Provider Licensing Market Map: Ensuring legal compliance and quality care
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Before credentialing (and enrollment) is even possible, provider licensing is a requirement for legal practice in each state. This week we’re diving into the licensing process, including renewals and cross-state licensure, as well as the workflows behind getting licensed.
Setting Standards
Provider licensing involves a rigorous verification process to ensure that clinicians meet the educational, training, and ethical standards necessary to deliver quality care. License to practice within a state is overseen by state medical boards and other regulatory bodies, with standards that may vary by state but generally include:
Educational requirements: Completion of accredited educational programs.
Training: Required residency or internship programs.
Examinations: Passing relevant board exams (i.e. USMLE for doctors and NCLEX for nurses).
Background checks: Criminal and professional background checks to ensure no history of malpractice or ethical violations.
Licensing Workflow
Licensing occurs in three cases: new practitioners without an existing license, renewals that occur every 1-3 years, and licenses for new states and multi-state licensing. The overall workflow for each of them is as follows:
Application Submission:
State licensing board application: Providers submit applications to the relevant state board, including proof of education, training, and exam results.
Background checks: Many states require criminal background checks and verification of good moral character.
Verification and Review:
Credential verification: The state board verifies all submitted credentials.
Additional documentation: Providers may need to provide additional information upon request.
Approval and issuance:
License approval: The state board approves the application if all requirements are met.
Issuance of license: The provider receives their official license to practice.
Renewals
Licenses need to be renewed periodically to comply with state regulations. Typically, providers receive a renewal notice from the state board before their license expiration date, prompting them to gather necessary documentation, including proof of continuing medical education (CME). Additionally, many boards require proof of ongoing clinical work and practice hours, as well as audits and background checks.
Cross-State Licensure
With the growing need for telehealth services, cross-state licensure has become a significant focus. The Interstate Medical Licensure Compact (IMLC) and Nursing Licensure Compact (NLC) facilitate the process for physicians and nurses, respectively, to obtain licensure in multiple states, streamlining the application and verification process.
Essentially, states amend their legislature to join the compact, and agree to abide by the licensing process set forth by the compact. When a clinician applies specifically to the compact, they can request licensure in a number of states, and the clinician is provided individual licenses in each state where they will practice.
The Licensing Vendor Landscape
While going through the licensing process is generally painful because of the manual workflows it involves, doing it at scale for multiple states and a large number of providers can be absolutely overwhelming. If provider organizations don’t have in-house teams to handle these licensing needs, they can outsource them to third party providers.
Typically, these service providers do not build their own technology, but are able to use out-of-the-box tools for processes like:
Document management for licenses, as well as all of the supporting documents like diplomas and certifications
Automated background checks and primary source verification
Tracking of license status and expiration dates
Workflow management for collecting required documentation
As a result, there are a large number of sub-scale vendors that help collect all of the information required, perform the requisite checks, and interface with state licensing authorities to obtain licenses on behalf of the providers.
Because licensing is a services-heavy business with high variable costs, many tech-oriented vendors don’t view it as their main driver of cash flow, but continue to operate in the space because of how closely related it is to credentialing, and providers that use a vendor for licensing tend to also use them for credentialing, which can be a much higher-margin, software-enabled business.
Unfortunately, we’re not able to list the vast majority of licensing vendors due to their size and local presence. However, there are a number of vendors who focus more on cross-state licensing and can handle licensing a larger number of clinicians, sheerly due to their size and scale. These include Blueshift Licensing, CertifyOS, Credsy, Medallion, MedicalLicensing.com, Medtigo, OpenLoop, SteadyMD, and Verifiable.
AI Potential?
Licensing workflows are relatively straightforward, if time-consuming, involving chasing down information, filling forms, submitting them to state authorities, and corresponding with those authorities to move the process forward. While workflow automation is currently not sufficiently advanced to perform this task well, we suspect that vendors who perform these workflows well and understand their nuances will be well-positioned for deeper automation as the progress of foundational models moves inevitably forward. Alternatively, a vendor who makes the leap to leverage AI first could be well-positioned to pull ahead of the pack.