One state's response to the malpractice insurance crisis: North Carolina's Rural Obstetrical Care Incentive Program.

In the period 1985-89, there was a severe drop in obstetrical services in rural areas of North Carolina, partly because of rising malpractice insurance rates. The State government responded with the Rural Obstetrical Care Incentive (ROCI) Program that provides a malpractice insurance subsidy of up to $6,500 per participating physician per year. Enacted into law in 1988, the ROCI Program was expanded in 1991, making certified nurse midwives eligible to receive subsidies of up to $3,000 per year. To participate, practitioners must provide obstetrical care to all women, regardless of their ability to pay for services. Total funding for the program has increased from $240,000 to $840,000, in spite of extreme budgetary constraints faced by the State. The program and how its implementation has maintained or increased access to obstetrical care in participating counties are described on the basis of site visits to local health departments in participating counties and data from the North Carolina Division of Maternal and Child Health. The program is of significance to policy makers nationwide as both a response to rising malpractice insurance rates and reduced access to obstetrical care in rural areas, and as an innovative, nontraditional State program in which the locus of decision making is at the county level.

Does subsidizing rural community health centers hurt private practice physicians?

One reason for the shortage of primary care physicians in rural areas may be these physicians' reluctance to compete for patients with federally subsidized Community Health Centers (CHCs). Yet little is known about the relationship between private practice physicians and physicians in federally subsidized practices who share service areas. We used surveys from a two-state subset of a nationally representative sample to compare practice characteristics of three types of physicians: those who work in CHCs; those in private practice within CHC service areas; and private practice physicians in other rural areas. We found that rural physicians who compete with CHCs earn incomes comparable to physicians in rural areas who do not compete with CHCs, and that the percentage of Medicaid and uninsured patients seen in private physician practices does not increase when a CHC is not in the county. We conclude that CHCs do not provide competitive barriers to physicians in private practice, although we do not know if the presence of a CHC inhibits new private physicians from entering practices in these communities.