Friday, June 24, 2011

Ambivalence about Competition

Our attitude towards competition in health care is one of deep ambivalence.

We generally approve the principle of competition, believing that it leads to improved performance, innovation, and efficiency - results that are greatly needed in modern health care. But when it comes to our personal situations, we want to believe that our health care providers are focused solely on doing what is best for us and are not distracted by anything else – like competition with other providers. Of course, if that were the case, the providers wouldn’t be human, but we want to believe it anyway.

That ambivalence was reflected in the June 22 issue of the Boston Globe. It seems that Fallon, a well-known physician group based in Worcester, and Atrius, a conglomerate of groups based in the Boston area, have decided to merge.

According to the Globe report, the two groups agreed, as a condition of their merger, that the state Attorney General would have the power “to review the group’s contracts with health insurers and even put pressure on Atrius if its prices jump significantly as a result of the merger.” In other words, the AG will be able to limit the exercise of the increased economic power the merged entity will have in the health care market place.

The article quoted the head of Atrius as saying that the main purpose of the merger is to share technology, purchasing contracts, and expertise and that “We’re not coming together with the idea of using market power to drive the request for higher reimbursement.”

Apparently the attorney general, along, I suspect, with most informed observers, has her doubts about that.

But we’re still not ready to address the subject of whether there should be competition in health care and, if so, how it ought to be structured.

Until we do, the problems facing health care are going to be very hard to deal with.

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