Competition and choice benefit patients, but PCTs actively block it

July 28, 2011 6:08 PM

Two important stories on competition in healthcare have been reported today. The first is that research from the Centre of Economic Performance at the London School of Economics shows that competition in the NHS, introduced under the last Government, is increasing the quality of healthcare.

The authors of the report looked at data for 433,325 patients who had heart attacks between 2002 and 2008. This time period covers the time before and fixed-price competition was introduced. The scope of the study was broad too, with data from 227 English hospitals analysed. Death rates dropped by 7 per cent under fixed-price competition, and fell quicker in "more competitive markets".  The key finding is that there were 300 less deaths from heart attacks a year after the reforms were introduced in 2006. They added the rates would be significantly higher if other ailments were taken into consideration.

Dr Cooper, one of the team that carried out the study, puts it succinctly:

Incentives cannot be a dirty word in the NHS. Creating financial incentives can save the NHS money and improve clinical quality. We find that competition between hospitals in a market with fixed prices led to very strong improvements in patient outcomes. Going forward, if the NHS is going to be successful, it can’t shy away from competition. This research isn’t about public versus private; it’s about illustrating that financial incentives can have a profound impact on hospital performance.


On the same day, I read in the Financial Times (£) that PCTs have been deliberately limiting patients' choice of where they receive their healthcare. Around 40 per cent of patients now choose not to go their local NHS hospital so this is affects a significant number of people. Tactics include setting minimum waiting times before patients are treated; telling GPs where to send patients; and using referral management centres - providing a second opinion on a GP's diagnosis and directing patients elsewhere.

This is indicative of the attitudes prevalent in the NHS. Despite evidence showing that competition and patient choice work, existing institutions and comfortable incumbent bureaucrats are working hard to ensure that patients do exactly what they tell them to.

Scare-mongering about privatisation is stifling a very urgent debate about the benefits of competition in healthcare provision. It's time to put patients first.Two important stories on competition in healthcare have been reported today. The first is that research from the Centre of Economic Performance at the London School of Economics shows that competition in the NHS, introduced under the last Government, is increasing the quality of healthcare.

The authors of the report looked at data for 433,325 patients who had heart attacks between 2002 and 2008. This time period covers the time before and fixed-price competition was introduced. The scope of the study was broad too, with data from 227 English hospitals analysed. Death rates dropped by 7 per cent under fixed-price competition, and fell quicker in "more competitive markets".  The key finding is that there were 300 less deaths from heart attacks a year after the reforms were introduced in 2006. They added the rates would be significantly higher if other ailments were taken into consideration.

Dr Cooper, one of the team that carried out the study, puts it succinctly:

Incentives cannot be a dirty word in the NHS. Creating financial incentives can save the NHS money and improve clinical quality. We find that competition between hospitals in a market with fixed prices led to very strong improvements in patient outcomes. Going forward, if the NHS is going to be successful, it can’t shy away from competition. This research isn’t about public versus private; it’s about illustrating that financial incentives can have a profound impact on hospital performance.


On the same day, I read in the Financial Times (£) that PCTs have been deliberately limiting patients' choice of where they receive their healthcare. Around 40 per cent of patients now choose not to go their local NHS hospital so this is affects a significant number of people. Tactics include setting minimum waiting times before patients are treated; telling GPs where to send patients; and using referral management centres - providing a second opinion on a GP's diagnosis and directing patients elsewhere.

This is indicative of the attitudes prevalent in the NHS. Despite evidence showing that competition and patient choice work, existing institutions and comfortable incumbent bureaucrats are working hard to ensure that patients do exactly what they tell them to.

Scare-mongering about privatisation is stifling a very urgent debate about the benefits of competition in healthcare provision. It's time to put patients first.

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