Two major changes to the NHS in England were brought about without any real political discussion and had no electoral mandate. This is as true of the move to a quasi market by the last administration as it is of the move to a full market by the current one. Partly for this reason, the debate around markets, marketisation, privatisation and the aims of the NHS is incoherent and fragmented. Some kind of rational framework for the debate, if we are to be permitted one, might be helpful.
There may still be a few who believe that we can fund everything through the NHS and there is no need to make any decisions about priorities or about allocating resources or provider efficiency. The vast majority accept that in any health system demand will exceed supply and so there have to be mechanisms to resolve the issues which arise. Healthcare costs tend to rise far faster than GDP, under any system, and there has to be a constant drive for efficiency, and effectiveness. In our NHS we are at a crossroads faced with the need (?) to cut £20bn of expenditure in 4 years, perhaps the greatest challenge ever faced by any service.
So the issues are important and we need to frame the debate and ensure we all use the same terms.
The debate about use of markets and competition is rooted in the need for efficiency; getting the most health care from the available budgets. Efficiency comes in two types, allocative and technical.
Allocative efficiency is concerned with how resources are allocated; how much is spent on a, b, c as opposed to d, e, f. In our NHS this is achieved through political and bureaucratic means and markets play no part at all.
Technical efficiency is about how providers are made as efficient as possible so the charge they make (or the tariff that is set) is as low as possible – or alternatively the least resources are consumed in achieving the outcome required from the provider. In real markets both allocative and technical efficiency are achieved. The economic reality that poor decisions about allocating resources can totally undermine any benefits through technical efficiency is comprehensively ignored in most discussions of “markets”.
Markets are the mechanism by which supply and demand are brought into balance by some kind of non planned means, the blind operation of the market. For a market to exist there has to be more than one provider (or at least the potential for more than one), competition and choice.
You can have choice without competition - you choose which hospital you go to but your decision does not impact in any way on the economics of the hospital you choose. You can have competition without choice – professionals motivated by the publication of comparable outcome data even though this did not affect which patients they treated.
Economic theory asserts that markets work when both choice and competition are present and that that providers are affected by the operation of both to the extent that they have to respond. And for a market there have to be mechanisms for new providers to enter and for old ones to exit. The argument about whether markets deliver anything at all in the way economists suggest, since the models are a vast oversimplification, is beyond this humble work.
In a real market the price of the commodity (or service) is relevant and the mechanisms reflect some financial evaluation, conscious or unconscious. In a quasi market, the competition is not based on economics –competition between providers when the price is fixed is the best example.
There are also three kinds of market at work in our NHS. The first is the market which operates when the consumer (patient) makes the choice about which provider to use; and this currently applies to some planned care. The second type is when the “commissioner” makes a choice through a procurement process about what provider to award a contract for provision of a whole service, usually on a time limited basis. Type one is competition within a market, type two is competition for a market – once you have it there is no choice for patients. The two market types are inextricably and confusingly intertwined in the NHS. The third type is when a provider (either appointed or commissioned) of a service subcontracts all or part of it through a tendering process.
The role of the commissioners is to gain the best health outcomes for the population it serves, within the resources available. They are strongly influenced by a needs assessment. They are a combination of planner, regulator and performance manager. They make the allocation decisions bureaucratically and to use contracting to get efficiency of provision. This is type 2 market territory. However if there are also type 1 markets in operation with, for example, many patients choosing to get their treatment from providers outside the area, then the commissioning model will not work. If there were a full market then there is no role for a commissioner, although most markets have some form of regulator. Like the “allocation” issue this is something else that discussions avoid.
Marketisation is what we have seen and are seeing; which is a drive to introduce market mechanisms into the NHS, in stages, so far as this is logical to do. The markets will mostly be financial ones but might also be quasi, based on quality. This kind of market could operate within a wholly public sector system where all the various planners, commissioners and providers were all public sector bodies.
Privatisation is a process where public assets and services that were delivered by public sector organisations are transferred to the private sector. For most purposes the private sector means anything not public sector, so it includes any kind of voluntary organisation or social enterprise. We could have privatisation without a market, and we could have a market without privatisation.
