Readers will remember the high noise level of the row that took place about the role of competition in the NHS in the last three months before the Health and Social Care Bill was passed. It was ferocious – with those opposed to competition claiming that one of the main things wrong with it was that there would be an increase in competition.
The row centred around worries about increased competition between NHS providers and third sector or private providers.
But for the foreseeable future most of the competition will be between NHS provision and other NHS providers. This issue creates less emotion because it doesn’t bring with it the spectre of privatisation, but there is still a strong feel within the traditional NHS that competition – even between NHS organisations – is in some way wrong.
Last week the Cooperation and Competition Panel produced a working paper based upon its investigations of hospital behaviour in those 8 trusts that were undergoing mergers between May 2011 and May 2012. In each case the trusts compete with at least one rival – usually more than one – to attract referrals.
This led to competition for different sorts of activity.
There was direct competition for patients based on reputation. The evidence suggested that providers understand that the outcomes and the reputation of the trust are communicated to patients by word of mouth, by local and national media, by national regulators, and by websites. Hospital trusts that want to attract more referrals will therefore have an incentive to innovate and invest in those aspects of hospital performance that matter to the patients.
Secondly it is clear that GPs’ previous referral decisions are an important indicator for predicting in which hospital a patient will be treated. Hospital trusts will therefore have an incentive to innovate and invest in the aspects of the hospital’s performance that matter to the GP.
The paper lists the various improvements that hospitals make in trying to attract patients. They are responding to the incentives that the system has created for them to improve. Of course these strategies may not be successful, but in all 8 cases there is evidence of hospital trusts responding to incentives through innovation and by investing in strategies that they expect to improve the quality and integration of services.
These are responses from hospitals to the threat of a competitor, or to an actual loss of market share as well as exploiting the weaknesses of a competitor’s offer. All of the examples show that hospital trusts recognise that they need to innovate and improve to attract income and that such improvements must be sustained over time.
Of course this is quite normal and straightforward behaviour. If you place institutions in an environment where patients can choose between them then they will work hard to provide the services in such a way as to attract custom.
The point that those who disagree with competition in the NHS make is that this is the wrong way to induce improvements in behaviour. Whilst it may have a place in the distribution of all sorts of other goods and services, it is in some way out of place within the NHS.
My point has always been that it forms a major part of the behaviour of our society and that to exclude from the NHS is to try and take away from it one of the main ways in which improvement takes place.
It is not the only way the NHS improves, but it is an important way.