REGULATION OF HEALTH CARE PROFESSIONALS

THE REGULATION OF HEALTH CARE PROFESSIONALS

Current regulatory policy concerning health care professionals is based on the assumption that the market for health care services fails because consumers do not have full information about the quality of services these professionals provide. As a result, some professionals may exploit consumers by providing lower-quality services. Accordingly, the major justification for regulating health professionals is to increase the quality of their services and thus to protect the interests of uninformed health care consumers. Health professional regulations restrict entry into the profession by setting the minimum levels of education and experience required to practice. In addition, those regulations specify the legally permissible boundaries of practice for the health care provider or the allowed scope of health care professionals’ practices and specify the allowed business practices of health care professionals.Under the federal system of government in the United States, each state regulates health care professionals’ practice. Health professional practice acts are statutory laws that establish licensing or regulatory agencies or boards to generate rules that regulate medical practice. State licensing statutes establish the minimum level of education and experience required to practice, define the functions of the profession and limit the performance of these functions to licensed persons. State business practice restrictions often include restrictions on the employment of professionals by for-profit firms, restrictions on the use of trade names, restrictions on the operation of multiple branch offices, and restrictions on the location of health care professionals’ offices. Before 1977 state business practice restrictions often included restrictions on advertising by professionals. In Bates v. State Bar of Arizona, however, the Supreme Court ruled that professionals, regardless of their state’s statutes, may advertise.State scope-of-practice restrictions include tying requirements that effectively prohibit different types of health care professions from providing the same health care services. For example, certain states prohibit denturism–the practice of dental laboratory technicians’ selling dentures directly to the public without the involvement of a dentist. That effectively ties the sale of dentures to the services of dentists and reduces the ability of denturists to compete in the market with dentists. Only ten states allow nurse practitioners to prescribe medication independently. That effectively ties the services of nurse practitioners to the services of physicians and reduces the ability of nurse practitioners to compete in the market with physicians. Other states prohibit independent opticians from fitting contact lens. That effectively ties the sale of contact lens to the services of ophthalmologists and optometrists and reduces the ability of opticians to compete with ophthalmologists and optometrists.There is theoretical support for the hypothesis that such regulations will result in consumers’ receiving higher quality health care services. For example, one study shows that occupational licensing, the requirement that professionals engage in a minimum level of investment in training, increases the market share of high-quality sellers. If such regulations are effective, then they may serve the public interest by preventing poorly trained, incompetent, or unethical professionals from practicing medicine and by altering the behavior of health care professionals in the course of their practices.Despite the potential for market failure due to consumers’ incomplete information in the market for health professionals’ services and the potential for professional licensure to partially correct the market failure, the regulations developed by self-regulating health professionals increasingly are being perceived as a means to serve their self-interests, rather than the “public interest.”Other studies show that a self-regulating profession may set minimum quality standards excessively high or may increase its members’ incomes at the cost of reducing consumer welfare.One author writes, “It may be that collective self-regulation is used deliberately to exclude lower-cost technologies because of their threat to the earnings of professionals as labor suppliers.” Another study shows that the entry of a paraprofession will result in professionals’ incomes falling, while consumer welfare will increase with the entry of rival paraprofessions. Thus, self-regulating professionals may have an incentive to enact scope-of-practice restrictions that inhibit entry by paraprofessionals. Other studies show that regulations that increase rivals’ costs (such as business practice restrictions) may increase firms’ profits whether or not rivals exit the market. Thus, self-regulating professionals may have an incentive to enact business practice restrictions that increase rivals’ costs.In summary, then, the theoretical literature suggests that medical professional regulations may affect the quality of health care services, the costs of producing and the prices for providing health care services, the number of practicing health care professionals, the types of practicing health care professionals, and the incomes of health care professionals.