HEALTHCARE PROFESSIONALS, LEGAL REGULATION OF

Licensure is "the process by which an agency of government grants permission to persons meeting predetermined qualifications to engage in a given occupation"; certification is "the process by which a nongovernmental agency or association grants recognition to an individual who has met certain predetermined qualifications specified by that agency or institution" (Welch, p. 179). The purpose of licensure, regulation, and discipline is to protect the public at large; the assumption that grounds these practices is that governmental and nongovernmental institutions are competent to judge how such protection should be accomplished.

Background

Public efforts to regulate the health professions, especially by imposing restrictions on those who shall be allowed to practice them, go back to the Babylonian emperor Hammurabi (d. 1750 b.c.e.). Rules for medical practice existed in ancient Greece and tenth-century Baghdad. By the Middle Ages in Europe, it was customary for civil powers to demand a university education, examination, and experience as conditions for permission to practice medicine. In this period the first professional societies were founded, modeled on the merchant guilds (Gross). University and guild combined to link education to licensing—government permission to practice.

The first licensing statutes were passed in the American colonies in the seventeenth century, although not until the eighteenth century did the statutes seek to restrict practice. According to Eliot Freidson (1970), medicine did not emerge as a consulting, as opposed to a teaching, practice until the late nineteenth and early twentieth centuries. Throughout the two millennia since the time of the Greek physician Hippocrates (c. 460–c. 377 b.c.e.), the medical elite created by education and licensed by the state was supplemented by a vast number of unlicensed healers, mostly women (generally barred from medicine), who treated the common folk.

The trend to state regulation, endorsement, and protection of the health professions suffered a brief hiatus in the nineteenth century in the United States, when there arose a deliberate experiment in egalitarian deregulation following from a democratic belief that the common folk were as good as the educated elite in most matters. The experiment was abandoned later in the century, as Texas passed a medical practice act in 1873 and California followed suit two years later; by 1905, thirty-nine states licensed physicians (CSG). Nurses formed a national professional association in 1896; by 1926 forty states required licenses of nurses.

The trend is not, however, universal. Professional recruitment, standard setting, and discipline can be carried out by professional groups and associations without the protection of the state. Typically, groups of serious practitioners band together, agree to set standards, and develop informal review procedures for adherence to standards—for members only. Professional ethics and oaths, including professional standards of education and compensation, can be enforced by the professional association alone, and in some cases (various psychological and holistic health professions, for example) the process goes no further. In several healing professions, there is no regulation beyond that of the voluntary association; the only penalty for professional wrongdoing, if it is discovered, is loss of membership in that association.

Regulation tends to be reserved for those health professions that are widely perceived to have powers the abuse of which can lead to public injury. At one time, only the profession of medicine was included in that category; now it has extended through dentistry, nursing, pharmacy, and others (close to fifty, on one count; CSG/CLEAR), on a state-by-state basis (naturopathy, for instance, is regulated in some states but not in others). Licensure varies in kind as well as in range: As of 1973, nine states still had permissive licensing for nurses—an unlicensed nurse could practice without hindrance as long as she did not claim to be licensed. Scope-of-practice statutes ordinarily accompany licensure, defining the procedures for which the practitioner is licensed.

The Limited Competence of the State

Well established as the custom is, there is a certain awkwardness of fit between professional standards and state enforcement. The request by the health professions for state protection of their monopoly is certainly plausible. While the state can play little part in instructing or defining the work of the professions, it certainly has always had as part of its police power the protection of the public from outright dangers to health, including health frauds—quacks, charlatans, and sincere professionals whose education was simply inadequate to their tasks (Dent v. State of West Virginia, 1889). But a profession is defined in large part by its esoteric knowledge: Only professionals can set professional standards, determine when they have been violated, and, by extension, determine the sanction that would be appropriate as a punishment.

