Central Map ..... Initial Map ..... USA Map ..... Australian Map ..... International Map ..... Corporate Practices Map..... (to print)
Home ...... international ...... criticism introduction

The role of competition in health care

Criticism Number 11


Health Care as a Market Based Industry

In the first paragraph of this section Samuel reasserts the underlying principle of his argument - that health care is an industry and that as a consequence it should be subject to market principles and competition theory. As I have indicated elsewhere on this www site the logic and the semantics of this is extremely dubious. His whole argument is founded on a supposition which cannot be sustained. Quite apart from the logic there is the question of the appropriateness of the culture and the practices which exist in the marketplace generally and which develop in the health care marketplace in particular.

This web site and earlier criticism reveal a culture and practices in the marketplace which I argue cannot be considered by any reasonable person to be appropriate for the care of the sick and the aged. None of us would hand the care of our loved ones over to the second hand car industry - let alone to groups whose commercial success is based on exploiting the vulnerability of our family member to defraud the system. We are all looking for someone we can trust to act in their best interests.

Trust is essential for the care of the vulnerable. Professionalism has failed most seriously when the pressures of the marketplace culture have induced doctors to breach this trust.

CLICK HERE -- for more about Trust, the Market and why Professionalism fails.

As Samuel points out health care currently competes with other demands on government for taxpayers money. The original medicare levy was, as I understand it intended to protect health care from just this situation. The public have never been fully informed nor been given the opportunity to have medicare taxing kept separate - or else replaced by some other system like medical savings accounts.

In the second paragraph Samuel uses this competition for taxpayer funds to justify increasing efficiency by using competition. The only problem for his argument is that competitive private care is both more costly. It is less efficient. It is therefore an argument for publicly provided care.

CLICK HERE -- for more about efficiency in the marketplace.


Empowerment: - Samuel's third paragraph in this section reads like an economists catechism. I have already dealt with much of this in other contexts. He speaks of empowerment.

Empowerment is a positive experience and something to aspire towards. Hopefully most of the medical profession has moved beyond the paternalistic behaviour of the colonial era, but as Samuel reveals they still carry the stigma.

Efforts are increasingly being made to educate, discuss and help people to make their own decisions. Good doctors, who relate well to people, and who are intent on care rather than profit or efficiency have been doing it all their lives.

Samuel is trying to have his efficiency cake and eat it. Most of us aspire to an increasingly knowledgeable society which makes informed health care decisions. Dealing with people like this is rewarding but very time consuming. It is not efficient. It impacts on profits. The legitimacy of market theory depends on market choice by informed consumers. Health care corporations have actively discouraged empowerment by "economic credentialing" and by "delisting" doctors who assist in empowering patients.

CLICK HERE -- for more information about informed patients, empowerment and the way corporations have addressed this.

Professionalism:- Samuel's claim that "professional self-regulation, has robbed consumers of sovereignty" and "Self-regulatory practices that have developed essentially to serve the interests of service providers" is a reiteration of the views of Adam Smith, Friedman, Califano and Wooldridge. This view has been attacked and discredited by Wynia et al. Professionalism has sometimes failed - spectacularly in the USA. Professional principles have succumbed to contexts which threaten the welfare of professionals and their families. Unprofessional actions have been taken in contexts which challenge the continuation of professionalism as a guiding principle in health care.

When the principles of professionalism are examined the criticisms are simply not sustainable, particularly when set against the disturbing principles and consequences of replacing it with a competitive marketplace.

When we look more closely we see that professionalism has bent and sometimes failed because it has succumbed to pressures generated in the wider community. In recent times this has been commercial competition and market pressures. The problems are due to the failure to resist very powerful external forces and an all embracing ideology. We saw the same behaviour, to a lesser degree in Germany and South Africa.

If we examine the far greater failures of the health care marketplace it is clear that these failures are a direct consequence of the application of market principles. The problems are integral to the idea of a competitive health care marketplace.

(Wynia M.K. et al "Medical Professionalism in Society" New Eng J Med 1999 -Vol. 341,No. 21)

CLICK HERE -- to explore the issue of professionalism.


