Competition called vital in health care

Competition is vital for any market-based industry, and health care is no exception, Utah health professionals and lawmakers heard this past week.

Speaking on the "Importance of Competition in the Health Care Economy," Dr. David Dranove said competition has resulted in an increased focus on quality in the industry and has helped keep rising health-care costs in check.

"Competition is good for health care," said Dranove, a professor of health industry management at Northwestern University.

Dranove spoke at the second in a series of seminars sponsored by Regence BlueCross BlueShield of Utah, the Salt Lake Area Chamber of Commerce and University of Utah Health Care. The lectures are in response to a legislative task force created earlier this year to study health-care systems in Utah.

Specifically, task force members are studying the tax-exempt status and marketplace dominance of Intermountain Health Care, the state's largest health-care network.

Dranove also spoke at length about the dangers of consolidation in health care, though he declined to comment specifically on the state of Utah's health-care systems.

"I know just enough about the Utah market to get in trouble if I opine about the Utah market," he said.

Dranove did say that the solution to marketplace dominance is vigorous antitrust enforcement and, if necessary, the dissolution of "those who are too powerful."

The audience for the lunchtime lecture was primarily the same as that at the highly politicized task force meetings. The seminars are underwritten by Regence BlueCross BlueShield and University of Utah Health Care, two of IHC's biggest competitors in their respective markets.

Consolidation in the health-care industry has grown at unprecedented rates in the past 10 years, Dranove said, leading to increased prices and decreased competition, undoing all the good things that have come from a competitive marketplace.

"There is always that danger that competition will inspire all of these virtues, but when competition disappears the vicious side of the marketplace will begin to take root," he said.

Largely, Dranove said, local policymakers don't understand the importance of competition in health care.

"There's this real ignorance as to how competition works," he said.

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