Proposal: Abolish Medical Practice Statutes

Medical practice statutes are state laws that dictate who can and who can’t practice medicine. For the most part, they tend to say that only medical doctors and personnel operating under a doctor’s supervision can administer most medical care.

One hundred and fifty years ago, when the first meeting of the American Medical Association was held, there were no such laws in the United States. In fact, it took organized medicine about 50 to 60 years to get most states to pass legal limits on the practice of medicine. More on this history here.

Then, in 1962, Milton Friedman made a bold proposal in his book, Capitalism and Freedom. He argued against all occupational licensing, including the licensing of doctors. These laws, he said, are not protecting patients. They are creating cartels that look very similar to medieval guilds. To protect patients, what we really need is certification, not licensing. Through certification, the government would verify that practitioners have the skills they say they have.

In what follows I assume that “certification” means not only the government giving its opinion about skills the practitioners have, but also preventing fraudulent advertising.

Let’s say there was a sign outside a shop that reads, “Trained to Give Flu Shots.” Then the government, in its role as a certifier, would determine whether the advertising claim is accurate. If accurate, the sign could stay and the practitioner could give people flu shots ― even if not a medical doctor and even if not a registered nurse.

But let’s say another shop has a sign that reads, “No Training in Giving Flu Shots, But Willing to Give You One Any Way.” We can all agree that this sign is probably prima facie accurate and I think Friedman would have allowed it. I know I would. The job of government is to prevent fraud, not to go around telling everyone what to do.

At first glance, certification might appear to be a much weaker regulatory approach. But in some respects it raises the bar much higher. Under current law, once a doctor has a license to practice medicine she can legally perform brain surgery ― even if she never received a minute of training in that field. Licensing doesn’t protect the patient from practitioners who claim to have skills they really don’t have. Certification, however, would do so.

What brings this whole issue to mind is an editorial in the Sunday New York Times on all of the ways non-doctors might practice medicine ― thereby relieving the expected doctor shortage. Among the suggestions:

  • Eighteen states now allow nurses to deliver primary care without a doctor’s supervision and studies show that the quality of care is high.
  • Nurses, operating in retail clinics (such as MinuteClinics), deliver care that is not only cheaper than conventional primary care, but more closely adheres to best practices.
  • Pharmacists who work in federal agencies are allowed to start, stop or adjust medications, order and interpret laboratory tests, and coordinate follow-up care.
  • Community aides, without the training of a PN or an RN, can deliver a lot of home-based care.
  • Patients can be trained to successfully manage a lot of their own care.

Although the Times editorial does acknowledge legal barriers in some cases, it does not forcefully make this point: the reason we are not taking full advantage of these opportunities is government. At the state level, government is preventing non-doctors from practicing altogether. At the federal level, Medicare’s payment formulas discourage all of the above.

MinuteClinic, for example, had to fight the doctor’s lobby in practically every state to be able to carry out its business model. Even today it is constrained by requirements (which vary from state to state) that MinuteClinic nurses be under doctor supervision. By the way, Texas (which tends to be friendly toward the marketplace in other respects) has some of the most restrictive laws governing nurse practitioners in the country. We have previously noted that pharmacists were once allowed to dispense birth control devices and Louisiana Governor Bobby Jindal would like to see that happen again.

As for Medicare, we have previously noted that its formulas discourage the use of nurses and other paramedical personnel by automatically reducing payments for any service not delivered by a doctor.

Two reforms would move us in the right direction.

First, abolish medical practice statutes nationwide and let sate governments engage in certification instead. I realize we could also go about this piecemeal ― service by service and practitioner by practitioner. But a clean sweep would be so much more efficient and final.

Second, change Medicare’s payment structure. For example, if a local MinuteClinic is charging $40 for a flu shot, Medicare should pay $40 ― regardless of who gives the shot and regardless of who gives it.

Postscript: Some doctor friends of mine hated the NYT editorial, which arguably was disrespectful to doctors. Let’s separate out the disrespect, however, from the economics ― which were right on.

