SB668 SD1: Compact could entice physical therapists to practice in Hawaii

The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the Senate Committee on Commerce and Consumer Protection on March 2, 2023.

March 2, 2023
9:30 a.m.
Conference Room 229 and Via Videoconference

To: Senate Committee on Commerce and Consumer Protection
      Sen. Jarrett Keohokalole, Chair
      Sen. Carol Fukunaga, Vice Chair

From: Grassroot Institute of Hawaii
            Ted Kefalas, Director of Strategic Campaigns


Comments Only

Dear Chair and Committee Members:

The Grassroot Institute of Hawaii would like to offer its comments on SB668 SD1, which would allow the governor to enter Hawaii into the Physical Therapy Licensure Compact.

If this bill is enacted, the Legislature will take an important step toward encouraging more physical therapists to practice in Hawaii.

According to the Physician Workforce 2023 annual report, Hawaii has a 25.3% shortage of doctors specializing in physical medicine and rehabilitation.[1] This shortage is especially severe on Hawaii island, 82.2%, and Kauai, 90.0%.[2]

Attracting more physical therapists to practice in Hawaii requires a multipronged strategy that will address everything from Hawaii’s high cost of living to the state’s regulatory scheme for healthcare facilities. Perhaps most important is the need to reform licensing regulations for healthcare professionals.

One-fourth of all licensed workers in the U.S. work in healthcare.[3] Their licenses can be difficult to obtain, are expensive and carry geographic or “scope of practice” limitations.

As discussed in the Grassroot Institute of Hawaii’s new policy brief on medical licensing, “How changing Hawaii’s licensing laws could improve healthcare access,” the state’s shortage of healthcare professionals makes its restrictions on healthcare workers who already hold licenses in other U.S. states seem redundant and self-defeating.[4]

 As the Federal Trade Commission noted in a report on occupational licensing portability:

There is little justification for the burdensome, costly, and redundant licensing processes that many states impose on qualified, licensed, out-of-state applicants. Such requirements likely inhibit multistate practice and delay or even prevent licensees from working in their occupations upon relocation to a new state. Indeed, for occupations that have not implemented any form of license portability, the harm to competition from suppressed mobility may far outweigh any plausible consumer protection benefit from the failure to provide for license portability.[5]

In other words, though medical licensing is intended to protect the public, there is a point at which the level of regulation reduces the number of people in practice without an appreciable public benefit.

One study of licensing among medical professionals found that “licensing is associated with restricted labor supply, an increased wage of the licensed occupation, rents, increased output prices, and no measurable effect on output quality.”[6]

This is where we can benefit from the lessons learned during the coronavirus situation. The governor’s emergency modification to state licensing laws demonstrated a need to embrace license portability, making it a simple matter for a healthcare professional licensed in another state to practice in Hawaii.

The interstate compact approach outlined in this bill would streamline licensing for physical therapists, making it easier for them to move from participating states to Hawaii without facing time-consuming, costly and redundant regulatory hurdles.

The state would retain its control over Hawaii licensure requirements, but would simultaneously increase the pool of physical therapists able to practice in Hawaii and shorten the time it would take for them to begin working here.

At present, the PT Compact includes 33 states. Almost a dozen other states have introduced legislation to join as well. Years of successful implementation testify to the safety and effectiveness of this approach to license reciprocity.

The PT Compact Commission states that “Compacts are the most powerful, durable and adaptive tools for ensuring cooperative action among states. Unlike federally imposed mandates that often dictate unfunded and rigid requirements, interstate compacts provide a state-developed structure for collaborative action, while building consensus among states and federal partners.”[7]

Joining the PT Compact would be an important step toward attracting more physical therapists to our state, thereby addressing our physician shortage and improving healthcare access for all.

Thank you for the opportunity to submit our comments.


Ted Kefalas
Director of Strategic Campaigns,
Grassroot Institute of Hawaii

[1] Annual Report on Findings from the Hawai‘i Physician Workforce Assessment Project,” University of Hawai‘i System, December 2022, p. 17.

[2] Ibid, pp. 19 and 23.

[3] Ryann Nunn, Improving Health Care Through Occupational Licensing Reform, RealClear Markets, Aug. 28, 2018

[4] Malia Hill, “How changing Hawaii’s licensing laws could improve healthcare access,” Grassroot Institute of Hawaii, February 2023, pp. 5-7.

[5] Karen Goldman, “Options to Enhance Occupational License Portability,” U.S. Federal Trade Commission, September 2018, p. 25.

[6] Sean Nicholson and Carol Propper, “Chapter Fourteen — Medical Workforce,” in “Handbook of Health Economics, Vol. 2,” Elsevier, B.V., 2012, p. 885, cited also in the previously mentioned FTC study, footnote #9, p3.

[7]FAQs: What is an Interstate Compact? PT Compact, accessed Feb. 8, 2023.

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