Britain, in particular England, was early in making different kinds of market reforms within medical care. In this SNS Policy Brief the author test the effects of these reforms.
TWO TYPES OF MARKET REFORM. Britain, in particular England, was early in making different kinds of market reforms within medical care. The reforms were implemented in two steps – with different competition models. This makes it particularly interesting to study the effects of the reforms. At the beginning of the 1990’s, a customer-provider model was introduced in specialist care which meant that hospitals had to compete with each other. Customers did primarily give a premium to lower prices and shorter queuing times. At the beginning of the 21th century, a model was introduced where patients could choose freely between different providers of care. The prices for different treatments were fixed. Thus, there was an increase in the presence of the competition based on quality.
SHORTER QUEUES, BUT AT THE PRICE OF INFERIOR QUALITY. The customer-provider model turned out to be an efficient way of cutting the queues for care. But there is some evidence of a decrease in quality in dimensions that are more difficult for the customers to measure and observe.
CUSTOMER CHOICE SERVES TO PROMOTE QUALITY. The customer choice model, in combination with fixed prices, turned out to increase the quality of care, measured as survival and lead to shorter durations of treatment, without there being a cost increase. There are no signs of an increase in the inequality of care in the same period.
UNCERTAIN PROFITS FROM LARGE HOSPITALS. In parallel with the market reforms, extensive mergers of hospitals into larger units did also take place. There is no clear evidence that this has affected the quality or productivity of care in any direction.
AUTHOR Carol Propper is Professor of Economics at Imperial College Business School and University of Bristol. E-mail: c.propper@imperial.ac.uk.