How to Bring Real Competition to the Health Care Industry

Leemore S. Dafny

Thomas H. Lee

<article-ideainbrief class="article-ideainbrief">
 <h4 class="ideainbrief-title">Idea in Brief</h4>
 <div class="ideainbrief-contents">
  <h5>The Problem</h5>
  <p>The U.S. health care system is inefficient, unreliable, and crushingly expensive. In other sectors, competition improves quality and efficiency, spurs innovation, and drives down costs. Yet health care organizations are actively consolidating in order to stymie competition.</p>
  <h5>The Solution</h5>
  <p>Health care payers and providers must stop fighting the emergence of a competitive health care marketplace and make competing on value central to their strategy.</p>
  <h5>The Way Forward</h5>
  <p>All stakeholders in the health care industry can catalyze change in five ways: Put patients at the center of care, create choice, stop rewarding volume, standardize value-based methods of payment, and make data on outcomes transparent.</p>
 </div>
</article-ideainbrief><p>Here’s the good news: Thanks to the Affordable Care Act, or Obamacare, more Americans have access to health care than ever before. The bad news? The care itself hasn’t improved much. Despite the hard work of dedicated providers, our health care system remains chaotic, unreliable, inefficient, and crushingly expensive.</p>

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<p>The U.S. health care system is inefficient, unreliable, and crushingly expensive. There is no shortage of proposed solutions, but central to the best of them is the idea that health care needs more competition. In other sectors, competition improves quality and efficiency, spurs innovation, and drives down costs. Health care should be no exception.</p>
<p>Yet providers and payers continue to try to stymie competition. Many are actively pursuing consolidation, buying up market share and increasing their bargaining power.</p>
<p>In this article, the authors argue that health care payers and providers must stop fighting the emergence of a competitive health care marketplace and make competing on value central to their strategy.</p>
<p>All stakeholders in the health care industry&#8212;regulators, providers, insurers, employers, and patients themselves&#8212;have roles to play in creating real competition and positive change. In particular, five catalysts will accelerate progress: Put patients at the center of care, create choice, stop rewarding volume, standardize value-based methods of payment, and make data on outcomes transparent.</p>

Health Care Needs Real Competition

The U.S. health care system is inefficient, unreliable, and crushingly expensive. There is no shortage of proposed solutions, but central to the best of them is the idea that health care needs more competition. In other sectors, competition improves quality and efficiency, spurs innovation, and drives down costs. Health care should be no exception. Yet providers and payers continue to try to stymie competition. Many are actively pursuing consolidation, buying up market share and increasing their bargaining power. In this article, the authors argue that health care payers and providers must stop fighting the emergence of a competitive health care marketplace and make competing on value central to their strategy. All stakeholders in the health care industry—regulators, providers, insurers, employers, and patients themselves—have roles to play in creating real competition and positive change. In particular, five catalysts will accelerate progress: Put patients at the center of care, create choice, stop rewarding volume, standardize value-based methods of payment, and make data on outcomes transparent.

Health Care Needs Real Competition

Summary.

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