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Squaring the circle – is competition in healthcare the wrong answer?

Dr Darren Leech, a director at NHS Elect, a members’ network providing high-quality support to in-house management teams, takes a step back to examine the ‘competition question’.

Circle Holdings recently decided to withdraw early from a contract to provide hospital services at the Hinchingbrooke site in Cambridgeshire. This decision attracted quite a number of news headlines and these largely focused on philosophical arguments about whether or not private sector providers should be able enter the market to provide NHS services. 

This superficial ‘pulp fiction’ argument misses the point. The real and missing policy debate for the future of the NHS is whether or not a system based on competition is right as the principle upon which healthcare for the population of England will be developed and delivered in future. 

There are two well-trodden philosophical paths on this topic. Firstly, there are those who believe that state provision is the only fair way for healthcare to be provided. The basis of this argument is that state provision is the only way to ensure equity and fairness for all, safeguarding the vulnerable against the failings and inequities that can precipitate from a purely market-based approach. There is already public angst about other former public services that have been ‘marketised’, such as gas and other utilities. Taken a step further, some would say that services caring for the sick and vulnerable in society are of such moral significance that they should not be provided by the market – as they would then be tainted by association with financial exchange and profit. This view goes back to the late 20th century, when a general concern for a loss of ‘public services’ and the public service ethic was typically applied to both health and education. 

A clearer and blunter summation is that private profit should not be made where there is an element of human suffering involved. 

Conversely, there is a compelling argument for the market too. It is contended that market-based systems for public services can produce well co-ordinated results, without the need for any conscious co-ordinating processes from the state. Further, that optimal service quality and organisational form will evolve in ways that naturally reduce inefficiency and the cost of transactions, whilst more quickly adapting to the demands of the customer. The organisations that succeed in this environment will become less or more complex, depending on a number of critical factors such as the complexity and certainty of the operating environment.

What is true of the market system is that competing organisations seek to be the best. They strive to offer services of the highest quality, at the lowest cost. They promote innovation and focus relentlessly on customer satisfaction. On the face of it, having NHS providers with exactly this approach could be a great thing. It is not a surprise therefore, that policy makers and commissioners are attracted to the idea. 

The economic arguments against competition are largely around the costs of duplication, concerns about how to manage monopoly and the inevitable fears of market failure. There are some other unwanted side effects too. As an example, we know from research that senior managers and clinicians in the NHS are now sharing less than they used to. They are behaving in an increasingly protectionist and overtly competitive way, ironically mirroring the language and behaviours seen and expected of more competitive business environments. This emerging reduction in collaboration could slow or stop the spread of innovation and service development. It is at odds with a more traditional NHS culture that promotes an ethos of shared learning, to allow quick adoption of new and improved clinical techniques, operating models and standards for care. 

These issues, coupled with the recent ‘failure’ of the Circle experiment, might prompt the NHS to think again about whether competition is the right underlying principle for its operating model. 

In the eyes the public, this could be seen to undermine the ‘N’ in NHS and this is dangerous political territory. Politicians are likely to be concerned about anything that conveys to the public that doctors and nurses aren’t getting along nicely, or that there is any material variation of service by postcode. The evolving side-effects of competition will be a challenge to navigate, especially when integration is the new mantra and when taken to its ultimate conclusion, any market will have organisations that succeed and organisations that fail. 

If the market is the future for our NHS, then policy makers are going to need to ‘square the circle’ with the public, setting out the pros and cons that this has for the customer – as taxpayer, relative or carer and ultimately, as patient. This will require a new openness and honesty about the policy of competition to provide NHS services.

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