Whose Side Are You On? States' Roles in Enabling and Constraining Innovations in Healthcare Markets

We use institutional theory to understand the pattern of adoption by US states of a professional licensing policy innovation that influences the evolution of a market for healthcare services. We demonstrate how the power of incumbent and challenging professional associations, the characteristics of a state’s labor market, and previous adoptions by neighboring states affect a state’s propensity to embrace or resist state legislation of professionally-contested healthcare licensing legislation over a 10-year observation period. The results of our research have implications for understanding state healthcare policy innovations, the power of professional associations, and institutional theory.