Hospitals need true competition to improve quality of care

A compass pointing to the word "quality."
Image by Olivier Le Moal / Getty Images

Hospitals should focus less on mergers and brand-building, and instead engage in initiatives that will genuinely improve the quality of care.

Part of the problem is that the current operating environment for hospitals excludes genuine competition—the type of atmosphere that pressures providers to improve patient care, according to Harvard Business School professor Leemore Dafny and Thomas Lee, M.D., the chief medical officer at Press Ganey Associates, in a piece for Harvard Business Review.

“Many healthcare organizations have sought to stymie competition by consolidating, buying up market share, and increasing their bargaining power with insurers and suppliers,” write Dafny and Lee, noting that from 2005 to 2015, the number of U.S. hospital mergers per year doubled.

But they note that “despite its short-term appeal, consolidation for the purpose of increasing negotiating clout will diminish the potential for the healthcare sector to create value and thrive in the long run.”

Dafny and Lee recommend hospitals and payers take the following actions to shift their focus to quality efforts: 

  • Standardize data collection and analysis
  • Put the priorities of patients first (such as by offering same-day appointments)
  • Establish methods that focus specifically on paying for value, not volume
  • Make outcomes transparent
  • Foster competition among providers and reward improved care

There has been a fierce debate over whether mergers actually improve the quality of care. Some experts say that is definitively not the case. Others claim that mergers only drive up costs.

However, not all hospitals are falling down on the job: The Joint Commission noted in a recent report that many of the nation's acute care providers have made significant strides in improving patient care.