Competition matters on both sides of the Atlantic

There is often a lot to learn by comparing the US and UK health care systems, but as often as not we revert to Shaw’s “two nations separated by a common language” when looking for lessons. Let me give one example.Although the UK has had a single payer, nationalized system for over six decades, there also exits a small but vibrant private sector system. In this sector, private insurance companies—supported by premiums paid by individuals or corporations (on behalf of employees)—contract for services from private hospitals and consultants (i.e., doctors.) The system operates in a similar fashion to the US private care system. Insurance companies negotiate with the provider groups as to the rates that will be paid for the various clinical services.As in the US, there are some private provider groups that have sought to obtain geographic dominance in certain markets. One purpose of that dominance is to have monopoly-like leverage over the insurance companies to obtain super-normal profits.In the US, when this kind of dominance occurs, it is—for the most part—ignored by public policy makers and regulatory officials. Indeed, it is explained away by assertion that such ACOs (as we now call them) are better able to coordinate care for their patients and thereby achieve efficiencies that will lead to lower costs. As best I can tell, no one with training in economics believes that such an offset is likely to be the result. Recent rulings by the Competition Commission in t...
Source: Running a hospital - Category: Health Managers Source Type: blogs