Hospital Competition Thrives in a Nationalized System.
Hospital competition is an important and significant driver of quality and outcomes improvements, a School of Public Health researcher argues in JAMA.
In an article that looks at the United Kingdom’s National Health Service (NHS), Austin Frakt, a health economist at the VA Boston Healthcare System and associate professor of health policy and management at SPH, writes that competition can exist in both a private health care system, like that of the US, and in the UK’s nationalized health care system, where doctors are employed by the government.
Since 2006, NHS practitioners have been required and paid to ensure that their patients are aware of five choices of hospitals, Frakt says. Hospital quality data are available to patients to help them make choices. Those choices affect hospital revenue because the government’s diagnosis-based payments follow the patient. This encourages hospitals to compete for patients on quality, he says.
“The only way for a hospital to thrive is to improve its attractiveness to patients. Hospital managers who do so can receive higher pay. Those who don’t might be fired. And failing hospitals are at heightened risk of closure,” he writes.
Frakt, who is also an associate professor of psychiatry at the School of Medicine, cites a number of studies that have found that greater competition is associated with better management—which has been tied to better outcomes, including reduced lengths of stay, lower infection rates, shorter wait times, and even lower mortality. On the contrary, research shows that quality diminishes when hospitals consolidate and competition is reduced, he says.
“To be sure, one can attempt to improve management and outcomes without competition. Perhaps better training and payment incentives could move the needle. But nothing focuses the mind like an existential threat from a competitor,” Frakt writes.
“Today US health care markets are going the other way—they’re consolidating, reducing competition. Perhaps the United States has something to learn from the UK’s nationalized health system after all.”