The real problem with the NHS U-turn

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A year or two before the last election, the Conservative opposition decided on an important strategy. They knew that Gordon Brown's years of overspending and overborrowing would catch up with him, and that he had none of Tony Blair's political skill and public appeal to fall back on. They were pretty confident that they would form the next government – though they careful not to show it. They were very aware that electors hate politicians who take their votes for granted.

But they also knew that governments have a very short time in which to push through their programmes. Traditionally, it was reckoned that unless you had got your main measures through within the first year, you would run out of time. In the age of 24-hour media, that window of opportunity was probably open for very much less than that.

They figured that the policies they really had to get through quickly were health and education reform. Specifically, restoring the internal market structures that had been torn up in the early Blair years – and which even Blair had wanted to go back to. So they were determined to introduce these measures straight away upon taking office. They knew that it might take a year to get the measure through Parliament and another year to put the administrative changes in place. That left only two years for them to prove their worth before everyone started talking abut the next election. But by then, they hoped, these essentially Thatcherite policies would actually be working, and electors would appreciate that fact.

All credit to Michael Gove for pushing through the education reforms. But sadly, the health reforms stalled. That is partly because the Conservatives were over-confident, and ended up sharing the stage with coalition partners who were much more statist on health policy. But some of it was self-inflicted. Did it really need the biggest reform bill since 1948 to do what the Party bosses hoped to achieve? Should they not have focused on the essentials, and moved on to reform other parts of the NHS later – or have been confident enough to believe that their market-oriented reforms would actually, slowly but irreversibly, change the structure and culture of the NHS and do the job for them?

Arguably it is right, when there is so much opposition, to pause and consult again. Except that NHS professionals all have a vested interest in opposing and avoiding competition, and any pause simply gives them time to re-graoup and make sure change is blocked. And any delay to the reform schedule means that, even if the original ideas were reinstated, they would not have sufficient time to be put in place and show their worth.

Maybe most of the internal market idea will indeed survive. But the damage has been done. The government's failure to push through reforms like Gove did in education – doing it first and then dealing with the criticisms and problems later – inevitably spooks those very providers who one wants to see coming in to provide internal market competition. If you are investing millions or billions in a healthcare business, you need to know that you are investing in a stable policy environment. You need a government that will protect your investment, and the policy of private competition, through thick and thin. Alas, they cannot take much heart from this episode. Still, there are plenty of other, more welcoming countries to invest in. Shame if you fall sick in the UK.

Giving the NHS a bypass

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For the most part, radical reform of government services cannot occur. Large organisations are inflexible and, in the face of changing circumstances, those that can no longer well function die, and are replaced by the growth of new organisations or existing small organisations into large organisations which, although equally inflexible, are suited to the current environment. As such, reform of the NHS is impossible. The NHS cannot be fixed.

I think it is in fact not merely a matter of reform being impossible. It is also, I suspect, a matter of the British public paying very large amounts of tax and seeing, on the whole, very little for it. The NHS is a very visible service where those who pay feel they are in fact receiving something for all that they pay, and so there is massive resistance to anything which would on the face of it reduce the service provided. The NHS's visibility makes it seem like better value for money than it really is.

I propose, then, a mechanism for making the NHS irrelevant, an approach which requires no reform of the NHS proper and which will not fail in the face of the public's desire to see something for its tax money.

There are now those who pay twice for health care: those who contract to private health care providers, but still are forced to pay for the NHS through their taxes. Clearly, these individuals have removed the burden and costs of their health care from the NHS. Why, then, is it that some individuals pay twice, while others (users of the NHS) only "pay" once? This is clearly unfair, and should be resolved.

I propose a simple reform that leaves the NHS untouched: people who contract to a private health care provider should receive a full tax rebate of the money taken from them for their public health care provision.

As individuals depart from the NHS, the part of tax which which forms healthcare will decline. Accordingly, the rebate will decline. Eventually, with a competitive market of health care providers where the NHS is but a player, the anomaly of its funding being intermediated by the state could be removed and those contracted to the NHS could then, as they would with other providers, simply pay directly.

