Missouri State of Mind

Bodegas Clinicas: Diagnosing an Outbreak of Competition

The New York Times today has an interesting article about the ambivalence of the Los Angeles medical establishment over the proliferation of what are known as  "bodegas clinicas" --small storefront licensed physicians' offices that operate on a cash economy without the intermediation of health insurance.  These bodegas clinicas  specialize in offering primary care services to some of California's uninsured including some of California's estimated 2.5 million undocumented residents.

What's not said in the article is as telling as what is.  Bodegas clinicas have been thriving in California for some  years. Their growth is of a piece with the growing number of medical clinics found in Mexican border cities -- clinics that cater to undocumented California residents who may re-cross the border for care as well as uninsured or underinsured American residents who cross the border for care in Mexico.

Why the hue and cry now about quality concerns in Los Angeles' bodegas clinicas?

One reason is surely that some of the documented now using these cash-based programs have (under California's early Medicaid expansion) or will become eligible for Medicaid.  And whatever can be said about Medicaid reimbursement rates in California, they are certainly higher than zero.  The newly or about-to-be low income insured, as a result, are in the genuinely odd position of being sought after as customers. 

Competition appears to be breaking out on the low end of the health insurance scale between bodegas clinicas and safety net providers for newly or about-to-be Medicaid eligible and soon-to-be subsidized health insurance exchange purchasers. Students of competition policy will note that one way to drive competition from the marketplace is to attempt to raise rivals' costs, say -- for example -- by activating expensive licensing investigations into the business models of thinly margined competitors.

California has some of the lowest Medicaid reimbursement rates in the entire country.  They are on a downward trajectory. This does not and will not make Medicaid beneficiaries particularly sought after in facilities with a better payor mix.  But California's Federally Qualified Health Care Centers (FQHCs) and FQHC look-alikes are fighting for their financial lives.  And Medicaid reimbursement may look good to them.

In fact, if California's 100 plus FQHCs cannot make the case for their own newly insured to stay with them as well as to solicit the business of newly insured from others, they will be in trouble.  This is because they serve the undocumented -- the outsiders to the Affordable Care Act. An FQHC will be hard pressed to make the successful business case for a patient panel consisting entirely of the undocumented uninsured. The problem is that some FQHCs have behaved exactly like providers of last resort -- impersonal and inflexible.

What I do like about the New York Times article is how it offers insight into why some consumers with options might prefer bodegas clinicas for primary care over an FQHC.  The article points out the good neighborhood access of these facilities, the extended hours designed to accomodate the many service worker patients who work the night shift,  and the linguistic competence of all levels of the staff. I have written elsewhere on what patients at all income levels seek from the clinical encounter. (You can read more here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2078684.)

Is it possible that, in one of the more modest corners of our country's health care delivery system we can learn lessons about health care delivery success that is neighborhood based, culturally competent, and forgiving of those without the foresight to fall ill only inside of bankers' hours?

 

X posted at http://prawfsblawg.blogs.com/

Do We Even Need Hospitals Anymore?

Cross posted at http://prawfsblawg.blogs.com/

 

You may have also received an invitation to participate in tomorrow's "Future of the Hospital" forecasting game.  (An open invitation is found here:   http://www.iftf.org/future-now/article-detail/future-of-the-hospital-infographic/  for those among you who have yet to register.) Sponsored by the California Health Care Foundation and others, this twenty four hour competition looks like an attempt to crowdsource the question: "Do we even need hospitals any more?" 

This is a very good question.

Intrigued, I have explored the forecasting game's website, twitter feed, "challenge" posts and decided to register.  Why this one? I receive invitations to a number of such "let's re-invent health care before  we become obsolete" type events. I occasionally participate by helping formulate questions. 

But this is the first time I would like to help brainstorm answers in this format. The difference is the series of smart questions posted under the first challenge: "Construct a 21st century safety-net system that is fair, economically sustainable and delivers high-quality emergency care services to all in need." This challenge includes these sub-topics:

• Should hospital relocations and closures be stopped through the legal or political systems?  What if minority communities could sue to prevent a hospital closure?
• What if the drop in operating EDs across the country is a positive sign of market forces at work, creating a more efficient healthcare system?
• Could EMTALA (the act that requires hospitals to provide care to anyone needing emergency health treatment regardless of citizenship, legal status or ability to pay) be strengthened to restrict closures in medically underserved areas?

This is great stuff, much of it resonant of the 2006 Institute of Medicine's study on challenges facing 21st century hospitals.

Hospital closures -- whether full closures or partial closures such as  stand alone Emergency Department closures -- are complex and, often, emotionally fraught.  Whoever said every divorce, from the perspective of family life, is the death of a civilization might have known a thing or two about community hospital closures. In a secular society, schools and hospitals often substitute as the institutions where all of our paths eventually cross at transcendent moments of our lives -- birth, death, life-threatening illness. Hospitals, while primarily health care institutions, are also civic institutions.

As a result, in the throes of a pending closure, it can be a challenge to address the larger questions about efficiency, the changing nature of hospital delivered care, and equity. I look forward to the forecasting game's insights. As a warm up,  I offer here a few thoughts on the topic of permission to close a hospital.

Permissive hospital closings are the inverse of the long-debated hospital building certificate of need ("CON") process.  In some states -- but no longer on the federal level -- a hospital's advance permitting to build requires a determination of need. A CON is not required in California, for example, but is required in New York.  There is considerable diversity of approach in between the hands-off wild wild west approach and the fairly searching scrutiny required in some states. Just as you might imagine, this means hospitals are often built on spec as it were in some states, in anticipation of demographic trends, and then have to be re-purposed as other kinds of facilities.  There are risks.  In other places, it can be arduous to open a hospital, essentially protecting market share for long-established institutions.  There are risks to harm to competition in these places.

In these different contexts, you can see that requiring permission for full or partial hospital closure might seem more or less consistent with that jurisdiction's thinking about hospitals as public goods. All of this is further complicated by the fact that, though the majority of hospitals in the United States are not for profit, states like California have substantial for profit hospital chain presence.

Add to this mix the reality that some parts of the country are over-supplied with acute care hospital beds (and their attendant hospital-based medical specialty providers) and some are under-supplied and realize that tomorrow's forecasting game ought to be lively.

Reinvent community hospitals for the 21st century? I'm game.