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.