Healthcare

1. Competition harms healthcare

Competition increases deaths in health care
BBC News, "NHS competition 'costs lives'”, 29 January 2003,
http://news.bbc.co.uk/2/hi/health/2701899.stm
The rate of deaths from emergency admissions for heart attacks was used to determine quality of
care. This measure is widely used in the United States.
They [Professor Carol Popper and colleagues at Bristol University's Centre for Market and Public
Organisation] compared death rates in those hospitals with no local competition - one in three trusts
- with those that had to compete for business.
They found the death rates among these patients were much the same in the early 1990s.
However, they discovered death rates started to vary once competition took hold in the health
service.
According to their study, death rates were highest in those areas that had to compete for business.

Competing private insurers waste money on health-care.

Jerry Adler and Jeneen Interlandi, “The Hospital That Could Cure Health Care”, NEWSWEEK, Nov
27, 2009 http://www.newsweek.com/id/224585/page/1
But a visit to Cleveland Clinic makes it hard to avoid the conclusion that if you're looking for
"waste" in the health-care system—defined as expenses that do not directly contribute to medical
outcomes—a good place to look is the nation's cobbled-together system of competing private
insurers. Nissen, who considers himself less bound by the need for circumspection, points out
that "the overhead for private insurers is 29 percent. For Medicare, it's 3 percent. If what's left
over is what you can spend on patients, I think 97 percent is a much better deal."

Competition between medical insurance companies wastes $210 billion every year.
Jerry Adler and Jeneen Interlandi, “The Hospital That Could Cure Health Care”, NEWSWEEK, Nov
27, 2009 http://www.newsweek.com/id/224585/page/1
The same study estimated that another $210 billion is wasted each year on medical paperwork.
That, though, is one potential savings that has mostly eluded Cosgrove. At the clinic's patients'
accounts office, rows of cubicles are piled high with file folders and printouts, testimony to its
dealings with thousands of different health plans from hundreds of insurance companies all over
the country. Thousands of times a day, clerks pick up the phone and get put on hold like anyone
else who calls an insurance company. Industry estimates put the average cost of handling a phone
call at $3, to each party. This is the hidden cost of competition; whatever else a government-run
health-insurance system would accomplish, it would impose a uniform billing system on the
current one, in which clinic's 2,000 doctors require 1,400 clerks to handle their billing.

Joshua Mirth 1/5 Healthcare Brief

Competition may lower quality in heatlh care
Vicki Fong (Penn State University), 8 April 2005, "Health care competition may not result in better
quality", Public Health News
For several decades, competition within the health care industry has been touted as the way to curb
rising prices by reducing inefficient practices and improving quality and safety. But a study of 341
HMOs suggests that more competition may not automatically solve price and quality-of-care
problems as hoped for by legislators, regulators and employers.
"Our findings show that less, not more, competition was associated with better health plan
performance in several -- though not all--factors," says lead author Dennis Scanlon, associate
professor of health policy administration at Penn State. "This finding seems counterintuitive, but it
is possible that more HMO competition may result in providers finding it difficult to respond to
competing quality initiatives. Also, competition may be focused more on driving down the plans'
premiums, resulting in less attention to quality."

Zero Sum competition in health care reduces value

Michael E. Porter (University Professor, Harvard Business School), Elizabeth Olmsted Teisberg
(Associate Professor of Business Administration, Darden Graduate School of Business
The University of Virginia) Sometime, "Redefining Health Care: Identifying the Root Causes", Harvard
Business School, May 2006
Health care competition is not focused on delivering value for patients. Instead, it has become
zero sum: the system participants struggle to divide value when they could be increasing it.
Although health care offers tremendous value, the unnecessary costs of zero-sum competition
undermine and erode that value. It is the zero-sum competition in health care that has created the
unacceptable results detailed in Scoping the Problem: high costs, low or variable quality, under-
and overtreatment, too many preventable errors in diagnosis and treatment, restrictions on
choice, rationing of services, limited access, and a raft of costly lawsuits.
Zero-sum competition in health care is manifested in a number of ways, none of which creates
value for patients:
Competition to shift costs
Competition to increase bargaining power
Competition to capture patients and restrict choice
Competition to reduce costs by restricting services

Competition bad for health care

Kohn, Alfie, “No Contest: The Case Against Competition,” Revised Edition, 1992, Houghton Mifflin,
New York NY, ISBN 0-395-63125-4, p. 239-240
A similar dynamic is now at work in the field of health care, where many institutions are being
pressured for the first time to become “competitive”. More hospitals and clinics are being run be

