Magazine article The Spectator

The NHS Internal Market Has Totally Failed

Magazine article The Spectator

The NHS Internal Market Has Totally Failed

Article excerpt

The NHS's internal market has been an expensive catastrophe

The NHS is in dire straits. I never thought I'd say this but as a doctor, and having seen the extent of the current crisis, I'd be scared if a family member had to go into hospital. Despite the best efforts of staff, the pressures are such that it's all too easy for mistakes to be made. Doctors and nurses are going to work fearful of the situation they will find. They know how unsafe it is, and yet they are utterly powerless to do anything about it.

The predictable response is to call for more money to be hurled at the NHS. It's all because of cuts, they say. Yet a report last year from the National Institute of Economic and Social Research found that health spending is at its highest level in history, and that Jeremy Corbyn's accusations that the Tories have presided over 'deep cuts' to the NHS budget are simply wrong. The annual spend on the NHS has now reached £2,160 per person and the figure has continued to rise steadily in terms of a fraction of Britain's total income, increasing from 4.7 per cent in 1997 to 7.4 per cent last year.

What's really happening is that demand is outstripping supply: the increase in money hasn't been sufficient to cover the increasing pressures of an ageing population, higher expectations and advances in medicine. There's no doubt that when compared with other EU countries, we are not spending similar levels as a proportion of GDP. While we spend about 8 per cent of GDP on health, countries such as France and Germany spend nearly 12 per cent. We have fewer beds, fewer nurses and fewer doctors per patient than the rest of Europe.

But rather than throwing more money at the NHS, it makes better sense to ensure the money is being spent wisely. The NHS needs to ensure it is as lean and efficient as possible. Surveys have found that people are wary of yet more money being handed out. While the majority of the public rank healthcare as the top priority for government spending, only about a third are willing to pay more in taxes. If more money is going to be given to the NHS, it first needs to demonstrate that it's making the most of the money it is getting already.

And here's the rub. There is crippling, shameful waste in the NHS. The kind we hear about are things like missed appointments or doctors prescribing remedies that could be bought over the counter. Equipment such as walking frames that can't be returned. Or health tourism or failure to recoup the cost of treating overseas nationals. Of course, all of these are important. But there is a source of inefficiency that eclipses all this, wasting billions every year. It is the internal market.

This was first introduced into the NHS in 1990, when the National Health Service and Community Care Act put health authorities in charge of their own budgets. But the NHS really started to embrace market principles with Gordon Brown's 'mixed economy of care', which saw the health service open up to competition to provide services, creating a 'purchaser-provider split'. The unintended consequence has been bureaucracy on a gargantuan scale. And the spiralling cost has no discernible benefit to patients. A recent study from the Organisation For Economic Co-operation and Development (OECD) suggests that about one fifth of spending on health makes no or minimal contribution to improved health outcomes.

Even last June's Conservative manifesto acknowledged this, admitting that the NHS internal market can fail 'to act in the interests of patients and creates costly bureaucracy'. This demonstrates that many within the party have become disillusioned with the free-marketers. And disillusioned they should be. The introduction of the free market to healthcare was based on ideology and has shown itself to be costly, inefficient and a woefully inadequate system.

We know from other countries, such as the US and Germany, that introducing the market into healthcare results in higher costs. …

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