NCPA - National Center for Policy Analysis

Nurses Benefit from Competition

December 5, 2001

There is plenty of evidence that competitive, private sector delivery of health care allocates resources more efficiently than systems that give a public system a health care monopoly. One way this is manifested is in wage rates -- which tend to be low for health care professionals in monopolistic health care systems.

For example, Sweden's nurses have benefited from the injection of competitive choices into that country's publicly-funded health care model over the past few years. Unlike the old monopoly health care delivery system, a growing number of health care employers are competing for nurses and other staff.

  • As a result of the competition for their services, between 1995 and 1999 nurses increased their salaries by 26 percent, second only to civil engineers.
  • This gain is three times greater than what was won during the previous period, when private alternatives were still weak.

Not surprisingly, the Swedish nurses' union is in favor of market delivery of health care. Conversely, other public sector employees are able to obtain a wage premium -- pay above the marketplace rates -- through collective bargaining when the government has a monopoly.

  • For example, non-medical staff unions in British Columbia hospitals consistently received pay increases above those of nurses over the 1997 to 2001 period.
  • Analysts say that due to their monopoly position and willingness to use work stoppages and strikes to gain increased pay, the wages of non-medical staff average several dollars above what the market would pay.

Nurses and others directly involved in patient care are more reluctant to strike, and thus are in a weaker bargaining position. Partly due to this situation, Canadian physicians earn only 55 percent of their counterparts in the U.S., and nurses earn 85 percent of their equivalent U.S. market wage.

Source: Peter Holle (Frontier Center for Public Policy), "Quality of Care & Wages Both Increase with Swedish Health Care Privatization," and Nadeem Esmail, "'Don't Privatize Health Care,' Genuine Concern or a Quest for Higher Wages?" both Fraser Forum, November 2001, Fraser Institute.


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