Why hospitals (or GP surgeries) are not like coffee shops

I read a piece last week (I won’t cite it, but others will have seen it), from a doctor working for a private organisation, explaining to skeptics like me why competition was good for the NHS. To do so, he suggested, we think of GPs or hospitals as being like a coffee shop. In the world of coffee shops I don’t have to accept just one kind of coffee from a single provider of it. If I want a coffee, I get to choose where I have my coffee and what kind of coffee I want. If I don’t like a coffee shop, I go to another one. This forces other coffee shops to raise their standards, so everyone gets good coffee.

I think there are a lot of problems with this argument – it demonstrates a lack of understanding as to how markets work. But in many respects, it is the ‘competition is good for public services’ viewpoint that we’ve heard from both Coalition and Labour governments.

Problem number one is that, if I want to set up as a coffee shop, perhaps because I think that existing ones aren’t very good, I have a few costs I need to meet, and perhaps a couple of inspections, but nothing too off-putting. Setting up in healthcare is rather different. I’m either going to have to qualify as a doctor myself, or find people who will work for me that have already done this. At best, if I’m opening a surgery, I might be able to open a nurse-led practice and do away with doctors, but patients tend to still be rather suspicious of this kind of organisation, so for a new entrant, it might be risky. Even assuming I’ve got my professionals I’m going to have to get patients to come to my surgery, and that is going to take time as everyone in the area presently is probably already on someone else’s list. One of Labour’s least well-thought initiatives was to have open-access GP surgeries for commuters which seemed to be perpetually empty because no-one knew they were there, and everyone made appointments with their own GPs instead (or went to accident and emergency).

Things get much worse when it comes to opening your own treatment clinical or hospital as you will have to find much bigger premises than GPs and to typically invest in capital equipment of some kind or another. Even if you can achieve all of that, you’ve then go to get GPs to refer to you – and remember, no referrals, no money in the NHS now (unless you can get the government to back you and force referrals to you in the local health economy).

So the whole entry thing is going to be complicated. It’s going to require deep pockets and patience. But even more difficult, arguably, is exit.

I wrote last week on the problems of allowing public hospitals to fail (http://bit.ly/ri9w1G). But what about private providers (as that’s what I’m presuming we set up). Is it a problem if they go? After all, if my local coffee shop goes bust because it isn’t doing a good job, or because it runs out of money, that’s not the end of the world is it? In fact, it will lead to a more efficient allocation of capital in the long run as the money invested in the coffee shop finds a new, and hopefully, more appropriate home.

The problem is that the market for healthcare isn’t like the one for coffee. If a healthcare provider goes bust then that imposes an immediate cost on everyone who is engaged with it, even if they aren’t been seen or don’t have an appointment right now. If my private GP surgery goes bust, I’ve got to find another GP surgery, and that is typically going to involve me having not only to re-register but also go through various induction checks (weight, blood pressure etc). That’s inconvenient, but inconvenient for every member of the local area who is enrolled – which is also extremely inefficient. For a hospital things are worse – it will mean that patients who are the beds will have to be found others in different hospitals (probably involving the intervention of a local health strategic body of some kind of another), that those with appointments will have to be transferred to, and if you have that kind of volume moving to other places, that will mean having to wait. It will also mean having to re-establish relationships with doctors, and perhaps even having to be rediagnosed. In short, a mess.

So, amongst many other reasons, GP and hospital provision is not like a coffee shop. It’s hard to enter the market, and chaos is likely to ensue in the event of a provider of any scale exiting. That suggests that we need to find other mechanisms for driving improvements in our healthcare systems other than competition, because competition can never be allowed to do its magic in creating a dynamic marketplace.

