Leventhal: Market-based improvements to rural health care

Justin Leventhal

Submitted photo

Rural health care is expensive and unprofitable, leading many people in need to skip seeing a doctor and leading to more than 100 hospital closures in the past decade since more than half are operating at a loss.

While all health care is complex, providing it in rural areas is even more challenging. Options exist to expand the supply of doctors and other health care professionals to bring more services and lower prices in rural areas if we don’t legislate them away.

In rural settings, the fixed costs of running a hospital must be spread over fewer patients. This has frequently been addressed by pumping state or federal money into these facilities to keep them afloat. However, another option is to lower the cost of providing health care.

The most effective ways to reduce the cost of any good or service are increasing its supply, decreasing demand and technological innovation. Because health care is a necessity, options to reduce demand are limited. However, increasing the supply of health care options and finding less expensive treatments can reduce the costs and mitigate the decline of rural health care.

The supply of health care is artificially limited. In 1997, the American Medical Association successfully lobbied to limit the number of residency positions because of an “oversupply” of physicians. Additionally, thanks in part to lobbying by the AMA, the scope of practice of nurse practitioners and physician assistants has been limited in many states, further reducing competition for doctors.

As with any other market, fewer practicing doctors increases their salaries, and a lack of competition drives up patients’ medical bills and increases wait times.

Since the pandemic, the AMA has reversed its position on the number of residencies, but the consequences from nearly 30 years of not training enough doctors remain. The Association of American Medical Colleges recently released a study projecting the U.S. will have 86,000 doctors short of demand by 2036.

Artificially limiting the number of doctors further increases health care costs by making it more expensive.

The same problem happens by limiting the scope of practice for nurse practitioners and physician assistants. Many procedures don’t require a doctor and can be done by far less expensive but fully trained medical personnel. The potential benefit from nurse practitioners and physician assistants would be especially useful in rural areas with a higher proportion of such professionals, given that doctors prefer urban hospitals.

Restrictions on nurse practitioner and physician assistant permissions to prescribe medication have led to higher costs and less competition for doctors. In both cases, patients pay artificially higher prices to keep doctors’ salaries higher than they usually would be.

New technologies can also help, especially when combined with an increased scope of practice, to bring down the cost of health care. Telemedicine is one such cost-saving tool.

However, overzealous regulators often limit the benefits of these new technologies or non-physician labor. State restrictions include the ability of nurse practitioners and physician assistants to prescribe certain medications, requisite in-person visits (the exact problem telemedicine solves), restricting nurse practitioners from practicing without a doctor or even signing a death certificate. In 30 states, telemedicine cannot be done with an out-of-state doctor.

Additional technologies include artificial intelligence, which has enormous potential in wearable medical devices that can help monitor patients and keep doctors informed of any problems in real-time, even remotely.

Rather than rush to regulate technologies like AI in health care or telemedicine, lawmakers should consider the protections needed for patient privacy and safety and the potential benefits. Reducing health care costs is critical for everyone, particularly for rural communities.

There is no one solution to the challenges of providing rural health care, but there are many market-oriented reforms that would help move rural hospitals into a sustainable position, assuming we don’t undermine them with overburdensome regulations.

Editor’s note: Justin Leventhal is a senior policy analyst for the American Consumer Institute. Reader reactions, pro or con, are welcomed at AzOpinions@iniusa.org.