For this to work, no reform of the NHS is required. The NHS simply becomes a player in the private health market, subject to success or failure by its own merits. Individuals may chose to use the NHS, should they wish; equally, they may wish to use another health provider. Contracts are no longer being imposed by the state. Freedom would be introduced to the healthcare market.

Not the NFS

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There was an interesting story in the Guardian this week about UK supermarkets’ response to challenging trading conditions. Unsurprisingly for the Guardian, the article chose its theme for the story as “Shoppers in a divided Britain compare supermarket deals”.

Despite that equality agenda, what the article really showed is why we’re lucky there’s no such thing as the National Food Service, modelled on the National Health Service, to ensure equal access to affordable food supplies.

The general squeeze on household incomes is playing out dramatically in the supermarket aisles. Not only are discount chains like Lidl and Aldi doing rather well, but the big four – Tesco, Sainsburys, Asda and Morrisons – are in a constant struggle to deliver what their customers want at the best possible price. Millions of individual decisions on what to buy and what to sell are made every day from Land’s End to John o’Groats. Amazingly, but unsurprisingly to believers in Adam Smith’s invisible hand, supermarket shelves remain fully stocked and there’s no reports yet of starvation in the hinterland.

Arguably, food provision ranks ahead of health care in any society’s top priorities and it’s not hard to imagine the disaster befalling our kitchens and restaurants if the industry was organised into an NFS in pursuit of an equality agenda. GPs (Grocery Practitioners) would be the gatekeepers to food supplies, assessing everyone’s basic dietary requirements and issuing coupons according to guidelines from Whitehall under budgets set by the Treasury. PCTs (Primary Comestible Trusts) would oversee the distribution of food parcels, adopting best practices as judged by NICE (National Institute for Cuisine Excellence). There’d be nationally set waiting-list targets to see consultants on wine and cheese.

Fortunately, nobody is seriously proposing a National Food Service – yet. But, equally, nobody is seeking lessons from the supermarkets on delivering efficient health care in rapid response to changing consumer demands. Which is too bad. The dwindling number of NHS dentists hasn’t required a re-issue of The Simpsons “The Big Book of British Teeth”. Nor has the demise of NHS prescription glasses caused a surge in collisions with lamp posts.

Which reminds me – whatever happened to suggestions back in 2007 that outfits like Tesco run franchised health centres? In these straitened times, the proven track record of the UK grocers to deliver the goods would seem an eminent contribution to the nation’s rising demand for health care. After all, every little helps!

Reform of the NHS fails again

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“Another reorganisation involving unhappy managers can only worsen the service.” So said a British Medical Journal editorial in 2001. Thanks to the Lib Dems reneging on their own manifesto, the opportunity to streamline the NHS is being thrown away.

Before Andrew Lansley allowed himself to be compromised into a huge and complex Health Bill, the issue was quite simple. The £20bn available from removing unproductive strategic authorities and primary care trusts (PCTs) would be handed to GPs to be spent on patient care. If the GPs thought they needed more managerial support, it would have to come out of their own budgets. The social care part of the PCTs’ activities was less well thought out but the same logic could have been followed with local authorities.

The role of government would just be to divvy up the available budget between GP practices, and local authorities. The GPs pay the hospitals and other health suppliers. The main reason, probably, why GPs object is that they, rather than faceless bureaucrats, will have to conduct the rationing process. We know that NHS demand will grow and so will the cost of treatment. Rationing is inevitable and will increase. GPs do not wish to take the blame.

Once the government accepted the arguments for GP practices combining and setting up commissioning bodies, i.e. mini-PCTs, involving other interested, but unaccountable, interests and “Patients’ Panels” all the savings were lost. Doctors will again be locked in endless committee meetings when they should be seeing patients.

The PCT managers in my county (Norfolk) are rubbing their hands with glee. The day they receive their redundancy cheques is the day they all start work with the new mini-PCTs. And more managerial jobs will be available, pushing up salaries, than there are today.

Norfolk used to have four PCTs which was considered inefficient and reduced to one. It is hard to see how having tens of mini-PCTs will be any better. And this is where we came in: every £1 spent on bureaucracy is £1 less on patient care.

