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The European Journal of Health Economics

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Open Access 01-04-2016 | Editorial

Competition among health care providers: helpful or harmful?

Authors: Pedro Pita Barros, Werner B. F. Brouwer, Sarah Thomson, Marco Varkevisser

Published in: The European Journal of Health Economics | Issue 3/2016

Excerpt

The idea of competition in health care can provoke strong reactions from commentators, with some for and others against. Proponents of competition generally fall into one of two camps: those who believe in the innate value of market-based resource allocation (i.e., a decentralised approach to production and consumption decisions, with prices providing the main signals for such decisions) and those who favour the market more for its potential to correct the failures of government regulation. Both camps typically expect competition to do the following things: strengthen patient choice, stimulate innovation, improve quality, enhance efficiency and control costs — in short, to give people what they want in the least costly way possible. Opponents of competition, in contrast, typically fear it will lead to undesirable outcomes such as a reduction in quality, access to health care based on ability to pay rather than medical need and, as a result, inequity and inefficiency in the distribution of health services. …

An extensive literature review was organised by the European Commission to support the Expert Panel’s work. This summarising article only includes a few references. A comprehensive list of references is included in the report.

Competition is here defined as an instrument to encourage organisations to be more efficient and responsive to the preferences of those they serve. The role and outcomes of competition depend on context and on the availability and nature of alternative instruments. Competition provides a set of incentives that may or may not be more effective than alternatives in achieving societal goals.

However, Brekke et al. [2] theoretically show that, even when prices are fixed, with semi-altruistic providers and a fairly general cost structure the relationship between competition and quality is generally ambiguous. According to them, this is consistent with, and potentially explains, the mixed empirical evidence.

For a description of primary care and its evolution, see the Expert Opinion on primary care [7].

The introduction of hospital competition in the UK did not seem to worsen equity (in terms of waiting times), as had been feared, but interpretation of the findings was difficult because increased competition coincided with a major central drive to reduce waiting lists [4]. Also for the UK, Cookson et al. [3] find a negative association between market competition and elective admissions in deprived areas. The effect of pro-competition reform was to reduce this negative association slightly, suggesting that competition did not undermine equity.

Boonen, L.H.M.M., van der Geest, S.A., Schut, F.T., Varkevisser, M.: Pharmaceutical policy in the Netherlands: from price regulation towards managed competition. In: A. Dor (ed.), Pharmaceutical markets and insurance worldwide, Adv. Health Econ. Health Serv. Res.,vol. 22, pp. 53–76 (2010)

Brekke, K.R., Siciliani, L., Straume, O.R.: Hospital competition and quality with regulated prices. Scand. J. Econ. 113(2), 444–469 (2011)CrossRef

Cookson, R., Laudicella, M., Li Donni, P.: Does hospital competition harm equity? J. Health Econ. 32(2), 410–422 (2013)CrossRefPubMed

Cooper, Z.N., McGuire, A., Jone, S., Le Grand, J.: Equity, waiting times, and NHS reforms: retrospective study. BMJ 339, b3264 (2009)CrossRefPubMedPubMedCentral

Cooper, Z., Gibbons, S., Jones, S., McGuire, A.: Does hospital competition save lives? Econ. J. 121(554), F228–F260 (2011)CrossRef

Dylst, P., Vulto, A., Simoens, S.: Tendering for outpatient prescription pharmaceuticals: what can be learned from current practices in Europe? Health Policy 101(2), 146–152 (2011)CrossRefPubMed

EXPH: Report on definition of a frame of reference in relation to primary care with a special emphasis on financing systems and referral systems (2014). doi:10.2772/33238

EXPH: Investigating policy options regarding competition among providers of health care services in EU Member States (2015). doi:10.2875/867590

Gaynor, M.: What do we know about competition and quality in health care markets? NBER Working paper No. 12301 (2006)

10.

Gaynor, M., Town, R.J.: Competition in health care markets. In: M.V. Pauly, T.G. McGuire and P.P. Barros (eds.) Handbook of health economics, vol. 2, pp. 499–637 (2011)

11.

Gaynor, M., Moreno-Serra, R., Propper, C.: Death by market power: reform, competition, and patient outcomes in the National Health Service. Am. Econ. J. 5(4), 134–166 (2013)

Title: Competition among health care providers: helpful or harmful?
Authors: Pedro Pita Barros
Werner B. F. Brouwer
Sarah Thomson
Marco Varkevisser
Publication date: 01-04-2016
Publisher: Springer Berlin Heidelberg
Published in: The European Journal of Health Economics / Issue 3/2016
Print ISSN: 1618-7598
Electronic ISSN: 1618-7601
DOI: https://doi.org/10.1007/s10198-015-0736-3

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