Just as with the utilities, choice and competition in the NHS will only drive up waste and costs
A crowded train is delayed for hours; when it finally arrives the public address announces: "Thank you for choosing Virgin trains." An exhausted passenger shrieks: "I didn't have any bloody choice." Stories of the incompetence and impersonality of telephone, water and energy companies are legion. All beneficiaries of choice and competition: an ideology successive governments have planned to bring to the NHS.
As the House of Lords prepares to scrutinise the health and social care bill, doctors' leaders of all disciplines are questioning the place of choice and competition in the health service. The proposed model for the NHS is very similar to the one that sold off the utilities ? a level playing field of providers all operating on a platform, be it Network Rail, the National Grid or BT Openreach. The platform for health is more abstract (and malleable, perhaps): a set of commissioners using the flawed currency of the national tariff for health services, and the even more flawed national outcomes frameworks. They will commission from any qualified provider whose sole credential will be registration by the Care Quality Commission.
We can all agree with the prime minister that an ageing population and technological advances create new challenges to which the NHS needs to respond. But what have choice and competition got to contribute to the answer?
Choice is an illusion created by people to sell you something. The egalitarian utopian market in which social businesses and the mightiest US private healthcare companies compete and provide health services in a mixed economy is a fallacy. Competition creates mega, monopoly suppliers. Many of the private companies are faceless, unaccountable, remote ? like Southern Cross. Once in charge of a big health tender they will be very difficult to dislodge. Private companies have to grow, have shareholders to satisfy and are not immune to failure. When they fail ? like Southern Cross ? who picks up the pieces? However flawed our NHS and social care system, it is there and it is accountable.
Competition is the supreme example of waste in health services. Private health and health insurance systems generate enormous transaction costs. It's an expensive process billing for health care, challenging what you are getting for your money, litigating for wound infections ? and paying clever underwriters to squirm out of paying patients or hospitals. NHS management costs run at not much more than 3%, compared with nearly 20% for the US.
The very nature of private healthcare systems generating choice requires surplus capacity ? empty beds ? so that patients can exercise that choice. It requires the separation of "cold" from emergency work, something the NHS has not generally achieved. So it requires more investment up front to serve the fewer patients better.
But there is yet more waste: as the NHS faces draconian cuts in management costs we are urged to "market test" ever more services. Who is going to do this? Every substantial tender will require months of management time: people to write specifications for services, people to scope how big the budget should be, and how to measure the quality of the work; how to involve the public who will use the service, and how to ensure fairness and equality of access.
This process is also generating huge amounts of work for procurement accountants, lawyers and due diligence negotiators for the successful bidders and the NHS commissioners. These people, not on the employer's books, are hidden from management costs ? so don't feature in the staffing reductions we face in NHS management. So there may be an impression of management cost reductions while transaction costs increase.
The scope for legal challenges and appeals makes the process even more protracted and leaves the nightmare prospect of no available provider at the end of a tender. Big tender decisions create acrimony and recrimination where there should be harmony and collaboration. If the NHS continues on this path and contracts for tenders bigger and brighter ? what about maternity services, accident and emergency services? ? we are on a course for complete collapse.
How has the NHS stumbled into this nightmare? Under the EU constitution, health services are the province of state legislation; the NHS seems determined to undermine itself by opening its services to European procurement law. We need more straightforward and efficient command and control. We can only hope the current rush to divest the NHS of direct service provision will be arrested by the Lords.
Chelsea United States Alexander McCall Smith Kazakhmys Office for National Statistics Lancashire
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