Competing for patients

Value for money in healthcare is just one issue to be discussed at a forum in Cork today, writes MICHELLE McDONAGH

THE GOVERNMENT’S commitment to a radical overhaul of our healthcare system will see independent hospital trusts competing against each other for patients. Universal health insurance will put competing health insurers at the centre of health service financing, but will more competition in our healthcare system mean more value for money?

This question will be discussed at a forum hosted by the Health Economics Group (HEG) at University College Cork today. The implications of the proposed changes will be felt right across the Irish healthcare system and today’s forum provides the setting for healthcare professionals and economists alike to discuss this issue.

Brian Turner, lecturer at the university’s department of economics and a member of the HEG, says increased competition is one of the foundations of the Government’s health reform proposals. The plans envisage competition between providers to offer value to purchasers and competition between purchasers to offer value to consumers.

“Competition works well in other markets, but it is not so straightforward in health, which differs from most economic goods and services in a number of ways. In particular, differing levels of information between citizens, purchasers and providers could potentially lead to market failures. That is why careful regulation of the market must be a prerequisite for competition to be of benefit to consumers,” he says.

The evidence from the Netherlands, which introduced managed competition in 2006, is mixed, explains Turner, and the question remains whether a competitive market (even with regulation) is the best way of achieving the Government’s objectives.

“The Dutch example, which Minister Reilly has been referring to, ranks highly in terms of consumer satisfaction, but it ranked highly before the reforms. The downside of this system is that cost is becoming a major issue as it has risen by 46 per cent over the five years between 2005-10. The Dutch example is not altogether rosy and we need to look at their system of managed competition and see what lessons we can learn from it.”

Although the aim of competition among insurers is to keep premiums under control, Turner says Ireland has not seen any reduction in premiums as more insurers were added to the market.

“In the last seven years of VHI’s monopoly, premiums rose by 6 per cent while in the duopoly of VHI and Bupa, they rose by about 9 per cent per annum. Since Vivas entered the market in 2004, premiums have risen by 11-12 per cent per annum so the addition of more competition does not automatically guarantee lower prices, due to a number of underlying issues.”

With more than 200 health insurance plans on the market in this country, consumers are bamboozled when looking for value and Turner notes there are ways insurers could direct people into different plans. For example, hip and knee replacements are not covered by a lot of the cheaper packages which obviously deters older customers.

Deirdre McHugh, economist with the Competition Authority, says “competition is a means, not an end” and stresses that when it comes to healthcare “it’s not all about price but about getting the best quality of patient care for the best value”.

She says the speakers at today’s forum are speaking in the dark to an extent as they have no specific detail about what is proposed in the new reforms beyond what is contained in the programme for government. The Government will be bringing out a number of significant papers in the new year including new papers on risk equalisation and universal health insurance and the report of the implementation group which are expected to be vital cogs in the wheel of reform.

“Competition at the end of the day is all about choice. You have to have information to make choices, whether you are a patient or insurer and it has to be the right information to make a decision on the best quality of healthcare. You also have to be able to respond to that choice. If I am a patient and am trying to decide which doctor or hospital to attend, I need to be able to access the service I want and switch easily.”

In a system where success is rewarded and failure penalised as envisaged under the reforms, McHugh highlights the importance of ensuring “success” and “failure” are properly defined.

Dr Jack Nagle, chief executive of Alpha Healthcare, Mallow, Co Cork, and a speaker at the forum, will focus on competition operating within primary care. “People think competition is new but, in actual fact, there has been competition within healthcare for a while,” he says. “Subtly, GPs are always competing with each other. Typically there are more patients than GPs, but in some areas in particular, GPs compete with each other for private patients.”