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Market failure occurs when the “usual forces of supply and demand lead to sub-optimal results” (Roger and Christie, 1945). For optimal service and product provision, markets must be competitive free of all constraints, but this is not possible in the presence of “externalities, public goods, and asymmetric information” (Blair and Christie 1945). Healthcare is one of the areas affected by the market failure and requires government intervention. The state seeks to control the inability of the market of providing quality healthcare through requiring the licensing of healthcare providers. According to Boulet and Marta (75) accreditation of medical school programs, revalidation and licensing of doctors are essential in ensuring quality healthcare. Licensing ensures the health providers operate above core standards allowing the public to access quality services. Licensing also ensures only qualified personnel perform in a given jurisdiction ensuring competent service provision. Consistency and systematic healthcare provision are also achieved within the state through licensing. These aspects of healthcare quality delivery may not be achieved when licensing is not available in a state hence the market failure. Licensing assures the public that those tasked with healthcare providers have the requisite skills and competency to perform their assigned duties and responsibilities. Best qualified personnel will make the highest contribution towards the provision of quality care for individuals in the state. The need to keep skills and knowledge to maintain licensing also ensures the healthcare providers are committed to providing quality care to the public.
Currently, the private sector does not have the mandate to undertake to license of healthcare professionals as this role is reserved for the state (Schneider, 36). According to Schneider (36), state health departments have the responsibility of certification and licensing of services and medical personnel with the aim of maintaining the quality of care and standards of competence. Private sector performance of licensing and accreditation would require a change of laws to accommodate the change. Therefore, the private sector does not currently undertake any licensing of healthcare personnel. Healthcare licensing could be done by the private sector is given the mandate through legislation. The opportunities for private licensing in healthcare include the professional bodies licensing its members to practice as was the case in the UK and currently implemented in Canada (Adams). However, private licensing is associated with weaknesses in the implementation of strong professional practice as evidenced by the UK that has seen the increased shift towards public regulation (Adams).
Advantages of public regulatory systems
Public regulatory systems in healthcare have advantages including the achievement of public interest. According to Field (2008), oversight is needed in healthcare considering the life and death situations and fundamental concerns. The legislation also ensures there is consistency on public service provision in by healthcare professionals within the state. The healthcare personnel working within a given jurisdiction have to adhere to the same set of minimum standards allowing for the achievement of consistent service provision within the state. State legislation also ensures high standards of practice are implemented allowing for respect of the health profession. State regulation also offers a disinterested external perspective that is less affected by economic self-interest allowing for the regulations to be effective in the achievement of set goals. The state regulation is also advantageous because of the checks and balances of federal and state governments allowing for the laws set to be optimal and input from each level of government allows for better regulation (Field).
The other advantage of state legislation is that there are limited chances of jurisdiction and dominance fights by regulating agencies since the state borders are well-documented in law. The effect is that health personnel have a clear understanding of the rules and regulations they are required to abide by given the state in which they practice. State regulation of healthcare professional standards also ensures there are limited fights between regulators agencies in conflict with the competitors with a view of winning key audiences including the state, employers, and the public.
Advantages of private regulatory systems
The private regulatory system has advantages including the clear understanding of the competencies and skills required in the profession to allow for effective regulation. According to (Field), private regulatory agencies such as the medical specialty boards and the Joint Commission consist of professionals with experience working in the sector that provides technical expertise for the effectiveness of regulations. Private practice is also considered more efficient compared to public sector hence the achievement of higher standards and better and easier access to licenses when required. Efficiency in the private sector also ensure the procedures for obtaining and renewing licenses would also be improved allowing for better management of the professional practice. Easier application and renewal licensing procedures would lead to higher rates of adherence to set guidelines both at state and federal level. However, the implementation of the private regulatory system has not been very effective in the achievement of set goals as evidenced by the complete elimination of self-regulation in the UK and the movement towards state and consumer appointed actors in Australia (Adams).
II. Practice licensing
Physician licensing is undertaken by the state through the enactment of laws that are implemented by the medical boards. Physicians have to be licensed to practice in a given state with civil fines, criminal penalties, and exclusion from federal Medicaid and Medicare as consequences for unlicensed practice (Eisenberg 206). Regulation changes have been prompted by the rise of telemarketing owing to increased competition from unlicensed out of state practitioners hence the move towards non-state physicians practicing telemedicine from remote locations to be licensed both in their local state and the state where the image is originating (Eisenberg 206). It is evident that states have to respond to changing conditions in laws and regulations and a new aspect that has emerged in recent years is the need for physician quality ranking.
