'Rent seeking' in the NHS is coming from all angles

“I hope I don’t have another heart attack here,” my cheerful wife remarked during the mid afternoon heat of our recent day trip to Albania.

Quite so, though her faith in the spanking new hospital on nearby Corfu where we were staying may have been misplaced.

In the current financial crisis Greek hospital budgets have taken a pasting that makes Jeremy Hunt look like Father Christmas. Staff and patients are humiliated. Don’t forget to bring your on loo paper.

‘Greek hospital budgets have taken a pasting that makes Jeremy Hunt look like Father Christmas’

But all advanced healthcare systems are under acute pressure for reasons we all understand.

Those twin horsemen of the NHS apocalypse: obesity and longevity - lifestyle and death style - are everywhere at a time when opportunities for useful employment and wealth creation have been shrinking for many Europeans over two decades.

That leads to a phenomenon, traditionally confined to dry pages of economic theory, but creeping into popular conversation.

It has a bearing on Mrs W’s chances, had she fetched up in an Albanian accident and emergency with heat stroke.

The boffins call it “rent seeking”, which means trying to increase one’s own share of wealth without creating new wealth, either through providing capital, labour or services that all help create such wealth.

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No bang for your buck

Hospital parking charges are an example of “rent” all NHS families know and mostly hate.

Many people can’t avoid driving to a hospital visit. Parking charges are often exorbitant, as they are on the street outside. Both hospitals and councils, and their hard hearted contractors are exploiting a state sanctioned monopoly to make money.

It may or may not be used for virtuous causes, but it is extracted by force from voters who feel they have paid already through their taxes.

‘The pressure is intensifying on surviving professions to extract more “rent” from a shrinking pool’

Government ministers who deplore such practices - they all do - are partners in hypocrisy because their cuts have already squeezed hospital and council budgets, making this form of highway robbery (think 18th century toll booths and you get the idea) near compulsory.

Unlike university tuition fees or charges for NHS dentistry, the customer making the parking version of “co-payment” gets almost nothing useful in return.

As Europe’s manufacturing base shrinks - jobs go even faster because machines now do most of the work, white collar as well as blue - the pressure intensifies on surviving professions to extract more “rent” from a shrinking pool.

It’s easier for monopolistic professions, closed shops like bankers and lawyers. Even lowly estate agents have a good time in crazy housing markets like London’s. Foxtons are currently in trouble over hefty hidden charges they shouldn’t levy: rent seeking.

Health tourism

It should be easy for doctors too but, except at the very top, most of their income does not come directly from the customers, but is third party funded, either by the taxpayer (NHS) or insurance (private).

Private docs, hospitals and insurers fight like cats in a sack. All sorts of NHS doctors are “incentivised” by tick-box targets in their contracts - a fashionable but questionably efficient way to improve outcomes. Paramedics are not deemed to need such incentives.

But the third party funders cannot afford to be passive either. Which takes us back to Albania.

States and insurers bear down on costs or shed liabilities to increase their own income.

Check out the Department of Health’s excellent website before you travel and you will find pages of minefields for the unwary.

It so happens that Albania is one of a handful of European states that does not accept the European Health Insurance Card. Don’t be outraged, it’s very poor and other excluders include the Vatican, Monaco and the Isle of Man.

‘Doctors are “incentivised” by tick-box targets - a fashionable but questionably efficient way to improve outcomes’

Greece “including Greek islands” are in the scheme. But the insurance card only entitles travellers to the same treatment (not always free) that locals get at state hospitals.

Whereas travel operators, so newspapers increasingly report, tend to push sick tourists towards private clinics where English is likely to be spoken. Holidaymakers must part with their credit cards upfront and reclaim from insurers if they have one.

Surprise, surprise, insurers get tricky over pre-existing conditions and other wriggle room, seeking to maximise their profits in lean times.

States are trying to cap costs too. France, for example, last year curbed foreign resident access to its excellent/expensive system.

Jeremy Hunt is famously coming after those “health tourists” who so alarm UKIP.

His move prompted The Guardian to make a freedom of information request which found that Britain pays out just one-fifth (£30m) to treat visiting Europeans compared with what it costs Europe to treat us. Perhaps the NHS is less efficient in recovering the money, the paper asks? You bet.

It is all part of a wider process that maximises any passing form of rent while squeezing out liabilities, the most dramatic NHS manifestation of which must be the emerging battle between hard pressed trust finance directors and those who built those private finance initiative hospitals on too favourable terms.

The hospitals got built, so a tangible service was provided. But that was then and those who now own the contract (not always the same people) want to squeeze more rent from them.

Looking at the high rise tourist blocks sprouting along Albania’s Mediterranean coast, it’s certain to be the same problem there.

Michael White writes about politics for The Guardian