David R. Henderson  

Free the Nurses--and the Patients

The Profound Sumner... Rojas' Grad Skool Rulz...
If a natural disaster hit Oregon, the victims would have fared much better. The state's 8,500 nurse practitioners (NPs) are free to come to the aid of people in need of care, with no legal obstruction. In Oregon, nurses with the proper credentials and licensure may open their practices anywhere they choose and operate in the same capacity as a primary care physician without oversight from any other medical professionals. They can draw blood, prescribe medications, and even admit patients to the hospital.
This is from "Why Not a Nurse?" by John Goodman and Virginia Traweek. The authors show that the degree of regulation of nurse practitioners runs the gamut, with Oregon being relatively unregulated and Texas being tightly regulated.

Another excerpt:

In Texas, which has some of the most stringent regulations in the country, however, a nurse practitioner can't do much of anything without being supervised by a doctor who must:

Not oversee more than four nurses at one time.
Not oversee nurses located outside of a 75 mile radius.
Conduct a random review of 10 percent of the nurses' patient charts every 10 days.
Be on the premises 20 percent of the time.

Comments and Sharing

COMMENTS (9 to date)
Devon Herrick writes:

The regulation of advanced practice nurses is plagued by the same problem as with the regulation of physicians and other medical personnel. Regulations need to be consistent from one state to another. Moreover, certification rather than licensure would promote more competition among medical providers.

Shangwen writes:

If we must have occupational licensing, then at least let us have competition or friction between licensing regimes that creates room for innovation and savings. This is one of the few ways that money can actually be saved in healthcare. I added a Nurse Practitioner to one of our clinics and then cut back on physician hours. Result? Hundreds of thousands of dollars saved, faster response times, easier access to the primary care provider, and higher patient satisfaction. When I told a colleague in Quebec about this, he lamented that NPs are disallowed there. His wait list is huge.

Sonic Charmer writes:

All I can think reading this is that if word gets out to Oregon nurses that their licensing requirements are so free, they'll push to increase them (to reduce competition for their jobs).

It's the existing practitioners of these credentialed roles who always make the biggest push for credentials. 'For patient safety', of course.

Colin k writes:


If we had a uniform national licensure system, it's at least as likely it would look like texas's as oregon's. Unless the returns to scale are really extraordinary, I'll stick with variety.

[Broken url fixed--duplicated "http:"--Econlib Ed.]

Nahuel Pan writes:

I could not agree more with 'Sonic Charmer'. I routinely post this question whenever I read a discussion on health care and so far I have no satisfactory answer. Why is there so little discussion about the effect on healthcare costs of the incredible high barriers to entry that health care providers face when trying to establish a practice in any of the US states? Why US hospitals cannot hire the best and brightest doctors from the rest of the US and the world, in the same way that Boeing, Microsoft, etc. can hire the best and brightest engineers no matter their location? That alone would help keep doctor salaries in check and make the hospital industry more competitive. I find state-level licencing requirements for doctors very close to those state-granted monopolies of yore. Why the government thinks that Boeing can hire and control the work of countless engineers who perform extremely complex tasks and who can potentially kill scores of passengers if their job is not done to the highest standard, but apparently thinks that no corporation can set up a governance structure that ensures that only the good doctors are hired and that they deliver high quality healthcare no matter where they studied or practiced before, is beyond my understanding. Given how much money medical associations give to politicians, I wonder if the main motivation behind those state-level requirements is to keep doctor salaries artificially high, not quality.

Becky Hargrove writes:

I at least have a theory as to your question. Should the U.S. get efficient at healthcare, it might not shine so in the world regarding GDP.
Broken Window theory writ large.

Shangwen writes:

@Sonic Charmer and Nahuel Pan:

I agree that, other things being equal, that would be the natural rent-seeking behavior. However my (unstated) point in my earlier comment was that, since places like Texas and Canada require NPs to work under MD supervision (and therefore keep numbers low and incur lucrative "supervision" fees for the docs), the initial pressure will be to have NPs liberalize laws, at least to free them from supervised practice.

But it must be said--and I realized this is what you were getting at--that if the condition were reached that all NPs in a national labor market were legally able to work as independent clinicians, then they pressure would begin to exclude others, limit licence issuance, erect barriers, etc.

An important point is that we also have Physician Assistants (or Physician Associates, PAs) who exist in most jurisdiction, and who are more "doctor-like" in their training and affiliation. They too, work under MD supervision, but in terms of regulated services they are indistinguishable from NPs (with the exception of certain prescribing privileges). So the dynamics of regulatory capture in primary care really have to be looked as an evil triangle composed of MDs, PAs, and NPs. When the licensing regimes are clearly exclusive and there is no overlap, you have less tension and maximum rent-capture. But if regulations create ambiguity and overlap--for example, a patient can get their anti-depressants or pain meds re-ordered by any one of those profesionals--then you have consumer choice and the opportunity to lower or control costs. It's a bit like arbitrage. The downward spiral begins when ambiguity is eliminated.

Devon Herrick writes:

Another aspect of licensure is the types of employment arrangements allowed. As I recall, one-third of states allow the corporate practice of medicine while one-third do not. The remaining one-third of states have vague laws where it is unclear whether they allow corporate employment of physicians. What if Healthmart (imagine Walmart) were allowed to experiment and figure out the appropriate mix of mid-level providers, lower-level personnel, physicians and diagnostic equipment as they see fit.

We’re still receiving physician car in a similar fashion as our great grandparents. Except our current system is one designed where a physician is gatekeeper; a health plan is payer, and patients are not consumers. Were it not for third-party payment -- and occupational licensure -- I do not believe the current structure would necessarily be the one we still experience today.

John Goodman writes:

I would only add Milton Friedman's view on the proper role of govenment in this area: certify, but don't regulate.

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