Free-market in English hospitals works because….

The length of stay in English hospitals declined in recent years and the growth of Day Clinics increased with the introduction of DBC’s (Diagnosis-Treatment Combination). This means that the cost per treated patient decreased. The quality of care did not change. These are the conclusions reached by a team of English, Scottish and Australian researchers and published in the British Medical Journal. The team compared the costs per admitted patient in England with those recorded per Scottish patient. Costs were compared over the period 2002 to 2006. During those years England had a payment system per diagnosis treatment combination; Scotland did not. The team corrected for differences in intensity of care, age and sex. But even then, the developments in England are more economically favourable than in Scotland. What can other European Countries learn from this outcome? To begin with, England does not have competition on price, only competition on quality. Each hospital receives the same price for a DBC. This fixed price means that hospitals are not heavily involved in price negotiations, the researchers said,  and they have a greater assurance that they will also receive this price in the future. Hospitals experience a greater incentive to operate efficiently than by competition on price. Would you like to read this article yourself in English? The details are as follows: S. Farrar ca, Has payment by results affected the way English hospitals provide care? Difference-in-differences analysis, BMJ, 2009, 339: b3047