Competition Vs Collaboration in health

Liberal Democrat leader Nick Clegg

For most business people, the opposite of competition is not collaboration, or what Nick Clegg wishes to encourage in the NHS in preference to competition, but monopoly - which is characteristic of swathes of health provision in the UK.

The competition that the Tory part of the government wants to see extended in the health service would be an attack on this monopoly provision. But it would be very limited competition compared with conditions in most industries - or indeed in health services around the world that are a long way from being genuine free market.

Under Andrew Lansley's plans, now under review, private and voluntary sector health providers would be able to offer more of their services to commissioning bodies - such as the proposed new GP commissioning groups - as an alternative to what's on offer from NHS hospitals.

Services that would be opened up to such competition would probably be those that are less complex - those that are closer to being commodity services. It has been suggested to me that post-operative care might be amenable to this kind of competition.

As I understand it, what is under consideration is not intense competition on price, because there is evidence from around the world that pure price competition leads to declining standards of health care.

Instead, a tariff would be set and then bids would be invited for the supply of specified medical services subject to that price control.

The idea is not that this would see vast amounts of health treatment moving away from NHS hospitals - but that the hospitals would feel under pressure to improve the quantity and quality of what they do, if they knew that they didn't have a monopoly.

It is the idea that has underpinned the introduction of small private sector competitors to nationalised airlines or telecoms providers in economies that aren't wedded to wholesale privatisation.

That said, the threat of competition is normally only a strong spur to efficiency for an institution that fears it would be allowed to go bust when it loses business. And it is not clear that even the Tory part of the government is ready to confront the popular anger likely to be sparked by the closure of long-established NHS hospitals.

Update 21:00

This question of whether hospitals can go out of business may be the heart of the matter.

As we saw from the recent great banking crisis, competition between institutions that don't fear they'll be permitted by government to fail can lead to those institutions taking crazy risks.

So if the culture of public service in hospitals were to be supplanted to an extent by a culture of risk-taking and competition, that could lead to hospitals behaving recklessly to win business, unless there was a credible threat of closure.

Robert Peston, economics editor Article written by Robert Peston Robert Peston Economics editor

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  • rate this

    Comment number 60.

    Competitive markets require parties who each value what the other has to offer.
    That's usually impossible in medical exchanges. Because the main value is in the diagnosis and prescription of treatment - that neither the patient nor the funder can know in advance.
    Moreover, our law of Tort allows medics to make honest mistakes that injure the other party.
    Competitive in health isn't feasible!

  • rate this

    Comment number 59.

    When Mrs. Hewitt, the health secretarty, was bood-ed at by the nurses union conference some three years ago she released figures showing that the average sickie bill per hospital was £4m the next day. It received little coverage.

    The fact that the difficulty was down to GPs taking a 50% uplift in salary was never mentioned in the media.

    We have a mess to sort.

  • rate this

    Comment number 58.

    You have used a key word. "monpoly". The very worst market.

    We need the best market in this important sphere. We need many sellers and many buyers. We need a perfectly competitive market place.

    Tony Blair asked us to bite our lip when GPs and consultants were able to increase their pay by 50% by ticking boxes when the correct answer would have been to sack the people resonsible for the mes

  • rate this

    Comment number 57.

    Look what happened to NHS dentists, opticians, care homes and care in the community. We have to pay. If unable to do so, tough, unless you have assets to sell (your home)

    Then look at some other privatised services: rail, gas, electricity, water.
    Are they efficient and competitive?

    NHS doctors? Won't be long before needing to pay for a visit. Waiting for treatment? Pay to jump the queue.

  • rate this

    Comment number 56.

    Many doctors and administrators are quite happy with things as they are. But so are many patients. Some time ago our local Primary Care Trust commissioned care from a private orthopaedic centre 15 miles away. Despite shorter waiting times and good outcomes, most people still preferred to go to our local District General Hospital.

    And yes, the GPs did encourage people to go to the private centre!


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