Pillock of the day

Yep, if we let foreign investors into the NHS then all that money that is paid to doctors, to nurses, to porters, all that cash spent on water, electricity, land, every single penny of the £120 billion a year we lavish upon health care for the citizenry immediately flows abroad, doesn’t it?

Pillock.

The only part that can possibly flow to foreign investors as a result of privatisation is the profit. And the profit is, by definition, the amount that is being added in value. So, they send their capital in (and we get the use of their capital, Yippee!) and if, and only if, they manage to add value do they get that profit stream back.

Adding value = we get more health care for less of our money.

Pillock.

BTW, do note the implication of his argument. The more locally the cash circulates the better. Thus I should never buy anything outside my own household because that makes the cash move outside my household. And thus, by his argument, makes me poorer.

Pillock.

He’s arguing that I am made poorer by buying my bananas from Tesco rather than building a greenhouse to grow my own.

Pillock.

32 comments on “Pillock of the day

  1. completely ignoring the option which seems to be the one private companies are going for, of providing less healthcare for more money, and passing the complicated expensive bits back to the NHS. Of reducing quality of service to protect their profit margins. Of bailing out when they can’t get rich enough on the suffering of others and leaving the NHS to pick up the pieces.

  2. We-e-e-l yes. But this is the NHS & the government here. It’s entirely conceivable foreign investment won’t produce a profit. ie deliver same level of service plus create a surplus. But the contractual terms will still give the investors a return on their investment.
    Isn’t this the standard form of contract the State enters into with the private sector? The “it’s only the taxpayer’s money” one.

  3. and passing the complicated expensive bits back to the NHS

    I’m not sure of what the problem is with this. The simple, non-expensive bits is probably what private companies can do better than the NHS; the complicated, expensive stuff is probably better left with the NHS.

    What’s the problem again?

  4. It’s simpler than that. You can’t spend pounds outside the UK. Ergo no pounds will ever leave the country.

    Idiots will tell you that you can convert Sterling into another currency; but that’s incorrect, you can only exchange currencies, not convert them. We’re not on the gold standard any more.

  5. Tim Newman

    The problem is that the NHS when it budgets for stuff doesnt have a good idea of how much stuff costs. Their internal systems are not set up for this purpose. So the NHS budgets £1,500 for hip replacements, but in fact this includes £1,000 for standard ones and £3,000 for the ones that go wrong and are complicated. A private contractor says they will do them for £1,400. They pocket the £400 and pass on the complications (eg emergency ICU care) back to the NHS. End result NHS is out of pocket.

    Over time these costs would become evident and prices would be revealing (and correct), but in the meantime, NHS trusts would bleed money.

  6. Ken>

    So reverse-auction patients off on a case by case basis. As long as there aren’t long contracts or high barriers to entry, no-one’s going to claim rents like that for long without competition. Hey, we might even end up with overcapacity, and work being done at less than cost.

  7. Ken; I can’t see how the NHS being less competent than private providers can be an argument against privatisation…

  8. Dave

    If we could auction individual patients in this fashion that would be great, but this mechanism doesnt exist. The present model if to put X thousand hip replacements out.

    Emil

    The NHS is not competent at pricing individual operations because the purpose of their internal audit systems was never to put such operations out to tender. It isnt clear that under the new system the private providers will be more efficient than the NHS, merely that they understand the costs better. When Labour did their privatizations, the private providers failed to do complicated ops and also bungled ops and added to the workload of the NHS.

  9. Economically, I agree with the reasoning behind auctioning off individual procedures.

    But I really don’t think it would fly politically. “Mr Smith, what we’re planning is to release your medical notes to half a dozen different private hospitals [1] and their computer systems will automatically tender [2] for the right to do your triple bypass. Your operation will be conducted by the lowest bidder. [3] Now, would you sign this disclaimer, please?”

    I know it should work better than we currently have, but the general public would throw a fit, at each of the three points I highlighted. You’ll need to come up with an alternative presentation. 🙂

  10. So the NHS budgets £1,500 for hip replacements, but in fact this includes £1,000 for standard ones and £3,000 for the ones that go wrong and are complicated. A private contractor says they will do them for £1,400. They pocket the £400 and pass on the complications (eg emergency ICU care) back to the NHS. End result NHS is out of pocket.

    I’m still not sure what’s wrong with this. For every hip operation that goes wrong, the NHS will have to pay for ICU care which they would also have to do if they’d done it in-house. Yes, they’re out of pocket by £400 but is this a common enough event to keep everything in house and not subcontract anything? I doubt it.

  11. Philip Walker said: “I know it should work better than we currently have, but the general public would throw a fit, at each of the three points I highlighted. You’ll need to come up with an alternative presentation.”

    A possible answer to that would be to let the patient decide via a price comparison website on the understanding that the NHS would pay for the cheapest (or most of the cheapest) and you could add your own money to go somewhere else. Weigh up the cost, reputation and location of the hospitals. Free cuddly toy with every major op. Simples.