Government announces re-think on supermarket reform

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"Mr Speaker, following the government's consultation on its proposals to reform the grocery industry, we have been pleased to take on board most of the recommendations of the Supermarket Future Forum. In particular:

"The commissioning consortia that purchase groceries on behalf of consumers will be required to have a transparent governing body and to explain how money is being spent on groceries and why particular groceries have been bought. Commissioning consortia will now include a much wider range of grocery and retail professionals. Multi-professional advice will be required before any groceries are bought on behalf of consumers. Consumer wellbeing boards will have greater powers to require commissioning consortia to explain how their purchasing decisions promote the wellbeing of consumers.

"The National Grocery Commissioning Board will set the parameters for choice and competition in all parts of the grocery industry. A Citizen's Panel will report to Parliament on how well that mandate has been implemented.

"The National Food Regulator's role in relation to competition will be diluted. Instead of promoting competition among supermarkets, its primary duty will be to support collaboration and integration among different grocery outlets. Private grocery outlets will not be allowed to 'cherry pick' customers from others, and the government will not seek to increase the number of supermarkets.

"The Secretary of State will remain ultimately accountable for the grocery industry. The Secretary of State will be given a strong and clear duty to involve customers in the organisation and management of supermarket chains.

"The Food Commissioning Board, the outcomes frameworks for the grocery industry, local commissioning bodies and others will all be used to help reduce food inequalities.

"Independent, expert grocery advice is needed at every level of the system. All local authorities and public food and grocery bodies must cooperate to improve the delivery of groceries.

"Mr Speaker, these changes will deliver the modern, dynamic grocery industry we all want, and will lead to a better-fed country. I commend them to the House."

Why Wayne Rooney’s hair transplant will save civilization

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Forget E. coli and Yemen, the big news this weekend was Wayne Rooney’s hair transplant. At a whopping £30,000 for what turned out to be a bit of a thatched job, it was naturally the subject of some teasing. But think twice before you mock. Wayne Rooney’s hair transplant is, arguably, the key to the future of medicine, technology and civilization itself.

Let me explain. Technological advance usually works in the following way: someone has an idea for an invention, makes a very expensive prototype, and builds a few initial models at very high cost. A few wealthy ‘early adopters’ pay the huge cost, which pays the inventor’s rent for a few months and creates time and an incentive for the inventor to build better or cheaper versions of that product. Mobile phones are a good example of this: the earliest ones were absurdly expensive, bulky and primitive. The same goes for early desktop computers, laptops and cars. All began as preserves of the rich and were seen as wasteful indulgences; all are now essential to modern life.

Over time, innovations improve the product’s quality, reduce costs, or both. Mobile phones are now a fraction of the cost of 1980s phones, and can do a lot more than their predecessors ever could. The value of innovations like these is enormous, because a single innovation can never be used up like a physical good can be. A good idea can be literally priceless, because its applications are potentially infinite.

What does this have to do with Wayne Rooney’s hairpiece? Well, like the early adopters of mobile phones, Rooney has created another bit of demand for hair transplants, increasing the incentive for an innovator to come up with a cheaper or more convincing hairpiece. Ok, so hair transplants won’t save civilization, or even medicine. It’s a superficial procedure. But if cheaper hair transplants make people happier, there’s little more we can ask of them.

Other wealthy people like Rooney will spend their money on other frivolities, creating more demand for niche innovations that might seem useless right now. People with huge amounts of money to burn initially act as early adopters, creating demand for costly and difficult treatments that mere mortals could never dream of being able to afford. Needless to say, neither the NHS nor BUPA would ever pay for these early experimental treatments.

High-end demand for niche products allows these initial prototypes to make some money, giving innovators the breathing-room they need to make their products accessible to a wider consumer base. Big spenders allow many innovations that would never get off the ground to survive; what seems wasteful today might very well seem essential tomorrow. If innovation is the motor of progress then people like Wayne Rooney can be, improbably, the jump-start that that motor needs to get moving.

The NHS is a socialist relic

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Здравствуйте! It's 1972 and you're in Russia, in case you were wondering. So I understand you want to buy a car? Here, take this brochure. It shows you all the cars on offer. No - you haven't misread it – you can have a Lada, or a Lada, or a Lada. Which would you like? The Lada? Excellent choice. But please, take your time over the decision, there's no rush – getting any of the fine range of shoddily-built cars will take a wait upwards of five years.