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8 Responses to “Why hospitals (or GP surgeries) are not like coffee shops”

  1. Jo Says:

    You write such common sense and I completely agree with you. Never mind the inconvenience of having to find a new provider, what about the relationship we have with our HCPs? If my local barrista bar goes bust, I’m sad but I don’t have the same relationship with him as I do with, say my breast cancer nurse at the local hospital… or the practice nurse, community nurses and my GP practice who know and look after my diabetes/asthma/heart failure so well….
    I can’t believe the coalition can’t see it. I hope your opinions are heard where it matters.

  2. Mark Balaam Says:

    Cogent, intelligent and therefore unlikely to become Government. policy.
    I have penned a very short blog which fumbles along similar lines http://confusedmanager.blogspot.com

  3. George Farrelly (@onegpprotest) Says:

    Thanks for this, Ian. I am a GP and it is clear to me that general practice is a very different technology than a coffee shop or a mobile telephone. They have tried to introduce competition to primary care with lamentable results in Tower Hamlets, where I work: see this Guardian story http://bit.ly/mOMyeI
    I am afraid they really aren’t interested is understanding how the technology works and they are plowing ahead with their agendas. My own particular concern is GP practice boundaries and I am hoping that GPs will put their foot down and resist. See my email exchange with Andrew Lansley (before the election) http://bit.ly/f4iTA1

    Illigitimi non carborundum

    http://www.onegpprotest.org

  4. anna hunter Says:

    Also, customers buying coffee know what a good cup of coffe should taste like, however individual tastes will be different, what’s good coffee for some is not so for others. BUT when it comes to health and being ill, as a patient I have to trust the docs knowledge and experience in the best way to treat me, or who the best surgeon for a particular op. In the same way I drive a car and know a tad bit about cars but am not a mechanic and wouldn’t know how to fix it.
    As for the political dogma of markets and choice? Choice in politician speak means Hobson’s ie this or that, or Henry Ford’s choice as long as it’s black, ipso facto a big fat con. AND patient is more honest than this illusion of customer. As for markets anyone know what is happening to Southern Cross and market failure which is suppose to right the market but the state has had to step in, hence privatise the profits and socialise the cost of failure ie in my view theft from the British taxpayer on a grand scale.
    my thoughts Anna

  5. Global market Social Network, Worldwide professional and Business Community site Says:

    Global market Social Network, Worldwide professional and Business Community site…

    […]Why hospitals (or GP surgeries) are not like coffee shops « Ian Greener's Academic Blog[…]…

  6. checkerspoppy Says:

    It seems strange, but the countrys HCPs representative bodies seem unable to think beyond the current healthcare model.Our social healthcare model is unique, that doesn’t mean it unquestionable.
    The prevailing political dogma is of the reactionary left, a sort of reactionary socialism. Perhaps the time is now for progressive conservatism. We want our NHS, we want to reduce the fear of Ill health,and it not be magnified with the worry of cost.However the post war dream of cradle to grave health care, didn’t include jobs for life protectionism and gold plated pensions.
    What the market can bring is productivity, more healthcare for your tax pound. The coffee shop that survives is the one that offers the best quality, for the best price.
    centralised, politburo controlled healthcare models don’t work, as they are expensive and unresponsive to local needs. We shouldn’t be afraid of the market, healthcare is not a charity in the uk. We should to adopt principles of governance and innovation and start to produce a NHS that is sustainable.

  7. Steve Says:

    Trying to introduce market forces into healthcare suggests those proponents have spent too long in at least one type of coffee shop – those in Amsterdam

  8. Lansley preaches to the nation | Abetternhs's Blog Says:

    […] … it was no surprise that Lansley felt obliged to come to his own defence. He chose to do so from the subscription only pages of the Health Service Journal (though you can access it here) where he laid his defense down like an evangelical preacher speaking to the faithful. The self-satirising, “There is little we can learn from examining the past”, “There is nothing to fear from competition” and ” in any other sector, it is the thousands of individual decisions to adopt a new technology – from, say, cassettes to compact discs to mp3 players – which combine to sweep away less effective services” Really? … Healthcare is not like any other commodity. […]

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