Richard Smith: Competition versus integration

Richard Smith“Competition in health care should be tactical not ideological.” That was the main message from a recent debate on “Competition versus integration in the NHS” organised by the Cambridge Health Network and the King’s Fund.

 In case you haven’t heard of the Cambridge Health Network, it might crudely and unkindly be described as the opposition to Keep Our NHS Public. It’s heavy on private sector people, many of them instinctive believers in competition in expensive suits, but increasing numbers of public sector people turn up because the network has such good meetings—and “nibbles.” Indeed, people from Keep our NHS Public were there and the first to jump up and voice their opinions.
The audience were pleased in many ways with their intervention because, used to highly polarised debates on the role of competition in health care, they wanted some blood and passion, and the debaters largely agreed with each other—that there is a place for competition but it’s no panacea.

Julian le Grand, a professor at the London School of Economics and once Tony Blair’s adviser on health, was supposed to be making the case for competition but began by saying it can be “terrible in many ways.” He then did his speech on how there are essentially four ways to run a health service, all of them imperfect. I’d heard this before and have found it memorable and useful. I recommend it to you.

The first way is “trust,” the government trusts professionals and hospitals to do the right thing. Unfortunately this ultimately fails because the professionals put their own interests before those of the patients. One of the people from Keep our NHS Public spoke in favour of  a planned system, and le Grand agreed that this would be the best system “if it could work but unfortunately it can’t.”

The Labour government began with trust when it came to power in 1997 but quickly moved to le Grand’s second way-“mistrust,” a regimen of “targets and terror.” This worked in the short term, bringing down waiting times, but such a system leads to distortion and gaming—and the professionals hate it. So next comes “voice,” where patients make clear what they want. This fails because the middle classes and the articulate dominate, but Paul Hodgkin, a GP and founder of Patient Voice, pointed out that voice might become more powerful and democratic because “the cost of keeping secrets is rising and the cost of making your voice heard, through blogs and social media, is falling.”

The final way to run a health system is “choice,” a polite word for competition. Evidence is emerging that hospitals in areas where competition is intense have improved faster than those in  areas where competition is less intense.  But, warned le Grand, the evidence is clear that competition around price is a bad idea because it drives down quality. He pointed out as well that the whole debate was based on a false antithesis because it’s possible to have competition among integrated systems, and it may be essential for there to be competition for integrated systems to avoid them turning into poorly performing monopolies.

Penny Dash, a consultant with McKinsey and one of the two “mothers of the Cambridge Health Network,” said that competition is good in some parts of health care but not others. Generally it’s best when care is less specialised. She and David Meredith have published a paper that argues that “For highly specialised services, competition should be limited or used only very judiciously to ensure quality and avoid over delivery. In contrast, greater competition could be an effective mechanism for improving the quality and efficiency of less specialised services, particularly care delivered outside the hospital.”

Emphasising the importance of good information on cost and quality for underpinning competition, Dash deplored the reluctance of the government to publish more of the information it possesses, much of it showing big variations in the quality of health care and how some of it is unacceptably poor.

“We should bust open the rigged market in primary care,” said one member of the audience, a doctor, later in a phrase unlikely to make him popular with the BMA, which some bits of the BBC now refer to as “the doctors’ trade union.”

Chris Ham, the director of the King’s Fund, took the same line as Dash—that competition may be good for elective and primary care and not so good for urgent, specialist, and chronic care. But it does depend on what  the  government is trying to achieve, whether it wants to improve access, responsiveness, or quality. Ham sees the case for GP commissioning but thinks that specialists should also have a role in commissioning, that it should be possible to commission integrated systems (although probably with overlapping geographies, giving a choice to patients), and that GPs should have a choice of “make or buy.”

Indeed, there seemed to be general agreement that the government shouldn’t fret about GPs also being providers and that if services are going to be moved out of hospitals then GPs have to be able to develop new services. There was also scepticism about the capacity of the National Commissioning Board to commission primary care services.

Somewhat disappointed by the agreement among the debaters, somebody in the audience wanted to know whether the government’s plans for the English NHS will deliver. He thought them risky and lacking an evidence base. The people from Keep Our NHS Public agreed, saying that they were frightened by what was proposed, there was no need for a purchaser provider split, the NHS would become nothing but a brand, there was no case for change, people were more satisfied than ever with the NHS, and the idea that the NHS underperformed compared with European systems was based on flawed data.

The temperature of the meeting was raised to its highest point when Dash responded to this by saying that she too was frightened by the very poor quality of care delivered to many people in Britain, particularly the poorest. Some primary care is dreadful (and a senior GP later agreed), and data in her paper show that, although three quarters of patients are receiving optimal care for a heart attack in some regions, there are many regions where less than a fifth are receiving that care and some regions where none are. Ten years of top down planning hasn’t solved the problem of inadequate care. It’s time for some competition.

There are technical problems with competition in health care, said Ham, but the biggest problem is political. Competition and a market are meaningful only if it’s possible for organisations to fail—and that has always been difficult for politicians. Will they let some hospitals go under?

Ham’s answer to whether the government’s reforms would work was “Nobody knows,” but he observed that the health bill follows closely the seven principles of reforming the public sector laid out by Andrew Lansley in 2005 (see the list below). The first principle is “maximise competition,” and the speech, derived from Lansley’s experiences of reforming British Telecom, included this sentiment: “The combination of the introduction of competition with a strong independent regulator delivered immense consumer value and economic benefits.” But, asked Ham, will the principles work in health care?

So will the NHS in England have competition rammed down its throat for ideological reasons or will it be applied tactically? A member of the audience suggested that we were at the beginning of a 10 year conversation on the role of competition in the NHS and pointed out that the health bill talks of competition “when it is appropriate.”

Andrew Lansley’s seven principles for public sector reform

  • Maximise competition.
  • When transforming public sector functions to the private sector, it is vital also to transfer risk.
  • Appoint a strong, pro-competitive regulator
  • Set out clearly the standards which have to be met and how operators will be held accountable for them.
  • Be clear about how and by whom universal service obligations are to be met.
  • ensure high quality information for customers.
  • More consumers rather than fewer.
  • From a speech delivered to the NHS Confederation in 2005:

Competing interest: RS is employed by the UnitedHealth Group, a for profit group whose subsidiary UnitedHealth UK is working in the NHS in England. He does not, however, work with UHUK but rather on a philanthropic programme to create centres in low and middle income countries to counter chronic disease. He has shares and stock options.
An edited version of this article has appeared in the current Health Services Journal. RS was not paid for writing the article.