Lansley’s retreat on price competition for healthcare

Campaigners against the coalition’s NHS reforms secured a victory this week, following a u-turn by Andrew Lansley on price competition for healthcare, reports Trevor Cheeseman.

Campaigners against the coalition’s NHS reforms secured a victory this week, following a u-turn by Andrew Lansley on price competition for healthcare. The Financial Times reported that Lansley’s NHS bill is to now be amended to remove the right of the new health regulator to set “maximum” prices for NHS care.

This follows Labour health shadow John Healey’s letter last week, which sought clarity on this issue following conflicting statements between Lansley and top NHS officials.

Price competition is significant in that it marks a big change from Labour’s approach – whereby a fixed tariff ensures a focus on quality rather than cost reduction. Many campaigners, including doctors’ leaders, have voiced concern about its implications for reducing quality of NHS care.

A leading healthcare researcher, Prof Carol Proper, has been even more direct, writing:

“…the consequence [of previous Tory price competition] was that patients in hospitals located in competitive markets were more likely to die after an admission following a heart attack.

“These kind of unforeseen consequences are likely to happen again – especially now when budgets are tight.”

Yet the issue of price competition remains sensitive for the government. David Cameron recently said:

“Instead of having to justify why it makes sense to introduce competition in some public services – as we are now doing with schools and in the NHS – the state will have to justify why it should ever operate a monopoly.”

Lansely himself sees the Thatcherite-style deregulation of utilities and telecoms as the inspiration for his NHS reforms; indeed Lansley himself worked as a civil servant under Norman Tebbit to open up telecoms to competition.

He remains sensitive on the subject, as witnessed on last week’s Any Questions when he was caught – eight times – in a “Paxman/Howard”-style question avoidance, when quizzed by Jonathan Dimbleby on whether GPs will be able to choose between providers of equal quality on the basis of price.

Yet the threat of a “race-to-the-bottom” on price remains a threat, given the Health and Social Care Bill will create an economic regulator in the NHS, known as Monitor, with a primary remit to promote more competition.

Lansley recently appointed as Monitor’s chair former McKinsey mangement consultant David Bennett, who, when interviewed by the The Times (£) about the NHS reforms, was clear that:

“It is too easy to say, ‘How can you compare buying electricity with buying healthcare services?’ Of course they are different. I would say… there are important similarities and that’s what convinces me that choice and competition will work in the NHS as it did in those other sectors…

“We, in the UK, have done this in other sectors before. We did it in gas, we did it in power, we did it in telecoms, we’ve done it in rail, we’ve done it in water, so there’s actually 20 years of experience in taking monopolistic, monolithic markets and providers and exposing them to economic regulation.”

Yet as Shirley Williams said, in criticising NHS reforms in a column in The Times (£) this week:

“British Gas raised energy prices by 7 per cent last year, while making £700 million in profits. Since rail privatisation, the UK had paid the highest fares in Europe. Should this inspire confidence?”

The next development will be the government’s plans for “Any Willing Provider” – in other words the private and voluntary sector alongside the NHS – to be opened up to NHS services provided outside hospital, such as district nursing and rehabilitation.

National tariffs do not exist here, allowing private firms to “cream-skim” the more profitable NHS services, leaving the financial burden of more complex work for NHS services to pick up.

24 Responses to “Lansley’s retreat on price competition for healthcare”

  1. Eoin Clarke

    RT @leftfootfwd: Lansley’s retreat on price completion for healthcare deceit http://bit.ly/fZQnJu

  2. Kelvin John Edge

    RT @leftfootfwd: Lansley’s retreat on price completion for healthcare deceit: http://bit.ly/gxkPpM

  3. Kelvin John Edge

    RT @leftfootfwd: Lansley’s retreat on price competition for healthcare: http://bit.ly/gxkPpM

  4. Jos Bell

    RT @leftfootfwd: Lansley’s retreat on price competition for healthcare: http://bit.ly/gxkPpM

  5. Anthony

    The coalition recently appointed the former Labour advisor Julian Le Grand as an advisor (on other matters), but who has been critical of price competition. “Any willing provider” was a Labour manifesto pledge, if anything he is being more Blairite than he is Thatcherite. In terms of getting value out of the money we spend on the NHS, I can’t see what the objection is. The NHS is about free care, not about ensuring everything is delivered by a state employee. If that was the case, we’d be nationalising the GPs.

