This article looks sensible at first glance, but only because
there's little that is specific to health care in it.

But to talk about "choice" as though it was like most of the other choices we make is just wrong. When I go to doctors and they say
do this, do that, have this operation, undergo that procedure,
I've no real choice because of my ignorance of medical matters.

Most other choices I make (eg at the present, what sort of garden fence to build), if in an area where I don't know much, I can ask around.
But as for asking other around as to whether I should have an operation - well, don't be silly. So the choice aspect is quite illusory.

As for "competition" - well sure, with a private system, I can find a GP I'm happy with, but when there's only one specialist in town who specializes in a certain condition, and only one surgeon who does that sort of operation - what does "competition" mean?

Hmm.

A large dollop of Austrian school ideology unleavened by facts.

Is there an OECD country that boasts a better health care than Australia, at lower or equal cost, where health care expenditure is growing at a slower rate, AND where the advantage can be clearly shown to be due to greater competition?

According to the 2006 edition of the OECD Factbook, Australian life expectancy at birth is fifth longest out of the 30 countries, although infant mortality rate is pretty ordinary (we come 16th).

Total health expenditure per head rates 13th highest (purchasing power parity-adjusted US dollars/head) with total expenditure at $2700 of which $1800, or 67% is public, and the rest private. (I suspect the private component includes the government subsidy to private health funds.) For comparison, the US total cost per head was more than twice the Australian and the private component was well over 50%. Despite this the US has the fifth worst infant mortality and nineth shortest life expectancy.

Although far more of the US system is in non-government hands than is ours, it delivers worse results at much higher cost.

Mexico and Korea are the only other two countries where the private component of health care cost exceeds 50%. I don't think they offer the kind of model that we are looking for either.

Readers might like to refer to an earlier OLO on our health care system at http://www.onlineopinion.com.au/view.asp?article=4288

The supposition that competition between doctors or between medical orgnanisations will lower costs is false. The classic example was in the great depression, when doctors, faced with declining numbers of patients and a diminution of their lifestyle, increased their fees.

True, many of them did not charge the very poor. But for those who could pay, the fees went up. The problem for eceonomic theory is that the demand for medical services is unlimited. If my life or those of my children are at risk, what would I not pay to have it saved?

I might shop around for cheaper services. But doctors have an idea of what is an appropriate standard of living. The more doctors, and the fewer patients each has, the more they charge.

Economic theory has to be applied with care. Understood crudely, the laws of supply and demand have more exceptions than examples.

ozbib

No, ozbib,

You are bending too far in the other direction. The medical establishment is hidebound and resistant to performance measures of any sort. But if you don't measure you can't improve.

You have stated the key point: "Economic theory has to be applied with care". Comparing GPs' fees as a measure of health system performance makes about as much sense as judging Olympic athletes' performance by the cost of their running shoes.

GPs are important, yes. Athletes' running shoes are important, yes. But they are both small parts of a large and complex system.

Mistakes, inappropriate and unnecessary treatment together with failure to put in place disease prevention strategies and to promote evidence-based health care are arteries through which health care money is hemorrhaging.

Competition OF THE RIGHT SORT can be a powerful tool for improving health care effectiveness and reducing health system cost.

Benchmarking treatment outcomes and costs across hospitals (and indeed across nations) can be a valuable tool in improving both.

As a specific example, doctors at Liverpool Hospital in Western Sydney realised in 1990 (it is difficult to believe this) that treating inpatients at risk of cardiac arrest as soon as disposing factors appeared was preferable to the standard practice: waiting until after a patient is, basically, dead. It stands to reason that medical treatment given to people on the point of inevitable death is a waste of money. The Liverpool team's innovation is now spreading round the world.

There is a clear measure of effectiveness. What proportion of cardiac arrest inpatients survive to discharge: as few as 17% or as many as 68%?

http://www.ethics.org.au/ethics_forum/forum_posts.asp?TID=1333

Do we prefer to subsidise a diabetic to visit a podiatrist at first sign of foot trouble, or to incur the hospital cost of amputating his leg three years later? Would it be even better if he was persuaded earlier still to eat less, exercise more and not develop diabetes in the first place?

The inescapable lesson of life is "you get what you pay for".

I remember reading an article in the SMH last year regarding the pro's and con's of private vs public health spending.

An example they gave of how private hospitals can waste resources was in the use of heart stents. There are 2 types. 1 costs around $7000, the other $20000. Private hospitals pretty much always used the more expensive stent, while public hospitals would use the cheaper stent unless there was a medical reason to go for the more expensive one.

To me this is not an efficient allocation of scarce medial resources by the private system.

I am sceptical that a hospital looking to make a profit can provide a cheaper medical service than a public hospital