Thursday, June 25, 2009

Health care competition

The Economist gets it:
A second big factor pushing up health costs is the lack of competition among operators of American hospitals. Thanks to a wave of consolidation in recent years, argues Harvard’s Ms Herzlinger, “most parts of the United States are dominated by oligopolistic hospital systems.” George Halvorson, who heads Kaiser Permanente, insists that “there is an almost total lack of price competition among providers.”

Nimble upstarts and innovators are challenging the incumbents in some areas. Such efforts range from specialist heart hospitals, which get better outcomes at more reasonable prices than local general hospitals, to retail clinics at Wal-Mart stores. Remote medicine, in the form of technology for tele-care or medical tourism to Thailand and Costa Rica, also poses a threat. But medical lobbies are using political influence and outdated regulations to thwart competition where they can (for example, through rules preventing a doctor from treating a patient in another state).

Of course we are not likely to realize any real competition among providers as long as most health care services are paid for with insurance.

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