Why do we really want competition in the NHS?
No, it's not just so that we can financialise all that is holy, expose the UK's great socialist experiment to filthy lucre. The reason, actually, is so that we can try and work out how to make the NHS better.
There's a report in the BMJ about how independent sector treatment centres (ISTCs) have been doing and the general answer is, umm, OK really. The medical outcomes are a little better than the standard NHS, even allowing for the different mix of patients. And the patients seem to like them more than he NHS as well. Better production and happier customers: but only a bit. It's not a bad outcome certainly.
It's also not quite enough to provide a conclusive answer to the question of why we want to have competition in the NHS. A bit better is, after all, only a bit better. The true answer about competition is that no one actually knows how to make health care better. I most certainly don't, I doubt you do and I know absolutely that Andrew Lansley doesn't. We also know that the knowledge of how to, perhaps, make it better is local: it's in the hands of the surgeons and nurses and managers and cleaners and aides and porters and......So, what we want to do is open up the space, allow people to try things out, provide them with incentives to do so and then we can see what works.
For example, perhaps this would be a good idea?
This is cardiac surgery on the production line, in an extraordinary hospital in India.
The Narayana Hrudayalaya in Bangalore is the largest heart surgery hospital in the world. It has 1,000 beds, and last year it carried out a staggering 6,000 operations, half of them on children.
By contrast Great Ormond Street in London did less than 600.
"We are all products of the National Health Service in the UK, and what we learnt over there we have implemented in perhaps a slightly different manner," says Dr Devi Shetty, India's most famous heart surgeon, and the driving force behind the hospital.
"We believe that the only way is to build large hospitals - 100 or 200 beds are not going to be the solution for the current world health problem. We need to build large hospitals where hundreds of operations are carried out every day."
And here in Bangalore, the theory appears to work. Despite the huge volume of operations, mortality rates are comparable with or better than those in Britain and the US, and costs are much lower.
Maybe this is a good idea, maybe it isn't. I don't know, you don't and Andrew Lansley doesn't. And that is the reason that we want competition in the NHS. We're all entirely buggered as to how to make it better. So we must open it up to experimentation, to that market process of trying things and then sorting through the successes and failures, so that we can actually work out what does make it better.
Yes, there will be failures just as there will be successes. But the evidence of the 20th century is that such market processes reduce costs and improve outcomes over time. A useful lesson for us to remember in the 21 st century.
Fat taxes won’t prevent people getting fat, fatheads
Research released last week suggested that people in Wales, Northern Ireland and Scotland should follow an ‘English’ diet to reduce levels of obesity. Fair enough, but unfortunately they also recommended imposing this diet by taxing fatty foods.
Fatty food has an inelastic demand curve i.e. price has little impact on demand. What will happen is people will redistribute their income away from other areas of consumption – clothing, housing etc and towards the, now more costly, fatty foods that they enjoy or they may simply spend less on food which means they'll cut out any healthier elements of their diets. But they'll still eat fatty foods so they'll be poorer, but still fat. Just like those smokers who still smoke.
The state would also be sending out mutually contradictory signals. On the one hand it would be attempting to increase the private cost of consuming fatty foods by raising their price. On the other hand it is effectively encouraging consumption of fatty foods by socialising the health costs of doing so via the NHS. A healthcare system free at the point of delivery is a very poor mechanism for incentivising healthy diets. An insurance-based system would be far more effective in this regard as it could incentivise healthy eating and weight-loss via reduced insurance costs.
The other problem here is that the researchers have failed to ask themselves why the English diet (I can see plenty of English people shovelling fat into their mouths, but still, on average) is healthier than elsewhere in the UK? Clearly this is not because we have taxes on fatty foods but because we are wealthier.
Within England, diets tend to be better in the wealthy South East than the poorer North East. There is a ‘robust’ correlation between absolute levels of wealth and health outcomes. Making people poorer by taxing them more is not going to make them wealthy and thus is it likely to reduce their overall health outcomes as well as having little or no direct impact. I can’t even see ‘Spiritlevel’ types supporting this kind of action; such taxes would fall more heavily on the poorest thereby increasing inequality.
