Introducing competition in healthcare can improve patient care

Photo of Prof. Carol Propper

Introducing incentives for providers of healthcare has improved the quality of patient care, was a finding from the research presented by Professor Carol Propper CBE at the Department of Economics 2016 Knoop Lecture.

Carol’s lecture 'Does Competition in Healthcare Work?' addressed some of the issues facing healthcare provision in the UK and other developed economies, in particular the increasing proportion of GDP being spent on healthcare. Also how governments have tried to improve the quality of care without further spending through introducing incentives for the suppliers of healthcare - namely hospitals and GP practices.

Carol presented research that analysed new policies introduced in England in the mid-2000s that meant patients could choose the provider of their treatment. The research showed that overall patients did respond positively to the new policies; with better hospitals attracting more patients and the quality of patient care increasing.

The reasons for the outcome are yet to be fully understood, however it may have been due to increased effort by management responding to the new incentives. It could be an example of the economic principle of a more competitive market resulting in greater firm productivity.

Some of the problems of the reforms outlined were that they can lead to mergers in healthcare providers, which ultimately may not be good for the quality of care. Also there is often opposition to competition when it is seen as privatisation. Further discussion explored how choice may be a luxury during hard financial times.

The 2016 lecture was the fifth annual Knoop Lecture and guests included secondary school children, University of Sheffield students and staff, alumni and members of the public.

The Knoop Lecture is in honour of Professor Douglas Knoop who was the first head of the Department of Economics.

Download the lecture slides 'Does Competition in Healthcare Work?'