Reforming the NHS: by choice and competition?
| Author | Ooi, Ronnie |
| Position | Features - National Health Service |
Prof Julian Le Grand gave a lecture at the LSE in February 2006 which proposed that choice and competition were essential ways of managing problems of the NHS (Le Grand, 2006). By 'choice', he meant giving patients a choice of hospital, someone giving them help in making that choice in addition to that given by the GP, and setting up privately owned facilities which rival the local NHS hospital.
James Purnell followed in August 2006 with a paper which also commended choice and competition (Purnell, 2006). He foresaw such policies as leading to the possibility of a 'self regulating public service'. Neither Le Grand nor Purnell attempts to design ways of delivering these proposals nor evaluate the financial impact they would have on the NHS.
Julian Le Grand speaks as an economist. Like many in his profession he makes simplifying assumptions which tend to divide economics from real life. In particular, economists tend to treat enterprises as black boxes with input and outputs. By contrast, those with experience of managing large and complex, technically based companies concentrate on the practicalities of controlling the enterprises.
There is a legendary Russian tale about a village council faced with deciding what to do with an enormous pothole in a local major road which was causing accidents. The council decided to call a meeting of the local wise men. After long deliberation they decided to build a hospital beside the pothole!
By analogy with the Russian tale, the NHS has recently suffered serious additional instability from the implementation of the substantially undefined choice and competition proposals. We believe it is far better to mend the potholes with traditional tight general management skills coupled with effective external regulation. The NHS should not be used as a test bed for economists' untried theories.
Market mechanisms
In his lecture Le Grand lists the problems of the NHS--waiting lists, inefficiency, unresponsiveness and slowness to innovate--and observes that few of them have much to do with money; they have much more to do with 'the monopoly nature of the state provision'. His main remedies are user choice and competition from new entrants, as incentives to improving performance.
Le Grand is ambivalent about top-down performance management. He says 'to my surprise it has been to some extent successful. Most NHS targets have been met and waiting times have sharply improved.' But Le Grand believes that targets discourage continuous innovation since once they are reached there is no incentive to go further. What is needed is a system with incentives 'embedded within it', which would give continuous improvement. He lists three key elements: user choice, money following choice, and new forms of provider. Like Purnell, Le Grand is concerned that the less well-off apparently make less use of the NHS.
In conclusion, Le Grand says there seems to be no alternative to the introduction of Blair reforms of choice and...
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