The role of competition in health care: a complex interplay

In the dynamic field of health care, physicians hold a vital role. Their invaluable contribution as life-savers, pain alleviators, and guides towards healthier living necessitates continuous learning and improvement. A potential catalyst for such progress is friendly competition among physicians. This concept isn’t about outdoing each other for a prize but striving for better patient outcomes, refining medical practices, and nurturing a culture of excellence.

A study by the National Bureau of Economic Research found that competition in health care tends to improve the quality of care, illustrating the positive effect of competition. Other sources highlight that competition in health care can spur innovation, improve quality, and drive down costs, which should be no exception in health care.

Consider two cardiologists working in the same hospital. They may compete to lower the readmission rates of their patients. This competition directly benefits patients, who receive higher quality care, and the hospital, which observes lower readmission rates. Another example is the surgeon scorecard developed by ProPublica, which ranks surgeons based on their complication rates for elective procedures. The scorecard implicitly encourages surgeons to compete for lower complication rates, enhancing patient care.

Provider competition can also have a positive impact on innovation in health care. The Cleveland Clinic’s annual Medical Innovation Summit is a case in point. Here, physicians present their groundbreaking ideas and inventions to a panel of expert judges, encouraging competition and fostering a culture of innovation.

Friendly competition can also fuel personal growth and satisfaction among physicians. It allows them to challenge themselves, stay updated with the latest advancements, and strive for excellence. A competition among oncologists to integrate the newest research into their practice would benefit their patients and ensure that the oncologists are at the top of their game.

However, the competition must remain friendly, fostering a culture of learning and growth rather than stress and rivalry. Health care organizations should cultivate an environment that values teamwork, collaboration, and mutual respect. Physicians at the Mayo Clinic, a health care organization with a culture of “coopetition,” are encouraged to compete with each other and collaborate and learn from each other. This balance between competition and collaboration has helped Mayo consistently rank among the top health care organizations worldwide.

However, competition in health care is not without its potential drawbacks. Increased competition could lead to overemphasizing performance metrics at the expense of patient care. It may also encourage aggressive tactics that could harm the collaborative spirit vital in health care. Therefore, it’s essential to strike a balance between competition and cooperation.

The role of regulation in ensuring that competition remains healthy and beneficial is essential. Regulatory bodies must provide competition without undesirable outcomes, such as monopolies or reduced patient care. In the past decade, regulatory changes have sought to promote competition in areas that were previously unregulated, reflecting the recognized importance of this aspect.

Different countries have had varied experiences with competition in health care. For instance, increased competition among English hospitals was found to improve their management practices and, in turn, their clinical, operational, and financial outcomes. In the U.S., evidence suggests that hospital quality is higher in more competitive markets, and competition can improve care quality and control costs.

Yet, the relationship between competition and health care outcomes is not always straightforward. It can be highly context-dependent and vary across different health systems and regions. For instance, while provider competition can result in improved patient outcomes and choice, as well as reduced system costs, there are also instances where competition has led to poor outcomes, duplicated costs, and inefficient allocation of resources.

This is clearly illustrated by the case of the Affordable Care Act (ACA) in the United States. The ACA saw an increase in premiums for benchmark plans in 2023, reversing a trend of annual premium reductions from 2019-2022, despite the continued growth in the number of insurers participating in the marketplaces. The level of competition played a significant role in influencing premiums, with regions with fewer insurers showing higher premiums than those with more insurers. Moreover, the match was less robust in smaller cities and rural areas, which typically had only two or three insurers offering coverage plans.

In conclusion, competition in health care can be a powerful force for improving quality and controlling costs. However, competition dynamics are complex and can sometimes lead to unintended consequences. It’s crucial to manage competition effectively and be aware of the specific circumstances under which it will likely produce the desired results. The role of regulation in shaping competition in health care is an essential consideration, although this topic requires further exploration. Understanding the role of competition in health care is vital for policymakers, providers, and patients as they navigate the intricacies of the health care industry.

This complex interplay between competition, collaboration, and regulation illustrates the multifaceted nature of health care. It underscores the importance of an integrated approach in which competition, cooperation, and regulation all play their parts in creating a health care environment that best serves the interests of patients. As health care continues to evolve, the role of competition will undoubtedly continue to be a topic of much interest and debate.