Public Management

Free market system in the health care sector: are there any other roads that lead to Rome?

By Edith Hooge | October 16, 2014 | 3 min read

The generation of a monopoly or dependency of the health insurer are undesired side-effects of a free market system in the health care sector. Named professor Edith Hooge on other roads that generate competition so that the health care sector becomes and stays dynamic, sharp and quality-oriented.

Image: © Nationale Beeldbank

The New Public Management range of ideas has been dominating government policy for decades now. A typical manifestation of those ideas is the introduction of a free market system in the health care sector. Operating efficiently and client-orientedness are important pillars. Along with the conviction that the positive strengths of the market will lead to the situation in which health insurers and health care providers compete with one another to offer ‘made-to-measure’, functional and innovating care.

The dynamics have demonstrably increased now that the free market system has actually been put into effect in the health care sector. In the curative health care sector, for example, via the health insurance act or the Social Support Act 2015 in long-term care. In addition, the undesired side-effects are becoming obvious as well.

Undesired side-effects 

Mergers and take-overs diminish the competition, leading to a monopoly. Competition cannot fully develop as the clients and patients cannot adequately fulfill their role of customer. Too often they are in a position in which they are dependent upon the health insurer or health provider and/or they are not assertive enough or able to cope for themselves or they have no purchasing power. It is also found that health insurers and health care providers (partly) withdraw from the public domain in order to avoid public accountability- or settlement-mechanisms. That in turn poses a threat to the transparency that is required in order to have the health care market function properly.

The side-effects mentioned here may overshadow the desired effects of made-to-measure care, efficiency and effectiveness, improvement and innovation, or may even wipe these out in the long term.

In order to prevent this, it is important to stop and think about what one actually hopes to achieve with a free market system. Is it really about competition? Do we not actually mean: competitiveness? Competitiveness is necessary to keep the health insurers and health providers sharp where it concerns the matter of: is what we are offering good enough and innovating enough, does it do adequate justice to the specific needs and situation of our clients, and are we not wasting too much (public) money?

A free market system is not the only cure-all in generating competitiveness in a way that the sector becomes and stays dynamic, sharp and quality-oriented. There are more roads that lead to Rome. The quadrant that Professor Kim Putters introduced in his oration from the year 2009 ‘Besturen met duivelselastiek’ beautifully demonstrates which roads these may be. In addition to the road of a free market system, he sees the road of the government & politicians, the road of the professions and the road of the community.

Road of the government and politicians

The government can organize competitiveness with the time-honored proven means of subsidy and supervision. A good example of this is ZonMw (Netherlands Organization for Health Research and development) that finances research, development and implementation on behalf of the Ministry of Health, Welfare and Sport and the Netherlands Organization for Scientific Research (NOW). Certain requirements must be met in order to be granted subsidy, such as scientific soundness, usability, innovation and valorization.

Road of the professions

The professions themselves can keep the competitiveness going by stipulating expertise and professionalism requirements, in the sphere of, for example, inter- and intra-professional cooperation, co-creation, public orientation, client- and patient-orientedness and innovation.

Road of the community

Finally, there is the road of the community as an interesting and promising initiative. Citizens can take the initiative to offer care or to insure care. This private initiative may be an alternative for what medical professionals and care professionals offer, or can come about in cooperation with these parties. There are plenty of examples, within and outside the care sector: the Thomas homes for the disabled, Buurtzorg in the homecare sector, De Weekendschool in the primary education sector, the Joop Gilliamse nursery in the daycare sector, etc.

What all of these organizations and initiatives have in common is that their founders are people who would have otherwise occupied the dependent role of client or patient, either with or without professionals. The foundation often leads to unrest or criticism: such initiatives are not professional enough, they do not meet all of the requirements that may be stipulated for services offered to the public, they are only for exclusive groups, etc. Apart from whether the concern or criticism cuts ice or not: it in any event keeps the sector on its toes and subsequently leads to healthy competitiveness without the major disadvantages of the free market effects alone.

These alternatives for a market system in the care sector should be better explored and promoted.

Grow at TIAS

At TIAS we believe in Life Long Development, continuous personal, professional and network development during and after your studies. With more knowledge, better skills and a broader network, you will be able to create more impact and be successful.

More about learning at TIAS » 

Brochure TIAS School for Business & Society

Get to know TIAS: The business school for tomorrow's leaders.