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Path to a better healthcare system

Path to a better healthcare system

Patients are living longer and receiving better care as a result of significant changes in overseas healthcare services.

A new Australian report on healthcare choice for public hospital patients found that in Britain "empirical evidence suggests greater hospital choice led to improved outcomes".

The research, conducted by Macquarie University's Centre for the Health Economy concludes, "There was a changing pattern of care, with patients in areas with greater hospital competition choosing to receive elective care in hospitals with lower mortality rates and lower mean length of stay. This had saved lives by reducing the risk of dying without raising costs. Patients demanded hospitals with greater quality in areas that offer more choice."

The report also noted that public hospitals also increased their efficiency through reduced length of stay, without any evidence of people leaving worse off or hospitals avoiding sicker patients. Competition for elective patients also increased hospital quality through measures such as undertaking clinical audits, improving governance and management and investing in new technology.

Greater choice

These outcomes follow 25 years of experimentation with greater choice and competition within the National Health Service (NHS) in England where a significant change within the hospital sector began in 2006.  

"Patients undergoing elective surgery were provided information on the quality, timeliness and distance to care and offered the choice of at least five hospitals by their GP, including one private hospital," the report said.

"This was managed through a 'choose and book' system. By 2008, patients could choose any public or private hospital covered by NHS England. Prior to 2006, public patients could not choose their hospital, instead being directed by the GP to their local hospital."

Dr Henry Cutler, director of the Macquarie University Centre for Health Economy, said there had been a push internationally around providing greater choice to patients not only in the healthcare system but also more broadly, partly due to the greater information flows that were coming to patients.

"Patients value choice. In the US, there is and always has been choice for those that can afford healthcare. Patients are treated by private hospitals funded mostly by private health insurers, although Medicare and Medicaid patients are publicly funded. The restrictions around that choice depend on the type of insurance you have. We mostly focused on the UK because of the similarities in public funding of hospital patients"

Elective surgery 

He said globally there was a body of evidence on the impact of competition on outcomes. Some of that evidence related to hospitals competing on both quality and price, as is the case with US hospitals. Outcomes in this case were less positive.

Other significant differences in the way NHS England implemented its policies in 2006 compared with the 1990s ensured hospitals only competed for patients based on quality rather than price. For instance, prices for elective surgery were centrally set, with hospitals receiving funding based on the number and type of diagnosis treated, similar to activity-based funding being used in Australia. Research also suggests concerns around the potential inequality of the reforms are largely unfounded.

"Significantly, in areas with greater competition, evidence from the UK suggests there has been an increase in access to hospitals for those in disadvantaged areas and those with low health," Dr Cutler said.

Increased competition and choice within healthcare has also been pursued in other European countries and Asia.

This content is produced by The Australian Financial Review in commercial partnership with the Commonwealth Bank of Australia.

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice.