Free choice of doctor important for competition in healthcare sector

By Theo Poiesz | February 10, 2015 | 2 min read

The bill to restrict the free choice of doctor did not go through in the Senate. However, according to Jo Caris and Theo Poiesz, this is not a bad thing. Competition within the healthcare sector is important. Health insurers, care administration offices and municipalities already have too much power, say the professors.

Since the bill on restricting the free choice of doctor did not go through, the government will have to draft a different proposal.  The bill did not receive a majority in the Senate. The power of health insurers and the restriction of the free choice of doctor also went too far for some Labor senators.

Why is competition in the healthcare sector so important?

Porter and Teisberg (Redefining Healthcare, 2006), and many along with them, are convinced that the quality of care is improved when there is competition between providers to provide the best value for customers.

Arguments for and against competition aside, there is little wrong with the opportunity for patients to choose according to their own assessments. In the market, customers select a service or a product after assessing the cost and quality of each.  This applies to cars, computers, watches, food, et cetera. The factors taken into consideration are technical and professional characteristics, but other aspects such as confidence in the supplier, service, proximity of provider, and friendliness are also taken into account.  The costs do not only pertain to the financial costs but also to distrust, discomfort, poor service, distance, waiting time, etc.

When a customer, for whatever reason, cannot choose, there is help available. There is often information available from consumer or member organizations (such as the Consumers' Association or the Dutch AAA). Additionally, customers are confident that a reliable supplier will not provide bad products or services. Each provider offers a different level of quality and customers differ in the assessments they make. That is essentially what qualifies as “competition” in the marketplace. 

How much does this apply to the healthcare industry?

Health insurers, care administration offices and, in the Social Support Act, the municipalities increasingly interfere with the purchasing process. There is no competition within the Dutch healthcare system. And because of the purchasing powers it will not materialize either. Having purchasing powers works against free consumer choice and thus against competition.

Having purchasing powers means that when providing healthcare it is no longer about customer values ​​but about the value of the purchasing power. The value that purchasing powers take into account are not the same as those of the end users. 

It is important to purchasing agents that the professional qualities meet standard requirements. The financial cost means more to them than to patients. Personal qualities such as trust, sympathy, familiarity, treatment, and considerations such as distance and detachment (for example) do not apply to buyers. We know that aspects such as trust and communication (treatment) are essential for good healthcare. 

Health insurers are increasingly using the quantity standard when contracting providers. There is a (slightly) positive correlation between the number of certain transactions and the (professional) quality and a negative correlation related to its costs. The quantity standard is easy to apply, however, it ignores what the patient truly values.

Providing a discount to the personal healthcare contribution when taking the insurers’ preferences into consideration, is a step in the right direction. After all, what is financially beneficial to the insurer is also financially beneficial to the patient. It is a pity that the financial costs to the patient do not relate to the other qualities and costs (the personal contribution is independent of the quality of the provider) and that disallows competition.

Even the most ardent opponent of competition should by now sigh: “If only there was competition within the healthcare system!"

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