To effectively promote competition in the healthcare industry, antitrust enforcers and regulators should focus on whether the goods and services that providers supply are valuable to consumers, according to a Commonwealth Fund-supported study in Health Affairs.
The study's author — William Sage, MD, the James R. Dougherty Chair for Faculty Excellence at the University of Texas at Austin School of Law — writes that the lack of competition in healthcare markets stems from a long history of government regulation. For instance, he says professional licensing laws grant specified functions to privileged groups while discouraging others from providing less expensive and more accessible alternatives.
As a result, Dr. Sage maintains more aggressive antitrust enforcement alone won't be enough to increase competition. Instead, regulators must focus on encouraging the development of competitive products, which add "intuitive and measurable value to the buyer." These products might have warranties, which would incentivize providers to improve quality. In the study, Dr. Sage identifies the following four strategies to promote competitive products:
1. Reduce regulatory barriers — such as restrictive licensing laws and certificate-of-need requirements — stopping new healthcare facilities and professionals from competing in the marketplace.
2. Encourage accountable care organizations to define and market competitive products. Additionally, Medicare should reimburse ACOs based on the value of assembled products as well as aggregate savings.
3. Medicare and antitrust regulators should work together to pay providers for assembled, warrantable products. They should also ensure consumers have the price, quality and safety information needed to compare these products.
4. Regulators should work to prevent larger healthcare providers and health insurers from establishing anticompetitive arrangements. For instance, large health insurers may include "most-favored customer" clauses in provider contracts to discourage hospitals, physicians and others from accepting lower fees from smaller health insurers.
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