If anything, the NHS should be carpeted with more competition

Not carpet bombs, but competition.. Pixabay/LoboStudioHamburg

David Nicholson, the retiring Chief Executive of NHS England, has warned against what he called “carpet bombing” the NHS with competition. For him, and others, less focus on competition is a good thing. He is wrong.

One of the lessons that the Blair government, to which I was an adviser, learned from its dealings with public servces was that they couldn’t be relied upon to improve on their own. Service providers continuously demanded more resources and promised great things if their demands were met; but, even as more resources went in, things didn’t get better.

From what we saw, simply relying on the intrinsic motivation of providers to deliver high quality services isn’t enough; some kind of external pressure is necessary.

The question is, what kind of external pressure? The Blair government began with a top-down approach - looking at management and senior leaders first - and set targets such as cutting waiting times, backed by a new performance regime. Senior hospital managers faced demotion or the sack if they failed to meet the targets.

This approach was originally termed “targets and performance management” but rapidly becoming known as “targets and terror”. It was remarkably effective. The NHS was soon meeting all of its targets and with dramatic improvements in key areas - especially waiting times.

But it also had some serious drawbacks. It encouraged manipulation and fiddling of the figures. Even more than that, it seriously demotivated and demoralised staff.

So the government decided to move to a more bottom-up source of external pressure: start with patient choice first and provider competition.

And again it seemed to work. Using the number of deaths from heart attack as a measure, Zack Cooper and colleagues at the London School of Economics found that, during the period when patient choice was introduced in England, hospital quality improved faster in more competitive areas. Their a result was confirmed by Carol Propper and colleagues at the University of Bristol who researched the issue independently and came to the conclusion that healthcare competition saves lives.

Propper and colleagues also showed that competition had a positive impact on the quality of management which had a knock-on effect on hospital quality. Richard Cookson, from the University of York, also challenged the idea that more competition undermines fairness of access and equity in health. He and colleagues showed that the package of competitive reforms introduced into the NHS in England actually improved these measures.

A comprehensive review of all the evidence led by Nicholas Mays, and published by the Kings Fund think tank, found that the market-related changes introduced by New Labour from 2002 had the predicted effect and “most of the feared undesirable impacts had not materialised to any extent” – though the review added that the improvements may not have been as great as those created by the previous targets and performance management regime.

So more, not less, NHS competition is desirable. And, despite all the sound and fury surrounding the reforms started by the former health secretary Andrew Lansley, the Coalition government is basically continuing this policy.

But there is a new and interesting development this time around. This is the encouragement the Government is giving to the growth of organisations for service delivery, including social enterprises and employee-owned organisations or public service mutuals - where public sector staff “spin out” or leave the public sector to run their own organisation to deliver services.

At present within the health and social care sectors, these mutuals are mostly confined to the area of community health and adult social care, but the competition policy gives the opportunity to extend this to other parts of the NHS, including acute hospitals.

Reviews undertaken by the Mutuals Task Force (of which I am Chair) concerning the performance of these employee-owned enterprises compared to competitors across countries and services, found that, in general, mutuals were more productive, with higher user satisfaction and with better paid and happier employees.

So long as the competitive playing field is level (and here there is room for improvement), mutuals and other forms of social enterprise may begin to win contracts for NHS services – with favourable knock-on effects on the overall quality of the NHS.