Head To Head

Is there evidence that competition in healthcare is a good thing? Yes

BMJ 2011; 343 doi: http://dx.doi.org/10.1136/bmj.d4136 (Published 05 July 2011) Cite this as: BMJ 2011;343:d4136
  1. Simon Stevens, president, global health
  1. 1UnitedHealth Group, 9900 Bren Road East, Minnetonka, Minnesota 55343, USA
  1. simon_l_stevens{at}uhc.com

Simon Stevens argues that, used properly, competition can improve NHS services, but Nicholas Mays (doi:10.1136/bmj.d4205) thinks the existing evidence is unclear

Would-be doctors compete for the best medical schools. Actual doctors compete for the best NHS jobs. NHS hospitals compete with private practice for consultants’ time, and they compete with non-healthcare employers to retain nurses. General practitioners have partly been competing for NHS patients since 1948. So have hospitals since 1991. Companies compete to provide the NHS with new medicines and diagnostics. NHS researchers compete for grants. The BMJ competes with other medical journals. And the NHS competes with schools, prisons, and the armed forces for public funding.

So competition in the NHS is both longstanding and inevitable. It involves not a binary yes/no ideological choice, but pragmatic and nuanced judgments about how—not whether—to make use of it.

Competition is not a silver bullet. Strong professionalism, greater performance transparency, sophisticated commissioning, and more rigorous independent regulation are also needed—as recent failures at care homes and at Mid-Staffordshire hospital graphically demonstrate. But competition has its place in policy makers’ therapeutic arsenal, and upping the dose could benefit patients, taxpayers, and indeed those working for the NHS.

Benefits

Competition gives NHS patients choices. “I just want a good local hospital” is a familiar refrain—just like the desire for good local schools and shops. Yet the very fact of choice—and its implicit challenge to would-be public or private oligopolies and monopolies—is grit in the oyster that helps create that result. Choice also provides patients with a more equitable alternative to underperforming services than the NHS traditional “like it or lump it” stance, which permits only the better-off to buy their way into alternative provision. Why shouldn’t patients have a right to know if their primary care is below par,1 or their local hospital is “failing to meet essential standards required by law”2—and then have the right to act on that information?

Competition can also benefit taxpayers. Some US evidence suggests that productivity is higher at hospitals that face more competition and that reducing hospital competition leads to higher prices—by as much as 40%—and possibly to reduced quality.3 4 Could the NHS drive productivity without competition just by squeezing its provider tariff rates? That would ignore emerging UK econometric research suggesting that even with fixed prices, provider competition improves quality and performance.5 6 7 8 What’s more, a substantial proportion of NHS hospital and community spending is not—and probably will not be—covered by these fixed tariffs. If general practitioners can provide needed services at equivalent quality and lower costs than hospitals, why rule this out? When the NHS is searching for an unprecedented £20bn in efficiencies, why tie its hands with a blanket prohibition on competition for these services?

More speculatively, competition might diminish tiresome but repeated top-down NHS reorganisations and pointless bureaucratic restructuring, which history suggests are the inevitable result of day to day central government control. Imagine instead a world where clinicians controlled more of their own destiny, where those with creative ideas and innovative approaches were free to form new organisations or partnerships, and which would succeed based on the extent to which they met patients’ needs and preferences. This is a conception of the NHS not as a giant hierarchically organised healthcare factory—as now—but as an evolving, plural, distributed, and self directed health ecosystem. Many European healthcare systems operate more like that—why not the NHS?

Concerns

What about the concerns? Might management costs go up? US transaction costs are arguably uninformative on this point since they partly arise from outdated manual “back office” processes which can—and are—being automated.9 In any event, NHS managers represent only 3-5% of its workforce, and “there is no persuasive evidence that the NHS is over-managed, and a good deal of evidence that it may be under-managed.” 10 If competition leads to more investment in effective management that might be no bad thing.

As to “cherry picking” of healthier patients—in fact, private providers have often been asked to care for some of the most complex NHS patients, such as people needing medium secure psychiatric care.11 As for elective services, in principle it makes sense for less complex patients to be treated in less resource intensive settings, as long as provider reimbursements are adjusted for severity, and for “level playing field” costs such as training and NHS pension subsidies.

Finally, competition is not the opposite of integration, it just alters the terms on which it occurs. Integration is often unnecessary for elective patients choosing between “any qualified provider.” In other instances integration may occur by default, through periodic contestable opportunities to operate as the sole local provider. But increasingly integrated provision will also develop between these two polarities, without requiring bricks and mortar organisational monopolies.12 Instead, patients with chronic conditions will be able to select providers who achieve virtual clinical integration through information sharing, shared care protocols, aligned incentives, and active patient engagement.

The bottom line? In principle, competition can raise standards, unleash productivity, and improve equity. In practice—if structured thoughtfully—it could make life better for NHS patients, taxpayers, and the health professionals who look after them.

Notes

Cite this as: BMJ 2011;343:d4136

Footnotes

  • Competing interests: The author has completed the ICJME unified disclosure form at www.icmje.org/coi_disclosure.pdf (available on request from the corresponding author) and declares no support from any organisation for the submitted work; SS is employed by UnitedHealth Group, which serves 75 million people worldwide, and in the UK contracts with NHS commissioners and clinicians to improve NHS care. He was the British government’s health policy adviser at 10 Downing Street and the Department of Health from 1997-2004.

  • Provenance and peer review: Commissioned; not externally peer reviewed.

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