The result is that the public ends up enforcing rules that only a private association can set, presumably for its own benefit as much as for the public good. Nor is it clear that licensing in general, especially in the context of rigid scope-of-practice statutes, is in the public interest. The costs of licensing will normally be passed along to the consumer in the form of higher costs, and the license requirement restricts entry into the profession to those who can afford the initial outlay. The scope-of-practice acts make sure that auxiliary professions, with less expensive preparation and lower fees, cannot perform certain procedures that they may in fact be perfectly competent to perform (CSG/CLEAR). Built into the arrangement, if it is to be tolerable, is a strong presumption of altruism on the part of the professional and trust on the part of the public. Let either fail, and the system is in danger.

Professional Exclusion: The Flexner Report

In 1906 Abraham Flexner, an educator, obtained a grant from the Carnegie Foundation for the Advancement of Teaching to review the quality of medical schools. When his report was published in 1910, it revealed wide discrepancies among the 155 schools studied and produced a strong impetus to regulate medical education at the state and federal levels. Having no independent standards of their own, nor any idea of how to develop them, the states appealed to the American Medical Association's (AMA) Council on Medical Education, which set new standards for accreditation of the medical schools. Physicians also staffed the state licensing boards. The consequence of this major public intervention in the healthcare professions was that by the mid-1920s the AMA had a virtual monopoly, guarding the gate to the medical profession at several levels: admission to medical school, choice of specialty, and obtaining a license to practice.

Such a state-sponsored monopoly is clearly subject to abuse, but it was widely imitated as succeeding levels of health professions sought and obtained state endorsement and protection. By tradition, the major regulatory role in the United States is played by the states, and the licensing laws are typically administered by state agencies and boards dominated by professionals.

Disciplinary Procedures

Disciplinary procedures responding to charges of fraud, incompetence, or malpractice occur at several levels. A certain amount of discipline is carried out by the professional association and is entirely a private matter among the professionals. At the state level, the procedure for disciplining delinquent practitioners varies, but generally it requires that some aggrieved party—a dissatisfied patient, a cost-conscious insurance company, or the plaintiff's lawyer in a malpractice case—register a complaint with the disciplinary board of the state. The agency in charge of these matters will investigate the case, assemble evidence, schedule a hearing, make a finding, and recommend appropriate action. Possible actions include dismissing the complaint, requiring some hours of community service, and removing a license. Increasingly, part of the decision is a refresher course in medical ethics.

The state medical boards are empowered to revoke a physician's license. Short of actual revocation of license, all actions taken against a professional are recorded and circulated through the National Practitioner Data Bank, where misconduct and malpractice findings are logged. The data bank is available to regulators in all fifty states. There are exceptions, but most health professions and practitioners are in the data bank.

Consumers' Protest

The federal government was active in the regulation of health matters for most of the twentieth century. The Pure Food and Drug Act, under which all drugs are approved for sale in the United States, was passed in 1906; since then the federal government has taken an active role in protecting occupational health and public accountability. Early in the 1970s, corresponding to the general wave of public skepticism regarding professional and corporate claims of authority and trustworthiness, a citizen/consumer rebellion turned on the health professions. Seminal works by Eliot Freidson and others spearheaded a literature of public protest against professional privilege and urged vigorous and vigilant over-sight of the health professions, medicine in particular.

The protest tended to portray state legislatures as weak, ignorant, or pawns of the powerful professions and urged a drastic widening of the federal oversight function. Such expansion was made possible by the passage of Medicare legislation (1965), followed by Medicaid and other programs that cast the federal government in the role of major funder of healthcare. In a 1976 report titled A Proposal for Credentialing Health Manpower, the U.S. Public Health Service recommended that a national certification commission be established "to develop, evaluate and oversee national standards" for agencies that certify healthcare personnel. The National Commission for Health Certifying Agencies was formed on that recommendation, charged with developing universal standards for credentialing healthcare personnel. This effort was supported through the 1980s by the U.S. Department of Health and Human Services, through the Health Resources and Services Administration (CSG/CLEAR).

The origins of consumerism are generally attributed to Ralph Nader, whose investigations of the safety of the American automobile alerted a generation to the possibility that the goods and services available from the trusted providers of the American marketplace might not be as good as advertised. A Nader offshoot, Public Citizen's Health Research Group, maintains that the disciplinary and regulatory powers and laws currently available to the American public are completely inadequate to the task. These groups have changed the broad direction of legislative action. In the era of consumerism, the people's authority exercised at the state or federal level now protects the consuming public from the professional provider instead of aligning itself with the professional against fraudulent competition.