And therein lies the problem of monopolies. They allocate resources inefficiently and react poorly to customer demand. When you're the sole provider of a service, there is little incentive to provide a decent service to your customers. By privatising firms, you make once publicly funded, clinically obese organisations compete on a for-profit basis with other firms and, ceteris paribus, the service improves. It's pretty basic stuff.

Why, then, do people fight so passionately for the last few state monopolies today in Britain? This weekend, UK Uncut have organised the 'occupation' of 30 high street banks in protest of proposed NHS reforms. Ignoring the fundamental flaws (PDF) of many of UK Uncut's arguments, it is unclear why they demand the perpetuation of a health system that fails the population of various accounts.

The NHS is, as of last year, the third largest employer in the world. Britain, by contrast, only has the world's 22nd largest population. Perhaps this discrepancy is due to the fantastic healthcare we receive? Alas, no: compared to other similar countries, it under-performs in a wide range of key areas, notably cancer survival rates (PDF).

Sadly, these statistics are not merely academic – they describe real-life outcomes that have irrevocable consequences to the people involved. For every percentage point that the NHS under-performs, people die. For every vested interest in the NHS protected against patients' interests, people die.

To end on a personal experience: I went to hospital a few months ago. I spent 11 hours sitting in a waiting area, without any food or drink facilities, sporadically being told that I might be seen soon. Eventually I was seen. Thankfully I was okay. However, given the choice, would I go back to this hospital? No. Do I have a choice? No.

Much of the problem lies in the public's 'it'll do' attitude towards the NHS. In my own minor experience it did'; but nothing more than that. We should all demand better.

NHS ironies

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The top two BBC Radio 4 news bulletins on Thursday morning were ironically indicative of the problems of the NHS.

The first was a report by the Care Quality Commission (CQC) that elderly patients in many English hospitals weren’t fed or watered properly nor treated with dignity. This was immediately followed by British Medical Association (BMA) report demanding the government’s proposed reforms for the NHS to be scrapped.

No surprise that the BBC didn’t link the two – that reform is urgently needed to deal with problems like care for the elderly - and no surprise that the ultimate in vested interests – the doctors of the NHS – are fighting this tooth and nail. The reports of the CQC and the BMA both suggest enhancing top-down control of health care with not the slightest hint that the NHS structure itself is the problem.

Start with the BMA’s own recommendations, especially these three:

• Change the primary role of Monitor (the economic regulator) to one of protecting and promoting high quality, comprehensive, integrated services, not promoting competition. (Translation: we have nothing to learn from anyone else.)

• The Secretary of State’s powers over the NHS Commissioning Board on appointments, further regulations and its mandate should be subject to explicit safeguards and transparency requirements to avoid unnecessary political interference. (Translation: We will not be accountable to the taxpayers of this nation.)

• Explicitly protect the independence of directors of public health as professionals treating a population by bringing together all public health staff under a single NHS agency. (Translation: The NHS isn’t monolithic enough.)

Meanwhile, the CQC, which, to be fair, only carries out orders, sends shivers down the spines of NHS bureaucrats with this warning from its chair, Jo Williams: “I will be writing to the Chair of every hospital where this inspection programme has identified poor care to ask what they plan to do to address these issues. The key elements that every hospital must have in place are a compassionate staff culture which is driven by strong leadership and supported by good systems.”

Expect to see frenetic hospital staff the instant that missive pops through the letterbox.

Health care is, indeed, a challenge to all policymakers but the UK’s aversion to decentralization and competition is mere proof of Nigel Lawson’s lament that the NHS is “the closest thing the English have to a religion.” And that religion’s priesthood is becoming more fundamentalist and intolerant as it fails to deliver heaven on earth.

In any listing of people’s most pressing needs, food, clothing and shelter come on top and all are extremely well provided by a huge diversity of competing private suppliers, driven by the profit motive.

But the Ayatollahs of the NHS will have none of it. Only 4% of acute-care beds in Britain are provided by private companies. In Germany, it’s 32%, more than are provided by the state with the rest provided by charities. (Now there’s a Big Society!) In that former victim of Stalinist control, Slovakia, two fifths of hospital provision is delivered by private operators. If you want decent services, set the NHS free!