Comments (33)

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  1. Al says:

    John writes: “Second, change Medicare’s payment structure. For example, if a local MinuteClinic is charging $40 for a flu shot, Medicare should pay $40 ― regardless of who gives the shot and regardless of who gives it”

    I suppose if a patient went to a doctors office and was given a flu shot for $40 by one of his helpers you would have Medicare pay the $40. Is that correct? The present fee in a physicians office is a lot lower. You sometimes appear to hedge on this issue.

    If you agree with the above would you permit the physician to bill Medicare or the patient an extra $3 for entering it into the primary care’s EHR that is then available to all other physicians and hospitals?

    Last question is if the local MinuteClinic is charging $100 for a flu shot would you have Medicare pay that as well?

  2. Ken says:

    Good post. I like the idea.

  3. Ralph F. Weber REBC, AEP says:

    Medical boards are one of the worst political culprits. Earlier this year in MN they decided to require general anesthesia for a colonoscopy, greatly increasing the price. Now, at MediBid, we send Minnesotans to Wisconsin for Colonoscopies.
    The market will never be defeated

    Ralph F. Weber AEP, REBC, CLU, ChFC, CFP, GBA

  4. John Goodman says:

    @ AI

    Yes, once a market price has been established, pay everyone that price — including the nurse in the doctor’s office. I don’t see any reason to pay a doctor-administered shot at one rate and a nurse-administered shot at a different rate. That would discourage the efficient substitution of nurses for doctors where appropriate.

    MinuteClinic has a EMR that is part of the price, so I wouldn’t add on $3 for an EMR in a doctor’s office.

  5. Greg Scandlen says:

    Okay, but I’m not so sure state governments should be issuing certificates, either. How is that different than a license? I am more comfortable with professional organizations certifying their members.

  6. Dr. Steve says:

    Why should certification come from the government? As long as my education credentials are not fraudulent, why not an independent, free market competition for “certification”?
    Consumer subscribers to the free market agency would pay for the information, not the provider. Competition in the market would assure credibility in the certification or the agency would fail. It could be Angie’s List, Consumer Reports, or maybe John’s list?
    Professional organizations could function as they do now in some certification, but it would be only for information to consumers, not binding or formally restricting practice.
    Organizations like hospitals now do not let just any MD do brain surgery in their facility. So, group practices/organizations can police their own members as they see fit by internal standards and what serves the public reputation.

  7. Greg Scandlen says:

    Regarding the flu shot question, why should Medicare be paying directly for flu shots at all? Medicare should have universal HSAs and let the patient pay for his own shot, at the best price he can get. Remember we are trying to reduce the role of third-party payers.

  8. Peter Ferrara says:

    Great post John. We should be able to find a friendly state to start the process. Jindal’s Louisiana is an obvious place to start.

  9. Alieta Eck, MD says:

    The fact that the government pays a different amount based on who does the billing is something that ought to be addressed. If a hospital owns a physician practice, it bills and is paid multiples of what the physician could bill on his own– a four-fold difference in the case of an echocardiogram.

    Greg is right– a true free market, as we would have in health savings accounts would put this practice to an end.

    It is interesting that the author of the NY Times article indicates that nurses deliver care more closely adhering to “best practices.” I would like to see some examples. The push to convince the public that they can get perfectly fine care without physicians is rather striking.

  10. Sean Parnell says:

    Greg got there before I did – there’s no particular reason to have Medicare pay directly, especially for something the retiree might well afford themselves. Government-funded HSA-type accounts for those that can’t afford it might be the best option for that population.

  11. Chris says:

    My problem is that we don’t have a free market in healthcare, whatever the government decides we all end up pushed into it.

    I have no problems with a multi-tier healthcare system where people on assistance or who cannot afford a doctor have to settle for a NP or a PA.

    But I can’t stand for any changes that result in everyone being pushed into such. For instance, when the government, the primary buyer of healthcare, cuts reimbursements, it can affect access to care for everyone. My hometown no longer has OB services at the hospital because of reimbursement cuts.

