Archive for August, 2011

The problem(s) with anonymous patient surveys

August 16, 2011

Let’s all agree first of all, that we need more patient ‘voice’ in the NHS. It’s actually quite painful to review research on how bad the NHS has often been at dealing with complaints and attempts to get patients (and the public more generally) involved in health organisation.  We need to do better.

However, I’m going to argue that one of the main forms we use to achieve this, anonymous patient surveys, aren’t that helpful in achieving improvements.

It’s a cornerstone of research, not just in the NHS but more generally, that anonymity is hugely important in responding to surveys. I understand why this is – especially in a setting such as healthcare where there are obvious power and information imbalances between patients and clinicians. However, the assumption has serious down-sides that are also not often acknowledged.

If we survey patients to ask them to think about how good (or otherwise) their experience has been of healthcare, we want them to be as honest as possible. We don’t want them to fear repercussions later on for saying when they’ve received bad service or clinicians who seem more concerned with having an easy life than than in being challenged in what they are doing. I think that this only applies to a minority of clinicians, but they are out there.

The trick is in getting patients to respond honestly to patient surveys. Is anonymity the best way? Intuitively it is, and many research bodies insist upon it. However, I’m concerned that research in areas such as behavioural economics suggests otherwise. Research reported by Dan Ariely, for example, suggests that anonymity can lead to cheating and exaggeration. Are patients doing this? We don’t know.

What I do suspect is that, in an environment where patients are increasingly encouraged to consider themselves as customers, and law firms are advertising medical negligence systems hard, the danger of vexatious complaints increases. Most patients will treat feedback systems responsibly, but a few won’t, accusing clinicians of the most appalling things. The asymmetry is that these accusations will be investigated and clinicians face potentially career-ending claims against them, even when there are no grounds underpinning those complaints, but have little or no comeback where a complaint or accusation is found to be groundless.

This situation is amplified when we consider websites that gather patient feedback. In these circumstances both lavish praise and out-of-proportion criticism can appear with little or no moderation, and no repercussions. It only takes one patient who feels hard done-by, but perhaps has significant problems of their own, to potentially tarnish the reputation of a clinician on-line. Once posted a comment is potentially there for years, with a clinician able to do little about it in response.

Anonymity also raises a problem in that it becomes just about impossible to see if the comments left are representative, or the result of organised action on behalf of an aggrieved patient who has posted several times, as well as perhaps getting friends and family to do so. This can result in a clinician or service being vilified on-line and appearing to provide poor outcomes when it may have comparatively few problems, but a vocal group who want to campaign against it. No clinical service wants to leave any patients feeling they have been poorly serviced, but it’s inevitable that some will feel that way.

Anonymity is great in encouraging the powerless to find a voice, but it is also a means by which people can make complaints and claims that are unsupportable. I suspect we are going to see a great deal more of this problem in years to come as feedback websites multiply and are incorporated into systems for measuring the quality of care. In such situations patient feedback can be brought out or presented with little regard as to whether it is representative or without having checked whether the complaints are justified.

It is crucial that we incorporate patient voice into measures of outcome, but I’m not sure anonymous comments are the best way of achieving this. Possibly unrepresentative messages about poor practice are too important not to be specifically investigated, or to be made in an unaccountable way.


Evidence, argument and NHS reform

August 15, 2011

Something that has been a theme in the present NHS reforms is arguments about whether or not evidence supports them. I’m not going to focus here on the claims the government has made in relation to how the NHS is a clinical laggard – you can find refutations about most of the points raised in relation to that at and

What I do want to talk about here is research that claims to provide evidence that competition is already up and working in the NHS, and why this is so disputed. I’m doing this in the spirit of trying to understand difference (as well, of course, to explain why I think I’m right!). And bear in mind that this research is being used by the government to justify the NHS reforms, and so needs to be scrutinised.

There are two (at least) key papers that claim to support competition, one by Gaynor and Propper (google ‘Death by market power’ and one by Cooper et al (‘Does hospital competition save lives’). I’ve written at length about the second paper in this blog, but it is important to understand not only what this research shows or doesn’t show, but also how it was done. It is important to understand the differences between their view (that the research shows competition is showing an effect) and mine (and others, that we can’t see how this can be true) in order to assess which is more likely to be the case.

This research depends on you accepting at least two points that I find difficult to square. First, on there being an ‘on-date’ for competition of 1st January 2006, when choice-based reforms were formally introduced. If you don’t buy that competition kicked into gear then, there it is hard to sustain that argument that it is what is making the difference in health outcomes that they authors claim to have found.

I’m a bit baffled by this claim because we have the NHS Collaboration and Competition panel laying into commissioners because they aren’t referring to new providers and working with market incentives, and a Civitas report from the end of 2010 reported that ‘There  is  a  strong  case  to  be  made  that  such  policies  have  been ineffective  because  to  date  there  has  not  been  a  functioning ‘market’  in  the  NHS’ – (Refusing Treatment available at

Equally, it seems odd to me that NHS managers and clinicians were, by this account, all not trying as hard as they could before 2006, then suddenly, when the choice policy kicked in, got their games together to secure clinical improvements. And it’s not as if they were doing this to get richer, which is the standard motivation you get in economics textbooks.

