I have to admit to being stunned by the level of misinformation that is currently accompanying the Health and Social Care Bill as it is introduced into Parliament.
Yesterday, the shadow health secretary John Healey stated that ‘the changes would make the health service profit centred rather than patient centred, health secretary Andrew Lansley said ‘competition would be on quality and not cost’ and that as the health service is free at the point of delivery patients obtain the best medical outcome rather than the cheapest option. Meanwhile, Karen Jennings, head of health at Unison, stated that the only survivors will be the private health companies which are ‘circling like sharks’ and MPs say ‘the reforms have taken the NHS by surprise’.
None of these statements has much basis in either fact or evidence. The reforms being introduced in the bill are essentially a continuation of the reforms started under the previous administration, albeit at an increase in pace and scale. The Labour reforms introduced competition between hospitals for patients and patient choice of hospital and a system of regulated prices. Lansley has changed the buyers of health care from local PCTs to general practitioners, but under Labour the PCTs were supposed to act on behalf of their local GPs anyhow. Why Healey believes that increasing the pace of reform and replacing the PCTs with GP consortia should mean the NHS switches from being patient to profit centred is completely unclear.
GPs have not been seen by politicians as profit centred previously. In fact, perhaps because GPs see so many voters each week, most politicians studiously ignore the fact that GPs are private contractors and not NHS employees. In addition, the new GP consortia will probably employ a fair number of ex-PCT staff. So it seems unlikely there will be a radical shift in values on the purchaser side.
On the other hand, the current secretary of state is also being somewhat disingenuous in his statement that because the NHS is free at point of delivery, competition will be in terms of quality. He rather forgot to mention one key change he has made, which is to abolish the fixed price tariff introduced by the previous administration, The fixed price tariff was introduced on the basis of evidence from the UK (as well as elsewhere) that competition in health care with fixed prices avoids a potential race to the bottom in which sellers of care compete to attract patients on the basis of lowest cost at the expense of quality
In his desire to push forward his competitive model, Lansley has thrown away the fixed price tariff and does indeed risk such a race to the bottom. The fact that care will be free to the patients is irrelevant, as the gains from price savings will accrue not to individual patients but to GP consortia that face the pressures arising from fixed budgets and a tight financial settlement. Exactly the same model was employed in the NHS in the internal market of the 1990s and in that market, cash constrained buyers focused on price and reducing waiting lists, at the expense of quality.
Karen Jennings’ statement appears to have even less basis in fact. Again, the plans to allow any willing provider to supply care to the NHS were actually introduced by the Labour administration. There has been relatively little entry of non-NHS providers not because these providers were not allowed to enter but because they didn’t find it profitable. There is no a priori reason why in a more constrained financial era that supplying care to the NHS should make private providers large profits.
It is true that GP consortia will probably seek the help of the private sector to carry out their commissioning function but given the poor performance of some PCTs, this may simply allow an increase in talent on the purchasing side of the NHS. And given that the purchaser side has been weaker than the provider side for a long time, this is probably a good thing for patients.
Finally, the fact that MPs think that these reforms have taken the NHS by surprise seems to suggest that MPs don’t notice things until they come to the House. These reforms were trailed very soon after the coalition government came to power and again in a White Paper this autumn. All the major components of the bill were in that White Paper and many NHS bodies have been preparing themselves for another period of rapid change.
What many MPs may not like is the speed of change - and there are good reasons to question this. For example, it is not clear that replacing PCTs with GP consortia at this stage in the reform process will help develop the gains that competition between suppliers has been shown to have had and creating a new set of purchasers will undoubtedly take a lot of attention, resources and time.
In my view these resources would have been better used in developing choice to a greater degree, getting the rules of the game right and then introducing, at a later date, a large role for those GPs who want it.
Carol Propper is professor of the economics of public policy at Bristol University’s Centre for Market and Public Organisation. This post first appeared on the CMPO blog
