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  • December 2016
  • Article
  • Harvard Business Review

Health Care Needs Real Competition

By: Leemore S. Dafny and Thomas H. Lee
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Abstract

The U.S. health care system is inefficient, unreliable, and crushingly expensive. There is no shortage of proposed solutions, but central to the best of them is the idea that health care needs more competition. In other sectors, competition improves quality and efficiency, spurs innovation, and drives down costs. Health care should be no exception. Yet providers and payers continue to try to stymie competition. Many are actively pursuing consolidation, buying up market share, and increasing their bargaining power. In this article, the authors argue that health care payers and providers must stop fighting the emergence of a competitive health care marketplace and make competing on value central to their strategy. All stakeholders in the health care industry—regulators, providers, insurers, employers, and patients themselves—have roles to play in creating real competition and positive change. In particular, five catalysts will accelerate progress: Put patients at the center of care, create choice, stop rewarding volume, standardize value-based methods of payment, and make data on outcomes transparent.

Keywords

Competition; Health Care and Treatment; Health Industry; United States

Citation

Dafny, Leemore S., and Thomas H. Lee. "Health Care Needs Real Competition." Harvard Business Review 94, no. 12 (December 2016): 76–87.
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About The Author

Leemore S. Dafny

General Management
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