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Applying competitive bidding to health care
J S McCombs1, J B Christianson
1University of Minnesota.
Journal of Health Politics, Policy and Law
|January 1, 1987
Summary
This review explores competitive bidding for public health services, detailing critical design elements like service units, bidder selection, reimbursement, and contract enforcement. It applies these concepts to a Medicare durable medical equipment bidding system example.
Area of Science:
- Health Services Research
- Public Health Policy
- Health Economics
Background:
- Public programs increasingly utilize competitive bidding to procure health services.
- Designing effective bidding systems requires careful consideration of numerous complex factors.
Purpose of the Study:
- To review empirical literature on competitive bidding for health services.
- To identify and discuss key design issues for bidding systems.
- To illustrate these issues with a practical example for durable medical equipment procurement.
Main Methods:
- Literature review of empirical studies on competitive bidding in public health programs.
- Analysis of critical design components within bidding systems.
- Development of a hypothetical bidding system for durable medical equipment.
Main Results:
- Key design issues include: specification of service units, selection criteria for winning bidders, reimbursement determination, treatment of losing bidders, and contract enforcement.
- These issues present significant challenges in developing functional and equitable bidding systems.
Conclusions:
- Successful implementation of competitive bidding in health services necessitates a thorough understanding and strategic design addressing all identified issues.
- The proposed Medicare durable medical equipment bidding system serves as a practical illustration of these design considerations.