Would More Competition Lower Health Spending

By April 26, 2017Commentary

A bevy of high-powered institutions including Brookings, the Robert Wood Johnson Foundation, the American Enterprise Institute and Carnegie Mellon issue a report based on a meeting regarding competition in health care.   (Competition Report)   The paper’s authors catalog the ample research regarding health market consolidation and dysfunction and make recommendations for a new competition policy in health care.  Our spending problem is largely related to high and increasing unit prices.  Reducing these prices therefore is critical to limiting further spending growth.  The paper’s recommendations include:

  1.  Reforming Medicare payment policies the encourage consolidation by, for example, having site-neutral reimbursement.
  2. Eliminate administrative burdens that encourage consolidation.
  3. Support risk contracts for smaller provider organizations.
  4. Simplify quality reporting and ensure wide public dissemination.
  5. Ensure that consumers get accurate out-of-pocket information at the time of service so they can shop for lower-cost providers.
  6. Provide better and more comprehensive data collection and analysis on clinician’s quality and cost performance, so that payers can use this for network and contracting decisions.
  7. Remove barriers to entry such as cross-state licensing restrictions, any willing provider laws, certificate of need laws, scope of practice restrictions and non-compete, exclusivity or most-favored nations clauses.
  8. Enhance scrutiny of horizontal and vertical mergers.

All very nice and probably helpful, but I keep coming back to the need to undo decades of far too loose antitrust enforcement.  Break up the large provider systems.  That would the single best thing we could do.

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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