Competitive hospitals as a virtue of the Singapore health care system

I won’t recap my earlier discussion, but rather here I will point out another feature of the system which makes it work and which keeps costs down: competition among hospitals.

Singapore has nine general hospitals, eight community hospitals, and twelve specialist hospitals, many of which are owned by the government.  (The public hospitals are usually bigger than the private hospitals, so the public hospitals serve about 80% of the market.)  To put that in proper perspective, Singapore is about the size of a U.S. county.  That’s 274.1 square miles, noting that most people do not live on the fringes of the territory.

The publicness of the public hospitals is not their most important feature.  Their most important feature is that they compete.  They do not merge, for instance.

Not every Singaporean public hospital is a contender to treat every kind of ailment.  And not every hospital is within convenient reach in a country where many people do not have cars.  Still, that’s a lot of competition by American standards.

To put matters in perspective, Fairfax plus Arlington counties have two hospital chains of significance, Virginia Hospital Center and Inova FFX hospital, and that is in a reasonably densely populated (by American standards) elite region.  Yes DC and Maryland may beckon (Sibley, Suburban, Children’s Hospital — what else is good?), but still ask yourself how many Americans can choose from a comparable number of hospitals as one can in Singapore?

One lesson is that urbanization is good for your health care system.  That is another reason to deregulate urban density.

A second lesson is that congestion prices for your roads make it easier for hospitals to compete.  Driving north on the Beltway to a Maryland hospital, from Fairfax, isn’t so great, especially if you are really sick.

A third lesson concerns the Hayek-Lange debate on managed competition as a potential solution to the socialist calculation debate.  The government-owned hospitals in Singapore would appear to be implementing one version of Lange’s proposal, namely that they are told to compete and they do.  Very successfully, so successfully that they are often cited as an example by market-oriented economists.  No, this could not work for an entire economy, and yes, in most other places public choice considerations would be a bigger problem than they are in Singapore.  Still, Lange’s proposal, viewed in light of the Singapore hospital system, looks a bit better than it used to.

Addendum: Here is Reihan on the monopoly power of U.S. hospitals.


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