In a return to the democratic assumptions of the nineteenth century, the mantle of legal and moral credibility as protector of the public has passed from the profession to the elected legislature: In the areas of technical expertise and professional wisdom, as well as in the areas of economic self-interest, the American voters are now assumed to be the best guardians of their own interests. Patients' autonomy vis-àvis their physicians has been generalized to public autonomy vis-à-vis the profession as a whole.

Typical of consumerist initiatives in healthcare is congressional action requiring nationwide licensing of nurses' aides. The bill was demanded by, among others, AARP, an interest group of older Americans with a strong stake in the conduct of nursing homes and chronic-care facilities. The passage of the legislation at the federal level (incorporated into the Omnibus Budget Reconciliation Act [OBRA] of 1987) made the law immune to the objections of state organizations of such facilities. Now the states must implement this law.

Also typical are the regulations proceeding from the work of the National Commission for the Protection of Human Subjects of Biomedical and Behavioral Research, established by Congress in the 1970s in response to claims that patients were being abused by their physicians in pursuit of scientific research (and that aborted fetuses were being used for research). The commission's work resulted in an immense number of federal regulations to protect the rights of human subjects of clinical research, including the formation of institutional review boards in any institution where such research is carried on, charged with reviewing all research that receives any federal money (in effect, all research in the institution).

A third example of such initiatives is the Patient Self-Determination Act, passed as part of the Omnibus Budget Reconciliation Act of 1990, which requires that healthcare providers inform adult inpatients of their rights to refuse treatment; to submit to the provider a document, generally known as a living will, specifying their desires regarding treatment or nontreatment should they become terminally ill and unable to give consent to treatment on their own; and to appoint any adult to speak for them to ensure that the living will's instructions are carried out, should they become unable to speak for themselves.

The contrast between profession-oriented and consumeroriented approaches can be seen in the norms governing confidentiality of investigations of professionals charged with incompetence or negligence. If government is to protect the profession, then the identity of credentialed professionals who are under investigation for wrongdoing must be kept secret until it is determined that they are unsalvageable in the profession, so as to maintain their good name and practice. Consumer advocate groups, on the contrary, demand that the names of accused professionals be made public as soon as the investigation begins, so that the public can take steps to protect themselves.

Rejoinders to consumerism in healthcare have come from diverse sources. One very influential reply, from the perspective of the medical profession, is Charles L. Bosk's 1979 account of a surgical training program, Forgive and Remember. In the training of surgical residents, as chronicled by Bosk, supervision was strict, the patients' interests were paramount, and discipline was swift, although generally informal, and highly effective. Bosk found in place an unwritten but well-understood set of rules, rapidly internalized by all surgical residents as a condition of success as surgeons and regularly enforced at all levels. The suggestion that emerged, although not explicitly, was that bureaucratic regulations could not possibly be as effective as this method of professional socialization in producing successful surgeons—at least at the level of the elite practitioners. On the other side, libertarian theorists have attacked regulation of all kinds, formal or informal, arguing that any regulation puts an artificial and uneconomic barrier in the free market. The libertarians achieved major gains in the last decade of the twentieth century.

Alternatives to licensing can easily be imagined. In 1984 Stanley J. Gross outlined a system of state registration of unlicensed practitioners whose competence is determined by the consuming public on the basis of full disclosure of background and skills. Given full disclosure and the absence of coercion, on the principle of freedom of contract, any two persons of mature years should be free to make between themselves any contract for goods and services. The point is primarily theoretical but of very wide application: If accepted, this doctrine would abolish a few dozen federal agencies and all state licensing and disciplinary functions. Concretely, this doctrine has been invoked as primary in cases in which patients request drugs not approved for distribution or sale, such as laetrile and other unproven cancer remedies or experimental AIDS drugs, or marijuana for medicinal purposes.

