BMJ  2005;331:1464-1466 (17 December), doi:10.1136/bmj.331.7530.1464

Education and debate

Using markets to reform health care

¹ NHS Confederation, London SW1E 5ER nigel.edwards@nhsconfed.org

The English healthcare market will be different from conventional markets and may not behave in the same way. Predicting whether the reforms will produce the intended results is therefore difficult

The first 150 words of the full text of this article appear below.

Introduction

Many health systems are using market mechanisms, competition, and incentives as a way of driving reform. The benefits of this are seen as increased responsiveness to the needs of patients and payers, the ability to increase and reduce supply quickly when required, greater efficiency, innovation, and less unhelpful meddling in provider management by central authorities. These advantages are potentially important but come with some problems and costs. The policy question is at what point the costs exceed the expected benefits?

Costs of competition

Competition has costs for providers, payers, and patients. Competition reduces some management costs but transaction costs such as billing and contracting are likely to be higher than in managed systems and providers may have large marketing costs. The reforms proposed for the NHS have avoided one important transaction cost by setting prices nationally, although this may be at the cost of removing some of the power of market mechanisms. The . . . [Full text of this article]

Effect on quality

Motivating providers

Competition, choice, and equity

Efficient functioning of markets

Conclusions

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