Market failure and rural health care

May 5, 2014 at 4:35 PM Leave a comment

For decades, the theory of American health care reform has been to introduce market forces and make them effective enough to control pricing and utilization, ideally at rates no greater than general inflation.  This has been true since before the failed Clinton era reform effort, and its core thesis of managed competition developed by Stanford economist Alain Einthoven. 

But what happens in locales that are too sparsely populated to support at least two competitors for a given service?  What if it can’t really support one competitor without outside subsidization?  Much of Colorado’s geography fits this description.  In the absence of market competition, what forces will match supply and demand?

The issue is more complicated than it seems.  From a purely technical standpoint, one might advocate for the decommissioning of facilities in such areas.  “Look, if the market can’t support them, then I certainly don’t want to use my tax dollars to do it,” some might say.   “If people choose to live there, then they have to pay their own way.  Many things are more expensive in rural areas, and health care is no exception.”

But health care services aren’t like others, in that people take “care” as a sign of “caring”.  If we stand by while their hospital fails, some would interpret that as a sign of neglect at best, and hostility at worst.  Recently in Boothbay Harbor, Maine, St. Andrew’s Hospital became St. Andrew’s HealthCenter, with no capacity to admit people overnight.   Despite the economic realities, the hospital seeing few emergent patients, and losing money because of expensive but underutilized staff, local residents were appalled that there would be no local hospital beds.

Someone at a local Maine foundation explained this to me.  She told me, “This isn’t just a matter of economics.  Many have contributed to their local hospitals over the years.  In some of our towns, it’s the largest remaining employer.  People identify with their local hospital, and its loss is a blow to civic pride.”

What this tells me is a lesson I have learned over and over again: the hardest problems aren’t technical, they’re cultural.  (This has to do with the American drive toward individual empowerment, but that’s a whole other post.)  Assuring adequate service to rural communities in the information age can be achieved, more cheaply and in many cases with an improvement in patient experience outcomes.   Sanjeev Arora in New Mexico is a pioneer in telemedicine through a program he started called Project Echo.  He’s demonstrated outcomes in many specialties in rural areas of New Mexico that are as good as those he achieves in his own specialty clinics in Albuquerque.  He does this by bringing nurse practitioners and other primary care providers on to his team remotely, through telemedicine.  I think he’s demonstrating that a static body of knowledge isn’t the main determinant of good care; it’s local relationships and the ability to stay current in an area through ongoing discussion with a team focused on the same kind of patient.   It tells me that the best repository of clinical knowledge isn’t single human brains last intensively programmed years ago, but a living human “cloud” intelligence supported by the actual computing cloud.  Both should continually update themselves.

Important questions loom in Colorado and other states with rural regions: how do we maintain adequate services for sparsely populated areas, at a price that is sustainable?  How do we need to start thinking about services differently in order to widen the possibilities to solve the set of equations that define this problem?  How do we honor the contributions of those who built these rural facilities that were once relevant, even vital, but before travel and information transfer were so easily available?   How do we keep up with residents’ expectations that rise as fast as those in urban areas, but whose infrastructure cannot? 

Complexity theory says that for complex problems with multiple independent actors, it is impossible to master plan solutions.  The independent actors respond unpredictably to attempts to change the system.  What can be done, though, is to plan interventions, measure results, adjust the intervention, measure, adjust, measure, etc.  Rural health care system redesign is likely one such complex problem.  Solutions to such a problem may involve innovative systems like telemedicine, mobile apps, and the local Walgreens being the main health care facility in town.  But as a cultural problem, surely anyone outside of communities suggesting any of these things for communities will fail.  Complex solutions cannot emerge without the leadership of the people affected by the problem.  The external pressures in communities are not under their control; their response to those pressures is.

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