Adam Smith and the division and specialisation of work

As the BMJ is reporting private sector surgery seems to be rather better than that in the NHS:

Planned (elective) surgery in an independent sector hospital in England, and funded by the NHS, is associated with shorter lengths of stay and lower readmission rates than the same treatment in NHS hospitals, finds research published online in BMJ Quality & Safety.

The findings were consistent for 18 common procedures performed between 2006 and 2019 on more than 3.5 million patients.

Since 2009, NHS patients in England have been able to choose where they want to be referred for non-urgent hospital treatment, and their choice can include independent sector hospitals.

The NHS spend on independent sector providers rose steadily from 3% in 2006-07 to 7.5% in 2015-2016, with the purchase of elective care one of the fastest growing areas of NHS expenditure on the independent sector.

We can’t say we’re surprised of course. Adam Smith did rather point this out 245 years ago and counting - the division and specialisation of labour. Folks who do things repeatedly get better at them, more productive. So, we should split up tasks so that people can so specialise and thus become that better, more productive.

The value of the marketplace is that it provides us, through the price system, with the measure of who is better, who produces a greater value of output for the same or lesser cost of input.

While many factors can influence the course of hospital treatment, the researchers speculate that “greater technical efficiency may explain some of the findings in our study.”

Quite so, run the hip replacements though the places which specialise in hip replacements and we’ll gain a better outcome.

The argument never is, never has been, that markets are somehow better. Rather, that they’re the method by which we discover what methods are better - who should be doing which bit then?