51³Ô¹ÏÍø

Article at a glance:

• Over the past 20 years, governments have turned to market reforms and competition to curb costs and raise standards in healthcare.

• Patient choice has increased, but more support is needed to help those who are less able to exercise this choice.

• Proactive scrutiny of mergers, alongside quality incentives and openness to new providers and modes of care, could ensure integration improves care rather than re-establishing local monopolies.

Healthcare functions differently from other product markets due to the importance of maintaining equity in access to care and quality of care. As a result, government intervention is high and healthcare markets are heavily regulated.

However, the cost of healthcare has steadily risen worldwide. In 2000, the average healthcare expenditure in the OECD was , which has since risen to . In the UK, this has risen from to  in recent years. In a bid to reduce these cost increases, governments have introduced reforms to make use of markets in healthcare.

These focus on increasing the role of patient choice and promoting competition between providers, such as hospitals and primary care settings. But does choice and competition actually improve quality of care for patients? reviews the evidence on market reforms in healthcare to shed light on this.

This is important as, even though market reforms featured more prominently in healthcare policy discussions in the past two decades, current priorities such as may also rely on competition and patient choice to succeed. Similarly, plans around integrated care and consolidation may benefit from a nuanced understanding of how competition and monopolies affect patient outcomes.

A mixed picture

What’s clear from the findings is that increased choice through market reforms can improve quality of care, but this is not a given. Evidence from the UK and Norway, for example, suggests that allowing patients to choose between providers (without any cost competition) can have a positive impact on patient mortality in emergency settings.

Research also suggests that patients respond to quality differences when choosing a provider. However, choice for some may be limited and there are demographic differences, with low-income patients more likely to register with poorly rated providers, partly because they lack the information networks of higher income peers.

Competition also introduces new modes of care. Deregulation has led to a rise in online provision, and in care being delivered by substitutes such as pharmacists and nurse practitioners. Evidence suggests these alternatives can provide similar outcomes to in-person care, offering greater convenience for patients and potential cost savings for providers. However, patients who use online consultations may also be more likely to require in-person follow-ups, partially offsetting those benefits.

Greater market freedom has also led to a wave of hospital mergers in some countries, reducing the number of providers and the competitive pressure between them. While concentrating some specialist services in larger centres can have benefits, mergers do not automatically improve quality, productivity or cost, and sometimes make healthcare more expensive. Without strong regulatory oversight, integration and consolidation could risk recreating the same local monopolies that market reforms aimed to reduce.

Areas for improvement

One important way to increase the benefits for patients is by improving access to clear, high-quality information. Rather than simply publishing information and hoping people read it, offering responsive, detailed comparison tools can help people to be better-informed, helping them reach decisions based on their individual needs. Community outreach programmes can help level the playing field, ensuring information does not only benefit those who are already better-informed.

On a macro level, many countries already have the power to scrutinise mergers that limit choice and offer little benefit, but this has often been underused. Using these powers more proactively would help ensure mergers add value, keep markets open to new entrants, and maintain competitive pressure on established providers.

"Increased choice through market reforms can improve quality of care, but this is not a given."

There is also a need to support integrated care while ensuring it does not recreate monopolies that deny patient choice. Regulators should prevent integrated providers from directing patients towards their own affiliated services regardless of quality. Where mergers are permitted, price regulation and quality incentives – such as shared savings models tied to measurable outcomes – can help ensure they genuinely benefit patients.

Regulation can also help keep markets open to new approaches. Allowing well-qualified substitutes such as nurse practitioners to deliver care, and new modes of care such as online consultations can expand choice and capacity, provided quality is closely monitored as the evidence base develops. This is particularly relevant in the context of the benchmarking approaches such as the updated , where high-performing providers may be given more leeway to test innovative approaches.

Overall, market reforms have given patients greater choice and offer real potential for improvements in care. However, they have not yet fully delivered to the extent policymakers hoped. Better information for patients and stronger, more proactive regulation are the keys to changing this, preventing the re-emergence of monopolies and maximising the benefits of new options and approaches to care.