesh with Obama­care’s fo­cus, through new rules and in­cent­ives, on de­liv­er­ing the same or bet­ter care at a lower cost.

Many doc­tors in the United States already come from abroad. Roughly 32 per­cent of all prac­ti­cing doc­tors in the U.S. gradu­ated from for­eign med­ic­al schools, ac­cord­ing to a May 2012 study in the Pub­lic Lib­rary of Sci­ence. But they face a years-long slog of res­id­ency if they want to prac­tice in the U.S., no mat­ter what their pre­vi­ous qual­i­fic­a­tions were.

For­eign-edu­cated doc­tors are more likely to spread out to areas with a short­age of phys­i­cians, bring­ing down costs and ex­pand­ing ac­cess to care. “If we can get doc­tors at a lower cost from else­where in the world then we could save enorm­ous amounts of money,” Dean Baker, an eco­nom­ist at the left-lean­ing Cen­ter for Eco­nom­ic and Policy Re­search, says.

Reg­u­la­tions also re­strict nurses from al­le­vi­at­ing some of the na­tion’s care short­age. In 2012, 32 states — in­clud­ing Cali­for­nia, Flor­ida, and Texas — blocked primary-care nurses from pre­scrib­ing med­ic­a­tion or dia­gnos­ing or treat­ing pa­tients without aid from a li­censed phys­i­cian. But there’s no evid­ence of a large dif­fer­ence in qual­ity or even treat­ment course between phys­i­cians and nurse prac­ti­tion­ers, at least in the primary-care space. “Clin­ic­al out­comes are sim­il­ar,” ac­cord­ing to a May 2013 Health Af­fairs policy brief sum­ming up a re­view of 26 stud­ies.

An­oth­er sys­tem­at­ic re­view pub­lished in 2002 by the Brit­ish Med­ic­al Journ­al found that pa­tients were of­ten more sat­is­fied with primary care from nurses than phys­i­cians and sug­gests why: Nurses tend to com­mu­nic­ate bet­ter, of­fer more in­form­a­tion about treat­ment, and spend more time with pa­tients. The Health Af­fairs brief also found high­er sat­is­fac­tion with nurses, and sug­gests that nurses’ “pa­tient-centered edu­ca­tion” may ac­count for the dif­fer­ence.

But phys­i­cians’ in­terest groups have res­isted in­creas­ing the scope of nurses’ prac­tice. In Au­gust, ex­tens­ive lob­by­ing by the Cali­for­nia Med­ic­al As­so­ci­ation sty­mied the state Le­gis­lature’s ef­fort to ex­pand nurses’ scope of prac­tice. The Amer­ic­an Med­ic­al As­so­ci­ation has sim­il­arly ad­voc­ated lim­it­ing nurses’ roles; an art­icle on the AMA’s news web­site notes that the or­gan­iz­a­tion’s “policy sup­port­ing a phys­i­cian-led, team-based ap­proach to care.”

Like nurses, prac­ti­tion­ers of telemedi­cine face strict li­cens­ing rules, even as the de­mand for doc­tors who can work re­motely grows. Many hos­pit­als now rely on com­pan­ies to ana­lyze scans off­s­ite, the Ad­vis­ory Board, a health-care con­sultancy, found in a 2012 re­port. The num­ber of ra­di­ology prac­tices of­fer­ing off-hours tel­era­di­ology climbed to 55 per­cent in 2011, up from 15 per­cent in 2003. And there are now 40 tele­der­ma­to­logy pro­grams in the U.S., ac­cord­ing to a 2012 re­port.

Many states re­strict the prac­tice of telemedi­cine by re­quir­ing doc­tors to hold spe­cial li­censes to of­fer re­mote dia­gnoses. Neb­raska bars re­im­burse­ment to re­mote doc­tors if pa­tients are with­in 30 miles of com­par­able in-per­son ser­vice, and oth­er states have sim­il­ar re­quire­ments. Medi­caid pro­grams in Cali­for­nia, Ok­lahoma, and else­where re­quire that pa­tients travel to the hos­pit­al or oth­er of­fi­cial set­tings to be seen, even though some pa­tients find the vis­it dif­fi­cult. “For many men­tal-health pa­tients, it can be stress­ful to travel to the doc­tor’s of­fice,” Joseph Kvedar, the dir­ect­or of Part­ners Health­Care’s Cen­ter for Con­nec­ted Health, re­cently noted.

There’s some fed­er­al sup­port for loosen­ing telemedi­cine re­stric­tions. “I think we can en­cour­age states to stream­line [li­cense re­quire­ments] or form re­cipro­city agree­ments,” Jes­sica Rosen­wor­cel, a com­mis­sion­er at the Fed­er­al Com­mu­nic­a­tions Com­mis­sion, said at a re­cent con­fer­ence. Rosen­wor­cel en­cour­aged Con­gress to con­sider tak­ing ac­tion; law­makers had pre­vi­ously passed a law al­low­ing doc­tors af­fil­i­ated with the De­part­ment of Vet­er­ans Af­fairs to prac­tice re­motely.

It may be a mis­take to lean too much on the the­ory that in­creas­ing the sup­ply of med­ic­al ser­vices will re­duce med­ic­al costs. Prin­ceton health eco­nom­ist Uwe Re­in­hardt notes that one of the key prob­lems in the health­care sys­tem is “sup­pli­er-in­duced de­mand.” Many people do what their doc­tor tells them to do without ques­tion­ing, and more doc­tors — or nurses per­form­ing what may be tra­di­tion­ally thought of as doc­tors’ work — may mean more doc­tors’ or­ders. In­creas­ing the num­ber of phys­i­cians may just in­crease the use of health ser­vices.

But the level of AMA res­ist­ance to ex­pand­ing nurses’ prac­tice sug­gests that the or­gan­iz­a­tiont doesn’t buy that ar­gu­ment. And the Af­ford­able Care Act con­tains a num­ber of pay­ment re­gimes aimed at dis­cour­aging ex­cess med­ic­al care: high-de­duct­ible plans en­cour­aging pa­tients to shop among pro­viders for cheap­er care; bundled pay­ments, which re­im­burse pro­viders for an “epis­ode” of care rather than each in­di­vidu­al ser­vice provided; and ac­count­able-care or­gan­iz­a­tions, which aim to lower costs by im­prov­ing co­ordin­a­tion among pro­viders. The ef­fect of these re­forms could level sup­pli­er-in­duced de­mand in the fu­ture, lead­ing more com­pet­i­tion to take hold, es­pe­cially if the num­ber of doc­tors and scope of nurses’ du­ties ex­pands. That might lower health care costs without sac­ri­fi­cing qual­ity, which is surely a win.

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