Measuring User Choice in Health Systems: Developing and Applying an Index to Examine the Effectiveness of Choice and Competition Reforms

Posted: 28 Jun 2007

See all articles by Zack Cooper

Zack Cooper

London School of Economics & Political Science (LSE)

Abstract

Objectives: This work has two aims: 1) to articulate the fundamental differences between choice and competition in healthcare and 2) to describe a methodology and an index to quantify patient/consumer choice which takes into account the crucial differences between choice and competition.

Methodology: I am developing a new methodology to quantify consumer choice which is a departure from the often used Herfindahl-Hirschman Index. This index is being used to get an accurate measure of the degree of choice individual patients have and to correlate degrees of consumer choice with measures of quality and efficiency.

Discussion: Patient choice has been a central theme in recent health system reforms in Western Europe and North America. In the United Kingdom, policy makers have embarked on an ambitious reform agenda that is designed to increase patient choice in an effort to reduce waiting lists, embed market forces, and improve equity. Quite to the contrary, in the United States, particularly within the hugely successful Veterans Health Administration, policy makers have sought to restrict patient choice in an effort to drive down rising healthcare costs. Underlying these reforms, there must be a methodology to examine whether or not these reforms have been effective at achieving their policy objectives.

While there is some academic literate examining the impact of patient choice reforms, the vast majority of the literature has adopted a faulty assumption which equates patient choice reforms exclusively with traditional market reforms. But, patient choice and market forces are not analogous. While increasing market forces is one piece of the overall rational for increasing patient choice, it is by no means the sole impetus for the recent choice reforms, particularly within the United Kingdom. This work explores the crucial differences between increasing competition and increasing patient choice. More fundamentally, this work develops and applies a methodology to quantify patient/consumer choice and examine the impact the degree of patient/consumer has choice on health system performance, equity and efficiency.

The Herfindahl-Hirschman Index has been the de facto tool to quantify competition in the health care market in order to correlate the degree of competition with overall costs and health outcomes. Consistent with the existing assumption in the academic literature equating choice with competition, academics have used the Herfindahl-Hirschman index to examine the impact of choice reforms on various measures of quality and efficiency. However, with a firm understanding of the differences between increasing competition and increasing patient choice, it is clear that the metric to quantify patient choice and assess the impact of choice reforms must take into account more than market share alone. I am developing a new methodology to quantify consumer choice which will be correlated with patient level data to generate meaningful analysis of the impact of health reforms on performance, equity and efficiency. This methodology will provide a framework to not only to assess choice in healthcare, but to assess choice in similar policy arenas like education, welfare and social care.

Keywords: Competition, Choice, Market based reforms, NHS, Herfindahl-Hirschman Index

Suggested Citation

Cooper, Zachary, Measuring User Choice in Health Systems: Developing and Applying an Index to Examine the Effectiveness of Choice and Competition Reforms. iHEA 2007 6th World Congress: Explorations in Health Economics Paper, Available at SSRN: https://ssrn.com/abstract=993383

Zachary Cooper (Contact Author)

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

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