Here is a blog post from Bristol University's Centre for Market and Public Organisation. OK, so the title first put me off "Healthcare competition saves lives" but the evidence is very interesting.
- It found that hospitals located in areas where patients have had more choice since the NHS reforms [the choice of any hospital in the NHS] had higher clinical quality – as measured by lower death rates following admissions – and shorter lengths of stay than hospitals located in less competitive areas.
- the hospitals in competitive markets did this without increasing total operating costs or shedding staff
- Research for the UK showed that when competition was introduced in the early 1990s in a regime that allowed hospitals to negotiate prices as well as quality there was a fall in clinical quality in more competitive areas. Waiting lists, however, declined for these hospitals.
If competition is to work, price regulation has to be retained. A free-for-all in prices would mean a return to the “internal market” of the 1990s, a regime in which hospitals competed vigorously on waiting times and ignored aspects of quality that are more difficult to measure. In addition, the tendency of the UK government to merge failing hospitals needs to be looked at carefully. Mergers are popular with finance ministries in NHS type systems because they remove what is often seen as ‘excess capacity’. However, while there are gains from removing poor managers when a hospital fails, removing capacity by merger will limit the extent of competition and may stifle the impetus given by competitive forces to improve outcomes for patients.Lansley does say that there will be a premium on the "best practice" price for quality. As the CMPO blog says "quality" is difficult to measure, so it is unlikely to affect hospital income.