    Why? Because it isn’t as good. There is a certain degree of hubris that exists in professions. Psychologists have tried to get rights to prescribe medications, so have chiropractors. Some of the people in these professions are all well and good, but lots are quacks. Chiropractors especially, I’ve had some tell me that spinal manipulations remove the need for vaccinations. I saw on TV where one diagnosed a pregnancy as a bowel obstruction and tried to manipulate it loose. You can’t make this stuff up.

    Meanwhile, my wife saw a patient, a 6 year old, who had be prescribed by an NP a dose of antipsychotic medications at dosage levels inappropriate for adults to combat a mild case of ADHD. The girl almost had a heart attack and may have had permanent problems because of it. The NP’s excuse? She didn’t know what she was doing. Literally that is what she said. The hubris of knowing you don’t know what you’re doing, and blindly doing it anyway.

  12. Sebastian Alexander says:

    @Greg Scandlen: The state would not issue certificates, but the certifying body would want the government to recognize it so that the certifying body could legally enforce the certificate, which is its intellectual property.

    For physicians, board certification is an example. If I claim that I am a board certified psychiatrist, but the American Board of Psychiatry and Neurology, Inc., has not certified me, the Board should be able to take me to court for fraudulently claiming certification.

    With respect to Medicare paying the lowest price for a service, wherever its delivered, the term of art in the industry for this is “site neutral payments” and, obviously, powerful interests oppose it.

    I realize Dr. Goodman proposes this as an intermediate step on the road to real health reform. Nevertheless, this, on its own, would continue to block the bundling and re-bundling which he encourages. For example, if a concierge doctor offered free flu shots, that would be a bundling of which we approved. However, a retail clinic would not be able to compete with that price of zero.

  13. Linda Gorman says:

    This is a fine proposal in a market system because markets provide the automatic accountability that goes with real choice.

    As a thought experiment, consider a situation in which there is a single payer that controls access to medical care for most people. It wants to minimize its costs, so it only allows access to minimally trained people. The time from presentation to cure takes longer and, ultimately, might cost more when all costs are taken into account. (There’s a older paper comparing docs and nurse practitioners that shows that the costs are the same because the nurse practitioners take longer to arrive at a treatment plan.)

    Already happening in obstetrics in parts of UK and Europe. Without particularly good results, as my post on the Netherlands shows, but the cost minimizing single payer doesn’t have to care.

    The good news, at least in the UK, is that one can still go private.

    The academic question would be how one protects people from concentrated power operating against their interests. The bigger and more mysterious academic question is why in the world anyone would advocate for single payer.

  14. NotMyUsualHandle says:

    Certification seems like it would allow for better division of labor.

  15. Rob Tenery, MD says:

    As an intern on my first rotation in surgery, a wise professor gave me advice that has carried my through my medical career of now 38 years. “Never undertake an elective procedure if you are not prepared to handle the complications.”

    Besides caring for patients, physicians have an obligation to protect patients from practitioners and therapies that might be harmful.

    In my blog, Turf Battles, but on Whose Turf? @ April, 2011, I discuss why there are and should be statutes that delineate privileges for those who provide health care services.

  16. Mark Kellen, MD says:

    A certificate is a license by another name. To truly improve medical care and minimize costs, the government should get out of the picture completely.

    Medical licensure is nothing more than a club the state (and state medical societies) hold over physician’s heads to keep them in line.

    Individuals spending their own money is the true path to reform.

  17. Ralph F. Weber REBC, AEP says:

    @John….true in some cases, but not in others. Whether my Big Mac is made by a high school drop out or a PhD, it is still worth $1.79. But if I hire an attorney to draw up a trust vs a paralegal I will pay more for it. By the same token, I’d pay more for a highly skilled and trained orthopod to to a Tommy John procedure vs. a PA.
    These are precisely the kinds of market forces harnesses through MediBid.
    We have everything from MD Anderson, Barlor Hearth Hospital, to Kerlan Jobe providing top tier service.

