Imagine that it is 2 am and your 3 year old child is crying and complaining of an ear ache. You want to be able to quickly figure out whether it is something serious or not, and one of your options at such a late hour is to open up your laptop and quickly find a qualified caregiver from anywhere in the United States to give you some basic guidance and recommendations on demand. The caregiver indicates to you that based upon the evidence, it is a basic ear infection and prescribes the proper medication and routes it to the 24 hour pharmacy closest to you. This could potentially save you a tremendously burdensome and costly trip to the Emergency Room. Expand this concept of virtual clinicians on demand beyond my simple example above, and you can see the powerful implications as it relates to timely access and costs associated with care across hundreds of situations where our current impulse is to go to the ER or call 911. Even within the hospital and outpatient clinic settings, the best specialists in their field could be brought in virtually to consult on complex cases – thus a Critical Access Hospital in Tulia, Texas could bring in a Cardiologist from the Cleveland Clinic for a consult in the unencumbered by regulations hospital.
Alas, this type of seemingly no-brainer innovation is but one of thousands of examples of regulatory-based supply restrictions that pervades healthcare. In this particular example of what is broadly called “telemedicine”, restrictions come in various forms but can largely be bucketized into reimbursement restrictions (doctors or facilities don’t get reimbursed for virtual visits even though they could perform the exact same functions as a face to face visit), geographic restrictions (a consumer can only leverage a caregiver in a certain state), or licensing restrictions (a consumer can only see a certain type of caregiver or can only see them upon certain conditions.
A recent Cato Institute podcast interview with John Davidson of the Texas Public Policy Foundation highlights such inane regulations, in this instance in the form of dictates pushed down from an unaccountable medical governing board comprised largely of licensed physicians, who will inevitably have a conflict of interest allowing more care supply. The specifics of the case are that the medical board published a ruling earlier in 2015 (with a company that provides access to on demand telemedicine services, Teladoc firmly in their crosshairs) that indicated that to use telemedicine services a licensed professional had to first have a face to face meeting with the patient or be present in the room while the virtual visit occurred. This of course defeats the whole purpose of telehealth and renders my example above of the ear infection as impossible to actually pull off. The case has since gone to court, and hopefully the judicial review finds the patently obvious conflict of interest ruling (physicians restricting supply will increase their own reimbursement) as anti-competitive.
At a higher level, this calls into question the sprawling and pernicious market impacts that such governing and licensing boards create, especially when legislative bodies fail to create controls or boundaries on such agencies. When such boundaries do not exist, we wind up with agencies that can create arbitrary rulings that favor the connected and entrenched interests and can have a sizable impact on economic forces and ultimately hurt the consumer, particularly the poor. The agencies can essentially act with unchecked powers – a quasi executive, legislative, and judicial branch all rolled into one. In this instance, I am pointing to the services required mostly of a Primary Care Physician, but the examples abound in Healthcare, Energy, Environmental, and many thousands of subsets of our economy beyond.