Lansley’s market dogma at odds with OECD health study

A major new report by the OECD has criticised those who advocate a purely market-based approach to healthcare as “zealots”, and severely attacks the US system.

A key OECD report on “Value for Money in Health Care” has criticised as “zealots” those like Tory MEP Daniel Hannan who “adhere absolutely to the belief that competition offers an unalloyed solution to society’s more intractable problems” – especially in the field of health care.

Such criticisms of a market-based approach are bound to come as a blow to the Conservatives’ Shadow Health Secretary Andrew Lansley, who in a speech to the party conference in October said:

“Labour have turned their back on patient choice and competition. I will not.”

Professor Peter Smith, of Imperial College, in a chapter on “Market Mechanisms and the Use of Health Care Resources” (pages 53-77), explains why the assumptions of a competitive market do not apply in a series of points. These include (pp. 54-55):

• Consumers (patients) are relatively uninformed about the characteristics of the health care on offer;

• There are other major information gaps throughout the health system, especially concerning the clinical outcomes achieved;

In many specialties and geographic locations there exists little realistic choice of provider;

• Exit and entry to health care markets is severely circumscribed by practical and regulatory constraints;

• Many aspects of health care, such as research and development, and education and training, have the characteristics of a public good, which traditional markets cannot deliver on their own;

• Society frequently has objectives relating to equity and solidarity that may conflict with the efficiency criteria underlying a pure market approach.

In November, in a speech to the NHS Employers Conference in Birmingham, Mr Lansley attacked the Health Secretary over competition – specifically Andy Burnham’s pledge to make the NHS “the preferred provider of services”, and the Government’s drive to reduce waiting times – saying:

“I know of no evidence that supports 18 weeks as a target for reducing waiting times. What drives reduced waiting times is capacity and choice.”

Professor Smith also cites (p. 58) one of the biggest problems of market-based systems, namely that those at greatest risk, and in greatest need, are likely to be priced out of insurance, with insurers given incentives to “cream skim”, to seek out insurees “whom they judge to have lower expected expenditure” – the starkest example of this being in the States:

“Concerns about adverse selection has led to a competitive race to the bottom in US health care, in services for chronic conditions such as mental illness, in order to avoid enrolment of high-risk patients.”

He concludes by saying (p. 72):

“True market competition introduces a set of raw incentives that carry serious potential for adverse outcomes for many aspects of health care.”

2 Responses to “Lansley’s market dogma at odds with OECD health study”

  1. Left Foot Forward

    Lansley’s market dogma at odds with OECD health study //bit.ly/77AIaI

  2. Richard Blogger

    “I know of no evidence that supports 18 weeks as a target for reducing waiting times. What drives reduced waiting times is capacity and choice.”

    The first sentence is a very odd thing to say.

    Perhaps I might help Mr Lansley here. A waiting list is when you get told that you have to wait for treatment. A target to cut waiting lists means that effort is made to make sure that the length of the waiting list is at the target or less. If targets are met then it means that waiting times are cut. I think that sounds very clear cut. What doesn’t Lansley understand?

    The actual figures are available on the //www.18weeks.nhs.uk website. For September 2009 they show:

    Nationally, 93.3% of September’s admitted pathways were completed in 18 weeks or less, sustaining the achievement of the target. For non-admitted pathways, 97.6% were completed in 18 weeks or less, again sustaining achievement.

    How much more evidence does dimwit Lansley need?

    His second sentence,

    What drives reduced waiting times is capacity and choice.”

    has some truth. Capacity is important, but also important is efficiency (ie using facilities effectively). “Choice” is a difficult word because, as mentioned above the line, Prof Smith says

    (patients) are relatively uninformed about the characteristics of the health care on offer

    In part this is a good thing, GPs are trained and they know the issues involved, so they should make informed recommendations.

    Frankly as a patient I have no idea what the qualifications of Consultant A are compared to Consultant B. My GP will (or should). I do know if Consultant A is rude to me, or if the hospital he works in is run down and dirty. Choice is a very complex concept, and when your well being (maybe even your life) depends on your choice I am not sure most people want to have the responsibility. The Tories want people to have more choice because it transfers responsibility to the patient. Patients should not suffer the consequences of making the wrong choice about something they are not equipped to make a decision about. So the “choice” word should be used very carefully.

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