Competition and privatisation will not guarantee efficiency in the provision of healthcare, argues James Wrynn
John Fingleton's arguments in his article (November 7th) on healthcare provision focused only on the issue of competition and related supply and cost issues. Perhaps this is understandable, coming from the head of the Competition Authority.
However, any proposals to change the way our health care is delivered must also take into account broader issues, issues of fairness, equality and rights. These are important political issues and cannot be divorced from narrow economic argument.
Political economy was the original term for economics and Horace Plunkett, in commenting on the political and societal implications of most economic decisions, remarked that "Political economy should be spelled with a capital 'P' and a small 'e'."
Leaving aside for the moment the political considerations of fairness, equality and rights, the arguments on privatisation, efficiency and cost are not well founded.
It is, of course, important that healthcare be efficiently provided, but privatisation and competition in every hospital nook and healthcare cranny does not constitute a recipe for efficiency.
The proposed model for Ireland based on competition and private provision in every aspect of medical care is best exemplified by medical provision in the US. The US system however consumes about 13 per cent of GDP and provides the most unequal and inefficient system of healthcare in the developed world. The Irish system costs about 8 per cent of GDP.
On the other hand, Sweden spends 7 per cent of GDP on healthcare and provides a system of medical care that is the envy of most civilised societies. It is a system that is almost fully state-funded and state-delivered and has no competition in the areas of hospital care provision and medical expertise provision, such as nursing, GP and specialist advice.
John Fingleton cites an anecdotal example of private provision of healthcare in France. The average French person takes great pride in their healthcare system, not because of its capacity to cater to chequebook purchasers in its small private sector, but because of its ability to provide healthcare in a prompt and efficient manner to all French citizens, including those without a cheque book.
The French spend 8 per cent of GDP on healthcare and almost all of that is through a state-funded system where equity and the right to treatment on the basis of need, rather than ability to pay, are its most fundamental values. It also manages to do this in an efficient way, as is exemplified by the figure of 8 per cent.
Competition through market mechanisms is not the way forward for most activities in the Irish healthcare system. Of course there should be measures of performance in delivery of all aspects of healthcare and it is a challenge for all those interested and involved in healthcare to develop and accept measures of performance, but there is no evidence that performance measures based on competition through market mechanisms are a useful model for developing efficiency in healthcare.
Thus there is little logic on efficiency grounds of advocating a US-style system that consumes almost twice as much inputs as certain European models, particularly when the outputs of these European systems are so much preferable.
Perhaps if the Competition Authority wants to make a contribution to one area of healthcare where competition might actually yield cheaper healthcare, they might look at the behaviour of the powerful pharmaceutical companies in the private sector so much admired in John Fingleton's article. It is also worth noting that in this area the State, as a single powerful buyer, has difficulty keeping pharmaceutical costs down.
Indeed the current dominance of a small number of pharmaceutical companies in the supply of many medical drugs is a good illustration of why the model of an idealised perfect market in healthcare, with a free flow of unlimited suppliers, cannot work and should not be left solely to imperfect market mechanisms.
Even if the aggressive Irish Competition Authority were to turns its gaze on the global pharmaceutical industry, it is unlikely it could change the structure or challenge the dominance of the small number of powerful players.
If such change is impossible, it would only add to the imperfections and imbalance in the market to create a fragmented set of buyers instead of the State in the purchase of many pharmaceutical supplies.
Competition in some sectors of economic and social activity is a good thing for the purpose of achieving efficiency, but it is a means to that end and not an end in itself. Sometimes it is the right means to that end; other times it is not, as in the case of much healthcare.
Of course good healthcare provision is not just about economics: it is a societal project requiring good use of scarce resources and reflecting societal values in relation to fairness, equality and certain rights.
As in so much debate, those who seek to narrow the argument to purely economic and efficiency considerations, even when such arguments are well founded, are often opposed to certain societal values relating to fairness, equality and rights.
• James Wrynn lectures in strategic management in DIT's faculty of business and is a member of the Labour Party.