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Entry tags:
Markets, Universities, and Healthcare
One of the things that has concerned me for a while with the thrust of government policy is its faith in the private sector (or, perhaps, its lack of faith in civil servants), and in the power of markets to make everything better. There's an assumption that government departments are large inefficient bureaucracies staffed by indolent jobsworth civil servants who are impossible to fire, whereas the power of the market means that companies can do the same jobs better and for less money. This lead to the privatization and marketization of utilities and the railways, and I think is underlying what looks rather like attempts to move towards markets and privatization in the NHS and university sectors.
One of the problems with markets is that they tend to value easy to measure things over things that are harder to quantify[0]. In healthcare, this seems likely to result in quality of care being sacrificed on the altar of driving down costs. The NHS Confederation agrees: "Economic theory predicts that price competition is likely to lead to declining quality where (as in healthcare) quality is harder to observe than price. Evidence from price competition in the 1990s internal market and in cost constrained markets in the USA confirms this, with falling prices and reduced quality, particularly in harder to observe measures". And, for all that some people in the US make a great deal of money out of healthcare, it's hard to see it as anything other than deeply dysfunctional on the whole. Even many UK doctors are against the proposed reforms, substantially because of their market-based nature[1].
In a similar vein, the government is trying to introduce a market element into higher education via variable tuition fees; there is also talk of encouraging more private input into the university sector, maybe even allowing companies to fund places at university for their chosen students. It seems likely that this is partly motivated by the successes of the big American private universities; but as this LRB article notes, even if you don't care a fig about public good, the US system doesn't deliver cost-effective excellence in Universities.
I appreciate that the boat has rather sailed, but I think it's time we realised that private enterprise may not be the best way to run services in the public interest, and that sometimes things that are hard to measure are more important than cold, hard cash.
[0] There is an ethical question here, too, of whether profit is the best motivation for, well, anything, but I think that's an aside for now
[1] http://www.bmj.com/content/342/bmj.d7.full [probably behind a pay-wall]
One of the problems with markets is that they tend to value easy to measure things over things that are harder to quantify[0]. In healthcare, this seems likely to result in quality of care being sacrificed on the altar of driving down costs. The NHS Confederation agrees: "Economic theory predicts that price competition is likely to lead to declining quality where (as in healthcare) quality is harder to observe than price. Evidence from price competition in the 1990s internal market and in cost constrained markets in the USA confirms this, with falling prices and reduced quality, particularly in harder to observe measures". And, for all that some people in the US make a great deal of money out of healthcare, it's hard to see it as anything other than deeply dysfunctional on the whole. Even many UK doctors are against the proposed reforms, substantially because of their market-based nature[1].
In a similar vein, the government is trying to introduce a market element into higher education via variable tuition fees; there is also talk of encouraging more private input into the university sector, maybe even allowing companies to fund places at university for their chosen students. It seems likely that this is partly motivated by the successes of the big American private universities; but as this LRB article notes, even if you don't care a fig about public good, the US system doesn't deliver cost-effective excellence in Universities.
I appreciate that the boat has rather sailed, but I think it's time we realised that private enterprise may not be the best way to run services in the public interest, and that sometimes things that are hard to measure are more important than cold, hard cash.
[0] There is an ethical question here, too, of whether profit is the best motivation for, well, anything, but I think that's an aside for now
[1] http://www.bmj.com/content/342/bmj.d7.full [probably behind a pay-wall]
no subject
In free markets the pressure on quality comes from the consumer, who is assumed to have a desire to buy quality products as well as cheap ones. This is why all three of Waitrose, Tesco and Lidl have market niches. However, this pressure only materialises when the consumer has the ability to make informed choices between different suppliers. This doesn't happen in the US healthcare system because almost everybody's health insurance is provided by an employer, so the consumer who is spending the money (corporate purchasing departments) and the consumer who evaluates the service (workforce) aren't the same person; and it's highly unlikely to happen in the UK since the lack of spare capacity in the NHS means that most people will take treatment wherever it first becomes available.
no subject
But a huge proportion (I would guess between 15% and 30% is chronic). Heck, 10%, predicted to rise to 25% is diabetes alone. Add in mental health, obesity, and so on ... maybe 30% is far too conservative. For people like me, I don't mind waiting 2 months, heck, even 2 years, to see a team which can actually extend my life (thinking 45 years rather than 35 years is a different sum to here next year or not!) and/or improve its quality - two years of 3 out of 10 life, followed by 45 years of 7 out of 10 life beats 47 years of 4 out of 10 life for many people.
Personally, I would push, as best of a bad job, for personal healthcare budgets.
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In theory I agree, though if you could manage to implement such a reform in the face of the accusations of privatising the NHS which would doubtless be flung from all corners, well...would you kindly run for Parliament so I can vote for you? I doubt you'll find predicting which constituency I'll be living in at the next election very difficult compared to that challenge.
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It would be far better to make sensible reforms.
Hence my inability to predict where you will be living... I guess Exceter.
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Don't ask me which is least bad, but although NICE probably makes reasonable judgements, and may both save money and encourage logical treatment a lot of the time, there do seem to have been occasions when they deny people treatment that might actually be both reasonably effective and reasonable value for money. Who can say that they are quick to respond when such situations arise?
Then again, just because someone who has done at least some of the research on a topic believes that NICE is being unreasonable in that case, it doesn't mean they are correct.
As best I remember, privatisation really got going with British Telecom being detached from the GPO, and later being subjected to competition. That *did* seem to help, though I was sceptical beforehand. I reckon we should have been using only dial telephones until very recently, had BT been allowed to remain a monopoly, state or private.
Can profit be a reasonable motive? Yes, at least at a basic level, because paid work can accomplish things that won't get done by voluntary work, as well as vice-versa. Would you do your work if not paid for it, but assuming you had an income from the state regardless?
A French friend of mine works most of the time in a state hospital, but one or two days a week at a private clinic, where he does the same work, and is paid the same per patient by the state as the state pays for the task in the state hospitals. He and a few colleagues have pooled their resources and carefully chosen the equipment they use and the work environment to maximise their efficiency, so they earn more for themselves while costing the state exactly the same per patient. Having the freedom to organise their work, and spend some of their income on their informed choice better equipment, has almost tripled their efficiency.
I can't see that as a bad thing in any sense.
I suggest that if it is possible for individuals and small groups to gain by doing their work better or more efficiently, and the incentive is not to reduce quality, then this can be beneficial. That is motivation by profit. Where it goes wrong is when the incentive is to cut corners. I think that the incentives for our glorious leaders are to do things contrary to the interests of most of the population. The box ticking requirements that have increased so much in recent years look to me like another incentive in the wrong direction.
Bank employees receiving bonuses for selling inappropriate investments and insurance is another despicable example, but that does not invalidate profit as a reasonable motive, *if* the profit is for doing something useful, not destructive.
no subject
Or am I missing something?
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http://www.bbc.co.uk/news/uk-13389147
"After the hearing, Network Rail, whose fine effectively comes from the public purse, said it was "truly sorry"."
Isn't privatisation wonderful?
no subject