The Unwanted Participant: Business and the Professions

In the last decade of the twentieth century and the first few years of the twenty-first, the whole philosophy of licensing and regulation of the healthcare professions has undergone a sea change. By 1990, there was a strongly felt undercurrent that healthcare was taking up too much of the national budget (13 percent, higher than any other developed nation) and that it was badly distributed. Often the poor in this rich country had only minimal access to healthcare: They could not afford private fees, they received no health benefits through their employment, and they fell somehow through the cracks of the government-sponsored programs, Medicare (federally funded, for the elderly and disabled) and Medicaid (state funded, for the poor.) In 1992 Bill Clinton was elected U.S. president, and aided by his wife, Hillary Rodham Clinton, he set out to create a single-payer system, a national health insurance plan, to provide universal access to decent healthcare. Overwhelmed by special interests (especially the private insurance companies, who wanted to run the system themselves), the Clinton plan failed in 1994.

In the aftermath of this failure, major insurance companies took over payment arrangements for the practice of healthcare, under a confusingly diverse pattern of plans. Some insurance company plans simply employ physicians, or contract with physicians' group practices, to provide services for all their subscribers. In such plans, a patient has to consult either physicians employed by the company or those in the groups under contract to the insurance company whose policy the patient purchased (or more likely, whose policy the patient's employer purchased). Other plans offer a choice from a select list of physicians and specialties. Most require preapproval for at least some medications and treatments, and some require preapproval for visits to the emergency room. No two plans cover quite the same list of consultations, treatments, medications and devices, under quite the same terms. The insurance companies arrange the terms, as they have had every right and duty to do, to serve the financial interests of their shareholders. Such arrangements include deliberate policies of delaying reimbursement payments to physicians and medical groups, because all funds retained can be invested for interest; refusal of authorization for payment for medical procedures or hospital days for those cases in which it seems that the patient would have no choice but to avail himself or herself of the service and pay anyway, out of pocket; and selective deselection of physicians who cost the plan more than the average over the course of the year because of referrals to specialists or the ordering of tests.

Deselection means that the plan subscribers can no longer receive reimbursement for consulting that physician. In effect, a deselected physician can no longer have those subscribers as patients. If the physician's income heavily depends on that group of patients, she may effectively find herself unemployed; if she belongs to a medical group that depends on a contract with that company, she may find herself rapidly separated from that group in order to preserve the contract. In both cases, because most practices depend heavily on insurance contracts and no group can afford an "outlier" who will attract negative attention to the group, the physician may be separated from all chance of making a living in the practice of medicine. Under the circumstances, it is not surprising that physicians feel that they have little choice but to stay well within the unspoken insurance guidelines, even if that means effectively turning away or deceiving certain patients.

The insurance contracts place healthcare professionals in a clear conflict of interest, a conflict that can affect the lives and health of their patients. (A conflict of interest, for a professional, involves any arrangement in which the personal interest of the professional [physician] is adverse to the interest of the client [patient].) Because all parties to the contract are competent adults, there is nothing the law can do to prevent such contracts from being signed. (Incidentally, according to the code that governs the ethical practice of law, which has legal force, any lawyer who put himself in such a position vis-à-vis a client could be disbarred.) The accrediting body for most U.S. hospitals, the Joint Commission for the Accreditation of Healthcare Organizations (JCAHO), has a special section on "Organizational Ethics" in the 2001 edition of its Comprehensive Accreditation Manual for Hospitals. The requirement of the main standard (RI.4) is simply the following: "The hospital operates according to a code of ethical behavior." Of particular interest in the context of bioethics is Standard RI.4.4: "The hospital's code of ethical business and professional behavior protects the integrity of clinical decision making, regardless of how the hospital compensates or shares financial risk with its leaders, managers, clinical staff, and licensed independent practitioners." Translated, this means that whatever impossible conflicts of interest physicians may have signed themselves into, it is the hospital's job to make sure that patient care is not affected. It is not clear how this standard might be met.

