Increasing Competition Between Providers in Health Care Markets: The Economic Evidence

This article scrutinizes the empirical literature on competition between providers and finds that the outcomes are highly varied, and that competition generates winners and losers among patients as well as providers. It examines the theoretical and empirical economic evidence on the effect of greater competition between providers in health care markets. Most of the evidence focuses on a narrow set of outcomes, primarily the effect of competition on prices and quality of health care, sometimes with a focus on winners and losers. It discusses the impact of centrally fixed prices on competition and examines the role of information in increasing competition is also discussed. It examines the effects of using centrally set prices. This article concludes raising some issues that seem to be pertinent for policymakers interested in increasing competition in their health care systems.