It also seems to me that these papers confuse choice policies with competition. Choice policies only mean competition in an environment of scarce demand – where a patient choosing a private provider means that public providers lose out. But in the areas I know best in the NHS, there is frankly enough demand to go around for all the providers in the locality. It could be that these aren’t representative – I really don’t know. But neither, it seems, does any one else.

So how do we reconcile the research findings that competition saves lives and the evidence and argument about that we’ve seen very little in the way of competition?

This brings me to the second point I want to raise in relation to this research. What troubles me is that the research doesn’t seem interested in showing that competition is actually happening, especially given the work above that suggests it isn’t. The econometric models (which take quite a bit of getting your head around) infer that competition is causing outcome improvements from a range of variables they hold to be representative even if they can’t explain exactly how exactly how competition itself is working. It seems good enough that they are using the best statistical tests (difference in difference) which indicate the effect is down to competition. But there is a difference between statistical and substantive significance – the first is a numeric relationship, and the second is based on an explanation that the numbers attest to.

The problem with this is that the actual workings of the NHS become a ‘black box’ where competition is assumed and inferred rather than being shown. No clear mechanism is specified and shown to be working.  I think, in contrast, it’s really important to be clear about how a mechanism works. If it is the case that it is possible to save lives through competition, that would be the most important finding in the history of NHS organisation. But the reticence of researchers in engaging with this really is a problem. We are asked to take their findings on trust, without them saying how they are happening.

The trouble is no-one has yet explained how, if competition is working, patients or GPs are making the choices that send patients to the best providers, or why hospitals are competing if choices can’t be made (as hospitals would then be wasting their time by doing so). We know that GPs are most likely to refer on the basis of experience or informal knowledge rather than engaging with performance data, about which they are often suspicious. Patients, in turn, are most likely to ask their GP where they should go for secondary treatment. In the National Patient Survey only 10% of patients reported having used the NHS choices website – it would be interesting to know how many of that 10% actually found it any use in making their decision. There is a lack of up-to-date, comparative outcome data on which choices that could improve outcomes could actually be made, and even if it were, GPs would have to routinely use it, which they don’t. There’s lots of work that explores these topics, but a good starting point is

Instead we are asked to assume that improvements in coronary care, the main example in the papers, are down to the effects of competition being so pervasive that they even affect AMI when that, in itself, isn’t subject to competition or choice. Now again, if that were true, that would be a huge breakthrough, but no-one can explain to me (or anyone else) exactly how this is happening without vague appeals to market mechanisms.

The NHS is not a black box. We need to understand how changes are occurring, especially where it is not clear exactly how the present structures can be made to improve outcomes. If researchers are going to claim that the competition reforms they advocate are the answer to the NHS’s problems, they need to explain exactly how they to work – the onus is on them to make their case.

Why the NHS reforms should be opposed

August 13, 2011

This is my summary of the main reasons I’ve so far gathered for opposing the 2011 NHS reforms. Thanks to everyone for pointing me to sources on the web. I hope I’ve managed to capture most of what people have said to me.

To be clear, this blog is not about the problems with the reforms, which are legion (and a couple of the sources below deal more fully with this). This is about why we should object to these reforms now, when the move to competition and increased private sector involvement has been going on since the mid-2000s.

So here are the reasons, in no particular order:

1. The Conservatives promised no more ‘top-down’ reform in the NHS, and the NHS was not a major part of the election campaign.

This reason points to the lack of legitimacy for the reforms. Do you remember Cameron saying he could give his main priority in three letters – ‘N, H, S’? Because the reforms were not debated or discussed at the election in any major way, and were not clearly presented in manifestos, they lack legitimacy.

2. There were considerable differences between what was proposed in the White Paper, the first versions of the Bill and the present version of the Bill (such as it is).

This suggests that Conservatives really don’t know what they are doing. A charitable explanation would be that they’ve listened to feedback, but the problem is that they’ve gone from a reforms that look liked they were a marginal continuation of what Labour proposed (White Paper) to more radical market-led proposals (first Bill) to a monstrous behemoth that is more bureaucratic and unwieldy that what it is replacing (second Bill) but still looks like it is primarily about getting more private sector contracts to friends of the Conservative Party.

In summary then, the proposals are a mess, and bordering on the incoherent, with the only main aim seeming to be to achieve more private sector involvement.

3. The reforms are a reckless at a time of austerity.

There are a number of dimensions to this claim. First, there is the cost of the reforms themselves which will be somewhere between £1bn and £2bn, and, depending on who you believe, possibly more. Then there is the disruption to NHS staff, who are going to be made redundant and skills in commissioning that have been built up over ten years potentially lost. Next there is the promise from the government to cut back on quangos, but their subsequent rebirth in the compromised NHS structure, and giving the sense that we might just be reinventing the same structures as we had pre-reform after disrupting all the staff employed within them. Then there is the way that the reforms were implemented through heavy-handed messages from the centre before they had even been agreed in Parliament, so that PCTs are selling buildings and not renewing leases before their successor organisations have even been created.