In order to manage the NHS there has to be some system, or systems at work. The usual segmentation formulated by Julian LeGrande, is between four mechanisms - voice, trust, targets and market forces.
The importance of “voice” is growing because recent generations are less passive, more ready to gather information and express their views even to the trusted professionals. More importantly there is evidence that involvement of patients in their treatment, and involvement of communities in local health projects are both beneficial. Voice also coves the need for elements of democratic control and accountability over a public service.
Trusting the professional to do what is best was the original organisational principle for the NHS and there is still a strong tendency within the NHS and outside to regard this as the best approach: an NHS made up of “knights” striving only to do good. The reality is that the introduction of “management” into the NHS is irreversible, and the idea of just “leaving it to the doctors” would probably be laughed at. There are those nostalgic for some golden age when the NHS ran smoothly and patients prospered without nasty managers interfering; this is an illusion.
Both voice and trust have a part to play but neither, nor both, on their own can be enough to deliver an effective and efficient system – neither is powerful enough to change the behaviour of providers. The centre ground of discussion is the extent to which a top down, planned, hierarchical system with targets and performance management, can be replaced by a market system where competition operates to drive innovation, efficiency and improved quality. It is partly a debate informed by assertion and limited evidence but also by ideology and politics.
Looking then at the spectrum of views about the issue then we can see the main camps:-
Those who believe that the NHS is a public service and that it is morally wrong for any such service to have any elements of markets within it. Performance management and targets distort the essential character of the service. A variation would be that there is some tolerance of “management” and “planning” of some sort; but still with the “trust” model predominant.
Those who argue that there is good evidence to show markets do not work in a health system. They have a rational case to argue both in economic theory terms (around market failure) and evidence from the acknowledged failure of market reforms to work so far within the NHS. They would accept planning within the system and so implicitly targets and performance management of some kind.
Those who accept there can be a role for market and see competition as a genuinely beneficial thing, but only under tight regulation. They accept a role for private providers but strictly regulated. They see the NHS as more than a logo and so have reservations about the extent of private provision and may set clear boundaries and operate preferred provider models for type 2 competition (for contracts). Allowing choice for some service with a wide range of competing providers from all sectors is accepted (the eyes and teeth model) so long as providers meet stringent quality base entry requirements. Accepting the limitations of markets there is still an overall managed system with powers for intervention to protect vital services.
Those who take the third way – that what works is best. And markets work elsewhere so long as the conditions are right, so just ensure this is the case. Regulation is necessary but needs to be there to encourage markets. The major problem is that the evidence about what works is contested, and generally just tells us we don’t know enough. Still they accept in principle greater competition and would encourage new entrants from the private sector which they see as more flexible, more innovative and efficient. They favour type one competition (for a service with patients choosing). But they still see an NHS as a managed system at some level with some type 2 competition and even non contested public provision for some services.
Those who accept a rationale for markets as the only mechanism powerful enough to resolve the long standing issues within the NHS and are motivated to use markets wherever possible, using incentives for new private entrants. They only like type one competition and would go further so that patients actually had the resources through direct payments so they could choose and buy the care they required. They favour privatisation to break the state monopolies and so give a more genuine market. They do accept however we still have a system free at the point of need and funded out of general taxation.
Those who see no future for the NHS as any kind of publicly delivered service and would have a full market system with all that implies. Various models for this do exist in other heath systems.
These are not strict boundaries and you can mix and match amongst various views but the central argument appears to be the issue of what limitations are placed on the operation of markets?
Two issues: 1) System choice: All or Nothing and:
2) Patient Choice: myths and realities
1) System Choice: All or Nothing.
The core issue was presented by Nick Timms, in the Financial Times, some years ago: once privatisation , and/or tendering for services starts, most if not all of health services will be prised open for commercial competition voluntarily or by court cases on the basis of UK and European competition law. Nick Timms also asked in his article why this wasn't already happening and received the answer that the companies involved do not now want to bite the hand that feeds. No preference can be given to CICs, social enterprises or other non-profits such as foundation trusts. In the English context, large, rich organisations including large for-profits (or nonprofits), have an advantage as they can bleed less rich competitors financially to death by loss-loading and suing or threatening to sue.
