Competing on Quality of Care: Developing a Competition Policy for Health Care Markets

Posted: 5 Dec 1999

See all articles by Peter J. Hammer

Peter J. Hammer

Wayne State University Law School

William M. Sage

Texas A&M University School of Law

Date Written: 1999

Abstract

As American health care moves from a professionally dominated to a market-dominated model, concerns have been voiced that competition, once unleashed, will focus on price to the detriment of quality. Although quality has been extensively analyzed in health services research, the role of quality in competition policy has not been elucidated. While economists may theorize about nonprice competition, courts in antitrust cases often follow simpler models of competition based on price and output, either ignoring quality as a competitive dimension or assuming that it will occur in tandem with price competition. This unsystematic approach is inadequate for the formulation of policy in the health care industry, where quality is a central concern of both consumers and society. Instead, courts need a framework with which to analyze the implications for quality of various market structures and to understand the welfare implications of proposed market changes. A competition policy would seek to evaluate the potential for private markets to protect and improve quality in the health care system. This article examines the present influence of antitrust law on price-quality and quality-quality tradeoffs in health care, explores the issues that would be confronted in developing a true competition policy and outlines a research agenda that would begin to accomplish that task.

Suggested Citation

Hammer, Peter Joseph and Sage, William Matthew, Competing on Quality of Care: Developing a Competition Policy for Health Care Markets (1999). Available at SSRN: https://ssrn.com/abstract=193512

Peter Joseph Hammer

Wayne State University Law School ( email )

471 Palmer
Detroit, MI 48202
United States

William Matthew Sage (Contact Author)

Texas A&M University School of Law ( email )

1515 Commerce St.
Fort Worth, TX Tarrant County 76102
United States

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