Competitive healthcare and the elderly: Handle with care

Pleasecitethisarticleinpressas:CarreraPM,LaudicellaM.Competitivehealthcareandtheelderly:Handlewithcare.Maturitas(2014), http://dx.doi.org/10.1016/j.maturitas.2014.04.001

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Maturitas

j ourna l h o me pa g e :w w w . e l s e v i e r . c o m / l o c a t e / m a t u r i t a s

Editorial

Competitive

healthcare

and

the

elderly:

Handle

with

care

An unprecedented wave of major, market-based reforms is sweepingthroughhealthsystemsacrosshigh-incomeeconomies. InGreeceandPortugal,thereformswhichfeaturecost-cuttingand cost-shiftingmeasuresaswellasstructuralchanges,areknock-on effectsofausteritymeasuresputinplaceresultingfromtheglobal financialcrisisof2007–2008,andthesubsequent2008–2012global recession. In comparison, similar health reforms in theUnited StatesandEnglandwerealreadyanagendapriortotheeconomic slumpandwerefinalizedandreinforcedinthemidstoftheglobal recession.While theimpetusforthereformsandtheirfeatures aredifferent,theendisthesame:introducingmorecompetition inhealthcaremarketsandopeningthedoorsoftraditionalpublic healthsystemstotheprivatesector.Asanimmediateconsequence, providers,purchasers(i.e.localcommissionersandinsurance com-panies)and consumersof healthcarehave beensubjecttonew competitive pressures as well as new conditions that support competitivebehaviors.Competitivehealthcare,itishoped–and promisedbypolicymakers,willleadtowardachieving affordabil-ity,acceptabilityandavailabilityinhealthcare,afterallcompetition hasworkedwonderselsewhere.

Increasedcompetitionin air travel,withtheproliferation of low-costcarriers,forexample,hasdramaticallyreducedthecostof flying,acceleratedtheautomationofservicesandchangedtravel stapleorairlinestandard(suchastheavailabilityofcomplimentary in-flighttreatsandcheckedbaggage,unfortunately).Theevidence oncompetitivehealthcare,covering competitiononthe supply-sideboth in terms ofdeliveryof careand insuranceaswellas demandside,however,ismixed[1].Whereasthefindingsindicate thatcompetitionleadstoareductioninprices,aseconomic the-orysuggests,thechangeinqualityintermsofclinicaloutcomes is lessclear. Atthesame time,analysis oftheefforts aimedat individualstoactmoresovereignintheirutilizationofhealthcare (i.e.choicecareproviderorhealthplan)havedelivered ambigu-ousconclusions.Giventheevidenceoncompetitivehealthcare– indeed,thenatureofthemarketsforhealthcare,assecondbest (wherebyinterventionsaimedataddressingmarketfailures actu-allyleadtoadecreaseratherthananincreaseineconomicefficiency asintended),acautiousapproachtoincreasedcompetitionis warr-anted.

Justastheside-effectsofmedicationshouldbepaidattention, theunintendedconsequencesofcompetitivehealthcareshouldbe consideredespeciallyastheyaffectthelotofthevulnerable,both intermsofmaterialwealthandhealthstatus,suchastheelderly. Unlikeairtravel,thepurchaseofhealthinsuranceorutilizationof

medicaltreatmentisriddledwith(combinationsof)marketfailures includingasymmetricinformation,missingordelayedcostsignals and(presenceofandextentof)uncertainty.Healthinsurersand providersalikehavetheincentivestocream-skim(i.e.selectgood risks)whileprovidershavetheincentivestodump(i.e.refuse low-margin,complexcases)andskimp(i.e.under-provideservicesto patients)[2].

Whilecompetitioninhealthcaremarketscandeliveron effi-ciencyandcostcontainmentacrossprovidersofcare,thismight alsoreducetherentavailabletoproviderstocross-subsidizemore expensivepatientswithprofitsmadefromotherpatients.Indoing so,equitygoalsinprovidingcaremightbeharmed.Astudy exam-ining the differences in the cost of providing elective care to vulnerablesocio-economicgroupsinEnglandfindsthatpatients aged 65 and above are farmore expensiveto treat than other patientswithlengthofstay(LOS)forahipreplacementexceeding 50%oftheaveragepatient[3].Consideringthatageisan impor-tantdeterminantofLOS,theelderlymight,therefore,beapotential targetofdumpingandskimpingpolicies.Intheabsenceofsafety netsforthevulnerableandappropriateregulationand monitor-ing,competitionmightincreasetheincentivesinundertakingsuch practices.

