Competition among health care providers: helpful or harmful?

Abstract

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.

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