Competition, Regulation, and Rationing in Health Care

Vital reading for those involved directly in the health care field as well as those who are concerned about the present and future of the health care industry in the U.S.

Category: Healthcare

This title is part of the Healthcare Administration list.

Of Interest:

Health Care Risk Management: Organization and Claims Administration

Hospitals, Health and People

Hospital Turnarounds: Lessons in Leadership

Managing a Health Care Alliance: Improving Community Cancer Care

Managing Doctors

The Health Care Marketplace

The White Labyrinth: Guide to the Health Care System

Warren Greenberg, a Professor of Health Economics and Health Care Sciences at George Washington University, provides an economist's view of the health care sector. He uses industrial techniques to analyze regulation versus competition, antitrust elements, technology, and rationing. He also identifies and describes the medical, hospital, insurance, and long-term care industries, exploring the market failures and imperfections in each industry, and explores some of the avenues government has taken to correct these imperfections. Finally, he gives a perspective on health care development in some other leading countries for useful comparisons.

Why is it, asks economist Greenberg, that when automobile or videocassette sales are up, everyone is happy, but when the health- care industry grows, everyone is unhappy? His application of a standard economic analysis of industrial organizations points out how health care differs from and resembles other sectors. Annotation copyright Book News, Inc. Portland, Or.

This book is fundamental reading for those involved directly in health care as well as those interested and concerned about the past, present and future of the health care industry in the United States. Originally published in 1990, Warren Greenberg examined the U.S. health care sector over the period 1960-1988 using standard industrial organization economic analysis. He looked at regulation and competition, antitrust elements, technology, and rationing, as well as pricing behavior and advertising. Although some experts claimed the health care industry to be unique and outside the purview of such analysis, Dr. Greenberg demonstrated that all industries differ in their own ways, but nonetheless can be analyzed using these techniques.

Dr. Greenberg's first goal in writing this book was to educate the layperson about the economics of the health care industry. Economists have pointed out two major potential differences between health care and other sectors of the economy: uncertainty of demand and imperfect and imbalanced information on the part of providers and consumers. Dr. Greenberg agrees with the first and less so with the second. Obviously, the timing, extent and length of future illness and the demand for medical services are impossible to know. A good deal of the consumer's uncertainty is smoothed over by health insurance. The uncertainty for insurance companies in the sector is somewhat different than that for other industries: while consumers commonly seek more health care than they would if they were not covered, it is rare for someone to burn down his own home just to collect the insurance. With regard to the imbalance in information, physicians do indeed know more about a particular illness and treatment than the average potential patient, but Dr. Greenberg asks how that differs from plumbing, law and accounting!

Dr. Greenberg identified and described the industries that make up the health care sector: medical services, hospitals, insurance, and long-term care. He explored market failures and imperfections in each and detailed some of the measures government has taken to correct these imperfections. For example, he described the efforts of the federal government to force competition in the medical services field and how barriers to entry imposed by physicians' lobbies to limit the number of physicians in practice were lifted, physicians were permitted to advertise, and restrictions on the services of nonphysicians were eased. He recounted efforts to require hospitals to disclose information on mortality rates, infections, and medical complications.

Dr. Greenberg's second goal in writing the book was to consider policy options. Although he claims skepticism of regulation (after working for the federal government), he believes that ongoing efforts to devise a more efficient and equitable health care system will require more competition, regulation, and rationing. He examined the Canadian, British and Dutch systems, so fascinating and different from ours, and found the Dutch system the least regulatory and most equitable.

This book is a primer on the health care industry. Dr. Greenberg explains economic terms in a straightforward and clear way without condescension and takes the reader way beyond Economics 101. Although the sector has changed significantly since this book was published, Dr. Greenberg's analysis of the past offers valuable insight into why our system evolved the way it did and what direction it might take in future.

Warren Greenberg, Ph.D. is a professor of health economics and health care sciences and a senior fellow with the Center for Health Policy Research at the George Washington University. He is also a scholar in residence at the Agency for Health Care Research and Quality. Mr. Greenberg’s research at AHCRQ focuses on the quality of care in horizontal and vertical consolidations of hospitals within an industrial organization context. He also examines the structure of vertical integration in health care. From 1971 until 1979, Mr. Greenberg was a staff economist with the Federal Trade Commission. He was a lead economist on many of the FTC’s activities in the health care industry and was responsible for economic analysis of antitrust litigation. Mr. Greenberg was a visiting associate professor of managerial economics at the University of Maryland and a visiting professor at Ben-Gurion University (Israel). He is the author of numerous articles on industrial organization economics and health care that have been published in the Journal of Law and Economics, Economic Inquiry, Journal of Risk and Insurance, Health Services Research, and other leading journals