Re-forming medical delivery systems: economic organization and dynamics of regional planning and managed competition

Abstract

This paper compares structural components of medical delivery in two major systemwide reform strategies in the United States. Commonly portrayed in terms of opposing ideologies of planning vs. market reform, regional organization and managed competition have promoted similar structural elements and geographic configurations. They both support growth of institution-based specialized teams and hospital consolidation. They both differentiate hospital care into vertically integrated levels, and develop regions as the key production and market area for organized delivery systems. System-wide management or regulation in each has tried to control allocation of resources, capital investment, and competition. Developed in the context of large-scale industrial production, these components have inherent economic dynamics and together they shape the market structure of medical care. The final section briefly considers the locus of power in the two reform approaches and the implication for choosing mechanisms of reform. It also notes that despite their rhetoric, the two strategies do not shape their services according to information about population benefit. The conclusion points out that the commonalities in structure and power demonstrate the dominance of economic organization in medical reform and contribute to the wide acceptance of this business form of organization as an international model.