In the early 1990s, national political and policy leaders determined that competition in healthcare services was a powerful way to reduce costs and expand access to care in America. During the past decade and a half we have seen these market forces at work. Competition as a theory was embraced by governments, businesses, insurers and many providers as the best method to achieve efficiencies and minimize premium increases.
What it has done is give providers and insurers greater incentive to aggressively and successively pursue higher profits by avoiding serving high percentages of poorer and sicker patients and more complex medical cases. This pattern often results in hospital closures, geographic relocations and new insurance products that target younger, healthier markets.
Providers struggling in communities with higher levels of poverty cannot and do not function well in competitive markets, especially when government programs are shrinking. In defense, many responsible providers compete by relocating or reducing services to sustain themselves, which may enable them to serve some segments of low-income and uninsured populations.
These actions are also fueled by public officials who reduce budget expenses and shift funding commitments and responsibility from the highest levels of government to the local communities. In some cases, communities are fortunate enough to have providers that can and will step up to fill the gap. More often, this is not the reality of healthcare delivery where cost- and risk-avoidance dominates.
Cities with the highest percentages of poverty have experienced a reduction in access to care for decades. What was once a slow drip may now be developing into a waterfall. Despite efforts to expand insurance coverage, many low-income communities simply have little to no services available to their residents. Apathy about this crisis is overwhelming. Over the past months, many cities have seen hospitals close or relocate. Public systems are experiencing accelerated service and budget reductions and are unable to offset the impact of health services that are eliminated.
The challenge for the local communities, providers and political leaders will be to find a responsible and successful way to manage change and reorganization in order to maintain access to care. This is a national challenge, one facing many urban and rural communities and vital to successful health reform. The dilemma in this situation is not created by the provider or the population at risk, but rather by the assumption that competition can exist and survive without a sound, rational, adequately financed safety-net system. In the absence of such a plan, private providers most responsive and accessible to the poor will be disadvantaged, at risk and may perish, while attempting to compete. Consequently, if the goal is for competition to succeed, we will have to fund provision of care for the poor in a fair and sensible manner.
Funding can be provided in various ways: adequate health coverage and insurance payments; market rate, stable and reliable private-sector provider subsidies; or better government-financed, community-based hospitals, clinics and physician delivery systems. Without such arrangements or other schemes, chaos will prevail, providers will relocate and reduce services to vulnerable populations to avoid failure.
In addition to adequate funding, a lot of work will be required to develop an appropriate healthcare delivery infrastructure and resources to make access and treatment a reality and enable effective use of the funds. In many parts of the country (both rural and urban), this means returning to a concept of "managed competition" which was quickly abandoned in the early 1990s. This means creating a balanced playing field by taking stock of the strength and weaknesses inherent in our delivery systems and making essential investments.
It also requires improvements in the human, physical, technical and scientific resources to create equally attractive and capable delivery systems. There will also be a need for incentives for professional staff (especially physicians and nurses) to be recruited and retained in underserved or impoverished communities. Many of these ideas had earlier programmatic lives. However, time has proven that they did count for something and provided a level of stability and assurance that enabled the competitive system to work.
Competition in healthcare can be productive, however, it must be accompanied by a rational systems-funding policy that at least covers primary and secondary care that supports all populations. The reality is, market competition and adequate funding for the uninsured are inextricably interlocked. The uninsured and underinsured have become a permanent fixture, and they are increasing steadily. However, the resources allocated to preventing illness and avoiding disease are not keeping pace. This combination is a man-made disaster in the works. Since prevention is a public health goal and has the highest cost-benefit value, the national agenda should be to adequately cover its citizens, and therefore preserve and protect a first-rate health delivery system.
Thomas Chapman is president and chief executive officer of HSC Foundation, Washington.