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Competition in the NHS has saved lives, study indicates

BMJ 2010; 341 doi: http://dx.doi.org/10.1136/bmj.c3787 (Published 14 July 2010) Cite this as: BMJ 2010;341:c3787
  1. Nigel Hawkes
  1. 1London

    Competition in the NHS in England has saved lives and reduced lengths of stay in hospital, a new study says.

    Patients who were treated in hospitals in areas where competition was feasible did better than those in areas where there was less competition, say the researchers, from Bristol University, Carnegie Mellon University in Pittsburgh, Pennsylvania, and Imperial College London.

    Lives were saved, length of stay in hospital was reduced, and costs did not increase, they found.

    The introduction in the NHS of “patient choice” (the right of patients to choose the hospital in which they are treated) and of the payment by results system, by which hospitals are paid according to the activities they carry out, made possible a natural experiment, the authors said. Health outcomes could be measured before and after the introduction of patient choice, and areas of greater or lesser competitive pressure could be compared. Patient choice was more likely to be exercised in areas with a greater concentration of hospitals and where travelling times are relatively short and less likely in rural areas.

    The team, which published its results as a working paper from the Centre for Market and Public Organisation at Bristol University (www.bris.ac.uk/cmpo/publications/papers/2010/wp242.pdf), used as an indicator of quality death rates after admission to hospital with heart attack. They also looked at deaths after any admission to hospital.

    Patients who have had a heart attack do not exercise choice: they are taken to the nearest hospital. But better hospitals tend to save more lives among such patients, so if the effect of competition is to improve quality, it could be expected that death rates would be lower in competitive than in less competitive areas. This is indeed the conclusion the researchers reached.

    The team—Martin Gaynor, Rodrigo Moreno-Serra, and Carol Propper—concluded that the policy saved 3354 life years by 2007, a benefit it calls “modest but not trivial.” Using the benchmark of $100 000 for the value of a year of life saved gives a financial benefit of $335m (£221m; €264m). Real benefits would have been greater, they say, as the calculation was based only on life years saved, not on other quality improvements.

    Professor Propper said, “The current ‘choose and book’ and fixed price regime in the NHS appears to create clear incentives for hospitals to become more efficient. Quality has risen without a commensurate increase in costs. Competition is bringing about positive results.

    “We need to ensure that policies to promote competition remain part of the government’s armoury. The new health secretary, Andrew Lansley, has signalled that this is his intent, but the promotion of successful competition in health care has implications that he may find less easy to swallow.

    “First, if competition is to work, the secretary of state must retain price regulation in the NHS. A ‘free for all’ in prices would mean a return to the internal market of the 1990s. We know that these arrangements led to poorer quality in competitive areas, as hospitals competed vigorously on waiting times and ignored aspects of quality that are more difficult to measure.

    “Second, it means that the tendency of the Department of Health to merge failing hospitals needs to be looked at carefully. While there are gains from removing poor managers when a hospital fails, removing capacity by merger will limit the extent of competition and may stifle the impetus given by competitive forces to improve outcomes for patients.”

    Notes

    Cite this as: BMJ 2010;341:c3787