This is all massively reckless and wasteful in terms of money and people’s lives, all to little apparent gain (except maybe for private healthcare providers).

4. Because of their vested interests we don’t trust the Conservatives to reform the NHS.

As noted above, and elsewhere on this blog, many of the changes the Conservatives have put in place have strong links with Labour’s plans for the NHS (and it’s about time Labour found new plans frankly). However, what is different is that we assume that the reforms are now in bad faith, designed to get more private organisations into healthcare because those are the funders and friends of those in power. Not it’s hardly as if Labour’s hands are clean on this front in terms of advisors and ministers going to work in the private sector, but it does seem that the Conservatives are careless, or even proud, of their relationships with private health providers who stand to gain considerably from their reforms. This gives us the right to be suspicious and sceptical – especially given the problems above.

5. The whereas Labour’s reforms can be seen as an attempt to increase care capacity in the NHS, the new reforms are trying to undermine public provision.

Despite some of the claims made about competition having existing in the NHS since 2006, the small private entry is perhaps best thought of as a subsidised expansion of NHS care capacity, reducing waiting lists in treatments where ISTCs have appeared. However, increasing private entry beyond a certain point will mean that public hospital costs bases will be undermined – NHS hospitals (especially new PFI ones) were built on assumptions about working at high capacity across all specialties, and if this turns out not to be the case, there is a danger of public providers not being able to cover their capital costs. The extension of private provision beyond a point where it provides extra capacity, and becomes a competitor for NHS care, will reduce NHS provision of the relatively straightforward treatments the private sector can compete with, and undermine the cost basis of NHS hospitals as a result.

Many of the private providers in the NHS marketplace were effectively subsidised by the Labour government to enter the NHS (receiving guaranteed minimum private contract sizes and full tariff payments at a time when public providers did not receive them). That they now threaten to undermine public provision is unfair.

6. We only really realise now reform is taking place how much change has already occurred.

A variation on the arguments above is that it took an election and break from Labour to reassess where the use of the private sector was taking us. Many of the Conservative’s reforms are continuations of what Labour were doing while in office – but that doesn’t make them right. There are campaigns that have spanned both Labour and Conservative governments, but the awful way the Conservatives have dealt with their reforms has led to more people becoming aware of exactly what is going on in the NHS, and that has created an opportunity to mobilise opposition against the reforms that we should make use of.

7.  The reforms have made selective and misrepresentative use of evidence and have no chance of working.

What has annoyed a lot of people is Lansley and Cameron’s (and others’) claim that the reforms are evidence-based. Ben Goldacre was pointed out the holes in such claims in his Bad Science column ( and

That’s not all. Elsewhere on this blog you’ll see me looking at research by Zack Cooper cited by the government as showing that competition in the NHS works, but which simply doesn’t. If researchers are going to make claims that they have some kind of magic bullet to NHS reform, then we have the right to be very wary, and they have an onus to prove their case far more strongly than they have done so far (

Then there are repeated claims about clinical problems within the NHS and the benefits that reform might bring. You can find these being taken apart at:

And at you’ll find a comprehensive list of refutations about claims that the government have made about the NHS reforms at one point or another.

So, in sum, claims that the reforms are evidence-based need to be treated with a great deal of caution.

So what to do? After just over a year in government the Conservatives have created an awful mess. Because of the heavy-handed way reforms have bee implemented before the Bill was signed off, we have chaos and no clear path forward. It seems to me we are reduced to trying to patch up the Conservative’s mess rather than trying to put in place a careful programme of incremental and democratically agreed reform that the NHS now needs. We should be even more angry with the government than we are.

Macs and PCs from an academic perspective

August 12, 2011

I like macs. I think they’re really good looking, and that OS X is still better than Windows 7 – it’s more stable, and generally seems to run more smoothly on a range of machines. I really, really like Macbook Airs, which run wonderfully well with Scrivener (on which I do most of my writing), and are fantastically light to carry about.

So why am I writing this on a PC?

The problem is that the two pieces of software which are in the end non-negotiable for me because of my jobs as an academic are Word and Endnote. I have to use Word for compatability reasons – the world uses .doc format, and if I’m ever going to submit my work for publication, then I need to use it too. I need Endnote because of cite-while-you-write. Endnote prepares bibliographies while you write papers, and because I’m the kind of writer who usually runs right up against word counts, I need to see how much room (usually none) I have left.

But Word and Endnote are available on the mac aren’t they? Yes they are. But unfortunately, there are both awful in their mac version. Sure, mac magazine have reviewed Office 11 as if everything’s fine, but it really isn’t. Word 11, with any length document, slows progressively down until it starts crawling. I can’t bear being able to type faster than my word processor – it drives me nuts. And I think Word 11 looks terrible – a sort of half-hearted mix between the ribbon and menu interfaces that gets both wrong. And when you add Endnote on top of Word, everything just about grinds to a halt. You have to turn off cite-while-you-write just to make it work acceptably, unless you want to wait 30 seconds every time you enter a new reference. Endnote is shockingly bad on the mac – it even makes Scrivener grind to a halt when entering references into it in their unformatted state.

