Tuesday, August 9, 2011

Emperor’s New Clothes: Regulators, Competition & Choice

Hermitage Museum ©2008 Am Ang Zhang
The greatest threat to the NHS is perversely that of its regulator and in turn it is a threat to our democracy as the regulator is not elected and therefore not accountable to the electorate.

“……Tom Clark our leader writer says the real problem with the bill is the fact that the new regulator has a duty to promote competition where appropriate. He points out that in a previous life as a special adviser the regulator used his powers to squeeze state bodies in order to open up the space for private providers. It's why he is so against competition.”

In Iceland:
I somehow stumbled upon “Inside Job”. 

The introduction was of Iceland. No, they did not cause the volcanic eruption and the film was not about that. It was about the financial disaster.

Iceland “de-regulated the banking system” believing that they too being one of the most stable, wealthy, healthy, educated and honest country in the world must be modernised.

As long as they have "good" regulators, everything would be fine.

When a regulator visits a bank, he would find 19 big SUVs parked outside and he would be confronted by 19 top lawyers arguing that whatever the banks were doing were legal. They generally won their argument.

On the rare occasion when they meet a tough regulator they would simply employ him or her in true John Grisham style.

……..competition and choice in contestable services may inadvertently cause
deterioration in the quality of essential services provided by financially challenged trusts, and therefore widen the quality gap between the best and worst performers. Market forces alone will rarely drive trusts into voluntary agreement to reconfigure in ways that will improve quality and reduce costs.

Understanding the causes of hospital deficits
It is important to understand why some hospital trusts in England have large financial deficits and high legacy debt. The implicit assumption made by the Department of Health has been that they are the result of poor management and inefficiency. Therefore, it followed that with better management and improved efficiency, deficits could generally be eliminated without the need for reconfiguration or organisational change, and without causing deterioration in the quality of care.

In South East London, this premise is false. Two of the DGHs (Queen Elizabeth, Woolwich, and Bromley Hospitals NHS Trust) are whole-hospital private finance initiative (PFI) sites. The annual payments to the PFI service providers are fixed in real terms (and rise in line with inflation) throughout the duration of the contracts. There is almost no scope to change the service specification or to reduce the annual payments for more than 20 years.12 These annual payments exceed, by a large amount, the Market Forces Factor (MFF)-adjusted funding provided in tariffs to pay for them.

Even if these trusts were more efficient than the average trust, because of this underfunding they would still incur significant recurrent deficits, and legacy debt would continue to increase. The corollary is that, were they to cut controllable costs to the level necessary to restore financial balance, then their spending on patient care (to fund staff costs and drugs) would be significantly lower than that of other hospital trusts. Patient care would suffer as a result.

In South East London, the two trusts with whole-hospital PFI schemes have by far the highest capital charges as a percentage of MFF-adjusted income; they are also the trusts with the largest deficits and the highest legacy debt, and provide relatively poorer quality of care. Conversely, those hospital trusts with largely depreciated capital stock and high MFF values have financial surpluses, and the quality of care they offer is much better.

There is a striking correlation between each trust’s capital charges as a percentage of MFF adjusted income and the size of its surplus or deficit; and between the size of its surplus or deficit and the observed quality of care.

Read the full summary here>>>>>
Read the full pdf report here>>>>>

Original NHS Reform:

There is little doubt in my mind that Andrew Lansley narrowly missed the opportunity to deal with the hospitals Keith Palmer talked about and no doubt many others are in the same sad state up and down the country.

Monitor would have failed them and they will be bought by Private Companies. What would they do you may ask. Well, these are very clever people and floating on the stock market is one way and perhaps a few times. There is the real estate value behind many of them and when all else fail, the government might have to buy them back when a few individuals might have made millions.

The future:

We must not overlook the fact that Monitor is headed by someone from McKinsey and my reading is that one way or another the private providers are coming in.

David Cameron and Nick Clegg can reassure us if like Scotland, all private providers are outlawed. Remember: they are the same doctors, private or NHS.

What we really need is a truly integrated service of Primary & Secondary care and the only way to do this is to do away with the internal market system that has led to some hospitals doing well and others doing badly as pointed out by Keith Palmer. 

Another not so young CHILD from Durham on competition & regulator!!!

I don’t care about my hospital’s use of resources, I want to know if it is going to deal with my particular problem on the day that it has to see me. We have a market with huge barriers to both entry and exit, and little or no idea on how either can be achieved. We have a regulator with little or no ability to get involved and deal with systemic problems like under-provision or to censure collusion.

In short, it’s a shambles. This isn’t a marketplace, it’s a distorted opportunity for private providers to make profits and undermine comprehensive public provision at the same time –  the very antithesis of a competitive environment. I fear for the future of health services in the NHS.

1 comment:

Anonymous said...

Why did they not know?

Thanks C.C.