Healthcare And The Competitive Market Structure

1003 words - 4 pages

A competitive market is one that allows easy entry and exit: a market in which companies are generally free to enter or to leave at will. This does not describe the health care market in the US. There are certain assumptions that the competitive market model operates under some assumptions, first is the consumer/patient has full information about the nature of the services required, the anticipated results of their decision and the benefits obtain from the service. This is not true in health care often time the patient is operating at a distinct information disadvantage when they require health care services such as insurance. If a patient purchases health insurance often they don’t know enough information to ascertain if they have purchased a quality plan. Second, consumers/patient and providers (physician, health insurance) act independently. This does not happen in health care because of the asymmetry of information that exists; patients must depend on the decisions made by their doctor or health care provider who is acting on their behalf as a health agent or gatekeeper. Sometimes physicians own diagnostic facilities or invest in health care organizations this affects their ability to be impartial. Third consumers bear the financial impact of their decision and are aware of price differences; most patients are insulated from the true cost of health care because of a third-party payer who bears the financial brunt of the decision to receive medical care. Shi and Singh state that even if a patient wanted to find out the cost of services sometimes it is difficult because of item based pricing. Fourth there is unrestrained competition regarding price and quality among providers. Access to the health care market unrestricted is blocked in many ways by regulations and laws. An example of this is physician assistants and nurse practitioners, these two sets of health care providers are not free to set up a primary care practice without some medical practitioner oversight. Another group often blocked is complementary or alternative health care practitioners. These restrictions and the insurance industry unwillingness to pay for these services, gives the physicians an almost monopolist control over health care. Providers must be able to enter the market for competition to work and there must be many providers vying for the patient. To get the most out of health insurance plans Consolidation of hospitals and multispecialty group practices increases the negotiating leverage of the group but in certain areas of the US a single large medical system has become the sole provider of major health service thereby restricting competition (Shi & Singh, 2008). This consolidation while giving the hospitals and group practice leverage when negotiating prices of supplies and services tends to increase the price of health care to the patient because there is no longer any competition (Shi & Singh, 2008). For these reason “competition will remain less effective in...

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