Friday, 12 June 2015

That's more like it.

From The Independent:

The NHS can save £5bn a year by getting better value for medicines, basic equipment and even energy bills, while also cracking down on staffing costs, a government-backed report has claimed.

Vast differences in the prices hospitals pay suppliers for essential items such as pills and artificial hips could be levelled out, saving millions every year, the report by Labour peer Lord Carter said.

On top of savings on medicines, more efficient procurement of everything from laundry services to dressings could lead to total savings of £3bn, it is claimed…

And so on and so forth, all good stuff.


Bayard said...

Years ago I was talking to someone who claimed to a top salesman and he said that in all his career in sales, he's met many people who he'd consider really good salesmen, but only one man who he considered was a really good buyer.

Lola said...

They come up with set of factoids on a regular basis. It never changes because it's the NHS and no-one gives a damn

James Higham said...

If they can do such a simple thing, why haven't they done it to date?

Lola said...

To expand, this story that regularly pops up is based on the same delusion and fallacy of the old Cl4.4, that it is possible for some central planner to obtain the best of everything at the best price and exactly what is wanted by each individual with all their own preferences. It is always trotted (Trot'd?) out by the bureaucrats as a reason for keeping the NHS nationalised. As eny fule no it is arrant nonsense. You can all get much better deals if all of you compete separately in the marketplace. Therefore better to denationalise the NHS and let each bit of it - GP's, hospital's, whatever - get on with doing their own thing. Plus, if it's beneficial bits of it will club together voluntarily to achieve better prices - that already happens in non-nationalised business.
Fat heads.

Mark Wadsworth said...

B, true.

L, true.

JH, Lola has explained that.

L, to be fair, when the NHS does make an effort i.e. setting max prices for drugs, it can harness something which it should be harnessing much more i.e. its monopsony power.

So that's central planning which works, and there's no reason - apart from laziness and corruption - why the NHS can't apply that to everything.

Lola said...

MW. I don't think the 'maximum price for drugs' thing actually works. The NHS fails to apply monopsony power because, broadly, it is in league with the 'drug companies'. And even if it did apply monopsony power by implication there is no competition. Anyway it is well recorded that governments invariably fail to get best price / value for anything. Evidence from other industries, my own included, is that the accidental aggregation of many, many small buyers has a better effect on reducing prices when buying from big suppliers. Often such smaller outfits voluntarily group together to get even better deals. In what I do the premiums were lower and quality higher for insurance policies bought via brokers than those distributed directly or white labelled from manufacturer to distributor.
Personally I just know that the NHS is beyond management and that it works at all is down to the fact that its staff try day by day to succeed. It manages to simultaneously enjoy massive producer capture and employee exploitation; exploitation in a the bad sense. Why therefore should it ever succeed in buying well? It has no interest in doing so. It is spending other peoples money on other people.

Robin Smith said...

Don't forget the GP service is a pyramid sale like double glazing car sales and city boiler rooms. And the ambulance service a job creation scheme.

It's all normal and we're all complicit.

Everything Is A Scam

Get over it. Integrate it into your psyche. And start to live.

The Stigler said...


In a nutshell, the problem with the NHS is that it lacks incentives. When I'm buying hardware and services for my business, I'm looking for value because it's my money. I'll spend 2 minutes googling for a website discount code because 5% off £600 is £30 and that's worth 2 minutes of my time. Does an NHS purchaser get paid more for finding that discount code, or even part of that, or does the NHS keep it all?

Lola said...

Correct. As I was trying to say (badly?) the incentives in the NHS are distorted. Economics is all about incentives. As I think Friedman said, there are only four ways to spend money, and the worst way to get value for that money is if someone (the gummint in the person of the NHS in this case) spends someone else's money on someone else. Which is what the NHS does.