Managing business licenses in the healthcare industry

It’s no secret that healthcare is a challenging line of business. Like so many other industries, the healthcare profession is facing a shortage of staff and increased demand. Costs for drugs, insurance, labor, and supplies are rising, cash is tight, and providing timely, quality care is imperative. On top of all this, healthcare professionals must meet stringent licensing and healthcare regulatory requirements from a variety of agencies.

Healthcare is a heavily regulated industry that’s subject to oversight by a number of local, state, and federal agencies, including but not limited to the U.S. Food and Drug Administration. Licensing helps build public trust by ensuring healthcare businesses are authorized to do the work they do, and are doing it in a clean, safe space. But managing licenses can bog down businesses.

Obtaining and updating all necessary licenses and permits — which run the gamut and may include a license for home visits, a license to handle biomedical waste, and the basic license to operate — can be a monumental task. Adding to the complexity, the licenses required to operate a healthcare business may change in response to evolving laws, public health issues, and technical advances. 

For businesses operating in this space, proper healthcare business license management is essential.

Business licenses for healthcare providers help ensure businesses meet healthcare regulatory requirements, improving patient safety and building trust. Practitioners are required by law to obtain a variety of licenses; regulatory oversight demands these licenses be up to date. Licenses help guarantee that healthcare providers are properly accredited and understand how to protect public health.

Patient safety and trust. Proper licensing certifies that healthcare providers meet the necessary regulatory standards, which is essential for patient safety and trust. Patients, families, and care providers are more likely to feel confident and secure in a well-regulated, licensed facility where they can expect high standards of care and professionalism​​.

Legal obligations. Compliance with business licensing requirements is necessary for legal operation. Failure to comply with licensing mandates can result in a variety of disciplinary actions, including domino discipline, inability to work or ship in a state, substantial fines, legal sanctions, and closure. 

Regulatory oversight. The healthcare industry is overseen by a host of federal, state, and local agencies. The regulations they help enforce are designed to ensure the quality of care, patient safety, and ethical operations. Noncompliance can lead to increased scrutiny and potential exclusion from critical programs like Medicare and Medicaid​.

Accreditation and reputation. Maintaining compliance helps healthcare providers build and maintain a reputable standing in the industry. It’s also required for certain accreditation. For example, failure to obtain or update a state license can result in loss of Medicare and Medicaid accreditations (or prevent providers from accreditation in the first place). 

Operational efficiency and risk management. Effective compliance programs help enhance efficiency and streamline operations. Regular audits and proper documentation help identify potential risks so they can be addressed promptly, minimizing the chance of serious violations.

As essential healthcare partners, pharmacies also need to comply with a host of pharmacy licensing mandates and regulatory obligations. Pharmacies need to be licensed with the states in which they operate. 

Necessary licenses and permits for pharmacies include:

• Pharmacy and specialty pharmacy licenses — required to operate a pharmacy

• Pharmacist license — required for each practicing pharmacist 

• Controlled substance license — required to handle and dispense controlled substances

Like healthcare practitioners, pharmacists and pharmacies must navigate specific compliance challenges. Requirements vary depending on the type of business and jurisdiction. For example, a pharmacy must be licensed in all states in which they send products to end users

Other compliance challenges for pharmacies include:

• Adhering to diverse state regulations

• Managing pharmacist-in-charge designations and ensuring continuous compliance

• Obtaining multiple licenses and permits, such as for controlled substances and medical devices

• Undergoing regular inspections and intense regulatory scrutiny 

Urgent care facilities are another essential, albeit relatively new, leg in the healthcare stool. As with other healthcare providers and pharmacies, urgent care facilities need a number of specific licenses and permits. These include:

• Facility license — for operating the urgent care center

• Medical Doctor (MD) license — for doctors practicing in the facility

• Pharmacy license — for operating a pharmacy

• Registered Nurse (RN) license — for nurses practicing in the facility

• Technician licenses — for example, for operating an X-ray

Managing urgent care facility licenses properly is essential. While urgent care facilities have to deal with some of the same compliance challenges as many other healthcare providers, they may face additional obligations as well. These include:

• Managing licenses for diverse services (e.g., lab services, radiology)

• Ensuring compliance with local health department regulations

• Coordinating between multiple professionals’ licenses within the facility

Operating without the necessary licenses is illegal. For a relatively minor infraction, such as failing to pay a licensing fee, a state medical board may issue a board order to a healthcare provider. State medical boards also have the authority to impose monetary fines and deny, monitor, restrict, suspend, or revoke a license.

Don’t leave healthcare licenses to chance. Fulfilling diverse licensing and compliance requirements takes organizational skills and planning. Following a few best practices can help: 

Consult with an expert. Licensing and compliance requirements are subject to change, so even if you’ve been in this business for years, it can be helpful to consult with an expert. Given how complex the regulatory environment can be, some healthcare organizations may find it beneficial to engage a compliance expert or managed services provider. 

Conduct regular compliance audits. Don’t take it on faith that your organization will be compliant next year because you were compliant last year. To ensure all licenses are up to date and meet current regulations, it’s a best practice to conduct regular compliance audits, either on your own or with the help of a trusted partner.

Implement centralized license tracking. If you’re responsible for obtaining and updating more licenses than you can count on one hand, you may find it helpful to set up a centralized system that can track and manage licenses. Such systems can reduce the risk of oversights.

You know how important it is to keep medical business licenses and permits up to date. You also know the time you spend managing licenses can be better spent serving your patients. Business license automation can help you fulfill licensing obligations in less time.

Our cloud-based license management software enables healthcare professionals to keep track of which licenses are required in which locations and maintain compliance with licensing mandates. The Avalara healthcare license management solution stores, tracks, and updates licenses in a centralized location, facilitating management and review. It also monitors regulatory changes, so you don’t have to.

Avalara License Management is a cloud-based software system that serves as a centralized repository for licenses. Benefits include:

• Automated renewal reminders

• Centralized document storage

• Compliance tracking

Ready to learn more about how Avalara License Management works? Watch a demo now.