Hot! Health-care competition: Can Britain’s experience help Canada? – commentary
Oct. 19 2012

Governments across the OECD are searching for methods of delivering higher productivity in health care, or, put more simply, ways of getting higher quality care without spending more money. Canada is not unique in this respect. Recent reforms in Britain place considerable weight on encouraging choice and competition to help achieve these goals. Critics of the U.K. reforms are vociferous in arguing that a focus on choice and competition is, at best, misguided and, at worst, will lead to the privatization of the National Health Service. In fact, a cool look at the evidence gives a more positive picture and some potential lessons for Canada.

First, there’s the evidence from the reforms implemented by the last Labour government. Known as “choose and book,” the 2006 reforms mandated that patients be allowed to choose from as many as five hospitals for their treatment, and so introduced competition between health-care providers. The evidence from these reforms broadly suggests the following: It’s clear that not all patients were offered choice, wanted it or took it up when offered. But it also appears that, by 2009, about half of the patients recalled being offered a choice.

Hospitals rated as better – both in terms of some measures of clinical quality and in terms of having lower waiting times – before the policy reform attracted more patients and patients from farther away than after the reform. This suggests that the choice agenda had some effect on the selection of hospitals. More patients chose – with the help of their GPs – to go to better hospitals. Fears that patients would only choose on the basis of convenience or factors unrelated to clinical quality also appear to be ungrounded.

Did this movement of patients have any effect on outcomes? There’s no systematic evidence that the choice agenda harmed patients. A study of equity post-reform did not find that patients from more deprived local areas fared worse. And recent studies have found positive news. Hospitals in areas where patients had more choice had greater improvements in clinical quality (measured by lower death rates after admission) and greater reductions in lengths of stay than hospitals in less competitive areas.

What’s more, hospitals in competitive markets increased their quality without increasing total operating costs or shedding staff. While reductions in death rates are a pretty crude indicator of quality, they’re are also used by health-care regulators in many countries as a measure of hospital performance.

Second, there’s evidence from the wave of mergers that the Blair government undertook when it first took office. About half the acute hospitals in England were involved in a merger between 1997 and 2003. A recent study of these mergers has shown that, just as in the private sector, most of these did not realize the gains that were promised before the merger. As mergers tend to reduce the potential for competition in a local market, these findings also suggest there are benefits from competition in a public health-care system.

Third, findings from a recent study of management in the NHS shows that better management is associated with better outcomes in NHS hospitals and that management tends to be better when hospitals compete with each other.

A look at the evidence in Britain and elsewhere in Europe suggests that the arguments for and against competition within a public health-care system may be more nuanced than many politicians (and perhaps health commentators) would like. When Canadians think of competition in the health-care system, they often think it’s a code word for private care for those who can afford it, or for introducing for-profit providers who will compete unfairly with not-for-profit hospitals. Canadians are right to be concerned with those models of competition that reduce quality in order to generate profits and create greater inequities within the system.

But the U.K. evidence suggests that, within a public system, allowing patients more choice and exposing poorly performing hospitals to the threat of their patients choosing another provider neither leads to the destruction of the system nor to equity issues. As long as prices are fixed and providers compete on quality, the evidence we have suggests that competition has the power to improve outcomes for patients within the publicly financed system.

It’s likely that, as in the U.K., many Canadians aren’t interested in a choice of providers, nor would it be feasible to implement in all parts of the country. But there are few “one size fits all” solutions, and there are also many parts of Canada where competition is both possible and, if correctly focused on quality and efficiency, desirable. In these cases, Canadians may wish to examine the evidence from those European countries that have successfully infused competition within their public system and helped their patients along the way.

Carol Propper is a professor of economics at Imperial College London. Mark Stabile is director of the School of Public Policy and Governance and a professor of economics and public policy at the University of Toronto’s Rotman School of Management.The authors are part of the Finance & Governance for Health symposium, hosted by the School of Public Policy and Governance, to examine how international evidence and experience can help build a better health-care system for Canadians.

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