Yes, I know there are other mac word processors and other bibliography software. I’ve tried them all. There are some good alternatives to Endnote, but they all have flaws I can’t bear. Some can’t deal with some entries having the full first names of authors and format them differently to entries with initials only, some don’t allow me enough flexibility in editing the bibliography style (some journals are very, very picky), and all are more finicky than cite-while-you-write.

If you want to see how bad things are between mac Word and Endnote and its PC equivalent, put a similar (or even inferior) spec PC next to a mac, and use the same document on both machines (isn’t dropbox great?). With any kind of standard academic paper, the mac version will slow down to a crawl and the pc version fly along. Now that Scrivener is just about imminent on the PC (the beta seems pretty stable to me), I’m running out of reasons to use macs. I moved over to them during the vista catastrophe (the most awful operating system I’ve ever used), and even though Mac OS is the one I’d choose if I could, my need to use Word and Endnote means I’m stuck with PCs, and Windows 7 is actually pretty useable, although in my experience at least, nowhere near as stable as OS X.

All of this is pretty depressing. I was hoping that Apple would have saved me by releasing iWork 11 sooner, with improved handling of bibliographies (it’s still not very good in the present version), but, despite claims on the web about it being finished, there’s still no sign of anything appearing soon. And there’s no guarantees things will be better – I’m aware that I’m in a minority in wanting improvements in these kinds of features.

So here’s to Windows 8! I hope they don’t bugger it up…..

What exactly is the problem with the NHS reforms?

August 11, 2011

An interesting (to me, but I hope to others) question is exactly why there has been so much opposition to the NHS reforms. When I ask this I don’t mean in terms of their content, which seems to me to be entirely unworkable. What I want to ask is why are we complaining now, when most of the things Lansley wants to are continuations of what Labour were doing in the 2000s. Let’s consider the most contentious elements of the reform package, which we might take to be competition, the pace of reform, the delegation of budgets to GP consortia, problems with accountability, and the dangers of services becoming fragmented. I’ll deal with each (briefly) in turn.

Competition isn’t new. We tried to introduce it between public providers in the 1990s, but it didn’t work out because of the lack of alternative providers of any particular service, but also because GPs didn’t refer to new providers and patients wanted to stay local. We extended competition in the 2000s by allowing private provision in, but it’s still small – less than 5% in the areas where it has made the most impact. The present bill wants to expand private provision, but complaining now seems to be odd – wasn’t the time to complain in the 2000s when private providers were subsidised into the marketplace? It might be that we are reaching some kind of tipping point now, but that isn’t the way the debate is being conducted – it’s as if non-public providers have never been in the NHS before. That simply isn’t the case.

The pace of reform is certainly pretty alarming, especially as we don’t have a final Bill yet. But when did NHS reform proceed at a leisurely pace (post 1970s anyway)? Governments want to get things done quickly – they are working on short political cycles and want reforms in place so that they aren’t still being implemented during elections. So no real surprise here.

The delegation of budgets to GPs is striking, but again, hardly new (remember GP fundholding and practice-based commissioning?). The innovative bit was to (initially) not allow any other commissioning form, but that’s entirely gone now with what looks like an increasingly big bureaucracy developing around GP consortia and the National Commissioning Board. And PCTS used to have over 80% of the NHS’s budget, so it’s not like we haven’t delegated budgets before.

Accountability problems in the new structures are everywhere. It’s not clear how anyone is going to hold any particular NHS body responsible (to me at least). It’s a mess. However, it’s always been a mess. The NHS has always been terrible at complaints (look at Judith Allsop’s work) and trying to hold local health providers to account has never been easy. This isn’t an excuse for the NHS’s lack of accountability, but I don’t think the new structures are much of a change here really.

Service fragmentation is an issue that the reforms raise because of the increased use of an increased number of providers. But again, we’ve had a marketplace spanning public, private and not-for-profit providers for some time now, so this is an expansion rather than a new thing. Equally, we can’t really say that the boundaries between health and social care have ever been particularly well dealt with, even when entirely in public hands. So yes, maybe a small change, but hardly one to warrant the level of complaint and protest that we’ve seen.

So in sum, what we are seeing is a continuation of what Labour did in the 2000s rather than anything new. Why are we getting so vexed?

Now I’m genuinely interested in thoughts on this, as I’m going to try and write about it in my academic life, so please leave comments. But here’s a few initial thoughts.

Are we cross because it is the Conservatives reforming the NHS and not Labour? If you accept my argument that most of what is involved in these reforms is not new, then is it because it is the Conservatives suggesting market-based reform that makes us upset? I think there are two parts to this.

We might object to Conservatives proposing reforms that we’ve not criticised under Labour because we believe that they are being conducted in bad faith in some way – that they are meant to lead to privatisation or to undermine the NHS in some other way. So we trust Labour more with NHS reform than the Conservatives, even if they are proposing many of the same ideas.