  6. Guppi Bola

    Access to free care (at the point of delivery) is just one of the guiding principles of the NHS -you forget the other two:

    * That it meet the needs of everyone
    * That it be based on clinical need, not ability to pay

    The objection is you can’t assure quality care when there’s a profit motive behind it. Privsting services is neither an economically nor clinically effective means of developing a healthcare system.

    Agreed “Any willing provider” was a manifesto pledge by LAbour, but that in itself was a response to the Thatcher/Major reforms during the 80s/early 90s. It would be useful to stop passing the argument back to what Labour did and consider the issue at hand. This is large scale privatisation like we have never seen before, and it is a move taken by the current conservative government.

  7. Plymouth City UNISON

    RT @TheGreenBenches: RT @leftfootfwd: Lansley’s retreat on price completion for healthcare deceit http://bit.ly/fZQnJu

  8. Anthony

    Lansley has removed price competition. There is evidence for quality competition driving up standards.

    There is also no reason why the other two guiding principles will be broken by these reforms. For example, there are no plans to bring in an “ability to pay” as part of these reforms.

    I hold no brief for the Tories, and personally find the tribalism and shroud-waving over the NHS reforms a bit disappointing.

  9. economy7.co.uk

    News: Lansley's retreat on price competition for healthcare – Left Foot Forward: Lansley's retreat on price comp… http://bit.ly/gzauqi

  10. Marie Wilson

    Lansley's retreat on price competition for healthcare: Campaigners against the coalition's NHS reforms secured a… http://bit.ly/enVZ1x

  11. John Cartmell

    RT @leftfootfwd: Lansley’s retreat on price competition for healthcare: http://bit.ly/gxkPpM

  12. Richard

    Just because the white paper makes no explicit mention of reforms to “ability to pay”, it does not necessarily follow that it will not ensue. It is called reading between the lines.

  13. Trevor Cheeseman

    Anthony – there are studies that purport to show that “quality competition” drives up standards. In reality they are inconclusive: they are based on a limited timescales and cannot account for the influence of other factors on care quality. For example, the last government had a sets of national standards, a performance management system, funded national clinical audits and national teams to support improvement. They also used competition for a relatively small amount of elective surgery.

    And lets not forget a massive increase in funding. Today’s NHS by contrast is looking at a real terms decrease.

    The main strategic challenge for the NHS is no longer in improving elective surgical services (waiting lists are substantially reduced), but how to improve chronic conditions (e.g. diabetes and respiratory care) and emergency care, especially for older people. Many NHS staff contend these require collaboration and integration, not fragmentation and “cherry-picking” style competition. Hence the concern.

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    […] public health does not have the glamour and interest of the wider NHS reorganisation debate that is dominating the headlines. Who ever saw an exciting television soap opera about public […]

  15. Daniel Pitt

    Lansley retreats on healthcare price competition http://bit.ly/gxkPpM #ConDemNation #privatisation

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  17. ad

    So there will be no more money for the NHS, but thanks to Labours efforts, we can be sure that it will not try save money on anything.

    That is a great combination.

  18. Guppi Bola

    Interesting comments on @leftfootfwd #NHS blog http://tinyurl.com/6crnbra if you care to get involved @BigSocietyNHS @savetheNHS #nhsreforms

  19. bigsocietynhs

    RT @guppikb: Interesting comments on @leftfootfwd #NHS blog http://tinyurl.com/6crnbra if you care to get involved @BigSocietyNHS @savet …

  20. Mr. Sensible

    The government’s NHS reform program is in an absolute state.

    And as Williams points out, look where privatization of those industries has got us?

    In the case of water, so far as I can see we’ve just replaced a state ‘monopoly’ with regional private monopolies. The only way to change water provider is move. So much for competition!

  21. nhsdirectaction

    An important step http://tinyurl.com/6crnbra @guppikb @leftfootfwd but the bill will still privatise the #NHS. Take Action 07/03 1545 Liv St

  22. Guppi Bola

    RT ¡NHSdirectaction An important step http://tinyurl.com/6crnbra ¡guppikb ¡leftfootfwd but bill will still privatise #NHS Take Action 07 …

  23. rospajak

    RT @NHSdirectaction: An important step http://tinyurl.com/6crnbra @guppikb @leftfootfwd but the bill will still privatise the #NHS. Take …

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