What would the NHS have to be like for competition to work?

Let’s turn around the question of competition in the NHS to ask what it would have to be like for it to work. This is worth thinking about because it shows exactly how far away we are from this (in both Conservative and Labour mind perhaps) ‘ideal type’.

First, we’d need to have a system for comparing all likely providers of services for us in a handy but systematic manner when we are deciding which GP surgery to go to (competition applies there too), or which secondary care service we are to be referred to. This system would have to be flexible enough to be able to deal with different people’s needs, but rigorous enough to produce a comparison based on the best possible clinical data. It would also need to take account of patient feedback that has been left by others with similar conditions who have already been treated, travel time, accessibility and be able to factor in time until appointment and patient availability. After considering all those factors, it would produce a list which doctors, nurses and patients could consider when making their referral choices. If we don’t have this, we aren’t performing rigorous comparisons between providers and we’ll end up making sub-optimal choices that allow poor providers to survive.

Second, we’d need a complete shake-up on the provider side. We’d need big providers (I’m looking at you, vulgar public hospitals) to be broken up into units that could compete individually in the local health economy. No more sly cross-subsidisation. We’d need data from all the providers to be gathered and systematically compared (so informed choices can be made). We’d need qualified clinicians to be able to get in and out of the market quickly so a system whereby expensive equipment and facilities could be made available to new services and bought back from services which don’t work out. Where providers are successful they’d need access to capital and space to be able to expand quickly, and where they aren’t they’d need an ability to exit without catastrophic financial consequences (or they wouldn’t enter in the first place).

We’d need a market regulator to offer incentives for providers to enter in under-served areas to make sure there is lots of competition, and to make-up for provision should any provider leave the marketplace. We’d need enough competition to make sure that each marketplace has just a little slack (so there is genuine choice) but not too much. Evidence of collusion from providers would have to acted upon quickly with appropriate censure.

So how does the current and proposed market or healthcare compare to this ideal type?

Well we have no idea how choices will be made. It isn’t that there isn’t information, it’s that it doesn’t exist in any kind of form for me to make choices. Patient voice websites don’t gather their information systematically, NHS choices is barely-used in choice decisions, and above all, we lack any kind of systematic mechanism for structuring a choice decision. Way back in the day Herbert Simon suggested there are four phases to making decisions; intelligence (gathering information); design (structuring it into a decision we can make); choice (coming to a decision); and implementation (actually making the choice, and making it happen). Patient choice and competition policies are focused on choice only –  they forget the first two critical phases. It’s also not clear they have really thought about the fourth. This hasn’t been thought through, and will result in poor choices by either GPs (using existing referral patterns) or patients (using proxies such as availability of car parking).

On the supply-side we have providers who are comprehensive competing with those that offer a few services only. The comprehensive ones tend to be public, and they are too important to local health economies to be allowed to fail, both in terms of their role in providing a full range of services, but also in terms of local employment and support (think of what happens when we try and close even poor NHS hospitals). The information we gather from healthcare providers is often extremely poor and out of date, and almost entirely unrepresentative of the service we as individuals might receive –  I don’t care about my hospital’s use of resources, I want to know if it is going to deal with my particular problem on the day that it has to see me. We have a market with huge barriers to both entry and exit, and little or no idea on how either can be achieved. We have a regulator with little or no ability to get involved and deal with systemic problems like under-provision or to censure collusion.

In short, it’s a shambles. This isn’t a marketplace, it’s a distorted opportunity for private providers to make profits and undermine comprehensive public provision at the same time –  the very antithesis of a competitive environment. I fear for the future of health services in the NHS.


9 Responses to “What would the NHS have to be like for competition to work?”

  1. barry mulholland Says:

    Fabulous article. As someone working in healthcare everyday you would not believe the amount if times senior staff and clinicians say “the data is wrong”. In some cases, it really is, but more often it is more accurate than they wish to believe. The overwhelming scepticism around data in the nhs is a massive barrier to making effective comparisons between services and the national IT programme has actually made the situation worse. Until the nhs makes accurate data a priority and incentivises trusts to provide it this whole issue of choice will remain a complete red herring.

  2. Am Ang Zhang Says:

    Quoted you in my latest post in

    The Cockroach Catcher Blog

  3. Richard Blogger Says:

    Excellent and very interesting.

    “On the supply-side we have providers who are comprehensive competing with those that offer a few services only. The comprehensive ones tend to be public, and they are too important to local health economies to be allowed to fail, both in terms of their role in providing a full range of services, but also in terms of local employment and support”

    It is interesting to note that the white paper (4.28) said:

    “Ex ante powers would enable Monitor, for instance, to … require monopoly providers to grant access to their facilities to third parties …”

    This appears to be to encourage the sort of “chambers of consultants” idea that is often mooted by Conservatives. This would be one way for there to be a wide range of providers without large capital outlays.

    However, the government has rejected this. I think they realised that they could not impose such a scheme on the 2/3 of hospitals that are Foundation Trusts, and so thought it was not worth applying it to the remainder wanting to become FTs.

    Similarly, the Right to Provide policy part of AQP does not apply to FTs and trusts hoping to become FTs will be reticent about allowing surplus generating services to be lost to R2P providers (they are allowed to object). This means that the AQP “dream” of a wide market of small providers is unlikely to occur, and hence the only AQP’s will be the large providers backed by capital.

  4. Barry Mulholland (@mulhollandbarry) Says:

    Fantastic article – quoted you in my latest blog post http://ukhealthcaredebate.blogspot.com/

  5. Competition in healthcare: the risks. | Abetternhs's Blog Says:

    […] What would the NHS have to look like for competition to work? Ian Greener […]

  6. Patricia Farrington Says:

    Really well explained…echoes my own criticisms of the “shambles” we are faced with. The changes suit greedy Tory politicians who are giving private providers – probably folk they went to public school with – the opportunity to make a fortune out of the sickness and disease of those less fortunate than themselves both physically and financially. It’s obscene, immoral and should be unacceptable in our society which pretends to care for the less able and the sick. The NHS has it’s faults but it had been working better in recent times and can claim some amazing successes, which are not always recognised.

  7. Flashback and data dump: End of August, end of summer, mail-out of of mental health, health and social care news,views and opinions « Launchpad: By and for mental health service users Says:

    […] against the NHS reforms as (still) framed are here. Competition in healthcare: the risks. And just what would the NHS have to look like for competition to work? [Hint: not what's being proposed]. Marketisation and choice has a […]

  8. Clive Peedell Says:

    Lansley has stated that competition is his number one priority and the way to achieve it is by maximising the numbers of purchasers and providers in the system. This is a crazy idea in a single payer system because of the prohibitive costs of market entry and exit. Unless of course the idea is to move towards a mixed funding system of healthcare……..

  9. What is the point of patient choice? | Abetternhs's Blog Says:

    […] There are several practical problems with this theory, best summarised in a blog by Ian Greener, What would the NHS have to look like for competition to work? […]

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