Objecting now might also be due to the frankly awful way the reforms have been handled, so that the initial White Paper was all rather secretive until it appeared – contrast that with the NHS Plan of 2000 which came with a raft of medical signatures on its front. Then the Bill seemed to go further than the White Paper in terms of competition meaning that it looked more radical and perhaps we all felt misled.

Now please let me make myself clear – I really don’t think reforms based around competition can work in the NHS whether they are being introduced by Labour or the Conservatives, and have written along those lines for nearly ten years now. But I do want to ask why we didn’t get angry about this in the 2000s in the way that we are now?

On the wisdom and foolishness of crowds in riots and stockmarkets

August 10, 2011

Crowds are strange. In certain circumstances they can demonstrate extraordinary behaviour. James Surowiecki wrote a book (The Wisdom of Crowds) exploring this, with the classic example being one where people are asked to guess the weight of a hog. Rather amazingly, the mean answer (when people are asked to guess independently) tends to turn out right. As it does when you ask them to guess the number of sweets in a jar. In situations where you ask people to make a judgement about something they have some basic ability in, on average, they are right. Kind of spooky, but it does seem to be the case.

Stock markets depend on traders being, on average, right. They are there to make sure that assets are valued correctly (easy to forget when things seem to be going wrong), and on average, most of the time, they seem to work okay. Traders buy and sell, and come to some average agreement on what prices ought to be. So long as there are reasonably liquid markets, with lots of buyers and sellers, and where judgements are being made independently of other traders, things tend to be okay.

Then we have riots and stock market panics. It seems to me that there is a basic difference between these situations and what most of us experience in everyday life. When people stop thinking independently of one another, and start going with what everyone else is doing, things don’t work out well. In riots local protests can gradually escalate in self-reinforcing loops where things get nasty. A shooting in London resulting in a peaceful protest can end up in a riot where people get angry and start driving one another on to things they wouldn’t do by themselves. Other people in other parts of the country see it on television, and start behaving that way too. Some of those rioting will have more justification than others – they will feel that they are excluded, hated, maginalised. Others will regard rioting as a chance to take things. In either case, people are engaging in behaviour they wouldn’t normally consider. They are doing it because everyone else is.

Stock market panics also go that way too. Stock markets work well when traders are making independent evaluations of whether to buy and sell. They work badly when everyone else is panicking and they feel obliged to join in, even if they don’t know what the source of panic actually is. Do you think traders are all coming to the same view about US or Spanish or Italian (or French) debts? Hell no. They are copying one another, waiting to see where the next crowd is running to. As David Smith blogged yesterday ‘Crazy bourses – booming one day, slumping the next – if they’re not careful they’ll give financial markets a bad name.’ @dsmitheconomics.

What this seems to point to is that we need, in riots and stock market frenzies, a way of getting people to stop copying one another and start thinking for themselves again. We all have it in ourselves to cause mischief of one kind or another if we get carried sufficiently away. Stock markets tend to rebound after falls and everyone recognises that they’ve gone too far. When they do get carried away traders are generally looking for credible reasons to stop behaving like mindless selling machines, and the turning point is probably less about specific plans for governments may announce about austerity or buying debt than an event that breaks the mind-state of everyone to get them to think again. My main worry is that on financial markets no-one gets fired for following crowds, but people do lose their jobs for trying to work against them – ask fund managers. If we rewarded the first people to start buying (or the first to start selling at the height of a boom) rather than those who are simply profiting from copying crowds (over 90% of financial traded is correlated across the industry), then we might begin to get traders to think for themselves, and for momentum that isn’t helping anyone or doing the job financial markets are meant to do – value assets – to be taken away. Another route into this is the Tobin tax – a tax on financial transactions that asks a constant question before someone buys or sells an asset that asks them – are you sure?

In riots we need to find ways of getting people to start thinking as individuals again. If we can bring it people’s attention they are being filmed or traced via their phones that might make them think again, even though I don’t like the civil liberty breaches that entails. Once we forget that our actions have consequences then we are on the way to very bad behaviour. Where we have people who have very little to lose by engaging in a riot – they have no job, little hope – then the urge to stop thinking might come more quickly. That’s not an excuse, but it might be a reason. We need to find ways of reminding those engaging in riots that they will have to face the consequences of their actions tomorrow – when they will see they’ve wrecked the place where they themselves live, destroyed people’s homes and wrecked local businesses who provided much-needed jobs. I saw a tweet yesterday that said ‘Manager of one store recognised people coming in to store to commiserate today as also appearing on CCTV as looters on Monday. Incredible’ @peterjohn6. Yes it is. But it’s a reminder that those people now know what they did was wrong, and probably wish that they’d stopped and thought about things at the time rather than following the crowd.

