Market and competition will improve the efficiency of healthcare production in a health system. Discuss
Economists believe that competition in any market is supposed to improve the productivity and efficiency of the market (Enthoven, 2004). Market is defined as any set of arrangement that allow buyers and sellers to communicate and thus arrange exchange of goods, services, or resources. Accordingly, a free market, is one in which the exchange of goods/ services and money as in price takes place without the intrusion of the government of the particular country where the market operates. Any market has two important stakeholders, a buyer or consumer and a producer. A buyer or consumer is an individual or group of people who pay money (price) to receive satisfaction in the form of a good or service. Whereas, a producer or a manufacturer is one who produces goods or provides services to meet the consumer’s demand (Green, 2002). Health ecomoists and policy maker considrer healthcare system as a market. However, before defining healh care system as a market, it is important to understand the concept of healthcare system and its various types existing in the world. A healthcare system is the organization and the method by which healthcare is provided. These systems differ from one country to another, and can be differentiated by the percentage of the finance that comes either fom public or private funds and whether the healthcare delivery is controlled privately or by the government (Rothgang, et al, 2005; Polder, et al, 1997). Healthcare systems can be divided in to three categories. In the first type, the state is responsible for regulation, funding, and provision of services and NHS is one example of this type. In such system, there is a proper hierarchical system, which implements the regulations (Rothgang, et al, 2005). The second type is the social insurance-type healthcare system that negotiates between sickness funds and service providers. In such system, public providers, payment systems, non-governmental, and non-profit organizations offer services (Rothgang, et al, 2005). The third type is the private healthcare system that is characterized by private financing. Services are provided by private for-profit enterprises, and a limited amount of public regulation is involved. The coordination between providers, financiers, and (potential) users is largely left to the market. Healthcare system in United Kingdom, Germany, and United States are considered the representative of a National Health Service (NHS) system, social insurance system and private insurance system respectively (Rothgang, et al, 2005). In 1989, the National Health Services (NHS) was going through major crises. People had to wait for admissions, the technology was not modern, and the hospitals as well as the health centres were not up-to-date. At that time, the then prime minister, Margaret Thatcher announced the need to reorganize and to introduce market forces in the healthcare system (Newbold, 2005). N.H.S. is neither a "free" service, nor an entirely tax-based. It is a comprehensive service that covers medical needs of the individuals from birth to death, from primary and public health to specialist care. People contribute to or buy their own National Insurance stamps. In I988-89, about 84% of the expenses were borne from the general taxation and about I6 % of gross from National Insurance contributions. Although people have to pay some amount of money to be able to use the services, it is cheap by international standards (Rivett, 2007; Marshall & Wilson, 2005). In addition, since it is funded by taxation, one does not have to pay at the time of use and people do not feel ashamed to use it. Doctors either are waged or have a contract with the NHS and they are the one to decide who requires treatment and this is also a measure to control the level of demand. (Oxley, & MacFarlan, 1995; Blendon, & Donelan, 1989). In contrast to...
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