The Corner

Economy & Business

How Occupational Licensing Is Used to Exclude Competition: Nurses and Telemedicine

The Wall Street Journal has a good piece about the licensing headache that nurses involved in telemedicine have to face to continue doing their jobs. As things are now, nurses who are in the telemedicine business have to be licensed in every state they have customers in. Never mind that they are already licensed in their own state.

Hospitals and some nursing groups are lobbying state legislators across the nation to do away with requirements that nurses be licensed in each state where they work, arguing that the rules inhibit the use of new health-care methods such as telemedicine.

The push to get states to join nursing licensing compacts reflects growing adoption of remote health services such as patient care and monitoring online and by the phone. Telemedicine, as it is known, is expected to soar in the U.S. to $1.9 billion in 2018 from $240 million in revenue in 2013, according to research firm IHS Technology.

Telemedicine is one of the many ways that innovators are bringing their ideas to the the health-care market and lowering costs for consumers.

It also shows that an important role served by licensing laws is the one of squashing unwanted competition by incumbents in the market. By preventing the increase in the number of nurses (in the name of the patients’ safety, of course), nurses’ unions manage to keep their members’ salaries artificially high.

But advocates of the effort are up against nurses’ unions who say such compacts would jeopardize patient safety because not all states have the same licensing standards. They also say it would erode their bargaining power and make it easier for hospitals to bring in out-of-state nurses to break a strike.

“Massachusetts has higher requirements than other states,” said David Schildmeier, a spokesman with the Massachusetts Nurses Association, a union and professional group. “This would allow nurses from other states to work here. We don’t want their problems to invade our state.” …

“It negatively impacts patient safety,” said Ms. Sayles. “Minnesota has continuing education requirements; not every state does.”

Never mind that there is no evidence that stricter licensing requirements lead to better services or higher quality care. Also, it’s not as if these nurses aren’t licensed in at least one state. And while the licensing process is different in several states, the curriculum for nursing school is the same everywhere.

Thankfully, the growing realization that telemedicine is here to stay means that more and more states are likely to join an existing multi-state compact that would allow nurses to operate across state lines without having a license in each state.

Supporters hope a newer version of the compact would trigger more states to join. Unlike the earlier agreement, this one requires member states to conduct fingerprint-based state and federal criminal background checks on nurses they license. A nurse convicted of a felony can’t hold a multistate license….

Under the enhanced compact, the state board that issues a nurse’s license is responsible for taking licensing sanctions against that nurse if an alleged infraction occurs in another member state. States share information on sanctions through a database so all are informed, supporters say.

These small steps are important in that they allow innovation to do its work and change the way things are done in the health-care market with the promise to lower the costs for consumers and taxpayers alike. I will file this in the “one more step toward permissionless everything” file, which contains other examples of innovations in the labor and health-care markets that allow people to provide better services to consumers without having to ask for the government’s permission.

I guess nurses’ unions will have to get over it.