Role of Private Sector in Health Care - Competition

When the private sector is driven by competition it tends to be more efficient. With competition, benefits like cost reduction, greater attention to consumercare, improved quality of service, etc. would ensue. Consumer can exercise the choice of selecting that service provider who provides the best quality for the price.

‘Transparency’ in policies of customer care (e.g. adherence to equity norms) and optimum utilisation of resources (e.g. utilisation of subsidy or grant efficiently) are important in ensuring healthy competition among the different private players. For achieving this, one of the recommended methods is to channelise funds through purchase arrangements. The flow of funds are routed in terms of materials minimising scope for mis-direction of funds. With due care taken, healthy competition can be introduced yielding efficient results. When there is no pure competition, there often exists conditions of ‘contestable market’ which motivates the private health care to be inefficient.