Joshua Mirth 2/5 Healthcare Brief

 for-profit corporations; many institutions, forced to battle for “customers,” seem to value a
skilled director of marketing more highly than a skilled caregiver. As in any other economic
sector, the race for profits translates into pressure to reduce costs, and the easiest way to do it
here is to cut back on services to unprofitable patients, that is, those who are more sick than rich.
This is exactly what insurance companies are doing under the banner of “competitiveness”;
denying coverage to those who need it most. In many cases, there is not even any greater
efficiency to show for the greater inequity. “Among providers, competition has led to a stunning
round of spending on facilities and equipment in an attempt to lure patients form other providers
— and never mind if the new facilities are [unnecessary].” The result: hospital costs are actually
higher in areas where there is more competition for patients.

Joshua Mirth 3/5 Healthcare Brief

2. Cooperation good for healthcare
Doctors at the Cleveland Clinic cooperate, and it's the most efficient hospital in America.
Jerry Adler and Jeneen Interlandi, “The Hospital That Could Cure Health Care”, NEWSWEEK, Nov
27, 2009 http://www.newsweek.com/id/224585/page/1
As Cosgrove [CEO Dr. Delos M. Cosgrove, a former cardiac surgeon] told a Senate hearing in
June, the [Cleveland] [C]linic's business practices offer a potential model for the American
health-care industry as it strains to bend the ever-rising cost curve. The evidence was in the 2008
Dartmouth Atlas of Health Care, which reported that of the five medical centers ranked best by
U.S. News in 2007, Cleveland Clinic provided the most cost-efficient care, measured by
expenses incurred during the last two years of life—$31,252, nearly 50 percent below the most
expensive. The clinic's distinctive feature is that in contrast to most other American hospitals,
where doctors are essentially autonomous professionals, at the clinic physicians work on fixed
salaries and yearly contracts. An outsider might describe this relationship as "employer-
employee," although Cosgrove [CEO Dr. Delos M. Cosgrove, a former cardiac surgeon] prefers
a teamwork analogy; he calls Cleveland Clinic "the world's second-largest group practice" (after
Mayo Clinic, which is organized similarly). This saves money in many small ways, such as on
expenses for medical supplies and devices. "Because we're all on a team," says Dr. Joseph Sabik,
chairman of thoracic and cardiovascular surgery, "instead of stocking 30 different heart valves,
we can stock two or three, and unless there's a good medical reason to do otherwise, that's what
we use." And it saves money in one large way, by divorcing doctors' income from the number of
procedures they perform. That, in turn, reduces the incentive for unnecessary tests, whose cost to
the economy was estimated at $210 billion a year in a recent report by PricewaterhouseCoopers.

Cooperating drove down costs of medical care for Duke University

Jerry Adler and Jeneen Interlandi, “The Hospital That Could Cure Health Care”, NEWSWEEK, Nov
27, 2009 http://www.newsweek.com/id/224585/page/1
But in 2006 Cleveland Clinic abandoned the traditional departments in favor of 25 "institutes"
organized by disease or organ system. This works well for patients, who don't care whether their
back pain is cured by a rheumatologist, a neurologist, or an orthopedic surgeon. But, says Regina
Herzlinger, an expert in health-care economics at Harvard Business School, it runs afoul of the
dominant fee-for-service system of medical billing, which discourages cooperation across fields.
When Duke University Medical Center set up a disease-management system for congestive heart
failure, coordinating the efforts of cardiologists, primary-care doctors, pharmacists, and nurse
practitioners, it drove down the cost of treatment by 40 percent in a single year, while reducing
readmissions and improving outcomes. But that highlighted the central paradox of health-care
economics: a patient's "cost" is the hospital's "revenue." The unintended result of the Duke
experiment, says Herzlinger, was that the unit lost tens of millions of dollars a year. The chief
beneficiaries were the insurance companies, which saved on reimbursements.

Eliminating competition between doctors drove up quality.

Jerry Adler and Jeneen Interlandi, “The Hospital That Could Cure Health Care”, NEWSWEEK, Nov
27, 2009 http://www.newsweek.com/id/224585/page/1

Joshua Mirth 4/5 Healthcare Brief

 At Cleveland Clinic, by contrast, the institute system worked because all its doctors were already
on salary. This eliminates the competition for patients between departments, and the incentive for
doctors to perform additional tests and procedures. The system also "drives our quality up,"
Cosgrove says, because it frees doctors to concentrate on their practices, not the minutiae of
running a small business

Joshua Mirth 5/5 Healthcare Brief