European Competition law does not prohibit single payer systems or full state services. (Indeed, in another sphere, the Berlin regional government decided in August to take back into state ownership privatised parts of public transport and gas/electricity that had been privatised, calculating a considerable gain for consumers and itself).
This makes it an all or nothing question, well understood in Wales & Scotland. Personally I wouldn't mind if private companies ran or helped to run an NHS service for a while, if the state equivalent did badly and no easy alternative could be found, or if the private organisation was demonstrably better, but this practical flexibility is now the thin edge of a wedge. We have lost the legal frameworks that enable us to make the most of true partnerships between state and private sector ( See: Ha-Joon Chang: 23 things they don't tell you about capitalism).
New Labour's plans would probably have led to more or less the same thing as Osborne's openly neoliberal proposals. Up to another 10 percent of the British economy would become part of the global casino economy, indebting and draining local economies, and indeed, the nation, of vast amounts of money and other resources (well understood by the centre-right in Germany in France, not by Labour).
SHA could do worse than revisiting this, and create an equivalent of the Ed Milliband moment re the Iraq war, namely, saying that it had it wrong.
2) Choice: Myths and realities
It is a misconception that there is little patient choice in the NHS (repeated in the text above). In most urban areas, people can choose between a number of GP practices (where I work, between 3-6 practices, where I live between 7 practices) . Choose and Book offers ample choice for secondary care. For acute primary care, patients can often choose between their own GPs, other GPs and Walk in Centres; in Birmingham, people can choose between 3-4 A&Es, or more if they go a bit further afield. There is less choice in say the Netherlands (where there is mainly a choice for insurer, but less for primary care provider) or the US (where the insurer decides where patients can and cannot go)
It is a fact that many people do not exercise choice beyond their nearest service (most people want convenience and health professionals and services they know and trust, few people look at league tables, the famous example is Bill Clinton who chose a mediocre hospital for his bypass surgery.)
The choice now proposed by the govt (and by New Labour) is the choice of the state of which provider will be available where (through the tendering process), not patient choice, which is already a done deal.
Last year I drove behind a double decker bus in Birmingham. It had an NHS advert all over its back saying: "Choose your own hospital!", then: "Is this too much to ask?"
We see here a mirror image of Leninism, aptly called Market Leninism: if patients don't choose they must be wrong, it can't be the theory behind this particular idea of choice that is wrong, the theory that recasts patients as consumers, and professionals as providers with (suspect) producer interests. As Tritter, Koivusalo, Ollila and Dorfman *) point out, society or patients are not asking for this, but pro-market think tanks and governments are, as well as some consultancy firms that operate across nations, governments and businesses. It is an ideological and a business project, and an expensive one at that, not in the national interest and not in the interest of equity.
*) Globalisation, Markets and Healthcare Policy: Redrawing the Patient as Consumer. Routledge 2009
Gilles de Wildt
Written on personal title. Interests: GP. Member of organisations involved with policy development (RCGP and Medact). Not a member of SHA or political party
Gilles is right to say that there are choices available in urban areas. I would add, though, that in the parts of the NHS where most of the money is spent - acute medical care and specialist services - patients are often too unwell to make many choices, and for many specialist services there is only one provider. And in most rural areas there are few alternative providers within realistic travelling distance.
'The debate about use of markets and competition is rooted in the need for efficiency'
Well here's the first misconception. The debate is about who gets their hands on the funds.
And reference to Julian LeGrande, with an acceptance of his conceptualising, when he was hired by Blair to push through, and give academic backing to NHS privatisation? Hospital disasters, where the 'target' culture was shown to have caused many hospital deaths, has been laid at his door. Why give him credibility?
But a major concept that is missing here is 'liberalisation' and it relates back to my first point - who gets their hands on the money.
Little used in the UK, because it is so much taken for granted, it means opening up to transnational investment. As public service privatisations go through, usually concerned with contracting in the a servcie like the NHS, where there is no consumer income stream (contrast railways), the contracts are inevitably offered to transnational investors, i.e. liberalised.
