Competing for business? Improving hospital services in Zambia with market forces

Abstract

Does competition improve hospital services? Do market forces in healthcare benefit the poorest members of society? Reforms which involve exposing hospitals to market forces are being introduced in many developing countries. However, very little is known about how these markets operate, particularly in developing countries. The University of Zambia, together with the London School of Hygiene and Tropical Medicine,considered the effect of competition among hospitals in Zambia. Market reforms should improve the standard of services, make hospital prices more competitive and encourage hospitals to run more efficiently. But they assume that patients have a choice about which hospital they use and that the hospitals are in fact in competition with each other. Hospital markets have certain features which make them different from other markets. Certain services a hospital provides may face no competition, such as intensive care or major surgery while other low-level services such as basic maternity care may be provided elsewhere, e.g. in health centres. The quality of the service and how near the hospital is to home, as well as cost, will affect the patient's choice of hospital. In developing country markets, where there is little health insurance, little is known about the specific form that competition takes - for example, whether hospitals compete by reducing prices or by improving visible aspects of quality.