Theintroductionof asmall doseof competitioninthe mar-ketofpublichospitalsinEngland(in2006),fortunately,hadno negativeconsequenceontheaccesstoelectivecareoftheelderly aswellassocio-economicallyvulnerable[3].Oneofthereasons istheincreasedresourcesandfundingavailabilityforhealthcare thataccompaniedtheimplementationofthereforms[4].Thenew scenarioofhealthcarecutsgeneratedbythefinancialcrisismight overturntheseinitialgains,sinceprovidersandpurchasersofcare mightbeforced tomakehard choices withtightbudgets. Poli-ciespromotingcompetitivebehaviorsinanenvironmentwhere resourcesaremoreandmorelimitedmightnotguaranteethe wel-fareofthemorevulnerablegroupsinsociety.

Healthycompetition –one that maximizeshealth gain with regardforthedistributionofhealthgains,maywellbeanapproach thatreachestheintendedconsequenceswhilekeepingincheckthe unintendedconsequencesofcompetition.Healthycompetitionas anapproachtocompetitivehealthcarecanbeseenasversionofthe positive-sumcompetitioninhealthcarewhichtargetsUS health-care[5].Itispositive-sumcompetitionattunedtotheEuropean valuesofsolidarityandcohesionand(thesocial)marketmodelof Europeaneconomies.Itisonewheremarketsforhealthcareare prudentlyregulatedbythestateaswellasnon-stateactors,that

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Pleasecitethisarticleinpressas:CarreraPM,LaudicellaM.Competitivehealthcareandtheelderly:Handlewithcare.Maturitas(2014), http://dx.doi.org/10.1016/j.maturitas.2014.04.001

ARTICLE IN PRESS

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upholdsvaluesofmembersofsocietyandrecognizeshealthcarefor thevulnerableasameritgood,recognizespopulationhealthasthe sinequanonofhealthsystemsandemphasizesvaluewithregards totheallocationofresourcesfavoring[6].Healthycompetitionin healthcareimpliesthatthestateacknowledgesthelimitationsof competitioninafreemarketandthatitisco-responsibleforthe healthofitspeoples.Moreover,itentailsintergenerationaljustice intheprovisionofhealthcarewherebynoindividualispricedout ofthemarketforeffectivecareandthattheconsumptionofcare todayisnotattheexpenseofconsumptiontomorrow.

Inrescuingthefinancialmarketattheheightofthefinancial crisis,theargumentwasbanksare“toobigtofail”.Inoursearch forpriceandnon-pricegainsbymeansofcompetitivehealthcare, weshouldregardhealth andhealthcare shouldbeseen as“too importanttofail” andthatthevulnerable,includingtheelderly arevaluabletootobelefttotheirowndevices.

Contributors

Q2

Dr.Carrerawrotethefirstdraftofthemanuscript,whichwas revisedbyDr.Laudicella.Bothauthorshaveseenandapprovedthe finalversion.

Competinginterest

Nofinancialassistancewasreceivedinthewritingofthis edi-torial.

Funding

None.

Provenanceandpeerreview

Commissionedandnotexternallypeerreviewed.

References

[1]GaynorM,TownRJ.Competitioninhealthcaremarkets.In:McGuireT,Pauly M,Barros PP,editors. Handbook ofhealth economics,vol. 2.Amsterdam: Elsevier/North-Holland;2011.

[2]EllisRP,Creaming.skimpinganddumping:providercompetitiononthe inten-siveandextensivemargins.JHealthEcon1998;17(5):537–55.

[3]CooksonR,LaudicellaM.Dothepoorcostmuchmore?Therelationshipbetween smallareaincomedeprivationandlengthofstayforelectivehipreplacementin theEnglishNHSfrom2001to2008.SocSciMed2011;72(2):173–84. [4]Cookson R, Laudicella M, Donni PL. Does hospital competition harm

equity?Evidencefrom theEnglish NationalHealthService. JHealthEcon 2013;32(2):410–22.

[5]PorterME,TeisbergEO.Redefiningcompetitioninhealthcare.HarvBusRev 2004;82(6):64–76,136.

[6]CarreraPM.PatientChoiceandResponsibility–TheCaseoftheGermanSocial HealthInsuranceSystem.Saarbrueken,Germany:VdmVerlagDr.MuellerE.K.; 2007.

PricivelM.Carrera∗ Q1

HealthTechnologyandServicesResearch Department,UniversityofTwente,7522NBEnschede, TheNetherlands MauroLaudicella HealthServicesResearchandManagementDivision, CityUniversityLondon,LondonSW72AZ,England, UK ∗_{Correspondingauthorat:Drienerlolaan5,RA} 5238,7522NBEnschede,TheNetherlands.Tel.: +31534895657;fax:+31534892159. E-mailaddress:p.m.carrera@utwente.nl (P.M.Carrera) Availableonlinexxx 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148