This page examines the claim that competition
results in efficiency. It examines the difference in efficiency
originating in the board room and efficiency originating at the
Rationing:- When resources are scarce we have to ration and maybe this is what Samuel is really hinting at when in his speech to the World Bank he talks about an "efficiency dividend" from competition. Food was rationed by government in the war. Kidneys, livers and hearts are rationed in our major teaching hospitals. The marketplace has never been considered by society as an appropriate venue for rationing. Marketplace rationing of care is for profit and the consequences are well illustrated by Sun Healthcare. When money is tight corporations will divert money from care to profit. For them it is a matter of corporate life or death. They have a fiduciary duty to shareholders not patients.
Efficiency and the Health Care Market:- Marketplace advocates like Graeme Samuel claim that the "efficiency dividend" increases the quantity of services. He does not explain that the most competitive health care system in the world is both the most expensive, the most inefficient and the most unhappy. It has restricted the quantity of services and who gets those services. More money is diverted from care to profit than anywhere else in the world Vast corporate empires have been built on the money taken from care.
Efficiency and Demand:- There is another nagging inconsistency. Samuel earlier spoke of increasing demand - that we should accede to the desires of the community by giving more choice and services. The market he suggests would do this. Now he is talking about scarce resources and stretching them by generating an "efficiency dividend". Is he stretching them to meet the urgent needs of suffering people or the demands of a population whose demand for health care has been stimulated by advertising. Advertising, market and competition go together. Surely a community service which tailors services to need and educates about the scarcity of resources would do all this infinitely better.
Efficiency in the Workplace or the Board Room:- In an earlier criticism of aspects of efficiency I explored aged care to illustrate the dangers, for the humanity of the services provided of rationing them by using competition for profit. If we are to preserve kindness and empathy then it is those directly involved who, faced with scarce resources will be motivated to use them more efficiently, and with minimal compromise to the human side of care. I have worked in situations where we have had to seek efficiency and stretch resources in just this way
The market has imposed efficiency from the board room. It has not supported and facilitated efficiency in the workplace. Aged care in the USA and Australia are a major indictment of attempts to increase board room decisions about efficiency by using market forces. The sort of system I have suggested introduces motives which are likely to foster less damaging efficiency.
Economic Efficiency:- The most efficient system of health care provision I have ever seen was that introduced by Tenet/NME in its psychiatric, substance abuse and rehabilitation subsidiaries in the late 1980's. Every facet of patient recruitment, treatment and cost was carefully recorded. Humanitarian care and suffering were not measured. Computers were used to track all this in great detail. Reports went up the system and efficiency requirements were sent down the system. Staff boasted in their reports. The company and its staff actually believed in what they were doing and were proud of this system and the care it provided. This is why it was so easy to prove their criminal conduct and the consequences for patients. Other corporations did the same things but were more circumspect.
Efficiency and Costs:- As Lawrence has shown in a recent paper the costs of private care in Australia are greater than that in the public system. This is despite the fact that the public system treats sicker people, with a comparable complication rate. In their study of available data in Australia Duckett and Jackson concluded that "care in the public sector is provided at higher levels of technical, allocative and dynamic efficiency than in the private sector".
[see Dr Carmen Lawrence,
MHR. "Shortcomings in the Howard government's private health
insurance incentives bill" (1998)
Duckett S J & Jackson T J Med J Australia 1/5/2000 Vol 172 p439-42]
In the state of Alberta in Canada, the government health service has been cut, closing hospitals and even pulling down the buildings. As in Australia the government claimed it did not have the money to fund the public hospital system. Instead it has contracted out services, particularly some surgery to the private sector. A recent study has shown that this has been much more costly and that patients are less well served. Under pressure from the media government is now saying that it never claimed that private care would be cheaper. It is having a small problem with credibility as it is struggling to find a reason for what was done and for what they plan to continue doing. Citizens have a lot to say about that at the moment. Samuel too skirts around this issue suggesting but not actually claiming it will cost less.
CLICK HERE -- for more about efficiency