The Upside of Health Care Competition

Last fall I wrote about how the Hannaford supermarket chain was offering incentives to employees to have procedures like hip and knee replacement done in Singapore, where the company believed treatment of comparable quality but significantly lower cost was available. I quoted the director of health benefits:

"Hannaford's new coverage policy was prompted by stinging criticism from its European owners. For them, medical costs and outcomes in the United States just don't add up. [They said] look at what they're spending in the United States. It's two or three times what they're spending in any other industrialized country. But if you look at quality, [the U.S.] is ranked dead last. So the Europeans said, 'why is health care going up at this extraordinary rate in the United States?'"

I speculated that self-insured employers might prod our society to be more thoughtful about value in health care by taking a more businesslike approach to the provision of health benefits.

In yesterday's New York Times a distinguished trio - Arnold Milstein (Medical Director, Pacific Business Group on Health and "National Health Care Thought Leader" at the William M. Mercer consulting company), Mark Smith (CEO, California HealthCare Foundation), and Jerome Kassirer (former editor, New England Journal of Medicine) - discussed the pros and cons of programs like Hannaford's and then asked:

So should offshore surgery be welcomed as a modest way to make American health care more affordable? We can’t know until we can directly compare the outcomes with those of American surgery. To begin, we must adopt a uniform way for American hospitals and surgeons to report on the frequency of short-term surgical complications.

They suggest that U.S. hospitals use the National Surgical Quality Improvement Program tools, available from the American College of Surgeons, and adapt the Swedish system for monitoring hip replacement to assess outcomes.

This is clearly a good idea and should be done. But it was clearly a good idea 5 and 10 years ago and with the exception of programs like Kaiser Permanente we've just sat on our rear ends without doing it.

Overseas hospitals are hungry for U.S. business. If the best ones aren't yet tracking their outcomes the way Milstein, Smith and Kassirer suggest, they'll probably start tomorrow. I'm sure that many will have results to be proud of. They won't be bashful about advertising their favorable balance of quality and cost, and they'll siphon progressively more "business" away from the U.S.

Price competition driven by evidence-based assessment of outcomes is exactly what the invisible hand of the market does best. I hope that leading hospitals in India, Singapore, Thailand and elsewhere put our feet to the fire over delivering better value for our health care dollars! That will be an admirable blending of global capitalism and good ethics!

(For previous posts about medical tourism and health system ethics see here, here, and here.)