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The personal dimension of care is regarded in the public sector as an optional extra -- but it shouldn't be optional. It is essential. . . . Public hospitals used to be the holder of the values of community and personal caring, irrespective of ability to pay . . . but now they're just another organisation chasing the buck, and if you don't get paid you don't do it.¹

As the responses in the letters columns seem to attest, this experience of contemporary medicine is common in Australia today. There appears to be a widely felt sense that the opening up of medicine to commercial interests and the promotion of economic competition have undermined fundamental values and seriously threaten patient care. It is widely felt, too, that these issues have been substantially neglected in the public debates, which have focused almost exclusively on technical issues of financing at the expense of ethical and cultural questions.²

I shall argue that the social policy which promotes economic competition as a major technique for regulating the healthcare industry raises a wide range of issues about the organisation and dynamics of healthcare and is likely to lead to a variety of outcomes that are not beneficial. Before committing ourselves irrevocably to such a policy we need to consider not just the economic variables, narrowly defined, but also the underlying ethical and philosophical questions.

One fundamental of micro-economic reform has been the application of competition principles to industry -- including those where public sector funding and provision has been significant, as it is in the health sector. These principles are based upon an approach [in] which decisions about the use of resources are made in the light of independent bids for the provision of goods or services made by players who are not in any way in collusion.³

An increasing emphasis on the role of the market in regulating decision making is at the centre of the national competition policy for healthcare in Australia (Box). Its advocates argue that enhanced conditions of competition among doctors, hospitals and insurers should be supported for two reasons: because they are necessary to contain healthcare costs and because they will provoke a shift in the healthcare power balance from providers -- that is, doctors -- to consumers -- that is, patients.

Many of the assumptions underlying such a perspective, however, depend on a view of human action and relationships that can be contested on both philosophical and factual grounds. For example, it is assumed that consumers always act out of self-interest, that they use their own money to buy all goods and services, and that they seek the best price quantity/quality combination to maximise total utility. Similarly, it is assumed that providers are also primarily concerned with their own interests, adapt their prices and throughput in the light of consumers' purchasing, act to maximise profits by increasing market share at acceptable prices, and always seek to use labour and resources sparingly.

All of these assumptions are mistaken, at least with respect to medicine. Although economic constraints of some kind are obviously unavoidable, it does not follow that these must be derived from the market. As is widely acknowledged, the healthcare market is not a perfect one.⁹ Individual patients by and large do not behave like typical consumers. Ordinary people cannot always understand the complex healthcare field, their needs are immediate, and decisions need to be taken under conditions of duress. In addition, patients become dependent on doctors with whom they have established ongoing relationships of trust and who in turn are sincerely committed to their patients' interests.

Similarly, the effect of competition policies on consumer choice has been mixed. Limitation of the sovereignty of physicians does not necessarily mean increased possibilities for patients. On the contrary, to the extent that market-based incentives tend to operate against the most needy and vulnerable members of the community, the indigent and socially disadvantaged populations are likely to be worse off under a more competitive system. In the US, where it is commonplace for healthcare organisations to seek openly to maximise their profits by restricting medical care in individual cases, this appears commonly to be the case.^3,14 In Australia, the introduction of casemix funding has openly discouraged admissions for social or compassionate reasons by attributing low weights in these categories, and there is evidence that specific social groups may be particularly disadvantaged.¹⁵

As both doctors and patients have always recognised, however, the medical relationship cannot be understood purely as a commercial relationship. Patients come to doctors because they are experiencing pain, illness or fear. They offer access to their bodies and to the intimate recesses of their personal lives. They grant wide discretion and decision-making power to doctors, on the understanding that doctors will exercise their judgement in a disinterested and compassionate manner. It is mutually agreed that the power of doctors is subject to rigorous ethical constraints arising from the long tradition of medicine, which have been upheld by the professional organisations for hundreds of years. These constraints, which constitute a complex, self-generated system of professional norms, limit the nature of personal relations between doctors and patients, the use and dissemination of information, licensing and credentialling of practitioners, and specific commercial practices such as fee splitting, advertising, self-referral, and ownership of pharmacies and hospitals by physicians. They primarily reflect altruistic concerns of doctors to separate personal and financial considerations from the paramount professional goal of doing what is best for their patients, even if, undeniably, they also have the effect of protecting doctors' financial interests. They do not prohibit competition, but rather channel it into non-economic forms, such as competition for reputation, recognition and status, and social influence.

Emphasising economic values undermines the role and power of ethical values.¹⁶ This fundamental shift may in the longer run prove deeply significant for society as a whole, for it may lead to changes in the structure and dynamics of the clinical process itself.

A crucial aspect of the medical encounter is that it is not purely "instrumental" in character. It does not merely subserve technical functions, the solution of problems in biochemistry or physiology through the application of scientific modes of thought and analysis. It is also involved in setting goals, in identifying and scrutinising meanings, and in establishing the frameworks within which the technical problems are identified and given a value. These latter functions are "non-instrumental" in character, and become possible because of the peculiar nature of the contact between doctor and patient: its intimacy and openness, its reliance on vulnerability and trust, the moment of sanctuary it offers with respect to the utilitarian relationships of everyday life. It is through the contact that the doctor is granted with the lifeworld of the patient that the healing process becomes possible. This contact, which occurs through a variety of mechanisms, including language and touch, stands at the irreducible core of clinical medicine.

