Effects of Market Reforms on Doctors and their Patients

Prologue: In assessing the impact of competition in the health care marketplace, David Blumenthal presents an important but often overlooked point: “The course of market-based health care reform will depend most critically … on how well our restructured health care system meets the needs of patients … which will be determined in large measure by how, if at all, reforms affect what happens behind the closed doors of physicians' examining rooms.” A physician himself, Blumenthal reminds us that patients' trust in their physicians is more than a nicety— such issues are frequently factors in patient litigation against providers. Here Blumenthal explores how physicians are both re-sponding to and initiating change in today's health care market and how patients are being affected by these changes through their interaction with physicians. The administrative techniques and financial incentives that health care organizations employ to influence physicians' behavior may reduce costs and improve quality as intended (although evidence at this time is scant). However, they may have a negative impact on patients' perceptions of their physicians and on physician and patient satisfaction, both of which ultimately affect quality of care. He argues that although many will benefit from a market-based health care system, historically vulnerable populations such as the elderly and the chronically ill likely will continue to be at a disadvantage. Blumenthal is chief of the Health Policy Research and Development Unit at Massachusetts General Hospital in Boston and associate professor of medicine and health care policy at Harvard Medical School. This paper was presented at an invitational conference, “The New Competition: Dynamics Shaping the Health Care Market,” conducted by the Alpha Center and sponsored by The Robert Wood Johnson Foundation, 9 November 1995, in Washington, D.C. Abstract: The outcome of the competitive revolution in health care will depend critically on how it affects physicians' behavior and their interaction with patients. From the standpoint of physicians, competition often seems mediated by three influences affecting their day-to-day practice environment: the organizational phenomenon, the customer phenomenon, and the commodification phenomenon. A careful examination of these three phenomena offers reasons to believe that both the supporters and detractors of competition may be partially correct. Competitive markets may work extraordinarily well for some consumers and very poorly for others. The competitive restructuring of our health care system will accentuate the divisions and inequalities that existed in our society before the transition to a market-based health care system.