Competition in Health Care – Health System Example

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"Competition in Health Care"  is a perfect example of a paper on the health system. The US has remained a developed economy and is presently one of the most powerful economies of the world as well as a global leader. The country owes its worldwide dominance to the competition that has existed in various fields, thereby propelling its citizens to do their maximum in order to make a living. This has resulted in wealth accumulation in the country, thus making it one of the wealthiest economies in the world. Similarly, the US healthcare industry has been constantly shaped by the prevailing competition in various areas of healthcare including competition among hospitals, health plans, insurance schemes, etc.

As Cultler, Dafny & Ody (2012) find, the healthcare system in the country is “ designed” around the “ premise and promise of robust competition” taking place within the value chain of production (p. 1). Albeit the fact that competition plays a prominent by pushing service providers to perform their best, there is also concern regarding situations where the providers merely aim to survive and will adopt any means to achieve profit.

Therefore, it becomes important to assess the contribution of competition towards the healthcare industry, and an in-depth analysis of the same reveals that it has both significant positive and negative results. Different Forms of Competition in Healthcare Industry:                       Competition existing in the healthcare industry can take up several forms including the introduction of new policies by the government hospitals, new health plans aiming at maximum coverage of citizens, increased and improved services on part of physician groups, development of new drugs by drug companies, etc.

Competition is always associated with development, as firstly, it is the process which provides “ resolution” when “ conflict of interest” arises in a society, and secondly, it is believed that competition gives rise to increased efforts taken by parties involved (Maier-Rigaud, 2012, p. 26). For instance, the heightened competition in the US healthcare industry has influenced President Obama to introduce “ The Affordable Care Act, ” which aims at bringing effective changes such as enabling parents to enroll children in their “ own plans” till they turn “ 26,” equipping women with “ greater access to birth control” etc (National Public Radio, 2013).

Furthermore, a competition that takes place in the healthcare industry illustrates that it is not merely dependent on pricing or costs involved, but also based on non-price aspects of care such as consumers’ “ choice of providers, access, style of care” as well as the technical quality of care (Miller, 1996, p. 109). Thus when there are so many different aspects involved in the competition, the benefits involved are understood, however, the downside is that it also has its own pitfalls or demerits. Benefits and Pitfalls of Competition: Competition in the US healthcare industry stands testimony to a lot of benefits for the citizens, the most significant one being reduced cost and expenditure on healthcare.

As compared to non-competitive markets, competitive healthcare markets provide the advantage of “ out-of-pocket payments, ” better utilization of resources as well as “ higher quality” of care, which is basically what citizens aspire for in the modern world (Miller, 1996, p. 107). Thus, it was seen that the healthcare providers who work in competitive markets are forced to adopt a good system of cost-cutting in order to encourage more consumers to choose their services.

However, at times, competition may lead to certain issues, which ultimately undermine the primary goal of healthcare. The main issue here is that increased competition among different healthcare providers, health plans and insurance actually is leading to increasing in overall healthcare expenditure or cost. For instance, the Obamacare maintains that if people do not have “ uncompensated care because everyone has coverage, ” the costs would decrease, however, costs have increased instead because uncompensated care costs get added with premium cost (National Public Radio, 2013).

On the other hand, with increased competition, the physicians or doctors working in a particular hospital may choose another hospital if the pay is more, thus the former hospital becomes a victim to turnover issues, thereby being unable to provide its best quality care to patients. On the other hand, with increased competition, if a particular hospital is unable to recruit highly skilled doctors, then it will lose its clientele and no be able to provide care to existing or future patients. Another disadvantage is that with increased competition, people look for brands of medicines or drugs that promote honey crusted words and promises, thus consumers may fall prey to fake drugs. Thus, it becomes clear how competition in healthcare also has a lot of od disadvantages, and these disadvantages make one ponder about what alternative forces should drive healthcare industries if not competition.

In this light, the primary driving force for all parties involved in the healthcare industry should actually be providing good quality care to patients. Therefore, the healthcare industry should be consumer-driven, thus not viewing any party as competition, and actually joining forces in order to reach this ultimate goal of patient satisfaction.

Government and private parties can work together and such a merger will help reduce costs through “ ownership consolidation and facilities consolidation” (Maier-Rigaud, 2012, p. 55). Thus healthcare professionals and healthcare instruments such as health plans can focus on providing top quality services to consumers based on a maximum low price. Elements of Successful Competition: Despite its pitfalls, competition is still the driving force in the healthcare industry, and it can also have reduced disadvantages if it is successful in its course.

There are a lot of elements, which determine successful competition, first being that it achieves its main objective that is the reduced cost of healthcare expenditure. It is seen that the cost of healthcare in the US remains an important concern for American consumers, this competition should ensure that costs are controlled and also that good quality care is provided. In order to ensure that competition has a positive influence in the industry, the parties involved need to impart competitive intelligence amongst all consumers, thereby providing them with better information about products as well as choices available.

Therefore through such measures, consumers can become better aware and make smarter choices. Influence of Competition on Healthcare Services: The influence of competition on healthcare services has already been discussed above and it has become clear the competition is the driving force in the healthcare industry. However, in order to maintain a good spirit of competition, the antitrust agencies need to ensure that competitive markets promote “ lower costs, encourage innovation, and enhance quality and choice” for American consumers (US Department of Justice, 2012, p.

1). Furthermore, the impact of competition is seen through “ (i) the existence of options, (ii) patients interested in choice (iii) information allowing well-informed choices, and (iv) incentives for hospitals to attract patients” (Maier-Rigaud, 2012, p. 1). In this light, it is important to consider the “ Choose and Book, ” an initiative that aims to “ expand patients’ hospital choices” in the UK (Cultler, Dafny & Ody, 2012, p. 1). Thus, it becomes clear that competition compels service providers to not only provide the best quality care but also to provide choices to consumers. Conclusion:                       Competition is the driving force behind the US healthcare industry and it is seen to exist among hospitals, health plans, healthcare providers such as physicians, doctors, etc.

It presents various advantages as well as disadvantages to both consumers as well as the healthcare parties involved. However, it is seen that the advantages outweigh the disadvantages, therefore, it becomes clear that competition plays a crucial role in the US healthcare industry by promoting reduced healthcare costs as well as better quality care.


Cultler, D., Dafny, L., & Ody, C. (2012). How Does Competition Impact the Quality of Health Care? A Case Study of the US Dialysis Industry.

Maier-Rigaud, F. (2012). Competition in Hospital Services--the Policy Dimension. OECD Best Practice Roundtables In Competition Policy.

Miller, R. (1996). Competition in the health system: good news and bad news. Health Affairs, 15(2), 107-120.

National Public Radio,. (2013). Looking Ahead: The Future Of Health Care Policy. Talk of the Nation. Retrieved from

US Department of Justice,. (2012). Competition and Health Care: A Prescription for High-Quality, Affordable Care. Orlando, Florida.

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