  18. Al says:

    John writes: “Yes, once a market price has been established, pay everyone that price”

    Aren’t you being a bit selective as to which entity is establishing the market price? Who is setting the price? Remember your statement was: “For example, if a local MinuteClinic is charging $40 for a flu shot, Medicare should pay $40”

    Should the Internist get a higher fee treating a complication of the shot given by the MiniClinic than when he was the one to give the shot? The shot will likely be overvalued and the followup treatment of a complication undervalued in relationship to one another. How do you intend to manage that problem?

    By the way you recognize that not everyone should get a flu shot and sometimes when to give a flu shot has to be carefully calculated. Should the clinic and the doctor with the higher burden be paid the same? Other MiniClinic functions create more complex problems.

    “MinuteClinic has a EMR that is part of the price, so I wouldn’t add on $3 for an EMR in a doctor’s office.”

    Typically it has been up to the Internist or primary care provider to keep up to date on what has happened to his patient. That is why consultants send their reports to the primary care physician even if he was not the one to recommend them. It appears that you believe the $3 EMR entry by the MinuteClinic magically appears on the primary care provider’s chart. It doesn’t. It has to be gathered by the primary care provider.

    I see further fractionation of care in your model though I do not object to competition for physicians. Today we are worried about pertussis vaccination. The patient got a tetanus shot from a MiniClinic at Walgreens or was it CVS or maybe at the grocery store. Was that just a tetanus shot or DPT including pertussis? Very time consuming. Even more time consuming when that patient talks about a reaction to the shot. This gets progressively more difficult to manage as the patient sees more and more different primary care providers especially when the problem might represent significant disease not recognized with a lot of data being lost from multiple centers due to lack of patient memory.

  19. John Goodman says:

    @ AI

    In those markets dominated by patients paying out-of-pocket (as opposed to markets dominated by third-party payers) prices tend to be market prices. So instead of imposing artificial fee schedules for these procedures, Medicare and Medicaid should pay the market price. And if they are paying it to one entity, why not pay it to all entities?

    Also, MinuteClinic procedures tend to be well-defined and susceptible to “cookbook” protocols. For more complicated conditions for which more training is likely to produce better outcomes, we can use traditional fee schedules — at least for now.

    @ Ralph Weber

    Agree completely.

    @ Mark Kellen

    Certification allows complete freedom of contract. Licensing forbids freedom of contract. They are not the same.

  20. Al says:

    John, I don’t want to belabor the point since we have underlying agreement with regard to most of the theory, but the specifics you mention here do not seem to match the realities and I believe some of your specifics might be artificial as well along with having unintended consequences that can be more problematic than the problem you are solving.

    We do have a solution that both of us I assume agree upon as one potential methodology, balance billing and HSA’s. That could save Medicare money and put the market back into healthcare. The other plan you mention doesn’t answer the questions that need answering.

  21. Arvind Cavale says:

    John: Rather disappointed with your analysis here. Like Dr. Eck asks, please demonstrate that nurses provide a similar level of quality of care as physicians. Besides, there is no such thing as “best practices” is medicine. This is just another name for cook book medicine, which technically can be provided by a computer with interactive skills for less cost than a nurse. Why not try that?

    You would enhance your blog by asking the proper questions…

  22. John Goodman says:

    @ Arvind Cavale

    Just as doctors routinely delegate activities to nurses within their own offices, patients should be free to “delegate” services to nurses directly — without having to go to the doctor’s office.

    It isn’t that the nurse can give a flu shot as well as a doctor (although she probably can),it’s that when I get a flu shot I don’t want to pay for a higher level of service than what nurses can deliver.

    I think I have always been clear in writing about walk-in clinics that they practice cookbook medicine. For a lot of conditions, a lot of the time, cookbook medicine is all patients want or need.

    In Britain, there is standard phrase people use with respect to the National Health Service: If it’s serious, go private. A similar principle should apply in a free marketplace: If it’s serious, see a doctor.

