Profession, practice and profits: Competition in the core of health care system

The health care system constitutes the organizational framework in which health care delivery takes place. The system and its reforms, therefore, have to reckon with the typical aspects of care delivery and medical practice. This article deals with one specific kind of health care reform which is becoming more and more popular in the Western world, namely the introduction of (managed) competiton. This diverse subject is restricted to the following question: does competition in health care do justice to the normative aspects of medical practice and does it result in economic efficiency? In short: profession, practice and profits. Three lines of thought are developed and combined to answer this question. After an introduction on the health care system, competition is first considered from an economic point of view. Secondly, a normative approach of medical practice will be developed. Thirdly, the implications of this view on medical practice for the health care system will be formulated. Finally, we readdress the competition issue focusing on the physician-patient relationship. We conclude that a simultaneous realization of the normative aspects in this core relationship of health care can only be attained by competition at high transaction costs. Competition, therefore,is likely to be inefficient. (C) 1997 John Wiley & Sons, Ltd.