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Richard Smith: Why the NHS can’t be left to government

23 Jun, 08 | by BMJ

Richard SmithTwo weeks ago I sang the “Winkle Song” in the excellent acoustic of the Oxford Union. I’m a terrible singer, and it must have been excruciating for the audience. But I’m confident that it was less excruciating than me delivering my speech against the motion “This house believes the NHS is only safe in government hands.” It was less excruciating because I was about the tenth speaker, and it was coming close to midnight.
Interestingly the union had struggled to find speakers for the motion. Ivan Lewis, the Labour minister, didn’t turn up, and trashy novelist Louise Bagshawe (her adjective not mine), a prospective Tory MP, was somewhat embarrassed to find herself proposing the motion when Stephen Dorrell, former Tory Secretary of State for Health, was opposing. She saved her career but mangled the debate by arguing that the NHS certainly wasn’t safe with a Labour government but would be fine if we had a Tory government in perpetuity.

I told what was left of the audience before it was assaulted by my singing that I would put my arguments into a BMJ blog—and so here goes.

My undelivered speech began with support for the principles of the NHS. It must cover everybody, be free at the point of delivery, and be driven by need rather than ability to pay. These are non-negotiable. Comprehensiveness has already gone with glasses, dentistry and long term care having fallen away, and high quality care for all has always been an aspiration rather than an achievement: the sad truth is that the marginal—the poor, the mad, the addicted, the imprisoned, and the like—get a poorer service than a middle class busybody who knows how to play a complex system.

If the government is to do all then it must fund, set direction and manage overall, provide, and regulate. In Britain the government or state does do all these things, but I don’t think that many in Britain understand how unusual this is internationally. The NHS is admired from a distance—particularly by those interested in keeping costs down—but rarely copied.

Funding through taxation is efficient, and I have no dispute with the government doing so. I do wonder, however, if it will be sustainable. There is very strong evidence that as countries get richer they spend more on health. We may well follow the Americans to spending 16% or even more of our gross domestic product on health, and if we do it seems most unlikely that the extra money will come from the public purse.

Nor do I have any great problem with the government setting a direction for the NHS and managing it overall, but many others – including the BMA – would like to see the NHS set free from political control. The economy flourished when the Bank of England was allowed to set interest rates. The NHS could do better if freed from political whims constantly pushing it in different directions. I doubt, however, that political independence is realistic when funding comes directly from the Treasury.

The core of my argument is that the NHS will be safer if there is a plurality of providers – and by this I mean hospitals, GPs, and (somewhat confusingly) “commissioners.” (In my talk I defined commissioners. It might seem patronising to do this for a BMJ audience, but my bet is that many readers are hazy about commissioning. I defined commissioners as people who try get maximum value from available resources.)

By bringing in new providers – private sector, voluntary organizations, and others – the NHS can increase capacity, access new skills, and inject competition. Many people feel uncomfortable with competition in health care, but competition is the only mechanism we have for consistently raising quality and reducing cost, which is why the vast majority of services and products that we receive in our everyday lives come from organisations that must compete to survive.

The private finance initiative has not been a big success. It has delivered new hospitals (and infrastructure in the NHS was shameful before it began) but at high cost and with severe constraints on the flexibility that is essential in improving health care. The government would have done better if it had been bolder. Buildings account for only about 15% of the annual costs of a hospital, and there is limited scope for savings. Clinical activities, in contrast, account for more than half of costs – and there is lots of room for raising quality and reducing costs.

Valencia in Spain has demonstrated what can be achieved by letting the private sector run not just the buildings but the whole show.  The local government outsourced a hospital and primary care, and the private company managed to produce services that were as high a quality as anything in Spain but ran at 75% of the cost. Importantly patients who were not satisfied could go elsewhere and the company had to meet the costs of their treatment. The company achieved high quality and low cost through redesign of clinical processes, coordination of  primary and secondary care, superior management of people, and electronic patient records underpinned by decision support for doctors.

General practice has always been in the private sector, and it’s generally of a high standard. Access is a problem, as patients and politicians know but GPs are reluctant to recognize, but the biggest problem is big variations in quality – with the poorest people generally getting the poorest care. Private companies can help. The company I used to work for, UnitedHealth Europe, took over a practice in central Derby, dramatically raised the quality, extended opening hours, offered more services, and consequently attracted many new patients.

Private companies can also help with commissioning. Everybody agrees that commissioning must be strong to avoid resources being sucked into hospitals. Everybody agrees as well that it isn’t strong. Private companies can increase capacity, provide missing skills, and through competition raise the game of existing commissioners. They can also be asked to do all this “at risk,” meaning they get paid only if they deliver.

The NHS is likely to be a lot safer if it has a range of competing providers and commissioners than if it depends simply on state institutions.

Finally, the government can regulate the health service – but it doesn’t have to. Arguably the Joint Commission, a private company that accredits hospitals in the US, has done much more to raise standards in hospitals than the bewildering array of regulators in Britain, which seem to change every three years as they fail to satisfy politicians.

It’s because the arguments in favour of the state not doing everything are so strong that the Oxford Union failed to find people credibly to argue the opposite – and I was reduced to singing the “Winkle Song.”

Competing interest: I am employed by the UnitedHealth Group, an international company that through its subsidiary, UH UK, is working with the NHS. I work, however, on a philanthropic campaign to create centres in the developing world to counter chronic disease, and the views in the blog are wholly mine.

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  • Roshen Mathew

    Privatization of health care indeed promotes competition and better health care. But in developed countries having socialized medicine as the major form of health care to its citizens, the entry of private health insurance companies who deliver healthcare would also cause unhealthy competition in the field. These health insurance companies always find their ‘black sheep’ to bribe in political circles and tip the scales in their direction. If an organization like the NHS thus has less autonomy of its functioning and has to depend on the treasury for its functioning, it might result in less resources being granted to it. This would cause even the middle class people preferring private health care instead of the NHS in the long run and the NHS being used by people who can’t afford health care. This would result in poorer care being delivered to poor people. Few developed countries have private health care and socialized health care systems running synchronously.

    The Joint Commission has improved health care in US hospitals, but not as significant as the author thinks. However, I totally agree to the fact that an organization like the Joint Commission in the UK monitoring the hospitals and health delivery systems would make a significant improvement to the NHS.

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