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Sunday, January 13, 2013

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?




Posted by Ann Marie Marciarille on January 13, 2013 at 01:23 AM | Permalink


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You mean that markets might actually be more efficient than centralized bureaucracies in the delivery of medical services? Who knew?

Posted by: Doug2 | Jan 13, 2013 8:36:25 PM

Great post (and actually month of posting Ann Marie). I wonder how you think this relates to the phenomenon of medical tourism from California to Mexico that both Nathan Cortez and I have done some writing about? (The always lovely "but tell me about how what you said relates to me!" question ;))

Posted by: I. Glenn Cohen | Jan 14, 2013 3:00:32 PM

Thank you, Glenn. I have read, with pleasure and interest, some of your and Nathan Cortez's writings on medical travel. I am intrigued by the topic of health care in a flat world.

I think that the relationship of domestically-located bodegas clinicas as well as foreign-located bodegas clinicas and oficinas medicas to medical travel might resonate most with Nathan Cortez's work on re-calibrating various aspects of health care law and regulation to allow the post-ACA uninsured to find some access to medical care.

It is, of course, not only the undocumented who are ACA outsiders, though they represent a significant portion of ACA outsiders in states like California and Texas. The ACA will likely leave a substantial number of documented Americans (I describe as too rich for Medicaid but too poor for the Exchanges) outside of insured status.

Will some of these individuals travel for their version of affordable care? Yes. They already are. Your paper on Protecting Patients with Passports makes the risks associated with this clear.

Will a domestic market in reduced price primary care physician services re-direct some of the travelers? I think it likely.

Posted by: Ann Marie Marciarille | Jan 14, 2013 7:03:01 PM

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