Crowds are great when the individuals within them function independently of one another, and their action is co-ordinated to bring out differences of opinion that keep extremes in check. When everyone starts copying one another, however, extremes can result in bad things really quickly. We need ways of putting a brake on the extremes by finding creative ways to ask ‘are you sure you want to do that?’ before things get out of hand. None of us is immune to doing deeply stupid things in a crowd in the wrong situation if we don’t stop and think again. Britain isn’t ‘broken’ or ‘sick’, but it does have people and communities where there is little sense of people thinking for themselves, and acting in unhealthy groups. We need to help people in finding their own voices, so they can learn that their actions have consequences. Part of that is punishment, but a bigger part is surely helping those that feel they have nothing to lose by joining in with a riot a feeling that they are a part of this country too.

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

August 10, 2011

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.

Why markets might work in primary education, but not in healthcare

August 7, 2011

My postings from the last couple of weeks should have made clear that I’m sceptical about markets working in healthcare. What I’m going to try here is to show that I’m not actually anti-market, just anti the use of markets where they can’t work.
For markets in public services to work, several things need to be in place. On the demand-side, there needs to be a way that whoever is choosing can make informed choices so that the best providers are rewarded by being chosen, and the worse ones aren’t. I’ve also claimed that making better choices doesn’t depend on better ‘information’ as we would normally use the term. It depends on having a frame or accurate proxy which we can use when making choices that is representative of our likely experience if we choose that provider. My examples (below) will hopefully make this clearer.
On the supply-side, there needs to be enough competition to prevent collusion and to offer genuine choice. Without competition, there is a danger that local cartels can stitch up provision, and without genuine choice (that is for choosers to believe there is actually a difference between providers that matters), then choosers won’t bother to make informed choices.
Between supply and demand there needs to be a means by which choices have consequences – that when chosen a provider is rewarded, and when not chosen (below a threshold) there are consequences. The most obvious means for doing this is for choices to carry a transfer of rewards – in private markets this involves a personal payment, but in public markets resources, usually from the state, have to follow choices instead. Where providers are not chosen, there needs to be a risk of closure. Where providers are chosen, in contrast, there needs to be some kind of additional reward. At very least, they should be safe in terms of resources.
Still with me? Let’s look at two examples.
In primary education we’ve developed a range of means for parents making informed choices. They are likely to care about where they send their child, and can look up league tables through newspaper and government websites to see how each school compares both nationally and locally in terms of the % of pupils achieving level 4 in English and Mathematics. They can get copies of OFSTED inspections. They can visit the school. They can talk to parents of kids already at the school. And they know if all else fails, they can probably move their child to another school if things don’t work out. The result of all of this is that you can get a reasonable idea of which is the best school for your child.
What this means, on the demand side, is there there is a frame for how you choose a primary school. It may well be that not all parents from all classes work according to it, and that the proxies aren’t entirely representative of how good a school is. But league table results provide a rough and ready guide as to how well the school is performing relative to others in the local area, and are just a starting point the decision process of which school you are going to send you child to.
On the supply-side, primary school are relatively small, which means that most children in any kind of urban area is going to have a choice. That choice may not be as wide as you’d like, as you aren’t going to typically travel long distances to go to primary school, but within a couple of miles of your door it is not untypical to have a few schools. It is also possible to create a system where funding can follow parental choices, and if those choices are reasonably sensible, that schools that are doing well will get more resources than those that aren’t.
This means that there are potentially more resources for schools doing well than for those that aren’t. Now this can cause problems in terms of equality, and that’s something that needs to be addressed strategically across a local health area, but in terms of getting a market to work to drive provision, I can see how one for primary education can work – there is a means of choosing for parents, a choice of schools, and a system of rewards for schools receiving choices. It’s not perfect – rural areas won’t have much if any choice, and there is a danger of poor areas being badly served by poorly-resourced schools without some additional intervention, and there will always be capacity problems – but in theory I can see how a market can work.
In healthcare we really do have none of the above.
On the demand-side, it’s hard to see how either patients or GPs can know much about the providers they are choosing unless they involve healthcare they have personally and recently experienced, and even then, they won’t have seen all the providers. There isn’t information that is representative of the particular services that patients need, and GPs will tend to prefer services they know and trust, even if this means making sub-optimal choices (from the perspective of the market). We don’t have data for individual services that can be presented in anything like league-table form, and even if we did, there is no guarantee that it would be representative of what that patient will actually receive. In schooling, a class gets pretty much the same teaching. In healthcare, treatment has to vary according to what ails you, and may be considerably different, even within the same service.
On the supply-side, public provision is large and comprehensive, and may be undercut by smaller, more nimble private providers that do not offer a wide range of services, but we can’t let the public providers fail because they are both too important (they offer the full range of services) and too big (there isn’t enough spare capacity in the non-public sector to take up the slack), to fail.
As such, we can’t really make good choices of health services, and we can’t follow the market logic of the consequences of public services not being chosen. We can’t make markets work here.
So I’m not hostile to markets. I can see, with some revisions (pupil premiums, for example) how they can work in primary education. But in healthcare – I just can’t see how they can work. Markets require careful design in either public or private sectors – and in healthcare I can’t see how to design them so they can work.

