Driving competition in healthcare

During last night's Beesley lecture on healthcare competition, Nick Bosanquet, Professor of Health Policy at  Imperial College London, drew a stark comparison between general attitudes towards competition and the view that is held by many constituents within the health system.  Attitudes on the benefits of competition in the economy have evolved over time - policy makers used to believe that protectionist policies will drive economic growth but now they understand that competition can be an engine of growth.   Nick highlighted how competition drives productivity and innovation, grows consumption; he argued that evidence shows how entry and exit from markets is a contributor to productivity gain - efficient and innovative providers replace those that are falling behind.

Nick argued that attitudes to competition in healthcare have been moving in the other direction.  Some believe that competition will lead to a race to the bottom on price and quality will fall, and because quality is hard to measure in health, it's difficult to safeguard against this.   But the evidence shows the opposite.   Nick highlighted a number of academic studies and examples to demonstrate that competition has delivered important improvements in the quality of healthcare.   And this evidence applies across a range of services (including some specialist care).   He talked about how different forms of competition (competition in and competition for markets) can be used to drive incentives across a range of health services.

Nick believes Monitor has a critical role to play going forward - to 'snatch victory from the jaws of defeat' as Nick put it.   David Bennett, Chair of Monitor, in his response, emphasised Monitor's duty to protect and promote the health of patients, and drive competition where the evidence suggests it will deliver this.   Monitor's new regulatory levers - licensing providers and setting prices (or at least the rules of the game) - are critical to this.   The proposed failure regime is also key to supporting competition - it's the mechanism that protects services, but not providers, in the event that inefficient hospitals leave the market.

David highlighted how the debate on the role of competition in healthcare needs to be fact-driven and not ideologically based.   This is a big challenge.  But he was clear that Monitor must contribute to this and must have clear evidence to support the direction it takes.  This won't eliminate the ideological differences around competition in health, but can at least start to move the debate towards the facts.

So the next few years are definitely going to be interesting.    The demand side of the health market is changing rapidly with the introduction of Clinical Commissioning Groups.   These groups will shape the markets they want to commission from, with Monitor setting the framework that allows effective competition to develop where appropriate. It's going to be a fascinating evolution.