It is an unavoidable consequence of the introduction of the unrestrained operation of market forces into healthcare that economic values penetrate to the heart of the medical relationship. Indeed, it is precisely the rationale of the policy that financial imperatives take over as the motivating principle of all medical decision making. To open up the clinical relationship to such forces, to subject it to criteria that are purely calculable and quantitative, risks undermining the dynamic structure on which the entire medical enterprise rests. The physician becomes the agent of the hospital or the system rather than of the patient. His or her primary obligation to act on behalf of the patient is displaced in favour of conformity to a complex system of economic incentives and disincentives. The scope for disinterested, compassionate care is greatly contracted.¹⁷ The opportunities to respond to individual needs, to the specific details of the predicament of a particular patient, are severely contracted in the face of the overwhelming power of economic imperatives.¹⁸

Health-financing policies cannot be understood as exclusively technical, or "value free", mechanisms for regulating the healthcare system. Rather, they must be interpreted and evaluated in accordance with philosophical and ethical criteria and in relation to their social and cultural consequences.¹⁹ We need to ask not merely Is this a way to balance the books? but also Is this the kind of healthcare system we want to have? If this simple test is adopted it becomes immediately apparent that a reliance on economic incentives to regulate the quality and distribution of healthcare resources is, through its effect on the conduct of doctors and the outcomes for patients, very likely to lead to consequences widely considered unacceptable.

The employment of economic competition as a key device in the regulation of the healthcare system, however, is more than a mere technical solution to a fiscal problem. It is an intervention that raises issues at medicine's philosophical core. One of the major objectives of competition policies is to challenge the traditional system of norms that guide the behaviour of physicians; the implications of this are potentially far-reaching. The possibility that the introduction of economic imperatives at the heart of the medical endeavour may compromise it in a fundamental way also needs to be considered. The globalisation of the economy -- in the dual sense of the elimination of national boundaries and the universalisation of economic values -- has the capacity to profoundly transform the nature of the entire domain of healthcare. To be sure, it may usher in lower prices for some services and enhanced availability of others. However, the cost of these gains may be very high, for it may also lead to the corruption of some of the central values of medicine, and to a contraction of the sphere for individual action in favour of the uncompromising demands of the ever-expanding system.

This scenario -- and that depicted by Dr Vaughan -- may, of course, be too bleak. Perhaps the traditional values of medicine will prove to be sufficiently resilient to survive under the changed social and economic conditions, as indeed they have over the millennia. Naturally, it is to be hoped that this will be the case. Nonetheless, it is essential that proposed new directions in healthcare policy are subjected to rigorous scrutiny in relation not merely to narrowly conceived fiscal criteria but also to cultural and ethical ones in open, public debate.

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15. Ruben AR, Fisher DA. The casemix system of hospital funding can further disadvantage Aboriginal children. Med J Aust 1998; 169 Suppl Oct 19; S6-S10.
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A version of this article was given as an oral presentation at the Australian Medical Association conference Competition in health, Canberra, 31 July 1998.

Department of Medicine, Monash University, Melbourne, VIC.
Paul A Komesaroff, PhD, FRACP, Associate Professor, and Director, Eleanor Shaw Centre for the Study of Medicine, Society and Law, Baker Medical Research Institute, Melbourne.

Reprints will not be available from the author.
Correspondence: Dr P A Komesaroff, Director, Eleanor Shaw Centre for the Study of Medicine, Society and Law, Baker Medical Research Institute, PO Box 6492, St Kilda Central, VIC 8008.
Email: Paul.KomesaroffATbaker.edu.au

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Competition policy is an economic and political strategy for ensuring that market forces operate as the principal device for the regulation of economic relations. Several approaches reflect the range of economic theories and philosophical perspectives represented.⁴

In the United States, antitrust laws are used to break up arrangements such as fee schedules by medical associations, corporations among hospitals, collective bargaining between providers and insurance carriers and payer reimbursement. More recently, managed care has emerged as a major approach to cost containment.^5,6 In the United Kingdom under the Thatcher Government, certain services were contracted out to private firms and hospital and general practitioners were granted a substantial degree of financial autonomy.⁷

In Australia, a National Competition Policy was introduced in 1995 with bilateral support, establishing competition and cost considerations as the guiding principle of public policy at every level of government. This policy is enforced through a framework of law -- including the Trade Practices Act 1973, the Competition Policy Reform Act 1995 and the Prices Surveillance Act 1983 -- and two key regulatory bodies, the Australian Competition and Consumer Commission and the National Competition Council.8 These regulatory bodies have very wide powers to oppose "anti-competitive conduct and unfair market practices" of all kinds, and to regulate "mergers or acquisitions of companies, product safety/liability and third party access to facilities of national significance".