Rapid Responses to:
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Rapid Responses: Rapid Responses published:
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life in the market
- Sebastian Kraemer (27 July 2007)
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Re: life in the market
- L S Lewis (28 July 2007)
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Not just whole hospitals...
- stephen black (30 July 2007)
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Sebastian Kraemer, Consultant Child and Adolescent Psychiatrist Whittington Hospital, London N19 5NF
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It is often stated that the government’s proposals for foundation trusts within the National Health Service could create practical difficulties, as if this were merely a risk that might, with good management, be avoided. There are bound to be problems in implementing such a plan (not least its hidden expenses) but these can be surmounted, with a will. What cannot be avoided is the fundamental error of principle in the plan. The intended effect of the proposed foundation trusts is to increase the wealth of units that can offer apparently cost-effective services at the expense of those which fail to attract custom. This cannot conceivably improve the performance of the service as a whole – neither at district nor at national level- because a market requires some units to be failing at any point in time. Not everyone can win simultaneously. The pressure on losers to shape up – or give up – is tolerable in an enterprise which is not obliged to protect lives and may even result in a better product. But if the product is an integrated health service, then any kind of failure within it is unacceptable, at all times. The unlucky patients who happen to have put their trust in a particular service which is struggling to survive will not be comforted by the knowledge that market forces will eventually weed it out. The text of this letter may seem a little odd in places, because it is - with only a few substitutions and deletions - identical with a letter from me about the internal market published in the Financial Times on 28th June 1989. Competing interests: None declared |
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L S Lewis, GP Surgery, Newport, Pembrokeshire, SA42 0TJ
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Sebastian Kraemer's claim that markets "cannot conceivably improve the performance of the service as a whole – neither at district nor at national level- because a market requires some units to be failing at any point in time. " remains as wrong as it was in 1989. two examples - 1: Old GMS. General Practices were in a market for patients ( List Size , with money-following-patients ) since the inception of the NHS. This implied a degree of competition, and a sense in which the patient could take her custom wherever she felt best-served by a willing GP. It worked quite well. Most GPs tried their level best and had a finacial incentive to do so. There was no REQUIREMENT for anyone to fail. 2: NHS TARIFF and payment-by-results. Elective surgery, for hips or cataracts, say, is now performed more 'profitably' by those units with higher volumes and lower costs. Any unit which cannot maintain profitability on these terms should get out of hip surgery, and into something else. We benefit as a nation of taxpayers, because for a given national spend, we maximise the number of operations done. We further benefit as providers because we have a free and fair mechanism for rooting out inefficiency. But nobody is REQUIRED to fail.. If all do their level best, and are all as good as each other, then all shall have prizes, and continue in business. My main criticism of Foundation Trusts is that they introduce a further bump in a non-level playing field, much as the staged introduction of fund-holding did. Successful markets work by squeezing out unnecessary costs, such as the NHS Apparat. It should come as no surprise that the Apparat therefore poisons any potentially effective market. Good 'market' ideas, where good performance is rewarded, can be defeated by poor implementation, or indeed, destroyed by the Machiavelli in NHS management. Competing interests: None declared |
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stephen black, management consultant london sw1w 9sr
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Chris Ham is right to point out the importance of the choices the government makes around failing hospitals: if poor hospitals know they will be bailed out it severely undermines any incentives to improve. But there are two related issues that could, if they were more widely discussed, mitigate the pain. The first is that much improvement could be achieved without closing any hospitals as long as the government does not impose overly restrictive rules on the closure of some services. Few hospitals run deficits in every department or in every service (though too many have little idea of the real positions across their departments). Many hospital deficits could, therefore, be substantially reduced if hospitals swapped activity with their neighbours so that each expands where they are efficient and eliminates those departments whose efficiency is poor (this can be a win- win situation). So the earliest question to confront Gordon Brown and Alan Johnson may be how to enable major reconfiguration of hospitals services, not closure of whole hospitals. The second factor is about the amount of alternative provision available. Almost every proposed reconfiguration will provoke local opposition from the people who live next door to the hospital. But what should matter for serious decision makers is not the views of the IMBYs (everone wants a hospital "in my back yard") but a rational standard of provision. For example, it seems reasonable that we should try to maintain general hospital levels of service within a certain travel time of the population (with perhaps a much less stringent limit for those services such as stroke requiring substatial critical mass). But this sort of analysis is rarely seen in the context of reconfiguration. We have recently been analysing England to see what the situation looks like. If we set an acceptable access standard of 30 minutes travel by road (actually quite a stringent target) we find that about 7% of the English population have no provision (this is mostly the rural fringes) but a remarkable 55% of the population have three or more hospitals available. 10% have more than 10 choices at this standard of provision. What this means is that there are parts of the country where even the complete closure of a major hospital would not leave a black hole for provision and the government should stand up the the IMBYs. In fact many of the most controversial proposed reconfigurations are in well- provisioned parts of the country where the proposed changes could give people substantially better quality provision at only a marginally less convenient location. If the government is flexible and sensible it will not undermine the incentive to be efficient and the threat of hospital closure, but it might able to avoid some of the tougher choices if is more flexible around allowing department-level reconfiguration. Competing interests: None declared |
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