  12. Tim Newman

    If you look at Labour’s attempts to do this, it was very common. The private providers in many cases did the following:

    1) Failed to deliver enough surgeries (because they could only do the simplest procedures)
    2) Employed incompetent staff who then created problems that were dumped back on the NHS
    3) Cherry picked overly generous contracts, which left the NHS out of pocket.

    I can see a case for a private provider running an entire trust. I can also see the potential for a proper market. But expecting the NHS to be able to disaggregate costs so that they know the precise cost of operations is optimistic given where we are. Eventually, the NHS would learn the true cost of different operations, but in the meantime, the likely result is substantial windfall profits for private providers. Long before the NHS works out pricing, I expect the politics to become too hot.

  13. Ok Ken, I see what you mean and it is undoubtedly a valid point provided you assume that specialised privately run units are incapable of developing the same level of competence as is found in the NHS.

    I am not convinced this is the case.

    In the rest of the economy wealth is generated by improved productivity which is created by innovation, which generally derives from specialisation. I don’t see why that isn’t the case also in health care.

    Experience shows that in all sectors of the economy where it has been tried privatisation has brought more innovation than leaving it run by the ministry.

    The problem is a political one not a technical, medical or economic one.

    The NHS is a sacred cow, the third rail of British politics, and we will be dying unnecessarily early and expensively as a consequence for decades longer, I suspect.

  14. Why is the mercantilist virus so hard to eradicate? We know, empirically and intellectually, it’s idiotic, yet it seems to call to some sort of atavistic need. Is it some sort of evolutionary psychology thing, or are people like this Peedell knob-end actively malicious (Hanlon’s razor is only a rule of thumb)?

  15. Someone needs to remind me again why we can’t do healthcare via a mix of mandatory and optional insurance, like we do with cars?

    Everyone has inviolable basic emergency care (either self-funded, via employer or social security) with free market bolt-ons for the stuff you want to add.

    So everyone is covered for disaster by default with their basic insurance (and we can handle fraud) but anyone bowling up asking for a free boob job gets asked to produce their insurance or get their chequebook out.

    Which is presumably what America had planned before the lobbying began?

  16. BiI

    No, I’m sure that in time competition would result in improvement – specialisation, efficiency gains etc. The only problem is that initially we have a buyer with no clear idea of costs and the need to contract in bulk + odd incentives for those doing the buying. It’s so much easier to do the cherry picking and the weaseling on contracts for new entrants.

    Ivor

    We prefer that everyone receive free primary care (the preventative bit ) because this reduces costs in the medium term and is better for the economy. In addition, there is social insurance of risks such as chronic diseases. The NHS provides pretty good emergency care, decent primary care and good in places with chronic stuff. Is the NHS the system a social planner would design today? Probably not. But given where we are, it isnt bad.

  17. I call this to myself “The Circulation Theory Of Economic Growth”, because I used to believe that is how the economy works. I had for many years a casual interest in the question of how the economy functions but, as with most Guardian types, never bothered to find out how it works by, saying, reading a book about it. The puzzle was this: if I spend £5 at Mr Patel’s shop, it is clear that no money has been generated. And yet somehow if this happens many times, we all get wealthier. This was a paradox.

    I therefore concluded that mere circulation of money creates economic growth, as if some magical thing happens simply by passing a piece of paper from one to another. It was only when I got the internet and was able to read about how the market works (and particularly the proper theory of value) that I was able to understand the truth and what was wrong with my “theory”. Most of these people never bother to look for the truth. As a result, I think many people genuinely believe some form of the “circulation” theory, and thus deem it essential that “pass the paper” stays in the domestic economy, to prevent wealth and growth “leaking out”.

    To be fair to myself, I had worked out a primitive form of Marginal Utility, in the realisation that value is not intrinsic but subjective, but hadn’t followed that logic through to understand how it generally applies.

  18. Failed to deliver enough surgeries (because they could only do the simplest procedures)

    Okay, but we’re back to my original point: what is wrong with the private sector doing the simplest procedures and leaving the rest to the NHS? Surely the answer cannot be “because the NHS doesn’t know what to charge”?

  19. So everyone is covered for disaster by default with their basic insurance (and we can handle fraud) but anyone bowling up asking for a free boob job gets asked to produce their insurance or get their chequebook out.

    Squeal! Squeal! Two-tier health service! Squeal! Squeal! Equality! Squeal! Squeal!

  20. Here in North Dorset eye examinations for diabetics have been outsourced to local opticians. I don’t know how the contract was let but my wife gets a choice of opticians and can chos the most convenient. The whole thing takes less than an hour including travel.

    This means that she books her own appointment to suit her timetable and not that of the staff at the local hospital. Before we moved she would spend an afternoon in the local hospital along with 30 other people waiting for the staff to deign to see them.

    Baby steps but there must be 100s of procedures that could go the same way.

  21. doing the simplest procedures and leaving the rest

    Simple:complex can be something of a false distinction, IME – even routine procedures can turn south, and very fast. Some elective surgery is amenable to a production-line approach, but I’d still want to be within crash-alarm reach of HDU/ITU. It’s better thought of as a kind of continuum – much of the “bread-and-butter” activity/capacity/skill-set actually forms a major component of a hospital’s ability to provide a decent level of acute care.