The liberalisations are then committed to international trade agreements, but that stage is seemless - the liberalisation has already occurred - and there is no publicity.
But at the stage when liberalisations are committed to trade agreements, a commitment to keep the sector open to transnational investment, the liberalisations become effectively ireversible. And inherently, so do the privatisations behind them.
So it is important to understand how the international trade dimension, 'negotiated' at the EU level so it is not noticed or explained, makes NHS privatisations irreversible.
This dimension should be understood because it is the basis of what might seem to be national level political decision making, apparently for the public good, or for 'efficiency'.
Some health professionals think that health is exempted at the EU level in trade dealings. But it isnt. Just about every aspect of what would be in the 'Health Related' category of trade-in-services can be shifted elsewhere, mostly to 'Business Services', which is certainly not exempted from trade commitments.
I would be willing to speak briefly on this at your conference
I am a commissioner in a Primary Care Trust. I am relatively new in this post and am learning fast. I found the contributions above very interesting although a little academic - I have to relate this to my working life. Pragmatic considerations for NHS managers do not allow for theoretical considerations. I am not knocking the theory - it is refreshing to consider this.
The main driver that I encounter is the requirement to provide care at lower cost - whilst maintaining or improving the quality of care. To do this with an existing NHS provider can be difficult if the existing providing organisation is large and can have set ways of doing things (the same complaint regarding set ways can be made of PCTs). There seems to be insufficient managerial and clinical capacity to commit to service redesign in large providing organisations even when the organisation is willing do do this in theory. It is not surprising that PCTs resort to going to tender rather than trying to persuade existing providers to redesign - as this can take many months if not years.
In PCTs we are now about to undergo a massive cut in our managerial capacity whilst GP Consortia are phased in. I am concerned that this reduction in our capacity will accelerate the trend to wholesale tendering out especially of outpatient services, which offer quick reductions in costs. I think there is more scope in working with existing providers - assuming that we can agree this with providers and that this agreement from senior management is passed on and agreed with clinicians, managers and throughout organisations, if it could lead to reasonably phased changes.
This Government is forcing a move to an Any Willing Provider model - this is going to be very difficult to achieve with reduced capacity!
My other comment is with regard to the comment that 'The role of the commissioners is to gain the best health outcomes for the population it serves, within the resources available. They are strongly influenced by a needs assessment'. This is true in theory and needs assessment can influence new investment very strongly, however, in a situation where funding is reducing decisions are very much about continuing the existing provision at reduced cost (or decommissioning) and gaps in provision rarely get considered.
Enough for now - I will follow this discussion with interest - and may contribute again!
i dont really expect to open this and be confronted with an advert for bupa !
see my website for a new provider of NICE-recommended complementary therapy which has to be provided, as patients have the right to it under the NHS constitution, which became law last January.
I belong in the group that believes there is good evidence markets do not work in a health system. Look at the many examples of expensive PFI contracts, and private companies that bail out once the subsidies disappear or the profits dwindle, leaving the state with an even larger bill. Healthcare is not like most (or any) other industry - most customers don't want to have to sample your product or service and have little control over when they might need it. Private companies will always have to create profits and dividends, and many accomplish this by cutting worker's salaries and lowering standards. We cannot risk this with something as important as our health. I don't belive there's evidence to show that the private sector are better than NHS professionals at research, innovation and re-design. Certainly, it's illogical to believe they HAVE to be better, merely by dint of being private sector. Any marketisation or privatisation will result in largely the SAME people running our healthcare, as doctors and senior managers move to the private sector, but no doubt on vastly increased salaries.
