Rural healthcare 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 healthcare is complex, providing it in rural areas is even more challenging. Options exist to expand the supply of doctors and other healthcare 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 healthcare.
The most effective ways to reduce the cost of any good or service are increasing its supply, decreasing demand and technological innovation. Because healthcare is a necessity, options to reduce demand are limited. However, increasing the supply of healthcare options and finding less expensive treatments can reduce the costs and mitigate the decline of rural healthcare.
The supply of healthcare 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 United States will have 86,000 doctors short of demand by 2036.
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Justin Leventhal is a senior policy analyst for the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.TheAmericanConsumer.Org or follow us on Twitter @ConsumerPal.