Thursday, 26 May 2011

Dear Nick, competition doesn't mean "flogging off to the highest bidder"


When some people speak of ‘privatisation’ they refer to the process of commissioning private businesses to deliver public services through some form of tendering process. And it leads to the Cardhousian contortions of Nick Clegg:

In a speech at a London hospital, the Lib Dem leader will say he supports the use of private providers in the health care service and that they have improved patient choice.

However, he will add: "It's not the same as turning this treasured public service into a competition-driven, dog-eat-dog market where the NHS is flogged off to the highest bidder."

So there you have it – after all the shouting about how the Liberal Democrats will be different, about how they will die in the ditch to protect the beloved NHS from evil Tories what do we get? Just what we have already – a system using private providers but where those providers are accountable only to NHS managers not to those using the service or to elected officials (and don’t give me all that nonsense about accountability to the Secretary of State for Health).

Now I’ve trawled through the collected comments (well perhaps not all of them) of health ministers, have looked at the proposed changes and nowhere in all this can I see any proposal – not even an inkling of a proposal – that the NHS will be “flogged off to the highest bidder”. There is a discussion as to how we improve health outcomes and a debate about the merits (or indeed demerits) of competition in helping deliver these improved health outcomes but that isn’t about selling chunks of the service off, it isn’t about ‘cherry-picking’ and it isn’t really much of a change from the programme of change instituted under the last Labour government.

The idea of ‘any willing provider’ is the central element of these pro-competition policies – this isn’t privatisation any more than using external suppliers is privatisation. What AWP is about is preventing NHS commissioners from closing off the market by saying they have to consider any organisation that is able to comply with the requirements. The result should be a more diverse supply to the system and end of the current situation of bureaucratic inertia.

As competition dawns there will no doubt be many providers, both larger and smaller, seeking to offer so-called integrated approaches in particular communities, which are, in fact, a byword for long-term monopoly. Once the commissioning bodies are dependent on the new arrangements the provider can turn the handle, raise prices and lower quality as much as it wants.

If this happens, it will be an expensive route back to what we have today in most public services: costly, unmoveable, low-quality, low-innovation services. The solution, of course, is for the principle of diversity of supply – allowing no one to become dominant – to be an absolute non-negotiable in local public service markets.

The comment above – from a Liberal Democrat with expertise in health care markets – signals the problem we face. The current situation isn’t good enough and the core solution of pumping ever larger amounts of cash into the service isn’t working well enough (which isn’t to say the cash isn’t welcome, merely to observe that health outcomes haven’t risen in line with that spending increase). However, within that diversity of supply we have to recognise that price must be a consideration in commissioning decisions – this isn’t about simply taking the cheapest but does recognise that price is a driver of efficiency and improved outcomes.

My big worry is that populist considerations fuelled by healthcare producer lobbies and trade unions (and sucked up by an increasingly clueless Labour party) will lead to a big climb down and we will lose the momentum towards using competition to provide accountability for NHS decision-makers and real advances in health outcomes. And it seems more of the evidence points to competition as the most important factor in driving improvement:

This is particularly ironic given the strong evidence now emerging that hospital competition not only works abroad, but also in the UK. Dr Zack Cooper of the London School of Economics and Professor Carol Propper of Imperial College have each produced studies showing that hospitals in more competitive areas performed better on quality and efficiency than those in less competitive ones. The LSE’s Centre for Economic Performance has shown that competition increases managerial quality in hospitals. Dr Nick Black and colleagues at the London School of Hygiene and Tropical Medicine have shown that the much-maligned independent sector treatment centres, introduced by the Blair government to shake up provision of simple elective procedures such as cataract removals and hernia operations, have produced work of equal or better quality than their NHS equivalents.

None of this is about changing the NHS model of free care at the point of need – instead it recognises that there is more than one way to deliver this promise. Breaking away from the hideous monopoly of the centralised NHS – a process begun haltingly under Blair – is essential if we’re to get the full benefit of that “investment” put in over recent years.


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