As the House of Lords prepares to debate the Health Care Bill, there’s an important piece in the Guardian today by John Middleton arguing powerfully that the concept of choice will make the NHS more bureaucratic, more expensive and less able to offer a comprehensive service:
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.
It’s a sobering dissection of the cost of the ideology of choice – and it’s worth remembering that this is about breaking up what is one of the most efficient and cost-effective healthcare systems on the planet. But there’s nothing new in this. As Middleton points out, it follows the example of the railways and the other privatised utilities, in which commercialisation has meant a culture in which decisions are regulated through contracts, which require an enormous amount of bureaucracy to manage and are hugely inflexible in dealing with the day-to-day realities of life. Everyone who uses trains is familiar with the blame culture as train operators and infrastructure managers seek to pass off the responsibility on to their contractors for delays to the service. It’s part of the failure of the Coalition vision that their rhetoric about concentrating resources on the front line so contradicts the reality of the bureaucracy needed to run a system of competing service providers.
And it’s also ironic that Cameron’s Tories get hugely exercised about the role of the EU in national decisions at the same time as opening up healthcare – which the Lisbon Treaty reserves as a matter for national governments – to EU rules on competition and procurement.
The alternative to choice is a system of universal, cost-effective excellence. If your local school offers a high standard of education, and is part of an integrated system, why is it rational (issues of snobbery apart) to go through the agonies of the school selection process and the drudge of bussing (or more likely) driving children across town – that of course is assuming you live in a town large enough to offer a choice? Likewise, if the NHS is offering a reliably excellent service, why go elsewhere? And how does a layman with limited medical knowledge choose a doctor anyway.
That’s the problem with choice. It’s not about providing better services – it’s actually a rationale for not doing so, because even as costs soar and quality declines, politicians can always fall back on the claim that people have a choice. It’s an ideological rationalisation of the act of walking away. And the evidence shows that it has absolutely nothing to do with improving services.