I think you have to start any such discussion by analysing where the money has been spent so far, and this is far from transparent. I remember reading an analysis of the NHS in the 1980s, when our total spend on healthcare (private & public) was half that of most other developed nations, yet the performance of the NHS was - amazingly - the same or better. In the following decades, funding increased significantly, especially under Labour, yet it is often stated that relative performance has not improved. I have read several papers and books about where the money has gone, and the concensus seems to be that over half was wasted on management consultants, lawyers and the bureacracy connected with changing the NHS strutures. Over half of the remainder was spent on salary increases, but well over half of that amount (70% by some accounts) went to the doctors and senior managers. Even now, in this supposedly cash-strapped, debt-ridden NHS, we can see massive sums being paid every year to these same groups, just by looking at the annual accounts of any NHS organisation. This is leeching money out of the system, which could otherwise be so much more efficient - and better in every way for patients. Basically, we've put the foxes in charge of the chicken coop, ad we're paying the price.
I totally agree with the previous bloggers - there is already a lot of patient choice and consultation in the NHS, but choice is largely unwanted and unused by patients and GPs.
The problem with the NHS is a simple one : it will NEVER have enough money while the only form of medicine it uses is pharmaceutical medicine. You cannot bring about real health with pharmaceutical medicine - all you can do is lessen symptoms and watch while the 'cascade of intervention' begins. The cascade of intervention is the system created by pharmaceutical medicine whereby the person is not actually helped to return to real health and equilibrium but instead they become dependant on a drug until such time as that drug no longer works or the (side) effects of that drug become so unmanageable that another drug is administered to deal with the one before etc etc.
If we were really interested in building health in our population we would have a system of healthcare which reflected the different cultural needs of our societyand encouraged people to make choices about their health which involved healing systems which worked to build health and equilibrium. That would mean pharmaceutical medicine taking its place behind all the different forms of healing that abound : acupuncture, herbalism, ayurveda, homeopathy, osteopathy, reflexology etc etc - to name but a few. The bottomless pit which the NHS is now would soon plateau out into a truly integrated system where people were moving towards real health which was not being propped up by endless chains of pharmaceutical interventions.
Sorry, but have to disagree that this helps. I think I understand what you are trying to do (is that you Martin), but you accept far too many ideas unproblematically for this to work in thinking about markets.
First, markets don't really exist - they are something economists dream about at night, but they aren't really out there. Le Grand (there's no 'e' on the end) makes the mistake of mixing up economic theory and reality, and so proposes some quite incredible things. The map is not the territory.
Second, various degrees of competition exist in healthcare in practice, but they tend to be very limited between two or three providers, and that really isn't very competitive. People generally don't want to travel to receive their healthcare - they want good local services and for the state to guarantee that.
Third, the people who are meant to be making the choices in this limitedly competitive marketplace don't make them on the provision of the best possible care - GPs tend to contract with local providers who they know (that's what their patients want too) and PCTs haven't really shifted contracts around very much. So we have a considerable amount of inertia in terms of choice.
So this means we don't have much competition and much in the way of organisations or individuals actually trying to make much choice -there are exceptions, but they are that - exceptions - rather than the rule. I know of one FT which is actually amazed that anyone chooses them any more their services have been so bad (and so well publicised as being bad), but patients keep coming - more than they are able to cope with.
The thing is, driving up quality and efficiency aren't anything to do with markets - they are clinical and managerial issues respectively. We need to find ways of making them happen without all the waste and nonsense of assuming markets will work - they won't - they'll just make a bunch of private providers richer, and allow a bunch of poor public providers to keep providing poor service.
We need our services to be accountable. Where I agree with the first posting is that this is best done by reinvigorating local democracy. Where I disagree with rix pyke profoundly about the services which should be offered, I respect his/her view, and we should be working through these issues in public - not making largely untransparent decisions to be made about them. Markets aren't the answer - making health services more accountable might be. The first ain't gonna work - they last hasn't really been tried since the founding of the NHS. It's time we gave it a go. We should be deciding what services should be provided, and how they should be managed - yes, it's messy and hard, but it's a lot better than the alternatives.
It seems very unlikely that the internal market will be abolished any time soon. But equally it seems clear that market forces do not improve quality of healthcare. Indeed the government now seem to be conceding that in most places, for most services, there will not be many willing providers. Some people are prepared and able to choose between different providers of cold surgery, but most patients are neither able nor willing to do so. So in reality the decisions about provisions will continue to be made by GPs.
Post preview:
Close preview