Of course the root of the problem is that these regions of the UK have Soviet (actually higher than Soviet) levels of state intervention which is impoverishing them. The way to deal with obesity here is not to make them poorer by increasing tax rates and further intervention, but to make them richer by decreasing rates of tax and decreasing intervention i.e. completely the opposite to what the very sinister-sounding 'Health Promotion Research Group' propose.
‘Sin’ taxes do not merely fail in their objectives, they have serious unintended downsides as the trade in smuggled alcohol and tobacco demonstrates. I look forward in trepidation to the day that there is a serious outbreak of food poisoning because someone has smuggled a lorry-load of dodgy frozen burgers into the country in order to avoid the ‘fat tax’.
We're going to have to abolish drug licencing you know
Yes, I do mean health type drugs, not fun type ones, for the latter a system of licensing would be a tremendous step forward from the current position. But for health type drugs we really are going to have to abandon drug licensing. Or at he very least, our current system of licensing them.
The reason is that currently we've a system which, however bad it is, however many people it kills by keeping new drugs off the market through the expense of getting a license, is aimed solely and purely at mass market drugs. If, as we move to more personalised medicine, we stop having mass market drugs then we cannot have a drug licensing system which is set up only for those mass market drugs that no longer exist.
If each drug takes $1 billion to reach the market and 10 million people use it over its patent protected lifetime, then each patient contributes, on average, $100 to the development of that drug. If we keep shrinking the denominator, then the economics become more difficult. Taken to the extreme of personalized medicine, with one specific drug for each person, we cannot expect that one person to cover the $1 billion development cost. Even if the development cost drops to $1 million per new drug, the economics won't work.
I think the average development cost would need to drop to $10,000 per drug to be reasonable. To reach this price, we would need to exclude the FDA completely--allow drugs to be marketed without prior FDA approval--or allow the FDA to approve the process of drug development instead of each specific drug.
And there are drug treatments out there which are tantamount to a new drug or each person: cancer treatments that study the DNA of the cancer, the specific immune system and which then turbocharge one to attack the other as an example.
Even where we retreat from such extremes we already know that different drugs have different effects on different parts of the population even when being used to treat the same disease. Those of West African derivation can react quite differently, as a group, to a drug than those of northern European, or East African, or Australasian genetic heritage as can each group from the other. We're finding certain gene combinations which mean that certain drugs will or will not work in sub-groups of such larger collectives as well. All in all, we're finding that ever more drugs have ever smaller target populations, to say nothing of those drugs we've developing, or would like to, to treat complaints that only strike a few people.
We therefore have to reduce the cost of a license for each and every drug: which means abandoning out current methods of licensing drugs. We simply cannot continue to use methods solely appropriate for mass market drugs when we're not in fact trying to develop mass market drugs.
All of which is rather alarming really. For you could, I am sure, talk to any individual who works in or with the drug licensing authorities and easily gain agreement with the basic thesis above. But there's nothing quote so conservative as a bureaucracy when acting collectively, however reasonable or intelligent the component parts of it.
Think piece: The future of long-term care
As the encroachment of government grows larger and larger, so does corruption, greed, and dictatorial behaviour grow likewise. The dumbing down of state education ensures that “we the people” will become less and less knowledgeable about what is a proper role for government.
A case in point is the issue of Long Term Care (LTC) – a crisis which has been building up for decades, at the same time as we the people have come to expect a growing NHS and, in many cases, would now expect the NHS to expand as necessary to cover long term care of the elderly. Nor have governments done anything to abuse us of that impossible notion any more than has the NHS which, on the contrary, has encouraged it and advertised “NHS continuing health care” as “a package of continuing care provided outside hospital, arranged and funded solely by the NHS, for people with on-going healthcare needs”.
Governments don’t do long term. Few readers may recall that way back in 1997 LTC funding was made a priority by the Labour government, with a Royal Commission reporting in 1999 – at which point it was thrown into the long grass. Pension schemes (similar in many respects to LTC) have been peppered with reams of rules and regulations throughout my long career in that industry and get worse by the day. The 1997 raid on occupational schemes by Gordon Brown via changing the ACT tax rules virtually killed off final salary-related schemes in the private sector. This raid was upon existing assets, which were backing promises in respect of years of service already accrued, so naturally it plunged many thousands of schemes, large and small, into insolvency. (1, see references below) This is a crucial matter because pensions and LTC have many similar features. It is all too easy to see that another “Brownian raid” may hit LTC providers retrospectively. [Continue reading]
Should medical patients be customers or burdens?
