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Improving Quality and Efficiency of Health Services by Introducing Market Incentives,
Competition, and Choice: Opportunities and Challenges
19th April 2014, KermanKerman University of Medical Sciences, Iran
Marianna Fotaki
Professor of Business Ethics Warwick Business School
The University of Warwick
1
The aim of the presentation
To understand the effects of introducing a market ethos and
individual choice in public health services on:
Efficiency
Quality
Equity
Individual and institutional trust by users,
To propose an alternative approach to choice that is in line
with patients needs’ 2
Assumptions
Introduction of market tools into health service
provision is expected to improve quality and
efficiency in health care provision
It could improve equity for those who did not have
access to health services
It is also an aspect of care that patients value
3
Policy shifts towards market-based consumerist patient choice
Reflexive welfare subject (Giddens, 1990)
Questioning the benevolence of civil servants: knights, knaves and pawns (Le Grand, 2003)
Governance by scrutiny mechanisms such as inspection and audit
Introduction of choice, competition, and decentralisation (New Public Management)
4
The logic of choice
In health policy world choice is a normatively and ideologically loaded concept (‘choice is a good thing!’)
It is mostly influenced by normative theories and advocacy,
and almost not at all by descriptive accounts of how choices are made in reality
5
Impact on efficiency 1
In marketised health systems administrative expenses are higher while additional losses of efficiency occur due to gaming of the system
The evidence from other public health systems committed to universal health service provision (e.g. the Netherlands and Sweden) shows that implementing competition and choice is associated with an increase in costs
6
Impact on efficiency 2
In marketised systems providers tend to compete on
quality by introducing expensive technology
(particularly when they do not face hard budget
constraints)
This leads to higher costs and squeezes out cost-effective
care
7
Impact on quality 1
There are ways in which quality can be driven up in
hospitals other than through competitive mechanisms
The impact of market choice and competition in terms
of improved clinical outcomes is inconclusive
8
Impact on quality 2
Many other factors besides competition influence the quality of hospitals’ services including: price structure, payment methods, internal organisation and pre-existing culture in addition to quality regulation systems and protocols
In reality, any impact on quality will depend on the precise institutional setting and on the regime of regulation
9
Impact on equity 1
Age, class, income, health literacy and family obligations affected patients’ ability to travel to a non-local provider, and therefore their choices
Although users may be generally attracted to the idea of having a choice, research shows that not all groups of patients are able to exercise it in an equal measure
10
Impact on equity 2
The risk for creating new inequalities over and above those that already exist is real
Some patients could receive preferential access and treatment under certain schemes
Physicians are likely to modify their behaviour in order to fit the market
11
Do patients want choice?
Contrary to policy makers’ beliefs, patients tend to favour a provider they know and trust and opt for choice only when no such provider is available
Choice depends on the context and the condition
Retaining the public and universal aspects of the health system is a concern overriding any desire for choice for patients across the UK and the EU
12
Which patients choose?
Age – older patients over 65 are less likely to choose
Those with family commitments are less likely to choose
Less educated are less likely to choose
Those with income below £10,000 are less likely to choose
Source: Burge et al (2005) London Patient Choice Project Evaluation. A model of patients’ choices of hospital from stated and revealed preference choice data.
13
Factors affecting patients choice
Patient individual characteristics Availability of transport Distance Relatives/visitors Car parking Waiting lists Performance of surgeon Recommendation by GP Continuity of care Social services Follow-up/emergencies
14
Therefore we need to explore
How communication in health care affects information provision which changes the way people make choices
Factors that impact on choices such as:
Beliefs about health and body,
Perceptions of risk,
Patient expectations, Witnessing unsuccessful treatment, A long experience of prejudice
15
Furthermore,
“Choice, then, is not simply something which occurs after reasoned deliberation,
most choices we make are made on impulse in urgent and contingent
encounters in which we have to make on-the-spot decisions as our own and
others’ needs, expectations, phantasies and feelings press in on us. Indeed, for
much of the time we are not even aware of having made choices; it is as if they
catch up with us later, often much, much later when the reasons for key
choices in our lives - of partner, job, lover etc. – become clear to us. Or
should I say, ‘some of the reasons’ for we can never quite seem to get to the
bottom of the multitude-determined nature of our own life histories.”
