Ritchie tells us all about the evils of competition in the NHS

No, really, he does. And it\’s terribly evil of course.

For twenty years NHS reforms have made the NHS less efficient, more bureaucratic, less patient focussed and more costly.

There has been one explanation for this phenomenon: since the early 90s all NHS reform has tried to introduce two things into our health service. The first is the market, the idea being that this would create competition between suppliers. The second is patient choice, the idea being that this would create pressure on suppliers to really compete.

There have been two profound errors in this logic.

There is no market in healthcare – and can’t be

And on he goes.

The biggest criticism of the NHS is that it is riddled with bureaucracy.

The criticism is based on fact. The NHS is riddled with bureaucracy. However, the question has to be asked, why is this the case?

The answer is quite straightforward. This bureaucracy was introduced when the NHS was turned into a quasi-market.

To be a market the NHS had to be broken up into large numbers of quasi-independent units all contracting with each other, all transacting with each other, and all having to spend vast amounts of time managing those contracts and transactions before then accounting for them.

There were several hundred Primary Care Trusts (or their predecessors) when the process of marketisation began. This number has been reduced to 150 or thereabouts now. But shortly they’ll be replaced by 500 GP consortia.

And then there are Foundation Hospitals. And Ambulance Trusts. And Mental Health Care Trusts, and on and on and on, all of which are undertaking all those contracts, transactions and accounting.

All of this is ludicrous. There is one NHS, paid for out of one taxation fund, ultimately accountable to one minister in England (and others, I admit, in Scotland and Wales), consolidated into one final central account. Which means that all that separate accounting is at the end of the day a complete waste of time.

So, is there actually anything wrong with what he says? Well, this being the Murphmeister, yes, of course there is.

You see, we\’ve actually had a number of natural experiments and we can see the results of them. For example, NHS England has adoptde more market oriented changes than have either NHS Wales or NHS Scotland. And the result has been that quality of care in England has risen faster than in either Wales or Scotland at lower cost.

Which is the sort of result we\’d actually expect from a market drvien system….even if we have had to build a bureaucracy to provide said markets.

For example:

This policy change provides a natural experiment that researchers can exploit. Hospitals compete in geographical markets because patients prefer, among other things, to be treated closer to home. Hospitals thus vary in the extent to which they face competitive forces simply because of geography. Exploiting this fact allows researchers to look at outcomes pre- and post- competition policy across different markets.

In recent research along with Rodrigo Moreno-Serra (Gaynor et al. 2010), we look at all admissions to hospitals in the National Health Service – around 13 million admissions – pre- and post-policy. We find that hospitals located in areas where patients have more choice are of a higher clinical quality – as measured by lower death rates following admissions – and their patients stay in hospital for shorter periods compared with hospitals located in less competitive areas. What’s more, the hospitals in competitive markets have achieved this without increasing total operating costs or shedding staff. These findings suggest that the policy of choice and competition in healthcare can have benefits – quality in English hospitals in areas in which more competition is possible has risen without a commensurate increase in costs.

So the only thing wrong with Ritchie\’s contention is Ritchie\’s contention. I know, how surprising! More competition means better health care with no rise in cost. And given that we\’d rather like to have better health care at no increase in cost, more competition is therefore what we\’d rather like.

I can\’t help but feel that Murphy would be well served by checking what other people have already found out before he starts to reinvent the wheel.

6 comments on “Ritchie tells us all about the evils of competition in the NHS

  1. “There is one NHS, paid for out of one taxation fund, ultimately accountable to one minister in England (and others, I admit, in Scotland and Wales), consolidated into one final central account. Which means that all that separate accounting is at the end of the day a complete waste of time.”
    I think that is an interesting way of doing businesses.
    Don’t bother to account for different offices etc seperately. I am not an accountant can someone see a flaw in his arguement?

  2. Come on Mr. Murphy.

    Reply here. I know you are boosting Tim’s figures but I do the same everytime he sends me to you.

    Unfortunately, I don’t like the fact you keep shutting down threads, so I don’t go too often. But you are welcome here.

  3. Hang on, isn’t this the “country by country” reporting man – which is creating additional bureaucracy by requiring regional subsidiaries of companies, ultimately accountable to one Chief Executive (or Group Board, if you are feeling optimistic) and reported in one set of annual accounts. But they would have “to spend vast amounts of time managing those contracts and transactions before then accounting for them“, wouldn’t they?

    Now, I’m all for local accountability for public services – on the basis that it’s the only way there can be any accountability for public services (and I also believe that very large companies often become less efficient than smaller, more focussed ones) but the basic inconsistency of his position is just classic WGCE Ritchie.

  4. higher clinical quality – as measured by lower death rates following admissions

    Are they comparing like-with-like patient casemix & clinical activity/intervention following admissions? I mean, as far as death rates are concerned, my local walk-in centre (minor injuries) beats intensive care hands down!! :/

    Tim adds: Dunno. You can look up the full paper if you like. It’s from CMPO and they’re a serious outfit, not a political wonk tank at all.

  5. <emWhich means that all that separate accounting is at the end of the day a complete waste of time.

    Aye, because when Shell runs multiple projects, all out of CAPEX, they don’t bother running separate project budgets, they just book everything to the same cost code, Hague001.

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