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The role of competition in health care

Criticism Number 15

Getting from here to there

Staged Implementation

In the first paragraph of this section of his speech Samuel admits that the market system he is proposing 'represents a very major change from the "starting point" that exists in most countries'. What he is proposing is the replacement of a system based on "community" - a sense of responsibility for others, with a system based on personal advancement - a system where members of the community benefit from the misfortune of others.

The US system is a damning indictment of what happens when the starting points for a health system are moved from those to which we subscribe, to those proposed by Samuel.

Samuel speaks of the "transitional risks associated with the shift from one system, with its own logic and controls, to another". An examination of the US system shows that these risks are not "transitional". They are intractable and almost impossible to undo.

It is clear that Samuel is telling us how to get from here to somewhere we don't want to be and most certainly should not be.

This reference to "starting points" goes to the heart of my criticism of marketplace medicine and of the sort of health system to which most of us aspire. I have devoted an important page on this www to exploring the issue.

CLICK HERE -- to compare the starting points to which most countries subscribe with those Samuel advocates.

1. Create competitive conditions in the provider market

Samuel outlines the steps needed to make providers compete. He is critical of professional independence and talks of "anti-competitive provisions, often masquerading under the guise of "ethical" or "professional conduct" rules.

Samuel's frustration is understandable. To understand both the failures of professional independence and the important role it plays in society we need to examine its performance in similar situations in the past. Its response to market ideology is no different to its response to other now discredited ideologies - a thorn.

CLICK HERE -- to examine the way in which professional independence has sometimes failed and how pressures intrinsic to its "starting point" result in self correction and social benefit. Examples illustrate the processes.

2. Establish a clearly defined purchasing function

Samuel explains how his purchaser will pull the competitive strings to make puppet providers compete to provide desirable outcomes. They will buy "baskets" of services. It is not clear why these competing corporate purchasers should generate desirable "baskets" when consumers can be duped into buying less desirable baskets which are more remunerative. Samuel does not repeat his claim that consumers will regulate this. He hints that there may be a problem and confronts this by suggesting that government enunciate clear health policy and health goals. Will competitive purchasers listen or will they be too busy responding to the market? The US experience is depressing.

Government have already tried to turn our health care system into a corporate market. Australia has not had the corporate numbers to do this. They have attempted to bring in multinationals. This policy has failed dismally.

Local companies have not performed well and the government's public hospital outsourcing has proved a lightning rod for criticism.

CLICK HERE -- for a page which describes the corporatisation of health care in Australia and the depths to which government sank to accomplish this.

3. Establish a single funding stream for purchasers

I have some difficulty getting past the words to the meaning of this paragraph and some of it escapes me.

Samuel again reveals the paradigm shift. He moves from multiple funding streams presumably to a single uniform system of funding. Behind this is the market concept that you get what you pay for so those who pay better get better care. While this may happen in medical practice it is not congruent with the values of equity and good care for all - professionalism is bending. In fairness Samuel recognises this. He wants equity and his model seeks it through a single system of funding. The corporate purchasers and providers who will people his model are unlikely to identify with this. It is not one of their "starting points".

I do not have problems with a single payer system, but I do not believe that how the funds for care are generated should be a "key element" in any medical system. One way or another money goes from those who can pay to help those who can't. The professional and community ethic is that the money paid should not determine an individual's care. Money is a means to an end and not an end in itself.

Presumably Samuel is talking about a capitation system in which a provider is paid a specific sum of money to provide all the care needed by a patient. Once again he does not use the word capitation which has a bad name and has been strongly criticised.

CLICK HERE -- for a discussion of the relationship between money and care in the different paradigms - including capitation.

Productivity and rationing: - I have a problem too in "providers seeking major productivity gains in achieving outcomes". Sadly the "caring" in medical care cannot be measured and it is the inevitable casualty to this approach to rationing. This is board room rationing in contrast to rationing at the coal face, where unmeasurable factors like "caring" do enter the equation. It is rationing by formal structures rather than informal ones.

Who is rationing? If my interpretation of Samuel's proposals is correct then the purchaser is squeezing the provider and it is the provider who will ration the care. The provider will make profit out of skimping on care.

Samuel has not specifically indicated in his speech who will actually decide on what care is to be provided to an individual patient. With Samuel's economic mission to cut costs it cannot be the patient. His attitude to professionalism makes it unlikely that it will be the doctors who make all the decisions about the care patients receive although he later claims that they will. We are left with decisions made by company directors in the big for profit groups which Samuel clearly envisages as the future - Tenet/NME, Columbia/HCA, Sun, Vencor, Aetna or their successors.

The reports from the USA indicate that Sun Healthcare made its money by not providing the care paid for by a capitation like system, and providing excess care when it was paid by a fee for service system. It is the most obvious example of what has happened in the corporate ssytem.

The only thing which is really clear is that strong commercial pressures are to be introduced and that the commercial pressures will almost certainly be towards denying care and underfunding services. It is also clear that this is to be prevented by measuring outcomes to be sure that the care is provided.

Formal structures simply cannot measure all the outcomes - particularly the "caring" part of care. This is one of the nuances in our complex society. Many facets of care are controlled and measured by informal structures. Samuel's model enshrines formal structures and processes, and so firmly barricades itself from the informal human structures needed to address the complexity of health care.

Commercial Forces and Whistleblowing: - In the system proposed exposure of dysfunction will depend as it has in the USA on whistleblowing. In the USA this is encouraged by giving whistleblowers a share of the damages if they take a Qui Tam action on behalf of citizens and win. Australian whistle blowers are not encouraged in this way.

CLICK HERE -- for more about the role of whistleblowing in health care

4. Establish a competitive purchasing market

The problem of course is creating a system with built in pressures to dysfunction and then trying to control it with regulation and monitoring. The stronger the competitive pressures, the more the pressure to circumvent the regulations. The model creates strong pressures to cherry pick, an area where regulations are easily circumvented. I have already described the problems this has created in managed care.

I have considerable reservation about offering different "packages of services" and simply do not know how this can be done in any meaningful way. Presumably if you buy a package and you get a disease which is not part of that package then you will not get care. Many would not consider that they might get a psychiatric illness and select an option which excludes this. Yet psychiatric illness is very common. I cannot see how anyone could possibly provide a sufficient number of purchasers and providers across the sparsely populated areas of Australia. The incentives and subsidies needed to entice corporate groups to do so would dramatically increase costs. There would never be enough to compete.

Surely it would be simpler to provide decent care in a simple straight forward way in a good not for profit system and allow patients to pay or insure for specific luxuries. If you have a single integrated system then the limits of what is provided would be readily apparent. The community may want citizens with sufficient private means to assume the costs of some of their basic care up to a reasonable limit depending on their income. This would be a reasonable option. There are many options which could be selected for doing this. The problem is not the method of finding the money. One way or another we would spread it. It is how much we are prepared to pay as a community and how we stretch it for maximum benefit. Samuel's model does not accomplish this.

What we need is a system which protects citizens rather than the government from risk. This is one reason why citizens have a government - to accept and spread the risks of being ill on their behalf. They need protection from the risks to their care posed by the marketplace, particularly the corporate marketplace.

CLICK HERE -- to proceed to the next criticism - Number 16

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

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This page created October 2000 by Michael Wynne