The impact of market oriented reforms on choice and information: a case study of cataract surgery in outer London and Stockholm

Abstract

In the early 1990s, a set of market-oriented reforms was introduced into health care systems of the UK and Sweden, two exemplary cases of reliance on planned budgeting and integrated provision of services. In the pursuit of increased efficiency, several County Councils in Sweden have followed the public competition model, while in the UK internal market reforms were introduced. It was expected that the separation of functions of planners and purchasers from those of providers, which were to be freely chosen by the former, would achieve higher allocative efficiency but also enhance users' satisfaction with care.

This paper uses cataract surgery as a case study to trace the impact of competition among providers on choice and information. Qualitative research methods were employed to record the perception of changes in their type and amount as it was given to both purchasers and patients. A set of open ended and standardised questionnaires was designed to elicit the views of all actors involved and to measure the likely transformations. Four study sites from Outer London were selected representing the diversity of responses, and the only existing large provider of eye services to Stockholm County Council was used.

The analysis of the data showed that the quasi-market reforms have resulted in a change of attitude of providers. Some improvements in the amount and type of information given to purchasers and patients could also be detected, although as far as direct users were concerned, the demand has not been fully satisfied. However, the impact on choice available to patients and purchasers alike seemed to be adverse, an effect that was particularly strong in the UK case.

Introduction

The search for higher efficiency, prompted by an apparently limitless increase in demand for health care, was a driving force behind the changes introduced into many health care systems during the last decade Bennett, 1991, Hurst, 1991, Abel-Smith, 1992, OECD, 1992. In the case of publicly operated health systems such as in the UK and Sweden, this reform process has often been initiated as organisational restructuring, aimed primarily at achieving better value for money and promoting users' satisfaction with care. In the early 1990s, governments in both countries decided that these objectives were to be best served through the incorporation of market elements into the existing framework of public ownership and financing. In both cases, transformation of integrated systems of budgetary control into pluralistic contractual arrangements based on purchaser–provider exchange, was used as a means to achieve it Saltman and Van Otter, 1992a, Le Grand and Bartlett, 1993, Ham, 1997. The reliance on market features, manifested in the introduction of competitive incentives for stimulating micro-efficiency of production and freedom of choice in the allocation of resources, was determined by policy-makers' belief in their proven suitability and superiority to the structures that they replaced. The pre-reform organisation of these two health systems, involving a command top-down system of production and delivery of the services owned by the central (UK) or regional government (Counties in Sweden), were regarded as ineffective, costly and inadequate Enthoven, 1985, Anell, 1995.

Despite the introduction of market reforms, however, state regulation turned out to be more indispensable than ever Gustafsson, 1995, Klein, 1995. On the one hand, it was necessary to maintain the systems' compatibility with the overall strategic goals of public health policy. These could broadly be defined as securing that consumption of health services is sustained at socially desirable levels, that it is distributed relatively equitably, and that the principle of allocative efficiency is maintained. On the other hand, regulation would make sure that reforms were compliant with the overall framework of policies aiming at macro-economic stability. In short, it was to correct for `market failure' (McGuire et al., 1987), occurring when public goods are attempted to be freely traded, as, conversely, the introduction of market-oriented reforms into publicly operated welfare systems was to correct for government failure resulting from its position of a monopolistic provider Le Grand, 1991, Snower, 1993. Arguably, the policy choices incorporated into health care reforms in the UK and Sweden also reflected wider trends such as economic retrenchment and a disbelief in planning's effectiveness, although modified and shaped by the political tradition of each country Garpenby, 1992, Ham and Brommels, 1994, Anell, 1995. Thus the attempt at introducing planned or managed markets into health care took the form of internal or quasi-markets¹ in Britain Le Grand and Bartlett, 1993, Le Grand, 1994 while the public competition² model was followed in Sweden (Saltman and Van Otter, 1992a, Saltman and Van Otter, 1992b).

Health care systems of the UK and Sweden have been selected as the focus of this research which examines the impact of changes initiated by market-oriented reforms on choice and information. Their use serves a two-fold purpose. First, the availability of choice and information are conditions essential for quasi- or internal markets to work properly (Le Grand and Bartlett, 1993, ch. 2). If there is no choice, there can be no competition and hence little incentive to increase efficiency, quality or responsiveness. If there is little information, purchasers and users will be in a poor position to judge quality, and hence again incentives for improvements will be blunted. Secondly, choice and information, which lie in the heart of market-oriented reforms, are good and desirable things in and of themselves because they empower patients and may also be regarded as broader aspects of quality of care Maxwell, 1992, Ovreitveit, 1992. The latter is especially important as from the onset of the reform process, fears that micro-efficiency gains could mainly be achieved at the expense of quality of care were loudly voiced in both countries Boufford, 1993, Le Grand, 1994, Roberts, 1994.

In this paper, a brief outline of the reforms' designs precedes the discussion on the use of dimensions of choice and information which is followed by a description of methods and presentation of the results. In the final part, the interpretation of findings is concluded with delineation of policy implications for choice and information drawn from the transformation of vertically integrated health care systems into public contract models.