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The role of competition in health care

Criticism Number 14
Key benefits of a competitive model


Samuel now comes to the "expected benefits of the move to a market-based model in terms of the broad outcomes of performance, equity and quality". He starts by a section on costs implying but not actually saying that the market can provide care more economically. This is what the Canadian government in Alberta did. When their new system was shown to be more costly they denied that they had claimed it would be cheaper. Citizens were left pondering as there had been no improvement in care or in waiting lists.

Samuel makes a number of ludicrous claims

1. Samuel claims that the market will provide "long-run affordability" and "maintenance and improvement of service quality standards in line with consumer expectations".

How odd that the market in the USA has proven to be acutely unstable and subject to the fluctuations and fads of the stock market. Five of the largest aged care chains pursued their competitive roles so aggressively and with so little financial responsibility that when government stepped in to stop them from rorting the system they entered bankruptcy.

So much for "long run affordability".

2. Samuel claims that the market will result in "maintenance and improvement of service quality standards in line with consumer expectations".

Instead of improving quality of care staff were cut to the extent that there was widespread neglect and thousands are alleged to have died. Citizens across the USA are enraged and are taking nursing home chains to the courts.

So much for "quality standards" and "consumer expectations"

3. Samuel claims that the market "avoids the imposition of arbitrary or ad hoc rationing decisions".

This is the same market which rationed life sustaining nursing services but provided vast quantities of peripheral "therapies" paid for per item of service. There was an enormous demand which dramatically disappeared when therapies were funded differently. Either there was never a need for all these "therapies" or therapies were now being rationed for the benefit of shareholders.

This is the market which misinformed and deceived in order to admit psychiatric patients including children into hospital and give them vast quantities of therapy which was of no benefit to them.

Rationing care for corporate profit by managed care corporations has so angered US citizens that they seeking retribution by pursuing these groups through the courts.

How different to the public hospital system and the not for profit hospital systems. In both resources including money, staff and donor organs are rationed to stretch these resources for the primary benefit of patients and the community. How odd that the main complaints have been about government funding - a trifle more stable than the marketplace.

So much for "arbitrary or ad hoc rationing decisions"

4. Samuel claims that "operational risks are removed from governments and accrue to those best placed to control and manage them".

In the USA those risks are carried by large corporations which have repeatedly defrauded citizens to increase profits. In any other system they would have been barred from providing care to citizens. Hopefully we would do so in Australia. Their future of corporations depends on the vagaries of the sharemarket. The giants Columbia/HCA, Tenet/NME and Aetna have experienced massive falls in share prices. Many aged care chains are bankrupt. These groups are flogging off their health care services to anyone who will buy. They are simply closing services and dumping vast numbers of less well paying elderly citizens.

How odd that the citizens in New Zealand have now rejected the competitive market model of health care because of its uncertainties and instability. They are developing a cooperative health system in which citizens themselves play a large part.

So much for those "best placed to control and manage operational risks". Give me a caring community any day! I feel much safer.

5. Samuel tentatively introduces his new entity "Health Improvement Agencies" (HIA's).

What's in a name? - it seems a lot when you want to distance yourself from something unpopular! It appears that what Samuel has been talking about and what I have just been criticising, thinking it was a managed care organisation, an HMO is in fact an HIA - something which is going to improve my health!. If it is not an HMO then he has not told us the difference. If it looks like a skunk and it smells like a skunk then surely it is a skunk? Calling it a "lavender" doesn't stop the smell. How does the fundamental idea behind Samuel's HIA differ from managed care? I welcome enlightenment!


It is clear that Samuel lives in a different world to the rest of us. One where black is white and white is black. A totally new world is constructed. It is a looking glass world where everything is not what it is. It is carefully constructed world in which one can live out ones complex illusions. The Canadian author John Ralston Saul describes the way in which modern man builds illusionary worlds out of words. As a consequence we are no longer conscious of the real world.

John Ralston Saul -The Massey lectures "The Unconscious lectures"

CLICK HERE -- for a view of the contrasting worlds people like Samuel and the rest of us inhabit.

Key benefits of a competitive model


Samuel claims that "Several elements of the competitive model contribute to improving quality". Once again he makes claims which are the opposite of the truth. he is still in his looking glass world. Perhaps like our politicians he has been listening to the managed care salesmen - the slick con men who see silos of opportunity by playing on politicians pain before selling them ideas.

The evidence is quite clear. A commercially competitive healthcare marketplace has encouraged the misuse of vulnerable citizens for personal gain. Its advocates have been accused of deliberately neglecting the helpless elderly in order to increase profits. For profit health and aged care groups across the USA have cut staffing levels to unacceptable levels. Standards of care in private corporate run nursing homes is markedly inferior to not for profit facilities. Mounting evidence indicates that the risks of complications and of death is greater than in competitive not for profit facilities and very much greater than in teaching institutions.

None of us should be surprised at this. It is exactly what we would expect when profit rather than care becomes the driving principle for health care. Citizens have known this for 2000 years. They have shielded health from market forces. Samuel is promoting a system where decisions about quality will be made in the marketplace. The evidence is that these decisions are made in the board room and patients have little if any influence. But I forget we live in a looking glass world where things are not what they are when we want don't them to be something else.

So much for the "competitive model contributing to improving quality"!

Samuel once again propounds his arms length system of consumer choice. I simply point out here that the consumer who buys a health product from a purchaser has very different ideas about illness and her health requirements when she is a healthy shopper. When she becomes seriously ill and needs services her choices will be very different. She is now dealing with the provider and her influence on quality will be minimal - even if she lives. Her ideas about what quality is may change dramatically.

CLICK HERE -- to enter the world of competition and quality

Samuel indicates that providers are poorly placed to respond to consumer demands for quality. One suspects that he is talking about the health professions of whom he is very critical. The question of quality and who determines it is not a simple one.

CLICK HERE -- to examine a page which addresses the professions and quality.

Key benefits of a competitive model


Equity in health care is a social value to which most developed countries aspire and to accomplish this most have developed some sort of publicly funded health system. This ensures that the poor receive the same medical care as the rich and that their health care is not compromised by their social status. The response of the health care marketplace has been to make equity one of its publicly stated key objectives. This is another illusion. In practice its impact is very different. This is not surprising as the interest is in the money and who pays it - not in the poor patient. Attaching money to the poor patient does not generate humanitarian motives. It does make her a target for those in pursuit of the money.

The impact of competitive market forces on equity is best illustrated by the US system. It is probably the most inequitable in the developed world. This inequity has been compounded by the corporate community and the pressures of the sharemarket. Any one advocating for a market system must not only confront the US system but also confront the obvious reasons why it has become increasingly inequitable and ruthlessly uncaring.

What the market has created in the USA is a complex and dysfunctional monster which is full of distracting pressures, disturbing conflicts of interests, contradictions, impossibilities and ludicrous anomalies - the result of repeated attempts to patch the system. This is because the principles on which it is based are inappropriate and so cannot work. The model proposed by Samuel seeks to set up the same sort of system in Australia and in the developing world.

CLICK HERE --to go to a page which explores the issue of equity in the marketplace using examples. It also examines the impact of Samuel's model on equity in Australia.

CLICK HERE -- to proceed to the next criticism - Number 15

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

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This page created October 2000 by Michael Wynne