I know first-hand how appalling NHS care of elderly patients can be. I've been a critic of the NHS for at least the last 35 years, but even so, the inhumanity of how it treated my mother in her last weeks took my breath away. And I'm usually pretty good at taking public servants to task, but even so, the whole experience left me sobbing with frustration. Yet I knew then, as we all know now, that such treatment was not the exception. It was, as I could see from life on my mother's ward and as we now all see from the stories that are peppering the press, the norm.
It all happened at a time when the NHS had received a huge cash boost from Gordon Brown and many people were arguing that it provided excellent value for money in terms of medical outcomes, such as longevity. Current data on the UK's awful record on cancer outcomes is just one indicator that this is not so. But even if the NHS's technical outcomes were the best in the world (and it's far short of that), what is most wrong with it is that it treats people inhumanely.
In a recent book on The Morality of Capitalism, US think-tanker Tom Palmer talks of his treatment for a serious condition in both public and private hospitals. In the private hospital, he was seen quickly by the right people, treated as a human being, everyone took an interest in him, and they respected his wishes. In the public hospital, he waited, was bossed around despite being in pain, had no human engagement with his doctor, and was generally treated as a piece of meat.
I don't think for a minute that working for a private or a public institution fundamentally changes people's basic humanity. But the incentives in a private system nevertheless encourage them to show more of their human side. That is because they see the clients they have to deal with as valued customers: their job, their income, would not exist if those customers were not satisfied. And they know from their own experience that the way a service is delivered – the cheeriness, the human engagement, the concern – are as much a part of a customer's satisfaction as getting the service itself. By contrast, the incentive structure in too many public services induces staff to regard customers as a necessary inconvenience. Shouldn't we prefer a system that positively encourages and brings out people's humanity, rather than one that discourages and so obviously represses it?
Scrapping the NHS IT scheme
The UK government plans to scrap the £12bn National Health Service IT scheme, commissioned by the Blair-Brown administration, and which was supposed to join up the provision of health care, linking patient records, family doctors, hospital consultants, nurses, pharmacists, managers and all the rest. The announcement comes as no surprise – from its outset, the scheme (originally and over-optimistically predicted to come in at around £2bn) always looked like a mess. Ask a consultant what a patient record should look like, for example, and you will get back a hundred pages of dense text, which will change every week as new conditions, treatments and equipment springs up, unintelligible to anyone but a specialist.
It was another example of top-down, centralist thinking. A Stalinist approach, one might even say. But the trouble with such approaches is that far too much information has to be collected, collated and processed at the centre. It is an impossible job.
The last government should have read their Hayek. Most complex human structures – language, to take just one – do not arise out of central planning but are built up through the millions of one-to-one personal interactions. We try to make ourselves understood to others, and from that grows up the words and the rules of grammar that we all use because it actually works. We don't plan it – we don't even realised we're doing it – but it works.
When the budget hit £12bn – there were fears that it could reach £20bn – I commented that there was a much better way of getting a joined-up, computerised NHS. There are around 1.2 million people working in the NHS in total, so for the same price tag, £1,000 a head, we could buy them all a web-enabled laptop. Within months, rather than the predicted decade, they would all be talking to each other and working up protocols to move information about just like language – or the market – does. Sit back and watch it grow. Indeed, for £1,000 a head, we could have bought them all two laptops – one to use, and one with all our patient records on it to forget and (as seemed to be in vogue with civil servants at the time) to leave in the train.
We need competition in healthcare
Many of the misleading and paternalistic arguments against reform of the NHS are the same arguments which were used to oppose the privatisation of the utilities in the 1980s. Some opponents argue it will reduce standards, others dislike the idea of any profit being made and still others are enthralled by the idea of a benevolent state monopoly looking after us. Amidst the chaos of such confused logic and regressive thinking, the interests of patients and taxpayers have been sidelined.
