Glory in this logic!

The Observer has reported that:

Inefficient hospitals [are] ‘wasting hundreds of millions of pounds each year’

and

Labour peer Lord Carter [is] to list poor NHS spending decisions, on items from gloves and pills to prosthetic hips

The aim is, apparently to save up to £400 million for the NHS by making more effective buying decisions that will reduce the product range used by NHS hospitals from more than 500,000 items to just 10,000.

Three thoughts follow. The first is that it is very obvious that Lord Carter is saying that splitting the NHS into hundreds of trusts each making their own buying decisions is hopelessly inefficient, as was always obvious.

Second, he is saying that if you create an inefficient system where cooperation is not allowed because that is contrary to the dogmatically imposed idea that competition produces optimal outcomes you will end up with excess cost.

And third, he is saying that imposing centralisation on the system could save a great deal, as I argued on this blog only last week.

But he may also be wrong in one respect: 10,000 product lines may be too few. Today’s optimal supplier quickly ceases to be so if you make them sole supplier. That would remove competition where it is needed, amongst suppliers. And that would be daft, to be kind.

OK. So, we do need to have competition among suppliers, because that’s where it’s needed. Because a monopoly supplier rapidly becomes less optimal.

But we must not have competition in the supply of medical services, that should be reserved for the monopoly that is the NHS.

Yeah, logic, we’ve heard of it.

7 thoughts on “Glory in this logic!”

  1. Chelsea & Westminuster Hospital win an award a while back for saving money.

    They noticed that the drawers on wheels they were buying from a medical supplier cost zillions.

    For a tiny fraction of the price they bought the ones used in workshops. Which also lasted better since they are designed to deal with people lobbing their hammers into them.

    If you had a central purchasing authority – how long to get that into their catalogue?

    He is selling the same old central buying fallacy that all big companies have dropped long ago.

  2. My sister wrote an article some years back about how some flash consultancy company which charges millions had decided the NHS needed fewer gloves, and so cut down the range. Only nobody bothered asking the end users, and they found the gloves that had been scrapped were actually needed.

    There are no doubt a million ways to do things better and save money in the NHS. Wether the dingbats in charge have the competence not to fuck things up even more at great cost is something else entirely.

  3. And there was me thinking the NHS, like many big arms of the public sector, was all geared up for ‘sharing best practice’ between the bureaucrats at conventions and junkets.

    Perhaps it is the nature of the ‘best practice’ that is being shared that is the problem.

    Didn’t we see something similar with central government stationery? Vastly different prices for a ream of plain paper or something.

  4. My qualifications: 4 years before the mast in the NHS; 25 years on the supply side to healthcare.

    The NHS keeps going in circles. Years ago each hospital bought its own stuff, orders generated at ward/department level.

    Then ‘to control costs’, wards/departments no longer able to order, instead regional stores would bulk buy in stuff and the supply chain would be regional to area to district supplies… so a nice three tier system so far removed from the actual users that well… need I say.

    That got canned and replaced by 8 super regional purchasing centres – CEOs, assistants, staff, plush digs, large warehouses, glossy ‘corporate’ brochures with own budgets who would ‘sell’ logistics to hospitals. They also made their money by getting discounts from suppliers enough to give them a margin and show a discount to the hospitals… of course suppliers jumped at that opportunity. The only winners were the executives of the centres.

    Then a move back to localised purchasing.

    The problem with NHS purchasing is that whilst some of it is just tongue depressors and gloves, much of the purchasing criteria are in clinical preferences not just price, and these change as techniques change and new treatments come along.

    So centralised purchasing is back in fashion until it fails again, again, again just like…

    GP fundholding which was introduced in 1994 then abolished in 1998 then reintroduced in 2014.

    The NHS will continue lurching around like a wounded elephant until somebody has the guts and backbone to put it out of its misery and denationalise health care and let it operate in a competitive, free market where all the disciplines associated with that and private investments control costs and quality.

  5. “Three thoughts follow”. Well, strictly, three belches masquerading as thoughts. Who wrote this crap, Tim?

    “let it operate in a competitive, free market”: but beware; there are Americans so dim that they imagine that their omnishambles is a competitive, free market. And it isn’t; not even close.

    Can’t we just copy some intelligent nation? Switzerland? Singapore? ………

  6. I worked for a few years at Marks & Spencer. What I learned was the secret of their success lay not in their supposedly wonderful customer service but because they deliberately got a supplier dependent on them and then renegotiated margins.

    When 90% of your product output is going to the same customer, it is the customer that starts deciding what price they will pay, otherwise they’ll go somewhere else and you will go bust. The NHS has a government monopoly mandate, they need to use it in the free market.

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