Yes Polly, this is the point

For the first time the entire NHS has been put under competition law. The financial and clinical safety of NHS foundation trusts used to be the responsibility of the regulator, Monitor. Now its website proclaims: \”The first of Monitor\’s three core functions is to promote competition.\” That means \”enforcing competition law\” and \”removing anti-competitive behaviour\”. Few yet understand the nuclear nature of this. It compels every NHS activity to be privately tendered. If the NHS is the preferred provider, that can be challenged in the courts or referred to the Competition Commission. Red-in-tooth-and-claw commercial competition breaks all partnerships.

I do find this bizarre. The entire point of this system of getting GPs to commission services is exactly this: to ensure competition in the provision of services. This isn\’t some odd, unknown and hidden consequence, this is the very reason it\’s all being done in the first place.

If the NHS is cheaper/better than some other, whether for or not for profit, provider, then the NHS will be doing the work. If some other provider is cheaper/better (and of course, in something as complex as medicine cheaper is not necessarily better than better….which is exactly why the commissioning is being done by doctors, who can indeed tell the difference between the two) then that other provider will do the work.

Which leads to two highly desirable outcomes.

1) We get more bang for our buck. If all work is being done by the most efficient provider (and again, note that efficiency does not translate directly to price, price is only a part of it) then for whatever level of resources we want to put into the system we are getting more health care out of it. This is good.

2) We also know, because Polly has told us so, that the NHS has its own inflation rate, rather higher than the general inflation rate for goods and services as a whole. Part of this is simply Baumol\’s cost disease and is common to all services. But the other part of it is that NHS productivity rises more slowly (and has even been negative according to some estimates) than the economy in general. Well, these are really just two ways of saying the same thing.

But, and here\’s the important point. We really only know of one way to consistently improve productivity over the long term. That\’s the use of markets and competition. There\’s a lovely Paul Krugman essay out there that makes this point very well (sorry, lost the link), showing that that planned economy, the Soviet Union, managed no growth in total factor productivity at all, over its 74 years, while 80% of the 20th century growth in the market economies came from growth in that TFP.

So from competition and a market (and note that this says nothing about who is doing the financing, this can remain government, no problem) we not only get more health care now for whatever tax we put into the system, we also get progressively more over time. This is also a good thing.

So, to return to why I find this bizarre. Why are people complaining about these two good things?

11 thoughts on “Yes Polly, this is the point”

  1. I have a feeling the Tory reforms are going to bite them on teh arse – acute care will be overwhelmed.

  2. Why are people complaining about these two good things?

    Because they don’t fit into their belief model (or, if they are truly evil – their artificial persona as a propagandist.) Simples.

    Traditional NHS good – market bad. Public employees – valued servants of the nation; private employees – either overpaid capitalist exploiters or victimised wage slaves.

    You can talk about efficiency savings, care improvements and research economics all you like but it is as useful as wondering why the evidenced differences between Darwin’s writings on evolution and modern refinements don’t convince Young Earth Creationists.

  3. I know plenty of people complaining about it – most of whom would never define themselves as “socialist”.

    Whilst people dribble on about the beauty of competition (without ever being able to explain how works in the context of, say, PICU), NHS assets and infrastructure will continue to be hived off – at no benefit to the taxpayer/patient. snake oil McKinsey twats will continue to take their ill-gotten cut, Serco and United will count their cash, politicos will talk spurious nonsense about “empowering the frontline” – and none of it will help 75 year old Mrs Jones on trolley 4 with COPD and a suspected bowel obstruction.

    Still, believe what you will.

    Tim adds: But I can explain why competition will work: indeed, I have done, above.

  4. “But I can explain why competition will work”

    The Tory reforms will see large chunks of commissioning and provision handed over to the likes of United. It’s very little to do with competition, imo – and will do little to improve continuity of care. The NHS certainly ain’t perfect – but the things it CAN do well (e.g. emergency & ITU) are rarely facilitated by choice (in some respects, this is also true for social insurance systems). People yadda on and on about diversity of provision, but acute care is increasingly concentrated in fewer (but-larger) centres. I’m all for a mixed economy in healthcare, if it represents genuine value and provides comprehensive coverage… but Lansley’s reforms don’t represent a carefully thought-out transition – it’s more like a yard sale.

  5. @lost_nurse – what exactly are your objections? Can you put them in economic terms – it seems you are hinting at a cartel here (a few larger centres controlling prices)? Isn’t that where the competition commission becomes useful? You also talk about a ‘yard sale’ and ‘NHS assets and infrastructure being hived off’. I don’t know anything about this, though this seems to me a separate issue to competitive provision, but perhaps it’s where your real complaint lies?

  6. “what exactly are your objections?”

    TJ, quickly – before I have to go to work…

    The NHS, for all its faults, is pretty cheap compared to other healthcare systems. It’s ironic that much of the rise in management costs (and bureaucracy) has been the result of pseudo market-reform by successive governments. I’m not convinced that AL has any idea what he is doing. I don’t want the cure to actually kill the patient (the patient being a reasonable degree of healthcare coverage, rather than the NHS per se).

    I don’t think it would be going too far to accuse some of the big commercial players of cartel behaviour (in other healthcare systems, esp the US). Simply put – I don’t want ’em over here getting their hands on our care budgets. Continental social insurance healthcare systems have pretty rigorous regulation (e.g. as regards refusing cover), but we don’t seem to be going in that direction.

    Hiving off: property, assets, infrastructure – the usual story. It rarely seems to represent a good deal for the taxpayer.

    Competition: I’m not trying to decry the white heat/light of competition – but the rhetoric can be pretty meaningless in acute care. If I’ve got suspected appendicitis (or is it just a viral thing causing abdominal pain? or will it actually kill me?), I don’t want a choice of 5 hospitals – I just want to be able to depend upon my local ‘un. Now, I’m willing to bet that those new providers will be providing all manner of fancy foot spas etc in their well-being centres (or whatever GP surgeries will be called) and a certain amount of straightforward elective stuff in polyclinics/treatment centres…. But messy/unfortunate/tricky (and expensive) stuff will still be left for the NHS. In short, the likes of Serco and United aren’t anymore interested in REAL choice than the most Stalin-esque politico. And they are being given a big chunk of the pie.

    Tim adds: But, erm, acute care is the bit that will be affected least. A&E etc….that’s not the part that will be opened to such competition. Because you don’t go through your GP to get that, do you? It’s all the elective stuff that will……precisely where you agree that competition would/could work.

  7. I am in danger of missing my bus, but v.quickly.

    “Because you don’t go through your GP to get that, do you?”

    You do, though! I work in surgical emergency admissions – i.e. looking after both A+E patients and GP referrals (e.g. the classic “acute abdomen” which may-or-may-not be something nasty). Point being: ideally, all of these services exist on a continuum (and not necessarily in a competitive relationship). Even simple elective procedures can get very complicated: in a big teaching hospital, no drama – elsewhere, less so. Yes, the stuff actually amenable to competition is only a small % of the caseload – but the market rhetoric is being flung around a little too easily, imo. When it comes to healthcare, I start with Murphy’s Law and work from there.

    Anyway, be sure to keep your beady eye on Lansley… [runs out of the door]

  8. Interestingly, though, Polly’s claim in that paragraph isn’t true. As far as I can tell, Monitor has no such statement on its web site.

    It would be surprising if it did, as the CCP (www.ccpanel.org.uk) is responsible for competition policy in the health sector. Monitor is still responsible for the things Polly says it “used to be” responsible for.

    This might change with new legislation, but that’s no excuse for just making stuff up.

    (sigh) I miss Factchecking Pollyanna.

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