  23. Al says:

    John writes to Arvind: ” If it’s serious, go private. A similar principle should apply in a free marketplace: If it’s serious, see a doctor.”

    But, the market place is not free for healthcare. You are suggesting that a MediClinic function under one set of rules (free market) while the physician functions under the restrictive market of Medicare. Physicians are paid by the job. Removing the simple cookbook portions of medical care means that the physician is left on average with a harder job that doesn’t pay more. Sometimes that harder job is forced on the physician as the clinic relies upon the physician group to take care of those things the MediClinic should never have been involved in.

    I have no problem with competition in the free market, but we have already had a taste of how that idea worked out. In a location close to home there was a pediatric clinic run by nurse practitioners. It closed down because too many things were missed. However, when the suits fly the physician invariably becomes wrapped up in the suit. Maybe an x-ray was misread. Even though the physician didn’t do the x-ray the physician will likely have a higher degree of responsibility in a suit where someone else earned the fee.

  24. Bob Hertzka says:


    I am writing this quick note as a fan of yours.

    Disrespect and nasty “scope” battles aside, the NY Times Editorial citing “studies” that show equivalence between nurse practitioners and primary care docs is simply false. One can find surveys that show that NP’s are as well-liked than docs – or even felt to be “nicer” than docs by patients, and one can find studies that show that NP’s handle supervised protocol work (follow-up visits in diabetic clinics, “Coumadin” clinics and the like).

    But the key element involved in independent practice is in “diagnosing the undiagnosed”, and in that critical category NPs fail miserably. And that is no surprise – by the time a family doc is done with training, they have spent literally thousands of hours doing this, while NP hours are near-zero.

    The translation in the real world is that within medical groups, when NPs are allowed to operate with more independence, they order many more tests and refer their patients to specialists much more often (similar to green third-year med students). In the real world, while the NY Times – and Obamacare – fantasize about a future where most patients see NPs first, the highly efficient Kaiser-Permanente system in California is shedding NPs at a fairly rapid clip and bringing in more young MDs – they know more, they waste fewer diagnostic resources, and they need to refer less (most ringing in the ears does not need to see an ENT, most aching shoulders do not need an orthopod, etc.). NOTE – KP is one large integrated health care system that I know well…

    That said, certification done well might well improve the status quo, but it would be put together by politically-influenced state legislators and regulators – God help us.

    Bob Hertzka, MD

    Member, AMA Council on Medical Service

    Past-President, California Medical Association

  25. Arvind Cavale says:

    I agree that in a free marketplace, patients should be able to choose who they get their care from. Let us first establish such a free market place by getting rid of price-fixing, etc. Then we can all play according to the same rules. Otherwise, there is no basis to say nurses can provide the same quality or level of care as doctors.

  26. Pat Goltz says:

    I agree completely!

    A person who deliberately shortens or terminates the life of any human being (including the unborn and the disabled) should be prosecuted under the homicide statutes. It has been shown that licensing doctors does not prevent atrocities.

    Pat Goltz

  27. Jane Orient says:

    Some questions:

    1. How can the “market price” be to pay everyone the same thing? Market prices vary with time, place, buyer, and seller (see

    2. Why should a young person who is pumping gas have to pay for a retiree’s flu shot? That’s what you mean when you say “Medicare.”

    3. Have you looked into the Maintenance of Certification/Maintenance of Licensure racket? It’s a whole new cottage “not for profit” industry that colludes with government and the managed care/hospital cartel to line its executives’ pockets and put up barriers to market entry. It’s a good way to reduce the number of highly trained doctors to be replaced by minimally trained but more compliant others, who will make nearly as much money. Is this what you mean by a free market?

  28. John Goodman says:

    In the MinuteClinic study, nurses and doctors were evaluated on how they responded to specific symptoms. The nurses did as well or better. This is why I say that walk-in clincs provide high quality care — for what they do.

    This is not the same thing as saying that nurses are just as good as doctors. Obviously they are not. Doctors have more training, can spot irregularities, etc.

