1150 Seventeenth Street, N.W., Washington, D.C. 20036
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Is competitive choice in Britain's National Health Service (NHS) an oxymoron? Not in the case of hospital care, according to Carnegie Mellon economist Martin Gaynor, who argues that recent reforms to improve its quality might provide useful lessons for
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U.S. policymakers. In 2006, the NHS introduced a payment system that set fixed, regulated prices for treating patients in hospitals but mandated that all patients be given their choice of five different hospitals. The NHS reforms allowed patients to book their appointments online, set prices for every hospital procedure beforehand by a case-based payment system, and provided greater operating autonomy to better-performing hospitals.
Did this policy increase competition for hospital patients? How did it affect the quality and cost of their care? Did patients travel greater distances for better care? What are the implications for U.S. hospital markets? Gaynor will present his recent analysis of NHS reforms, in particular how less-concentrated hospital markets provide better care without increasing costs. UnitedHealth Group's Simon Stevens will discuss whether and how a greater dose of competition might improve hospital care for American patients. AEI health policy scholar Thomas P. Miller will moderate the discussion.
| 9:00 a.m. |
| Registration |
| 9:15 |
| Presenter: |
| MARTIN GAYNOR, Carnegie Mellon University |
| Discussant: |
| SIMON STEVENS, UnitedHealth Group |
| Moderator: |
| THOMAS P. MILLER, AEI |
| 11:00 |
| Adjournment |
WASHINGTON, DC, OCTOBER 27--Martin Gaynor of Carnegie Mellon University and Simon Stevens of UnitedHealth Group discussed the effects of the procompetition health reforms enacted in the United Kingdom's National Health Service in 2006. These reforms allowed for greater patient autonomy in deciding at which hospital to receive care. Additionally, the payment system was changed from one based on negotiated prices to one based on centrally set prices. Hospitals had to improve quality of care to attract more patients. Gaynor presented the results of his recent National Bureau of Economic Research paper analyzing the impact of these policies. Increased hospital competition improved clinical outcomes--measured by decreased mortality--without increasing expenditures. Stevens applauded these results to some extent and noted that similar types of policies should be implemented in the United States. Namely, hospital competition in the United States should increase to drive down prices and improve the quality of care.
- "The policy worked as intended. Outcomes in terms of mortality improved in places where hospitals faced more competition after reform than places where they faced less competition. . . . Within two years, this procompetitive policy led to improvement in clinical outcomes, as measured by mortality rates; reduced the length of stay; and did not increase expenditures."
"Competition can be an important mechanism for enhancing the quality of care. . . . The sound bite is 'monopoly kills.'"
--Martin Gaynor, E. J. Barone Professor of Economics and Health Policy, Carnegie Mellon University - "We don't start from a position of high hospital competition in many geographies in the U.S. right now. . . . There's a real issue here [in the United States] about the extent of consolidation and the degree to which that will affect negatively the procompetitive gains. . . . Part of what we need to think about is to ensure that the barriers to new forms of health care delivery are kept as low as possible."
--Simon Stevens, Executive Vice President, UnitedHealth Group
--GABRIEL SUDDUTH
Speaker biographies
Martin Gaynor is the E. J. Barone Professor of Economics and Health Policy in the H. John Heinz III College and the Department of Economics at Carnegie Mellon University. He is also an adjunct staff member at the RAND Corporation, a research associate at the National Bureau of Economic Research, and an associate member of the Centre for Market and Public Organisation at the University of Bristol. He is a member of the Economics Reference Group of the Cooperation and Competition Panel in the United Kingdom, advising the British National Health Service on competition issues. Mr. Gaynor's research focuses on the economics of health care markets and health care organizations, particularly competition, antitrust, and provider compensation and incentives. His work has been published widely in scientific journals, including the Journal of Political Economy, the American Economic Review, the Rand Journal of Economics, the Journal of Industrial Economics, and the Journal of Health Economics. Mr. Gaynor has worked with the U.S. Department of Justice, the U.S. Federal Trade Commission, the British National Health Service, the Netherlands Competition Authority, and the Netherlands Healthcare Authority. He is the recipient of the 2007 Victor R. Fuchs Award (for the paper with the most potential to spawn new research in an underdeveloped area of health economics or health policy), the 2005 National Institute for Health Care Management Foundation Health Care Research Award (for best published research on health policy and management), the 1996 Kenneth J. Arrow Award (for best published article worldwide in health economics), and a Robert Wood Johnson Foundation Investigator Award in Health Policy Research.
Thomas P. Miller is a resident fellow at AEI, where he focuses on health policy with a particular emphasis on information transparency, health insurance regulation, and consumer-driven health care. He was a member of the National Advisory Council for the Agency for Healthcare Research and Quality from 2007 to 2009. Before joining AEI, Mr. Miller served for three years as a senior health economist for the Joint Economic Committee, where he organized a series of hearings focusing on promising reforms in private health care markets. He also has been director of health policy studies at the Cato Institute and director of economic policy studies at the Competitive Enterprise Institute. Mr. Miller's writing has appeared in publications such as Health Affairs, the Wall Street Journal, the New York Times, the Washington Post, the Los Angeles Times, Reader's Digest, National Review, the Journal of Law and Contemporary Problems, Regulation, and Cato Journal. Before moving to Washington to work on public policy, he was a trial attorney, journalist, and radio broadcaster.
Simon Stevens is president of the Global Health Division and executive vice president at UnitedHealth Group, as well as founding chairman of the UnitedHealth Center for Health Reform and Modernization. He previously served as CEO of Ovations, UnitedHealth's Medicare business and the nation's largest Medicare health plan. Before joining UnitedHealth, Mr. Stevens led a varied career in health care policy and management, including as British prime minister Tony Blair's health policy director at 10 Downing Street, responsible for reform of the British National Health Service. He has also run academic medical centers and primary-care, behavioral-health, and payer organizations, in both the public and private sectors. Mr. Stevens was a visiting professor at the London School of Economics and currently serves as a board member for a number of leading health organizations.
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