  22. I’m with Bloke with a Boat on this, there must be and are numerous discrete functions that can be outsourced, and where genuine competition and therefore genuine value can be created.

    The NHS is huge, and very much entrenched, as are many of our attitudes to it. The constant top-down reorganizations fail because the set-up is too complicated, and government too open to being conned by both the civil service and the private sector.

    The NHS could be improved in thousands of small ways – just ask the staff – bit by bit.

  23. open to being conned

    In my view, the likes of Care_UK & their backers are doing *exactly that. Far from “adding value” in the way that Tim daydreams about, they are simply leeching off NHS acute capacity.

    This isn’t necessarily a defence of the NHS – I simply object to the smoke and mirrors involved.

  24. Some elective surgery is amenable to a production-line approach, but I’d still want to be within crash-alarm reach of HDU/ITU.

    Well, quite. I don’t believe it’s beyond the scope of mankind to arrange a system of a private contractor doing routine surgery with the NHS right there to take over the (rather different) task of intensive care treatment when it goes wrong. Isn’t this what we do with laser eye surgery?

  25. to arrange a system of a private contractor doing routine surgery with the NHS right there

    Well, that was (partly) the thinking behind ISTCs, and their track-record isn’t exactly spectacular – although they did (sometimes) add much-needed extra capacity. The overall effect has been somewhat disjointed – e.g. providers washing their hands of post-op complications, with patients then re-presenting in (already over-stretched) A&E Depts, etc.

    I’m certainly not against procedures (e.g. laser surgery) being managed by fwd-thinking and genuinely innovative providers… but that’s not what is happening under the present reforms, with bloc-contracts being awarded externally “just because”.

  26. I notice no-one has mentioned the duplication of effort involved when the NHS has to retain the capability to step in and catch the cases the private sector don’t want, or mess up. Or indeed what happens when providers bale on their contracts.
    The US health service model, which the “free marketeers” seem determined to push us into, is the most expensive in the developed world, with astronomical levels of fraud. Why would we ever want to go there?

  27. I notice no-one has mentioned the duplication of effort involved when the NHS has to retain the capability to step in and catch the cases the private sector don’t want, or mess up.

    It’s not capability that is the issue here, but capacity. The NHS should and will always retain the capability to perform any procedure, but that does not mean there are not advantages in reducing their capacity by outsourcing certain procedures.

    Or indeed what happens when providers bale on their contracts.

    We could look to the private sector for inspiration. What happens when a commercial enterprise bails on a contract?

    The US health service model, which the “free marketeers” seem determined to push us into

    Nobody, at least on here, is interested in that. But it seems beyond the wit of the NHS’ most staunch defenders to understand that there are models of healthcare provision which exist outside the US and UK.

  28. I’m certainly not against procedures (e.g. laser surgery) being managed by fwd-thinking and genuinely innovative providers… but that’s not what is happening under the present reforms, with bloc-contracts being awarded externally “just because”.

    I can believe that the reforms will be a disaster because they are handled by fuckwits both in and out of the NHS. That’s probably as much a hurdle as the ideological opposition.

  29. Gareth: Yes, something like that might do it. As a similarly-flavoured suggestion, I’ve often wondered whether we could adapt the NICE system to allow pricing of all treatments. Then private (and charitable) providers can conduct the treatment, setting their own price. (The complicated cases make this, well, complicated, of course.) The NHS would pay for the treatment, up to whatever NICE determines, with any excess borne either by the patient directly or their insurer. The private providers can know these figures, of course, and can set prices in a free market.

    The principal problem my thinking was tackling was the fact that NICE could end up disagreeing with a manufacturer over a matter of a few quid for a course of treatment [1] and deprive the entire country of it as a consequence. But I think it would also help with enabling people to make private provision while retaining lots of the essential features of a modern healthcare system.

    BII: You say the NHS is the third rail of British politics. We know healthcare has been polarised in the States for ages. My suspicion is that the subject is politically toxic anywhere, but maybe I’m wrong. What’s it like in Italy? And experiences from our other overseas commenters?

    [1] I mean, I know that for a few quid they’d reach agreement in practice, but in principle this could happen; it certainly happens at much greater levels of difference already.

  30. The system is corporate socialism. The “private” companies are doing deals with the state in the form of the NHS–not the customer–the patient. You pay-via tax thievery–but your name does not appear on the paycheck of the NHS or their “contractor”. As in all privatisation it is in the interest of the “private” provider to grab the contract by putting in the lowest bid and then do as little as possible to maintain their take home profit. In the case of hospitals/health they have to be a bit more careful since leaving corpses or cripples behind might bring a load of shite down on them–but otherwise it is the same as across all govt depts. The only competition is in schmoozing the Simple Shopper bureaucrats.

    Get rid of the fucking lot of them. NHS and hang-on bum-chum “businessmen” alike.

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