Friday 12 February 2010

Monopolies don't like competition - shock

The British Medical Association, for whose benefit the NHS appears to be run, do not like the idea of some services being provided by the private sector and have set up a nice website accordingly.

Admittedly, private involvement in health provision has a bad reputation, because the Labour government is no good at negotiating (or is deliberately wastefl, who knows?) and so has ended up vastly overpaying for PFI hospirals, tamiflu, GPs salaries and so on over the years, which adds about a third to the cost of the NHS without adding one penny to actual spending on healthcare.

But the principle is, surely, simple: if the NHS work out that a certain treatment costs £X,000, then it can tell patients that they are free to take a voucher worth [£X,000 minus ten per cent] and go and get it done privately. Maybe the waiting list elsewhere is shorter, maybe the clinic more convenient, maybe it's nice to be treated as a paying customer than an troublesome member of the public; but no doubt some people will go elsewhere (even if they have to pay a bit out of their own pockets on top).

Bingo, we've saved the taxpayer 10 per cent of £X,000. If all of a sudden everybody wants to go private, we know that we ought to reduce £X,000 by more than ten per cent; if nobody takes up the offer we ought to reduce it by less than ten per cent, but simple trial and error will quickly get us to some sort of optimum. This is not some wacky idea,this is what happens in most European countries.

Anyways, if that website is the best the BMA can do for arguments against sub-contracting services, them I'm all in favour.

9 comments:

bayard said...

The flaw in your argument lies here: "if the NHS work out that a certain treatment costs £X,000..."
Is this possible, given the bureaucratic nightmare that is the NHS?

Mark Wadsworth said...

B, the NHS do have such costings.

Plus you can use trial and error. For example, if a hip replacement operation costs £5,000 and the waiting list is six months, they can offer patients £2,500 towards cost of private treatment It may be that people are happy to pay £2,000 top up privately just to get it over with next week(assuming competing surgeons drive the total price down to £4,500), if not, then up the voucher to £3,000 and so on.

We would reach a stage where
a) The NHS, i.e. the taxpayer, is saving money and
b) People are getting their operations done quicker.
c) If they end up paying £2,000 to save six months of stiffness and discomfort, who's to say that this isn't a good deal for them as well?

What's not to like?

bayard said...

"B, the NHS do have such costings".

and they are reliable and not wildly underestimated for the purpose of torpedoing just such a scheme as you propose?

I wasn't arguing against your idea, I was just thinking that to ask the NHS's bureaucrats to administer a scheme that might put them out of a job is also asking for trouble.

ScotsToryB said...

'If all of a sudden everybody wants to go private, we know that we ought to reduce £X,000 by more than ten per cent; if nobody takes up the offer we ought to reduce it by less than ten per cent, but simple trial and error will quickly get us to some sort of optimum'.

No,no,no,no,no,no,yes? No.

Yes. If everyone takes up the offer we are discounting too much.
However, if nobody takes up the offer then the offer of ten percent is not a good enough incentive and the percentage must be increased.

Not decreased.

Simples.

STB.

Mark Wadsworth said...

STb, are you sure?

Let's go with operation that NHS says costs £5,000.

If the voucher is £4,500 and everybody goes private, then surely we ought to try £4,000 and see what happens.

Conversely, if the voucher is £4,500 and nobody takes it up (because private clinics have to charge at least £6,000 and people can't afford £1,500 top up fee - i.e. the NHS estimate of £5,000 was wrong), then we have to offer vouchers of £5,000.

I was talking about reducing or increasing the DISCOUNT, which obviously means increasing or decreasing the value of the VOUCHER.

James Higham said...

This is not some wacky idea,this is what happens in most European countries.

European countries can't be wacky?

Mark Wadsworth said...

JH, I mean they do it and it works.

bayard said...

"Conversely, if the voucher is £4,500 and nobody takes it up (because private clinics have to charge at least £6,000 and people can't afford £1,500 top up fee - i.e. the NHS estimate of £5,000 was wrong), then we have to offer vouchers of £5,000."

I would expect that, in the real world of politics, if no-one took up the £4,500 vouchers, there would be general cries of "See, I told you it wouldn't work", "we're better off with the NHS", "No privatisation by the back door", "Foreigners may do this sort of thing, but we're British, dammit!", blather, spew, and the whole thing would be dropped like a hot potato.

Mark Wadsworth said...

B, true, but nothing ventured, nothing gained, and in your example, nothing has happened, which can't be the worst of all outcomes.