Why the financial crisis hasn’t led to significant financial reform

August 3, 2011

Three years on from the financial crisis, why haven’t we seen significant reform to the way that financial markets work (or don’t work, to be accurate)? We’ve seen the biggest financial disaster of my generation. Depending on who you believe, losses are around $3 trillion, and governments supporting banks to the tune of at least $14 trillion in 2010 (the figure, I suspect, now would be even higher).

Perhaps more importantly, we are now seeing the consequences of this level of state support for the banks. The biggest economy in the world, driven by what look like from the UK to be a bunch of barking-mad religious fundamentalists who know no history, has come pretty close to defaulting on its massive debts, a significant cause of which is the effects of the crisis on the economy. In the UK a coalition partner has been made a liar by tripling Higher Education tuition fees directly against pretty clear election promises, and supporting government policy hell-bent on incoherent reforms to the public sector, probably putting itself into the political wilderness as a result.

In March this year, the governor of the Bank of England expressed surprise there had not been more popular protest at the results of the crisis, and has made it clear that those that are bearing its burden are in no way responsible for it ( After the Wall Street crash we saw the US government separate investment banking from deposit holding institutions, as well as imposing a range of other systemic banking reforms. Given the consequences of the financial crisis have been so huge, why haven’t we seen significant reform to the banks?

A number of explanations come to mind, none of them particularly flattering to the state of debate, or to our political systems.

One view, made very clear by Colin Crouch ( is based on misunderstandings that surround financial markets. Because they are portrayed as being dynamic, profit driven and profitable, we’ve lost sight of the fact that banking is in fact dominated by a few, effectively state-backed corporations with surprisingly little competition between them. Because we use the language of the market and the state, we forget the power that massive corporations like banks can achieve – they are a third form of organisation that are able to portray themselves as dynamic, entrepreneurial and market-based, when in fact they are in receipt of massive government underwriting, and lobby on a truly terrifying scale to get the laws they need to continue to make their profits. Instead of assuming banks are in a competitive marketplace where the best firms win, we should look a little closer. Banks have become massive lobbying operations – supporting politicians, and making it very difficult for them should they dare to pass reforms that go against bank wishes. The extent of this lobbying is perhaps made clearest in Robert Reich’s book ‘Supercapitalism’ where he goes as far as to claim we should abolish corporation tax and deny corporations any lobbying rights in Washington at all.

A second reason, related to the first, is the revolving door that has appeared in the last twenty years between politics and finance. Prominent bankers have become increasingly close to prominent politicians, often with a good deal of job movement following. In his wonderful book ‘Them and Us’ Will Hutton suggests that this has resulted in governments effectively becoming ‘captured’ by the financial services industry. Even if lobbying fails (the point above), finance can depend upon their former employees in government, especially in the US, not to work against banks’ interests. We don’t have to believe in a conspiracy to see how this might have happened – if you’re trained as a banker, you see the world in banking terms, and even if you subsequently end up in government for the most altruistic of reasons, you are likely to be heavily influenced by your training and background.

A third reason, and perhaps the one I believe most in, is that we are reluctant to pass laws restricting the behaviour of the banks specifically because of the mess they’ve caused. The problem is that the economies of countries such as the US and UK have become dependent on the financial sector to make profits, and to generate tax revenues as a result. We’ve become so dependent in fact, that we find it hard to come up with an alternative view. Think back to the 2000s – how many bankers were brought into advise government how to better to its job? Given the problems with debt we now face, and a certain lack of courage and imagination from our governments, they have been unable to think differently. They need the financial sector to generate profits to pay off the debts that the collapse in the financial services industry caused in the first place. If I were Chinese, I’d find this funny. I’m not Chinese.

Related to this is the argument that our deregulated financial sector has now got the poorest in society into so much debt that, if we re-regulated it, it would lead to widespread default, as well as preventing debt from driving the consumer-led growth which our economies now depend upon. It seems that we want to hold the real incomes of the poorest paid down at the same level as they were in the 1970s, but still expect this group to consume more goods and services to get us out of low growth. Regulating the financial industry would mean that getting the poor into debt wasn’t an option. So we’re not doing it.

Finally (for now), there is the complexity of the whole issue. This comes into play in lots of ways. I don’t think our regulators are fools – they are just trying to come up with rules to govern a banking system that is truly out of control. But one of the reasons its out of control is that we’ve allowed banks to lend ridiculous multiples of their capital in a bull market, and leave themselves all bankrupt when things went bad. I appreciate that to go in too hard with rules after the crisis would have probably brought even more banks down, but frankly, they’ve had long enough now to sort themselves out, and the evidence seems to be that they would much rather continue to invest in speculative financial assets – backed by government guarantees and based on quantitative easing – than invest in businesses trying to dig us out of the hole we are in. I understand that investing in business in a slow-growth economy is risky, but I’d much rather our banks do that than allow them to build us a new financial bubble in gold, oil or whatever other nonsense speculative money is running into that generates no good for anyone else.

The problem is that the financial services industry is so complex no-one really understands it in its entirety, and this means it is difficult to come up with good regulations. It also means that it is hard to have a public debate about this stuff. Whenever I start on how you move from a CDO to a CDS and then to a synthetic CDO people’s eyes glaze over. But these assets were a significant cause of the mess we are now in, and we need to take the time to understand the sheer bloody incompetence of the people who caused it.

