1. Is choice and competition
happening and if so where?
Carol Propper
University of Bristol & Imperial College
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2. The choice architecture
• Building blocks in place
– PbR
– PCTs as commissioners; sellers – Trusts, the private
sector
– Regulators: SHAs, Monitor, Carter Commission +
quality regulators
• The model
– Competition in hospital services
– Less clarity about competition elsewhere
• Long term and chronic care
• GP services
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3. Why might we want choice and
competition?
• Responsiveness of service
– Individuals may not want to shop around but do want
personalised service
– Monopolists less likely to be responsive since the
‘only game in town’
• Competition in health care has been shown to
have better outcomes
– Mainly US evidence
• Costs have fallen; Quality – less well established (FTC)
– Dutch agenda
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4. The evidence
• Little hard evidence so far
– Trusts aware of competition for their markets
– Much review and discussion especially in urban areas
– Response will be slow, in part because of lack of
good info
• Is there scope for competition and how
competitive are markets?
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5. Competition: the evidence
• US Department of Justice guidelines on
competition
– Market concentration is a function of the number of
firms in a market and their respective market shares.
– “HHI” index of market concentration.
– Divides market concentration into three regions
• unconcentrated (HHI below 1000)
• moderately concentrated (HHI between 1000 and 1800)
• highly concentrated (HHI above 1800)
– In concentrated markets an increase of 100 points
may be presumed to create/enhance market power
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6. Competition: the evidence
• How concentrated are English health care
markets?
• Examine different products
– maternity (people want to be treated close to home)
– Hips and knees (waiting times important, lots of
providers)
– CABG (few providers, people have to travel)
– All admissions
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9. Competition: the evidence
• English health care markets are concentrated
– Average provider HHI of over 6000
– Lowest in hips and all admissions; higher in maternity
and CABGs
• Concentration is not simply a function of the
numbers of sellers
– For example, maternity (150) as concentrated as
CABG (28)
• Nor is it a function of the number of PCT buying
care from each supplier
– For example, maternity (43) compared to hips (13)
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10. Competition: the implications
• Concentration is a function of
– existing patterns of supply, the relationships between
providers and PCTs (and GPs), and the willingness of
patients to travel
• Mergers could lead to more abuse of market
power in maternity (where there are many
suppliers) than in CABG (where there are few)
• Lots of issues for the Carter Commission!
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11. www.nuffieldtrust.org.uk