Competition and the threat of competition are fundamental concepts of capitalism. Few Americans question that retail competition contributes to lower prices, improved quality, and greater diversity in the delivery of most goods and services.
If retail competition lowers prices, raises quality, and results in greater diversity of goods and services in other industries, why isn’t retail competition the most efficient form of competition for ambulance services? The conditions necessary for an effective retail transaction do not exist in most ambulance market segments (both emergency and non-emergency). For a retail transaction to be effective, the following basic economic features must apply:
- There must be a choice of suppliers. The public is never in a position to ‘shop’ when an emergency ambulance is needed even if there were a choice of emergency ambulance suppliers. The chooser must have a stake in quality. Patients clearly have a stake in the quality of emergency ambulance services they receive, but are poor judges of quality. The chooser must have a stake in cost.Many patients have no health insurance or ability to pay for emergency ambulance services, and therefore have no stake in the cost of service. For those patients with health insurance, most policies cover ambulance service and almost all patients believe their insurance will cover the cost of services.The chooser must have a chance to compare. In most situations in which the public calls for an emergency ambulance, there is insufficient time, for obvious reasons, to comparison shop.
- The chooser must be qualified to compare. In markets where patients can choose between providers of varying degrees of clinical sophistication (e.g, a single ALS-Paramedic level emergency provider, and a variety of BLS-EMT level non-emergency providers) patients frequently select the wrong service. The consequence of their error in evaluating the level of their need can be the selection of the wrong type of care, which is extremely risky in emergency situations.
- The chooser must buy often enough to become a skillful buyer. Repeated experience in purchasing a commodity or service is necessary in becoming an informed consumer. Most people will order an emergency ambulance only twice in their lifetime, which does not constitute enough frequency to become proficient and skilled. In comparison, many people buy five or more houses in their life,each time relying on the expertise of a real estate agent, escrow company, appraisal firms, attorneys, and advice from family and friends. Frequency in buying increases skills.