It is often repeated that more competition should be introduced into the NHS to keep costs down - but it may in fact increase them.
It is often repeated that more competition should be introduced into the NHS to keep costs down. No doubt the prime minister will repeat the talking point in his much-trailed speech today. As leader of the opposition in 2009, claiming his plans for the NHS were in the spirit of Labour ministers who have since criticised the current policy, he said:
“The argument for more competition in the NHS seemed to have been won a long time ago. Blairites like Alan Milburn were evangelists for market mechanisms to drive up standards and drive down costs.”
However, there is evidence to suggest that choice and competition in healthcare will, in fact, increase the UK’s spending on health. Take this chart from Kaiser Permanente, who provide healthcare in the United States, on health spends in developed countries:
In fact, the United Kingdom, with its comparitively statist system, keeps costs down. Why might this be? It may be that in systems based on competition and choice, the lack of expertise on behalf of consumers means that providers can overcharge or charge for treatments which, in all honesty, probably do not have that much chance of working.
That the government are proposing a two-step choice – consumers choose thier GPs, who in turn help choose the treatment – may help with this; but then again, the consumer will always be at some information disadvantage.
How an information disadvantage can work in practice can be seen in the energy market, where the regulator OfGem has criticised providers for offering bamboozling products that means time-pressed consumers can’t make an informed choice, therby pushing up prices.
As it happens, it is the market in energy that the chief executive of Monitor, the body who will be responsible for competition in the NHS under the government’s plans, sees the NHS reforms as emulating.
43 Responses to “How competition in the NHS may push up healthcare costs”
Richard Blogger
@1 Competition was not introduced in 2004. It was re-introduced. The 1997 election was carried on a pledge to stop the internal market, but as you point out, it was re-introduced after a few years.
Lots of us did complain, then, and before, and we are complaining now. We got a referendum on a pointless and ineffectual change in the constitution but we are denied a referendum on vast changes to the NHS. Our political overlords know how far to trust us.
To the OP. I am not convinced from those figures. The US is a *totally* different system to ours. What we need is information about UK providers. The government keeps saying that the NHS has declining productivity and quote ONS figures that show a decline of a mere 4% over a decade. (That is neither here nor there.) There are no public productivity figures for the private sector. It should be a requirement that for any private company given an NHS contract they must provide information comparable to the NHS: productivity, HAI data and be fully open to FOI.
Ed
What about Germany? They now have a majority private provider system. Their costs have reduced at the same time paitent satisfaction has gone up.
Prateek Buch
This is one of the many salient reasons why Liberal Democrats are pressing hard for substantial changes to be made to Lansley’s misguided reforms, without which they will not pass through Parliament.
Ed's Talking Balls
Prateek,
Lib Dems cannot disentangle themselves from this mess that easily. Paul Burstow was and is heavily involved, while Nick Clegg himself signed it off. It’s not simply that the Tories put forward a terrible idea and the Lib Dems ride in on white horses to save the day!
Like most of the population, I imagine, I don’t understand the full implications of the Bill. Lansley’s communication has been poor and the media has been interested solely in lambasting a private sector bogeyman rather than elucidating the key aspects. It can’t simply be ‘public good, private bad’ (or vice versa, for that matter). I don’t care who’s providing the service so long as it is high quality and the government (i.e. the taxpayer) can afford it.
I just hope that the government gets this one right. It’s too important to mess up.
Anon E Mouse
Richard Blogger – OK fair enough…