MAKING COMPETITION IN HEALTH-CARE WORK

Health care reform in the United States is on a collision course with economic reality. Most proposals focus on measures that will produce o ne-time cost savings by eliminating waste and inefficiency. But the ri ght question to ask is how to achieve dramatic and sustained cost redu ctions over time. What will it take to foster entirely new approaches to disease prevention and treatment, whole new ways to deliver service s, and more cost-effective facilities? The answer lies in the powerful lessons business has learned over the past two decades about the impe ratives of competition. In industry after industry, the underlying dyn amic is the same: competition compels companies to deliver constantly increasing value to customers. The fundamental driver of this continuo us quality improvement and cost reduction is innovation. Without incen tives to sustain innovation in health care, short-term cost savings wi ll soon be overwhelmed by the desire to widen access, the growing heal th needs of an aging population, and the unwillingness of Americans to settle for anything less than the best treatments available. The misg uided assumption underlying much of the debate about health care is th at technology is the enemy. By assuming that technology drives up cost s, reformers neglect the central importance of innovation or, worse ye t, attempt to slow its pace. In fact, innovation, driven by rigorous c ompetition, is the key to successful reform.