James Gubb of Civitas suggests that the NHS obstructs new entrants to the healthcare market on grounds of ideology, and that mostly, market mechanisms have yet to be seriously tried. The NHS should be a 'service quality guarantee' thing; not a 'state-owned provision' thing.

Discussion of market-based reform in the NHS rarely gets an objective play in the public sphere. Free-market ideologues form one side (the market, by virtue of being a market must be the best option); and NHS ‘die hearts’ the other (a bad word against the NHS system of providing healthcare must be a sin).

What evidence there is around the subject appears to go out of the window – see, for example, HPI’s recent expose on the BMA’s response to the White Paper.

As ever, there is a large middle ground. Civitas has spent much of the past year conducting an in-depth qualitative study into how, exactly, the market in the NHS is playing out on the ground: that is patient choice in the field of electives and the principle of impartial commissioning based on an ‘any willing provider’ model elsewhere.

The results are published today. By and large it’s not working too well. The market has produced isolated, significant, positive effects, such as: faster treatment, patient-focus, and improvements in quality and efficiency. As one senior clinican commented:

”The trust [being a business] makes us think in a lean fashion. For example, we recently streamlined prosthesis and implants. It wasn’t our preference, but doing it saved money without adversely affecting patient care. We have to be making money in our own patch. If we’re not, we have to ask ourselves why, because other hospitals can make money on the tariff... You can’t lose money this way in the real world, and you shouldn’t be able to do it in the health service”. (p.34)

But we should not pretend all is well: there is a negative side too. Evidence was uncovered, for example, of collaboration suffering; of waste; and, above all else, of organisational self-interest getting in the way of high-quality care.

In most places, however, little real effect was observed at all.

Are market incentives the future?
The question is, what next? Does this mean a market is the wrong way for the NHS to be travelling? On balance, this is not what we found.

’Where the market has been used … participants did report examples of the positive effects anticipated by the market’s protagonists.’

First, where the market has been used (i.e. where providers report feeling genuine competitive pressure from patient choice and where PCTs have put services out to tender and chosen alternative providers), participants did report examples of the positive effects anticipated by the market’s protagonists.

And second, most importantly, we did not find enough evidence that a ‘market’ has truly been functioning within the NHS to date to justify any reliable conclusion that it must be abandoned.

’We did not find enough evidence that a ‘market’ has truly been functioning within the NHS to date to justify any reliable conclusion that it must be abandoned.‘

There are simply too many barriers to its operation: structural imbalance inhibiting the ability of purchasers (patients, PCTs and practice-based commissioners) to effectively influence providers; significant obstacles to real diversity in the supply-side due to the lack of a level playing field between NHS and non-NHS providers; adverse incentives stemming from payment-by-results; excessively bureaucratic tendering processes; underdeveloped skills on the part of both purchasers and providers; and an oppressive political and cultural environment.

Ah, culture. Here is your breakfast of strategy
The biggest factor here is almost certainly the latter; the prevailing culture of the NHS. Most commentary is focused on the negative effect of ‘command and control’ – and this is justified – but there is a deeper, more fundamental problem not often discussed: the aura surrounding ‘the NHS’ itself as something approaching an untouchable health system.

There is, of course, a level on which this is entirely justified. Many of the values the NHS embodies should always be part of the framework of a civilised society. Universal, comprehensive, healthcare is something that should always be defended. It is as the architect of the welfare state, William Beveridge, intended: in return for everyone accepting a responsibility to contribute in their working lives, "medical treatment covering all requirements will be provided for all".

The NHS: just civic glue?
But, in embracing the additional post-war ideal of nationalised provision, the NHS has also taken on a mantra of being a part of a ‘greater good’. In one sense, this provides some much needed civic glue. It has also been used in too many quarters as an excuse for inertia, complacency and false attachment to the status quo.

As one interviewee said: ”Many people in the UK were brought up to behold the NHS as something almost infallible ... these concepts stay with people and come out in unexpected ways, even when logically they know otherwise”.

Three examples present themselves.

One: there is an uproar almost every time a commissioning organisation proposes pulling a service out of a hospital or awarding a contract to a voluntary, private or even other NHS provider. Yet, if another organisation can offer a better service, at lower cost, all we are doing is denying patients and the public better healthcare and better value for money.

Two: the aura around the NHS inculcates a broader, and damaging, ‘us vs. them’ attitude between the NHS and private / voluntary sectors, that at times puts patient care in real jeopardy. Yet, as King’s College Hospital NHS Foundation Trust have proved with their recent joint venture with Serco in pathology services, patients could gain much from a partnership of talents.

Three: in stifling the competition that the market attempts to inject into the health service, NHS providers have collectively enabled services offering a poor deal for patients to keep running, and isolated surgeons, in particular, from pressure to up their game. One medical director described a shocking story of how surgeons take 2½ hours to perform an operation in the NHS that they do safely in 45 minutes in a private hospital.

Cultural reverence for the NHS as a nationalised system of provision can, in fact, explain many of the most intractable problems with the market: why acute trusts hold so much political power; why the inclination of PCTs is to micro-manage contracts; why there are pressures to leave such a bureaucratic trail when tendering (in case a service ends up going outside the ‘family’); and why independent sector provision has reached nothing like the 15 per cent of elective care envisaged by the Labour Government under Tony Blair.

And what of Equity And Excellence?
So, what of the ‘new’ (new, new) NHS, proposed in the Coalition Government’s ‘Liberating’ White Paper? It does, after all, put its weight behind there being a market.

The problem, however, is that it doesn’t really address the route cause of the market’s current relative failure: moving chairs in commissioning will, without the introduction of a new public consciousness around the NHS (starting with government), do little other than reinvent the wheel – or make it even rustier if too much power is handed to the BMA – and waste valuable time and resources. This is something that the NHS cannot afford in such financial times.

’If they really want results, the Coalition should … quit the headline-grabbing musical chairs and … tell a new story: not of the NHS as a culturally revered system of provision, but as a service that supports civil society through enabling all to access the highest-quality healthcare.’

If they really want results, the Coalition should start with one thing: quit the headline-grabbing musical chairs and embark on the less exciting but ultimately more rewarding task of getting behind commissioners and telling a new story: not of the NHS as a culturally revered system of provision, but as a service that supports civil society through enabling all to access the highest quality healthcare.

Who provides it should not matter: instead providers should compete on the quality of their service offering. We need new entrants with new ideas to meet the health service’s productivity imperative and make it one truly fit for the 21st century.

James Gubb is co-author of Refusing Treatment: the NHS and market-based reform, published today by the think tank Civitas

www.civitas.org.uk/nhs