    However, patients need to see providers based on their perception of the level of care they need. For some symptoms, self care is sufficient. For others, a nurse’s level of care will do. For more serious cases, a doctor will be needed.

    We need to free the marketplace and at the same time give patients better tools so that they can make good decisions in this regard.

  29. Ralph F. Weber REBC, AEP says:

    Good point Jane. It’s the same price fixing we have now. I went to a dermatologist about 5 years ago and the MD didnt actually see me, the NP did, and I was charged the same as if it was the doc. This I do NOT agree with. In the example of delivering a flu shot, the flue shot is the commodity you are purchasing, but there’s no way this particular NP knows as much as an MD.

    I’ve noticed over the years that the drug commercials have changed the “ask your doctor” to “ask your medical provider”. The move towards “cheaper” care givers delivering service has been going on for some time.

    PA’s and NP’s increase the cost of care in most cases, because their lack of experience usually makes them order more expensive diagnostic tests. Not that I would ever get a flu shot, but even in this scenario, the PA does not have enough medical training to really counsel the patient on the benefits and dangers. Then again, maybe this is the objective…(to increase costs and usage of medical care).

    At MediBid the market functions very well. People are allowed to get the care they want, not what the payers or FDA say they should have, and the prices are disclosed and agreed upon by buyer and seller in advance.

  30. wanda j. Jones says:

    There is no doubt that the whole licensure process is a tactic used by groups of professionals to limit entry and to attain an asset–the right to bill for services.

    A licence is an asset to the holder, so he has to go through a very complex process to be relieved of that asset.

    The state is supposed to block incompetent doctors from practicing, but the reality is that few doctors go through that experience because of the backlog of complaints and the cost of the lawsuits that so often follow.

    With the push toward ACO’s where hospitals and doctors form regional medical cartels, the logical next step toward workforce economies would be to have the state license the whole healthcare system, then delegate the right to them to certify their staffs in the skills that they need to do the job. As with many non-health businesses that require employees to have more than one skill so they can be deployed where the work needs them, healthcare could do the same. Imagine the RN who could draw blood for labs, use an automated blood analyzer, administer drugs, take an EKG, and do basic Physical Therapy–all things they once did before subspecialization set in after Medicare. Right now, by acctual measure, nurses spend only 20 minutes of a 12-hour day doing actual nursing care in patient rooms. WHY?????

    The healthcare industry should work hard to draft a new master state law that can be adopted across the country, to do away with such things as the “Corporate Practice of Medicine” law here in California that forbids doctors from being on salary to a corporation, unless it is physician-owned. This separates the medical profession and all other healthcare professionals just as we want them to work as teams.

    Perhaps it would help policy-makers take this on, if they were to be made aware that the licensing of physicians is essentially unchanged since it was inaugurated in 1910 as a result of the “Flexner Report.”

    Cheers to all..

    Wanda J. Jones, MPH
    New Century Healthcare Institute
    San Francisco

  31. LB says:

    I have a simple question. Wouldn’t the cost of hiring all of the people necessary to certify practitioners cost more than the current system? In addition, who would certify the certifiers? Although on the surface certification seems like a good idea, the practical issues of such a process make it impractical. We are talking about people’s health here, not fixing cars. Don’t get me wrong, I am fully in favor of the expansion of licensed healthcare workers to do more than they are currently able to do and to get paid a decent rate to do so, but to open up healthcare to all comers is a bit crazy.

  32. Sebastian Alexander says:

    The quick answer is that the market would certify the certifiers. The more substantive answer is that the private insurers would continue to credential providers, as they do now, and that itself might be the certification.

    In a consumer-driven system, your primary-care doctor would have no interaction with your insurer. However, if she suspected cancer and referred you to an oncologist, the cost would likely be high enough that the insurance would kick in. So, you’d ensure that the oncologist was credentialed by the insurer.

    This might be the primary measurement of quality that insurers use to compete for individual subscribers.

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