Bringing Miscreants to Justice

Notorious problems attend the disciplining of professionals for negligent, fraudulent, or otherwise unacceptable conduct. It is not the wealth or social status of the offenders that obstructs justice; there is no difficulty with trying these people for common crimes. But conflicting expectations arise around professional discipline—that the profession will discipline itself; that the hospitals will take responsibility for the competence of the professionals on their staffs; that state agencies will police the health marketplace and arrest wrongdoers; that the federal and state governments will use their power to withhold Medicare and Medicaid reimbursement to drive crooks and incompetents from the profession; that somehow insurance companies will act for and not against the interests of the patient; and that because the contract between professional and patient is a private one, private litigation is the best protector of rights.

The end product of these conflicting expectations is a nightmare of overlapping jurisdictions. There are, for example, clear cases of the impaired physician, usually a physician involved in substance abuse, where there is a clear trail of substance consumption (e.g., bills from the liquor store, prescriptions not justified by patient need) and substandard practice. These are handled at the state level, with reasonable penalties and conditions of rehabilitation. For the remainder of allegations of inadequate care, no one is clearly in a position to initiate action. But once a health professional has been accused of misconduct, every agency—federal, state, or professional—involved at all with the profession typically attempts to get into the case. Routine involvement in all cases is the only way the agencies can ensure public perception of their importance and continued public support. Private lawyers preparing malpractice or negligence suits often alert public agencies to the possibility of professional (usually medical) incompetence because public citation will strengthen their case. When all the agencies take off after a physician at once—threatening loss of hospital privileges and/or the right to prescribe drugs, fines for incorrect billing of Medicare or Medicaid and insurance companies, and devastating publicity for the whole affair—the result can be personally and professionally catastrophic, and quite unjust. On the other hand, complaints continue that physicians work essentially without supervision, that it is very difficult for patients to criticize or check their work, and that bad physicians are practicing, able to evade all scrutiny.

Not all problems are technical or supervision problems. There are conflicting principles at the root of some problems. One of the most common is the conflict between patient autonomy and the protection of patient welfare. If adults regularly choose treatments or interventions that serve very little medical purpose (e.g., liposuction, cosmetic surgery or implants, experimental drugs), who shall be held responsible for the undesirable outcomes? To what extent shall the medical profession be forbidden, by law, to provide such services?

Another typical conflict is that between the salvaging of a professional career and patient protection. A health professional's training is long, difficult, and expensive, and society cannot afford to lose the investment that it represents. There is good reason, then, to try to rehabilitate health professionals who have mismanaged their practices. The problem lies in deciding which lapses are remediable and which are not. There is always a danger that the professional who has offended once will do so again, no matter how tight the supervision. The problem is compounded by the need, given the nature of the professional–client relationship in healthcare, to keep the professional's problems absolutely confidential. Typically, if the physician or other practitioner is impaired—psychologically incapacitated, found not guilty of a crime by reason of insanity, alcoholic, drug abusing, or otherwise unable to practice until a course of therapy has been completed—the records will be kept confidential while the person undergoes therapy. Should the physician leave therapy or breach other agreements (by testing positive for controlled substances, for instance), the matter becomes one of misconduct rather than impairment and is no longer confidential.

Another typical case of conflict, becoming more common, is between the patient and the insurance company, with the health professional caught in the middle. If the physician says that a treatment, test, or referral is needed, and the insurance company disagrees, whose side is the physician on? Since Hippocrates, the physician has been expected to advocate for the patient; under the new market dispensation, such advocacy may threaten a professional career.

The Future

In the future, licensing, regulation, and disciplinary action will no doubt respond to greater consumer insistence on quality and cost control, thus limiting professional autonomy still further. Meanwhile, new communication modalities will make possible much greater communication with all healthcare professionals as well as with the public. Three major trends can be discerned.

First, higher and more public standards for certification can be expected. Nonprofessional members have already been added to licensing boards in most states (CSG/CLEAR). It is likely that legal statutes will be enacted requiring that health professionals be recertified at some point or at regular intervals in their careers. The public is acutely aware that the scientific foundations of healthcare are rapidly changing, and that professional education has a half-life of less than ten years—five, in the case of certain medical specialties. Mandatory continuing-education requirements are already part of the licensing laws for medicine and nursing; it is not a large step from there to provisions for occasional retesting. Some observers foresee that "good moral character" requirements—already part of the licensing statutes in most states but undefined—will be made more precise and will be more vigorously enforced (CSG/CLEAR).