Yet what is actually being proposed, allowing businesses and charities to compete with NHS hospitals, is far less radical than the privatisations of the 1980s. But it is a step in the right direction. People who believe in the intrinsic value of liberty should always support more competition as it means greater freedom of choice over consumption options. It is unfair to deny patients the right to choose another healthcare provider if they feel it will give them a better service. It becomes tragic, when we see the appalling conditions experienced by many elderly patients as shown by the Care Quality Commission’s recent report.
The increase in specialisation within the NHS itself that further competition would promote would drive up standards. Private firms or charities delivering especially good care in a particular service such as hip-replacements will drive NHS hospitals to shed their uncompetitive services and focus their resources on areas where they believe they have a competitive advantage. This should reduce wasted costs and increase the quality of choice for consumers.
If we are happy for our very important water, gas and electricity supplies to be no longer in the hands of a state monopoly, then there is no compelling reason why our healthcare should also be. If we have accepted that the profit motive is the basis for innovation, investment and progress in all other markets, then why shouldn’t we harness that in healthcare? Why should we not allow profit making and competition with state-run services if it drives the search for more creative and cost effective health services? Why should we be content with the status quo when Singapore’s system with substantial private sector involvement delivers superior outcomes for 3% of GDP compared to the UK’s 9%?
If we believe in liberty, if we want to see rising standards and if we want lower costs, then we should support more competition in healthcare.
Adam Memon won second place in the 2011 Young Writer on Liberty Awards.
The NHS is failing us
The NHS is failing us
Most in Britain dislike American healthcare. And rightly so, since the US insurance system is a cartel protected by government legislation. However, that shouldn’t make us want to defend Britain’s Soviet-style healthcare either. Both systems are bad.
You can check out the OECD statistics here. Britain's relatively poor cancer survival rates are of particular concern. The UK ranks 12th (and well below the OECD average) for bowel and breast cancer survival, despite a tripling the NHS budget for these services over 12 years. The ASI produced a good report on this earlier this year.
The problem isn’t finance (per-capita NHS spending is considerably above the OECD average), but the politically charged nature of the NHS, and therefore the inability to remove planners and reform provision. Figures for 2007-2011 show that the NHS spent more on “media professionals” (i.e. spin-doctors) than on cancer specialists. Yet pointing this out – as Daniel Hannan did – puts you beyond the pale of dialogue. The NHS’ failures on cancer included a shortage of oncologists, a lack of MRI scanners and an inability to provide cancer drugs. The basic functions of business (recruitment, procurement and provision) are poorly performed by the state.
This also explains the postcode lottery, where some hospitals (apparently) can provide Kremlin clinic standards, whilst many other hospitals resemble MRSA infested cesspits of pebble-dashed, post-war brutalist architecture. The NHS’s futuristic IT project is a categorical failure, having wasted more than £2.7 billion of taxpayers’ money. Moreover, the NHS’s rebuilding projects (using PFI money) may become obsolete through overcapacity, as recently revealed.
From 1999 to 2004, the government doubled GPs' pay . The Sunday Times reported that after a three-year contract (2004 - 2007) increasing pay by 25%, GPs worked 15% less and 33% worked part-time.
These oft’ repeated arguments don’t include the massive oversupplies of Tamiflu (based on public hysteria rather than medical evidence), or the inability to clean hospitals (as shown by MRSA outbreaks), or declining standards in nursing and elderly care, or even the extent to which unnecessary procedures are funded by the taxpayer...
It’s pretty clear that the NHS is failing. It’s funded by a damaging taxes on work and operated according to centrally determined targets. There’s no reason why the UK can’t have privately run hospitals funded by a truly competitive insurance market. It would almost certainly deliver a more efficient and comprehensive health system, and it needn’t challenge the universal access that so many people value. It's the ends that matter, not the means.
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Once in a while an idea comes along that's so crazy it just might work. A week ago I wrote a blog about the rise in tuition fees and the perceived necessity of a university education. But let's for a second consider that, having looked at all my options, I decide a university degree is the right path for me but I'm still concerned about the costs. Well one academic might just have the solution I'm looking for – I could pay off my debts by