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Improving healthcare through competition

This is the second of four articles in this volume of ECONOMIC REVIEW discussing the economics of the health sector. Carmine Ornaghi investigates whether competition is the magic potion to make the NHS fit for the challenges of the future

RYANARGU/FOTOLIA

Since the general election in May 2010 the National Health Service (NHS) has been at the centre of the news because of the reforms that the coalition government wants to introduce to the health sector. The mantra often repeated by the health secretary Andrew Lansley is that changes to the NHS are necessary to cover the cost of an ageing population with higher levels of chronic disease, and to guarantee access to new and more expensive treatments.

Competition is one of the key ideas that the government wants to use to make the NHS fit for the challenges of the future. Patients are offered the opportunity to choose among different healthcare providers. If a patient needs day surgery for a hernia repair, for example, a GP can give the patient the choice to go to the local public hospital or to any private clinic. The government vision is that the entry of new healthcare providers will stimulate competition in the sector, forcing all players (private and public alike) to reduce their costs and raise the quality of their services.

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The balance of payments

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