Second, the effort to control costs will be continued, whatever the fate of current insurance arrangements. There is still a widely held perception that health costs are too high and out of control. Major initiatives to limit them have been less than fully effective and have roused ire among health professionals and the general public alike. Yet to this moment there are no laws specifically excluding commercial arrangements from the healthcare marketplace, even those that entail the exclusion of sick people from private health insurance. The Health Insurance Portability and Accountability Act of 1996 (HIPPAA) at least ensures that a person who becomes ill when insured, and then must change insurance plans, can enroll in the new one. In the past, the illness would constitute a pre-existing condition, a sufficient disqualification for enrollment in a new plan. But we have still no way to care for those suffering from serious chronic conditions prior to any insurance coverage.

Third, the entire process of licensing, regulating, and disciplining health professionals will become much more transparent. Both professionals and consumers have demanded this. As an encouraging start, many states have created web sites containing information on how to apply for licensure, listing job openings, and publishing all state laws regarding licensure.

The United States entered the twentieth century with the assumption that only one consent was needed for medical treatment: that of the physician or other health professional. In the last decades of that century it became clear that three consents are needed: the professional's, the patient's, and the payer's—the government agency or the private insurance company. That third consent may become much more problematic. Patients are also taxpayers and ratepayers. There is an increasing mandate to limit the amount of the national wealth that goes into healthcare, and there is no telling how far this new stringency will go in reshaping the health professions.

lisa h. newton (1995)

revised by author

SEE ALSO: Impaired Professionals; Just Wages and Salaries; Labor Unions in Healthcare; Malpractice, Medical; Mistakes, Medical; Nursing, Profession of; Research, Unethical; Nursing as a Profession; Nursing Ethics

BIBLIOGRAPHY

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Committee for the Study of Credentialing in Nursing. 1979. The Study of Credentialing in Nursing: A New Approach, vol. 2. Kansas City, MO: American Nurses Association.

Council of State Governments (CSG). 1952. Occupational Licensing Legislation in the States. Chicago: Author.

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Dent v. State of West Virginia. 129 U.S. 114 (1889).

Flexner, Abraham. 1910. Medical Education in the United States and Canada. New York: Carnegie Foundation for the Advancement of Teaching.

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Grad, Frank P., and Marti, Noelia. 1979. Physicians' Licensure and Discipline: The Legal and Professional Regulation of Medical Practice. Dobbs Ferry, NY: Oceana Publications.

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Larson, Magali S. 1977. The Rise of Professionalism: A Sociological Analysis. Berkeley: University of California Press.

Mogul, Kathleen M. 1985. "Doctor's Dilemmas: Complexities in the Causes of Physicians; Mental Disorders and Some Treatment Implications." In Social Controls and the Medical Profession, ed. Judith P. Swazey and Stephen R. Scher. Boston: Oelgeschlager, Gunn & Hain.

U.S. Public Health Service (USPHS). Health Manpower Coordinating Committee. Subcommittee on Health Manpower.1976. A Proposal for Credentialing Health Manpower. Washington, D.C.: Government Printing Office.

Welch, Claude E. 1976. "Professional Licensure and Hospital Delineation of Clinical Privileges: Relationship to Quality Assurance." In Quality Assurance in Health Care, ed. Richard H. Egdahl and Paul Gurtman. Germantown, MD: Aspen Systems.

INTERNET RESOURCES

Business.com. "State Licensing Boards for Physicians." Available from <http://www.business.com/directory/healthcare/practice_areas/physicians/>.

Rhode Island. Department of Health. "Health Professions Regulation." Available from <http://www.healthri.org/hsr/professions/professions_reg.htm>.

Texas. Department of Health. "Health Professions Resource Center." Available from <http://www.tdh.state.tx.us/dpa/Coverpg.htm>.