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

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

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:

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?


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