Last Word


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

Source: NHE March/ April 15

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.

Tell us what you think – have your say below or email


Rupert Fawdry   02/04/2015 at 23:50

While working in the NHS, I found myself, starting 35 years ago, with an unusually powerful interest, in the potential of IT to help me in the care of my individual patients. As a result my many years of experience as a GP, in A & E, and finally as a consultant in Maternity Care and Gynae, and also my personal knowledge of writing detailed computer code, I provided the knowledge currently used in the maternity systems of both CSC and System C. In the process it became clear to me that the problem of inter-operability would ultimately depend on an open availability of the kind of specialised understanding I had gained. (See our letter in the BMJ on the need for wisdom of crowds not the marketplace ) Having been an ignored advisor to three £½ million government initiatives, each of which quite wrongly assumed that the complexity of medicine could be frozen into the rigidity of traditional IT methodology, I decided that the only option was to set up my own web-sites providing open access to the understanding I had gained. The two results of what I now describe as 'pathological altruism' (my 'hobby' costing me personally over the years, well over £50,000 for IT equipment and travel expenses), are a) entering "Perinatal Data" virtually anywhere in the world now puts the EEPD in the top 10 of over 3 million hits, the only hit concerned with collecting data rather than analysing the data collected by others b) my website looks at the basic information every person should document about matters of their own health. But sadly so far there has still been little understanding by those at the top in the UK of the value and need for that kind of altruistic Wikipedia-style approach that I found myself pioneering. Yet the principles set out in the first page of the EEPD still stand.

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