4.1 Overview

4.2 Economics of Healthcare

4.2.1 Healthcare Costs and the Gross Domestic Product (GDP)

4.2.2 Productivity Growth Rates of Healthcare Services

4.3 Supply and Demand in Healthcare

4.3.1 Healthcare Model

4.3.2 Supply-Side

4.3.3 Demand-Side

4.3.4 The Physician-Workforce Shortage: Demand Outpaces Supply

4.4 Porter's Five Forces of Competition

4.4.1 The Threat of New Market Entrants

4.4.2 The Bargaining Power of Suppliers

4.4.3 Threats from Substitute Products or Services

4.4.4 The Bargaining Power of Buyers

4.5 Barriers to Free Market Competition in Healthcare

4.5.1 Intermediary Role of Insurance

4.5.2 Difficulties in Measuring Quality and Outcomes

4.5.3 Certificates of Need as Barriers to Entry

4.5.4 Physician-Owned Healthcare Facilities

4.5.5 Exclusionary Boycotts

4.5.6 Antitrust Regulations

4.6 Historical Reform Efforts and Their Effect on Competition

4.6.1 Managed Competition

4.6.2 Reform of the Insurance Industry

4.6.3 Commoditization of Healthcare

4.6.4 Provider Consolidation

4.7 Conclusion

4.8 Key Sources

4.9 Acronyms


The potential benefits and costs of free market competition within the healthcare arena have been, and will continue to be, the focus of intense debate. Those who advocate market competition in healthcare stress numerous benefits, which include reduced costs, increased quality, improved efficiencies, and an incentive to innovate. Those who oppose competition in healthcare argue that unique differences exist between ...

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