Don't backpedal on health reforms

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There's speculation around the Westminster Village that, humiliated at the polls, the Liberal Democrat leader Nick Clegg will demand more from his coalition partner, the UK Prime Minister David Cameron. The argument is that LibDem voters don't like the Conservatives' domination of the coalition agenda, so more Lib Dem policies need to be adopted. (Conservative backbenchers, by contrast, express astonishment at the idea that a party which has just been so heavily defeated have the right to demand anything of the Tories, who actually picked up local council seats, despite being in a strong position since the last round of local elections.)

Still, in Nick Clegg has his way, one of the prices that is being talked about is abandonment of the NHS reforms that have been spearheaded by the Conservative Health Secretary Andrew Lansley. There is even talk of Clegg becoming the Health Secretary as well as Deputy Prime Minister. Paying either price would be a grave mistake.

Before the election, the Conservatives did a lot of serious work on the reform agenda, specifically in health and education. The model is similar: basically, let anyone (not just public-sector bodies) provide the service, let customers choose, and let the taxpayers' money follow those choices. An internal market. The Conservatives worked out that they had to introduce these reforms quickly – Education Secretary Michael Gove was out of the trap like a startled whippet – because it would take years to get them working and show results.

We have wasted 15 years in health and education reform. Under Mrs Thatcher, the Conservtives developed the internal market model (for which the ASI can claim some credit in designing), and started to put it into place. But too late. When Tony Blair took office, he had to pay debts to his left, and gave those briefs to left-wingers who unwound all the Tory reforms. Five years later, with billions wasted in trying to improve these monolithic state monopolies, Blair was visibly regretting that, and started trying to re-introduce the internal market, against resistance from his party and his Chancellor.

Internal markets are the right way to bring competition, choice, and innovation into health and education. The last thing we should do is to give up on it now because of some short-term political problem in a minority party. If we backtrack now, it will be 25 years we have lost.

Fatties and smokers save the NHS money

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We're told, endlessly, that smoking must be even more highly taxed because smokers cost the NHS oodles of money. Further, that salt, fats, junk food, should all be taxed because fatties cost the NHS lots of money.

This is nonsense, nonsense on stilts.

There are good reasons to suggest to people that perhaps they shouldn't smoke: it's not particularly good for them after all. But having suggested, having checked that they are aware of the trade off they are making, that's as far as we should perhaps go. Taxing smokes highly because demand is relatively insensitive to price is also fine: we do have to get tax revenues from somewhere. The case for doing something about obesity is of course much stronger. Over and above the danger of ill heath to the porkers themselves there is of course the societal pollution of us all being confronted with the snorting beasts in the streets. Quite enough justification for us to tax them (by the way, the definition of obesity is 20 lbs heavier than the person complaining about obesity).

But to argue that either hamburgers or tabs lead to costs to the NHS is simply wrong:

The researchers found that from age 20 to 56, obese people racked up the most expensive health costs. But because both the smokers and the obese people died sooner than the healthy group, it cost less to treat them in the long run.

On average, healthy people lived 84 years. Smokers lived about 77 years and obese people lived about 80 years. Smokers and obese people tended to have more heart disease than the healthy people.

Cancer incidence, except for lung cancer, was the same in all three groups. Obese people had the most diabetes, and healthy people had the most strokes. Ultimately, the thin and healthy group cost the most, about $417,000, from age 20 on.

The cost of care for obese people was $371,000, and for smokers, about $326,000.

And as Kip Viscusi has pointed out, when you add in the costs of the state pensions that those who die young don't get, smoking and gorging save the government vast sums of money.

There are perfectly good arguments to use in persuading people to not smoke or to eat well. "Wouldn't you like to live longer?" is a useful one for example. But if the answer that comes back is "No, I'd prefer to have a cigar right after this triple scoop sundae" then that's just up to the individual and how they wish to chart their course through this vale of tears we call life.

Lying to everyone about the costs of health care just doesn't help at all. So could various people please stop doing it? Thank you, much obliged.