The state should consider ranking physicians in the future as a platform to increase the quality of service provision and ensure the thirst of the public for information on the performance of doctors is met. There has been an increased focus by the public on understanding how doctors perform their duties as a precursor to making decisions on their health needs. According to Schlicht (204), physician rankings provide comparable complexity augmenting the public’s ability to make informed choices. Therefore, when the state offers to provide physician rankings, the public would have an easier and cheaper platform for information on the physicians. The demand for information on the quality of physicians is high, which could result in misleading information from sources with self-interests hence the state would be the most optimal to rank physicians and provide the information to the public to avoid biases (Schlicht 204). Rating physicians on quality would also serve to show the state’s commitment towards providing quality care to all. The success of Medicare and Medicaid in the rating of care providers is a testament that the state rating of care providers could be undertaken successfully and ensure the delivery of high-quality care for the public (Gao et al. n.d.). The findings of Gao et al. (n.d.) supports and forecasts the increase of online physician rating and its role in ensuring the quality of care is improved.
However, care should be taken to ensure the ratings provided by the state are highly scrutinized and correct to avoid tarnishing the reputation of physicians, which could result in the reduced morale. There should also be close collaboration between care providers and the state regulators to achieve a balance between rating and care provision to avoid a situation where the physician ratings are more important than offering quality service to the public. Involving the physicians and other stakeholders in the development of rating systems would ensure the benefits are more than the detriments of implementing the rating system.
Physician rating can also be done at provider levels allowing hospitals to publish data on the performance of physicians aided by patient reviews and ratings. This will allow providers to engage with patients and ensure high levels of transparency are achieved while providing the best care to the patients. The providers also have access to data for effective rating and will ensure the physicians are more accountable for the provision of quality care for the patients. The providers will also ensure a shift from patients using unreliable data on physician rating available online by offering detailed ratings and an action plan to improve the performance of physicians whose ratings are low. This will aid in improving the confidence of the patients in the care delivery process and the accountability of hospitals. Provider ratings will also be more effective than state rating as physicians will be offered opportunities to train and improve in response to low ratings.
Not licensing medical practitioners would be very detrimental to the achievement of quality healthcare for the public. The impact would be the less qualified practitioners would join the industry causing deterioration in the quality provided. The respect of the profession would also be lost, and the need to undertake rigorous training to achieve high levels of competence would be lost resulting in individuals with a lack of understanding of the procedures and practices providing care to patients. This would evidently cause a fall in the quality of care provided and result in avoidable losses of life.
It is evident that state licensing of medical practitioners is very important in the achievement of high-quality care for the public and ensuring minimum standards of care are provided in a state. Licensing also ensures ethical practice and promotes confidence in the public on the healthcare delivery. The shift towards transparency and more patient participation in healthcare delivery also provides a basis for physician rating to be implemented both at the state and provider level as a measure of improving health care quality delivery.
Adams, Tracey L. "Professional self-regulation and the public interest in Canada." Professions and Professionalism 6.3 (2016).
Blair, Roger D., and Christine Piette Durrance. "Licensing health care professionals, state action and antitrust policy." Iowa L. Rev. 100 (2014): 1943.
Boulet, John, and Marta Zanten. "Ensuring high‐quality patient care: the role of accreditation, licensure, specialty certification and revalidation in medicine." Medical education 48.1 (2014): 75-86.
Eisenberg, Ronald. Radiology and the law: malpractice and other issues. Springer Science & Business Media, 2012.
Field, Robert I. "Why is health care regulation so complex?." Pharmacy and Therapeutics 33.10 (2008): 607.
Gao, Guodong Gordon, et al. "A changing landscape of physician quality reporting: analysis of patients’ online ratings of their physicians over a 5-year period." Journal of medical Internet research 14.1 (2012).
Schlicht, Ekkehart, ed. Firms, markets, and contracts: contributions to neoinstitutional economics. Springer Science & Business Media, 2012.
Schneider, Mary-Jane. Introduction to Public Health. Jones & Bartlett Publishers, 2010.
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