Samuel recognises the benefits of arms length relationships when there are conflicts of interests. The problem is that the competitive system he proposes creates endless conflicts of interest when there is no need to do so. A system built around cooperation would eliminate this. Surely having a simple system with fewer conflicts of interests is better than a complex system with multiple vulnerable areas, each requiring a set of arms length procedures and a monitoring and oversight process to be sure that it works. As I have shown monitoring and arms length procedures have not worked well in the USA or in Australia.

Samuel is setting up a series of structures to fulfil roles. Each will he claims work because there is competition. It all sounds so like the USA, that it is difficult to tell the difference. Markets in health care have been more concerned with market share and control than choice or empowerment. Corporations can compete more successfully for market share and control if patient choice is limited and people are disempowered. This is what has happened in the USA and this is behind the alienation and public outcry in that country. There is no reason to doubt that this is what will happen with Samuel's model.


I suggest that my tentative thoughts about an integrated not for profit health system in which the community participates will be much more likely to empower our citizens and allow choice. When rationing is required it has a better chance of not alienating the whole community. It is simply not possible to convince people that rationing is needed when large profits are made, and when directors enjoy multimillion dollar bonuses and lavish life styles. It was this corporate opulence when contrasted with the misery in nursing homes which has made ordinary people in the USA so very angry with Sun, Vencor, IHS and Beverly particularly.

The whole structure of society depends on our following the rules, norms and values which a civil community has established. We trust others to do so and our own identity is dependent on our doing so. We are outraged when others fail. Without trust we cannot have a society which works. What we are seeing is a major threat to society - a challenge to the sort of community we think we are.

Other Countries are shifting to a market model in health care
Well are they?

In his fourth paragraph Samuel seeks support for his model by claiming that health care "reform" in a number of countries including Australia and the United Kingdom has followed this direction. The facts do not support him. Australia has been singularly unsuccessful, New Zealand has reversed its policies and is abolishing competition. There is a public outcry in the USA where many groups are pressing for changes which would drastically reduce competition in health care.

It is too early to evaluate the other countries which Samuel mentions. These are experiments and it is deceptive and dishonest to promote them as "health care reform". The USA is still the only accurate guide to the marketplace in health care. For advocacy of a market system to have any credibility it has to confront the US experience. Samuel does not do so.

(The New Zealand Public Health And Disability Bill 2 August 2000, 10:06 am. --- Press Release: New Zealand Government)

CLICK HERE -- for more comments about the market in these countries.

In the 5th paragraph Samuel uses his role paradigm to criticise the dominant role of government. There are valid criticisms of the governments dominant role but this is not one of them. He presents his model without considering other options. He says "I am convinced that the outcome of this analysis must be a greatly increased private involvement in health care, vis-à-vis the current starting points in most Western countries". By private he undoubtedly means corporate and share market listed.

Performance:- It is clear from the United Kingdom, and Canada that public hospital systems have been less costly, provided satisfactory care and despite complaints have been supported by the public. The World Health Care report rated Britian highly, well above the USA. It is equally clear that the Australian medicare and public hospital system supplemented by a predominantly not for profit private sector is also popular. It required a large bribe and threats to induce Australian citizens to take out private insurance. The reformed health system proved so unpopular in New Zealand that government has now reversed policy. A fully privatised system in the USA has been the most costly and unpopular in the world. Samuel may be "convinced" but in a democracy he should be required to convince the public and I doubt that his arguments would do this if they were opened widely to public discussion.

Samuel's perceptions: - However Samuel might like to conceptualise it, market concepts in medicine have not come as a popular movement from the public. It is difficult to sell the idea of corporate "fat cats" taking responsibility for citizens health. Health care policy has been presented to the public buried in broader political policies related to markets and international trade and not as an issue to be directly addressed in its own terms. It has been marketed to them by the political process as "private medicine" and not "for profit medicine" or "corporate medicine". This is dishonest. As this www site shows these are very different things.

CLICK HERE -- for some thoughts about political thinking and the market.

CLICK HERE -- to proceed to the next criticism - Number 12

CLICK HERE -- to go to the next section of Samuel's speech

Central Map ..... Initial Map ..... USA Map ..... Australian Map ..... International Map ..... Corporate Practices Map..... (to print)
Home ...... international ...... criticism introduction
This page created October 2000 by Michael Wynne