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Disappointing Health Retreat

May 18th, 2011 Posted in health by

There has been a detailed review, pros and cons have been analysed, and Nick Clegg has concluded being seen to reform the NHS is bad for his poll ratings.

The party now consistently believes that regulated competition is a good thing in almost all fields of human activity, but not the provision of health services which are ‘special’. The Parliamentary Party would like the proposed new regulator Monitor to support ‘collaboration’ not ‘competition’ for the benefit of patients.

This looks like cowardly sophistry.

Outside the UK, Finland and Cuba competition for the provision of health services is perfectly normal. International League tables on health outcomes, where the UK often languishes in mid-table mediocrity would suggest this has not harmed patients. Quite the reverse.

There is a good article today in the Guardian of all places on why competition benefits patients:

“The media debate has ignored the most obvious evidence: the fact that almost everywhere where they have been tried, market approaches work better than centrally planned government ways of running the same activity. Not all markets work well, but even the bad ones seem to do better than central planning.”

Meanwhile what a duty to protect ‘collaboration’ might mean, and why this needs to be different to competition, is unclear.

Good collaboration happens in competitive markets all the time. Entities come to together to offer packaged services. They network, they work with clients to tailor services to their needs. You do not need to work for the same company as your clients to deliver excellence for their customers or patients. The profit motive means the constant pursuit for the quality and value your clients demand not a race to the bottom.

Bad collaboration,  or cartel behaviour also happens in competitive markets, but is illegal. Stopping professional interests within the NHS colluding to cheat the taxpayer and patients by offering poor quality services at high cost is the point of giving the proposed regulator Monitor powers to enforce competition policy.

It is not yet clear whether Liberal Democrat obfuscation on this matter will yield changes in the Health and Social Bill. Parliamentary arithmetic on any Liberal Democrat revolt is tight.

It is further not clear that if implemented the outcome would quite what the left-activists lobbying against affordable healthcare will have hoped. A shrewd regulator could interpret ‘collaboration’ and the ‘for the benefit of patients’ as a licence to demand NHS purchasers collaborate with better value private and third sector providers rather than costly in-house alternatives.

This could actually be a contest of political language, not substance.

In that respect Nick Clegg could be playing quite a devious long game. But we will have to wait for the detail; and I’m entirely sure the anti-reformists will be lobbying for all sorts of caveats in the Bill precisely to stop that happening.

And, as we warned last week, what this looks like on the surface is opportunism rather than political courage.  It is inconsistent with Nick Clegg’s recently stated desire to be a radical centre-ground party of Enterprise and Fairness. Enterprise requires competition.

It is preparation for permenant Opposition, not the act of a party in Government. That in the long-term will harm the Liberal Democrats, entrenching the sense of two parties within a shell of convenience, not bringing us together around a consistent narrative. 


10 Responses to “Disappointing Health Retreat”

  1. Tabman Says:

    The Guardian article raises some interesting points, many of which I have sympathy with. There is one argument that is not addressed in it, that opponents of change have made – that the “profit” making low-risk/cost operations subsidise the high-risk/cost emergency services provided by the NHS that private organisations would not want to touch.


  2. Psi Says:

    An argument for full economic costing?

  3. Editor Says:

    It’s a good question, I don’t though have much sympathy with the ‘cherry-picking’ complaint.

    The thinking behind it is that expensive/difficult operations are rare. You couldn’t justify hiring NHS staff only to do those, that would necessarily make such things even more expensive… therefore they need a monopoly over the easy stuff as well to spread their cost…

    It’s the argument the BBC use to justify spending taxpayers money on reality TV shows and is equally worhtless.

    If you reverse it what it means is that by doing the easy stuff private companies would attract and retain staff who could do the difficult stuff for less than the NHS. If the cost argument holds ‘cherry-picking’ would encourage private companies to bid for the hard stuff as well… and do it better.

    But it’s not obvious that divided cost argument is right.

    For starters you cannot neatly divide health professionals into purely private or purely public. The whole point of successive doctor settlements is to allow doctors to mix their work, each according to their preference and demand. In that set-up the doctors would contract to either the NHS or the private provider, cherry picking makes no difference to expertise.

    Secondly on pure efficiency grounds cross-subsidisation is not a good model. For operations that are high volume and easy there is a lot of sense in allowing specialisation. It makes no sense to put your best spinal surgeon on to ingrown toe-nail duty. Let the market decide the mix of specialists and generalists just as it does in every other sphere of professional service.

    Thirdly if there are efficiency savings, more resources are liberated for investment in the difficult stuff, cherry picking raises all boats…

    And so on…

  4. Jack Hughes Says:

    Good point by Editor.

    Competition and free markets work very well in other sectors – like cars and TVs obviously – but also in sectors like opticians.

    We trust and rely on market-based solutions for important things like getting food from the farms to the shops to the table.

    There is nothing special about healthcare that means the normal rules must be suspended.

  5. Tabman Says:

    Interesting responses Gents, thanks.

    My own take on this is that the real issue is one of consumer risk – and that is what makes the NHS model so popular.

    Voters are worried that a “privatised NHS” would seek, as insurers do, to charge higher prices for higher risk patients.

    There is confusion between private indurance and private provision.

    Unpopular “privatisation” is because voters fear being unable to afforrd or receive the “best” treatment.

  6. Sam Says:

    It seems that the Lib Dems have decided to play hard ball with the Tories, believing they have been shafted at various points in recent times. That’s all very well, but we should have made better efforts to protect ourselves strategically before we went into coalition, not a year after.

    It’s all very well trying to score points at the Tories expense, but opposing this particular part of the reform is likely mean that the reforms do not improve health care, but worsen it, which we will get the blame for later on.

    On the face of it, we need to get much better at long-term political strategy.

  7. Drake Burroughs Says:

    Editor sounds like a bleeding idiot.

    The thinking behind “cherry-picking” is that it guarantees easy profits. Ever known private companies to get into the public sector and seek out difficulty, make money from it, and reduce the cost? Like they did in energy and trains?

    Why does the BBC waste money on reality shows? Because if they didn’t, they would be accused of making programmes that were not popular, and thus not justifying a licence fee.

    Liberals are finished as a political force. Not just for 20-50 years, but for at least a few hundred. You had a chance and spectacularly blew it. Mainly on AV.

    Your place will be taken by parties like the Greens. You will have a handful of seats in the SW, a sporadic sprinkling in minor pockets, perhaps reaching double figures. You are dead and don’t yet know it.

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