Hoggett, P. (2001), ‘Agency, rationality and social policy’, Journal of Social Policy 32(1):37-56.16
Choice paradoxes
Choice has different meanings for different user groups in different life
circumstances
It is constrained by the asymmetry of information between user and
provider
Barriers of culture, language and education limit access to information
and therefore to choice
Users of healthcare services are not rational utility maximisers17
How is market choice affecting trust in health care?
Intangible factors (e.g. emotions, anxiety, vulnerability, powerlessness) involved in the medical encounters
Choice is not always desirable (derived utility from decisions deferred to the professional)
Doctor’s omnipotence is being replaced by user’s/market’s omnipotence
18
Conceptual relations between trust and choice
One advantage of conceptualising trust in terms of choice is that decisions are observable behaviours (Kramer, 1999)
The notion of trust-as-choice enables exploration of theoretical and empirical implications (March, 1994)
Trust has a moderating effect on patient decision making and is also likely to have an impact on patient choices in the future.
19
Trust paradoxes
There is a recent revival of interest in the role of trust in public and private sectors but
But there is also evidence of decline of public trust in institutions (Nye, 1997; Norris, 2002; O’Neil, 2002)
Surveillance and monitoring decreases trust but these mechanisms are increasingly relied upon in public service provision
20
Concepts of trust
Economist’s view
an important precondition of economic exchange (Arrow, 1974)
a substitute for imperfect information (Williamson, 1993)
Sociologist and political scientist’s view
constitutive part of an institutionalisation process (Zucker, 1987)
and ‘social embeddedness’ (Granovetter, 1985)
encourages civic engagement (Putnam, 1993; Fukuyama, 1995)
21
The role of trust in markets
Reduces transaction and negotiation costs
Makes contractual relationships possible
Improves quality of services and products
Reduces cost by lessening the reliance on monitoring and surveillance
22
Is trust in public sector different?
It is a more diffuse and a taken for granted concept
It is more closely associated with societal normative values and moral principles
Discourages litigation (e.g. health care)
23
The role of trust in public institutions
On a macro level – it is important for increasing social capability and political legitimacy of the state
On a meso-level – public organisations build their legitimacy when their norms and practices are underpinned by trust
Trust underpins many individual relationships and enables provision of public services (e.g. effective health care)
24
What is the role of individual trust in health care?
Counteracts asymmetry of information
Makes dependency on the ‘stranger’ possible/tolerable
Decreases the cost of the service provision by limiting surveillance and litigation
25
The role of organisational trust in health care?
It fosters collaboration among different professional groups
It encourages trustworthy behaviour of doctors towards patients and their trust in organisations
Reduces the incentives to game the system (for adverse effect in its absence see HMOs)
26
Do patients trade off choice for trust?
Contrary to policy makers’ beliefs, patients tend to favour a provider they know and trust and opt for choice only when no such provider is available
Because patients often lack the information needed to make informed choices about their care, they need medical professionals they can trust; this overrides their desire to ‘shop around’
While choice may be desired, fairness of the system is more important than empowerment
27
Anticipating future developments
Trust could become less important as the deficits and access to appropriate information decrease
Exercise of agency will take priority over the significance of the trust towards an institution
Negative impact on trust brought by the market
might improve users’ benefits by improving overall responsiveness
28
Policy implications 1
Policies need to account for the social, cultural and context-specific factors guiding patients’ choices
Patients want to make choices together with trusted health professionals, rather than as consumers in the market place
Independence and choice are less important when compared to relationality and trust underpinning the ethics of care
29
Policy implications 2
Policies must also foster public trust in the health system
and health organisations, and protect trust between patient
and doctor or nurse, without which care is impossible
Policy makers should draw on interdisciplinary
frameworks and alternatives to market mechanisms in
health care to design their policies
30
Conclusions
Market competition relies on old-school neo-classical economics and involves a significant narrowing of the concept of choice
Choice and independence are powerful concepts but they do not always apply in health care
Public policy has to protect the most vulnerable members of society
31