The dangers of marketisation

The NHS is drifting into a world where key principles are under threat, patient care is increasingly fragmented and commissioning is contorted by the market.

Criticism of the government’s reforms often centres on the threat of “privatisation”. The Socialist Health Association distinguishes between privatisation and marketisation and highlights marketisation as the most dangerous.

Marketisation means a system where relationships and behaviours are driven by competition and profit. In the NHS it applies to both private and state enterprises, and competition and marketisation is almost always dangerous in healthcare.

Patients are not customers

The consequences of the failure of markets are seen worldwide. Yet we are spending billions turning the NHS into a regulated market on the same model as gas privatisation, based on the belief that competition, with private sector participation, is the driving force to “improve” our NHS.

‘Private companies, particularly delivering clinical care, bring more risks than benefits’

Health is not a commodity, patients are not customers, and choices about our care are not a form of shopping. Competition between clinicians to attain better outcomes can be beneficial. But rigging an entire health system so private providers can compete for our NHS billions is not supported by any reliable evidence and is not wanted by citizens nor by most GPs.

Private companies are integral to the NHS. You can’t build a hospital or offer a medication without them. Some NHS services are only available through private providers.

However, private companies, particularly delivering clinical care, bring more risks than benefits.

Private companies tend to have different values from the NHS and a focus on profits, which may lead to cuts to staff benefits or the use of dangerous financing techniques. Their reaction to financial difficulty is to protect profits, abandoning the NHS when finances dictate. 

Private companies may also promote interests in opposition to the NHS, co-payments, for example, and can exert political influence against NHS core aims. Companies with good track records can be bought by unattractive owners. Commercial confidentiality can hide poor performance or poor value for money.

Benefit is reduced as surpluses return to shareholders rather than to the NHS to reinvest in patient care. Integration across the NHS and with other public services will only be supported if in the organisations’ financial interests.

Radical innovation

Private companies should be explored only if they offer radical innovation or the standards of an NHS provider are poor and cannot be improved upon. Occasionally an NHS provider may subcontract services to another provider to help manage demand or improve efficiency. The additional risks of private providers should be factored into procurement processes. 

There are theoretical reasons why marketisation in the NHS will be ineffective. These include the need for excess capacity for effective choice; no real route for market exit; limited consumer informed choice; and price signals working poorly.

Studies reviewing years of the commissioner/provider split have found no evidence of real benefits to patients to offset the considerable transaction costs involved.

‘Studies reviewing years of the commissioner/provider split have found no evidence of benefits to patients to offset the costs’

The often cited quantitative evidence on the impact on health outcomes of competition rests largely on just two published studies in the hospital sector. Both concluded that competition under fixed prices appears to be associated with improvement in hospital service quality. Both studies are criticised by the York Economics of Social and Health Care Research Unit.

Evidence suggests that competition in the UK’s internal market in the 1990s had no impact on productivity and costs, but may have led to lower quality. Entry of new providers is cited as a driver for improvement, but evidence that this is the case is lacking.

Choice is assumed to be another driver, but studies show that hospitals do not perceive significant changes in their markets resulting from patient choice. Increasingly we see decisions taken by tendering managers, market regulators and competition courts rather than by patients and their clinicians.

Even in the care home market, where the most benefits might be anticipated, competition in the UK and US has lowered prices only modestly, with no evidence of improved care for the elderly.

Market forces

Successful service reconfigurations, such as stroke reorganisation in London, involve complex planning and engagement. Market forces cannot be the right way to drive financially and clinically sustainable, equitably distributed and politically feasible service configurations and integration.

Marketisation damages our ethics and our relationships, and makes society more unequal. The things that matter most in life should not be bought and sold. We drift from having a market economy – a tool for organising productive activity – to being a market society, a way of life in which market values seep into every aspect of human endeavour, where social relations are made over in the image of the market. 

What is needed is a coherent care system based on integration and collaboration, not a fragmented market system connected through legally enforceable contracts, with a pro-competition regulator policing anti-competitive behaviour. We support a preferred provider approach, with the NHS remaining the dominant provider of NHS services. 

Dr Brian Fisher is a GP and chair of the Socialist Health Association