Regulating against such nonsense will be difficult, but it’s crucial that we do. The consequences of the financial crisis will be with us for a generation because of the debt they’ve brought us, and that’s assuming the lack of adequate regulatory response doesn’t drag us all down again in a recurrence.

Fear and discipline in the public sector – does Letwin have a point?

August 2, 2011

One of the more interesting (and inflammatory) stories of last weekend was Oliver Letwin, at what we were told was a ‘meeting of the offices of leading consultancy firm’, making the following claim:

“You can’t have room for innovation and the pressure for excellence without having some real discipline and some fear on the part of the providers that things may go wrong if they don’t live up to the aims that society as a whole is demanding of them,” he said.

“If you have diversity of provision and personal choice and power, some providers will be better and some worse. Inevitably, some will not, whether it’s because they can’t attract the patient or the pupil, for example, or because they can’t get results and hence can’t get paid. Some will not survive. It is an inevitable and intended consequence of what we are talking about.”

So is Letwin right? Well….partly.

First of all productivity is something of a sore point in the public sector, but also the source of a range of misunderstandings. Concerns about productivity aren’t new – the problem is called Baumol’s cost disease (after William Baumol, who came up with the idea in the 1960s). The argument goes as follows:

In service sector jobs, the main cost of doing the job is the staff you employ. So about 75% of the NHS’s costs are staffing. You can increase productivity in that environment by treating more patients with the same numbers of staff, or by reducing the cost of your staff, or both. The problem is that it’s difficult get a GP to see more patients without ruining the quality of care they offer, and there’s only so much room in hospitals to treat them. It is possible for hospitals to be more efficient, but beyond a certain capacity level, infections tend to be a problem as patients are being ‘turned over’ so fast. So it’s difficult, beyond a certain level, to see many more patients.

What about reducing pay? It’s certainly true that the 2000s has seen an improvement in pay for money working in the NHS, but I think I’d argue this was overdue. Doctors are highly qualified people and deserve to get paid as such (they get paid a lot less than bankers but save lives rather than ruining them), and it’s pretty tough to argue that nurses are over-paid – the opposite continues to be true. So can we squeeze the pay of all the other workers who don’t deliver front line services? Possibly, but do we really want to penalise some of the most vulnerable workers in the public sector even more?

I don’t think increasing output or decreasing cost is very sensible then. As such, it’s little wonder that NHS productivity has fallen in the 2000s – it’s because we paid doctors and nurses better. This makes me wonder whether productivity is a sensible measure at all – what we have here is a private sector idea being applied to the public sector – a thoughtless comparison that isn’t appropriate. I have no problem with the public sector being held accountable, but this isn’t the right measure.

So how is Letwin partially right? Well I think he’s got a point about discipline, but for the wrong reasons, and I’m not sure wanting to instil fear into anyone is really sensible. I’m am rather struck by how many public sectors workers (speaking as a public sector worker) offer a frankly, bloody awful service to those they are meant to be looking after. Now this isn’t exclusive to the public sector – it happens a lot in the private sector too. But the difference of course is, that we all pay the wages of public workers through taxation. My own view being paid from the public purse brings with it a responsibility to try and do my best. I don’t think I always do a good job, but I do try (most of the time anyway).

Is poor service excused by poor pay? It’s certainly the case that if I have a generally unrewarding job and am not getting paid well, then my motivation might be pretty low. I have had some pretty awful jobs, and didn’t have a lot of fun doing them. But I still don’t think that’s an excuse for doing a job badly. The only reason for allowing work to be done badly is that the NHS is being an employer of last resort, providing jobs that don’t really need doing (a variation of what we might call the Pickles argument). I don’t think that really applies though. I tend to think that where a public sector service is being delivered really badly that is the fault of both the managers and the employees in that situation, and both have a responsibility to improve things (especially, of course, the managers, but that doesn’t let others off the hooks as well). If they can’t improve things (and this is the thing we really shy away from), we need to find others to replace them – which is not too far away from Letwin’s point. We shouldn’t be living in fear of losing our jobs in the public sector, but being aware that providing a consistently poor service has consequences.

Here’s the thing. If we don’t accept that there are problems in the public sector, and we don’t believe this is an issue that better management or improved service standards (or something else, like perhaps even employee ownership) can achieve, then we are left with the Coalition argument the the only thing that can help is introducing competitive forces. I’m going to argue in a future piece that there are some public services where competition is appropriate – but in the example I’ve used more here, the NHS, I think that doesn’t work, as I’ve made clear in many other posts here.

We need to stop pretending that the public sector is problem-free, and needs no change, when the service we sometimes get is pretty dreadful. Public services generally deal very badly with complaints, and have been laggardly in making improvements in many areas. If that means that we need better discipline, then part of Letwin’s diagnosis is correct. But if we don’t come up with a solution that is based on something other than competition, then that just leaves Letwin’s competitive market and fear. Is that really what you want?