Fewer hospitals, more competition
On 17 March 2010, the think tank Reform published a report (Fewer hospitals, more competition) which argues that the NHS should not be sheltered from the drive to reduce public spending.
The report contends that the public sector’s structural deficit is attributable to sustained over-spending. The largest part of this spending was targeted on the NHS which accounted for 40% of the increase in inputs across the whole public sector between 1997 and 2007.
It suggests that the closure of hospital services, in most cases due to a redesign of service provision, will be one of the best ways for the NHS to reduce activities and control costs.
Reconfiguration of services will be most effective if undertaken as part of locally based initiatives carried out by locally accountable managers. Innovation will come from reforming the front line, not simply driving change from the centre.
The report highlights a number of ways in which better standards and improved productivity can be promoted in the health system:
- Commit to greater plurality in supply and reverse the “NHS preferred provider” policy. The ability of competition to drive better standards and productivity growth is crucial for ensuring that spending reductions do not lead to “salami slicing cuts” and a decline in quality.
- Commit to plurality of supply within existing settings – such as through approaches like service line management (where decision making and budgets are devolved to specific, clinically-led operational units).
- Ensure the rules for competition are clear, consistent and enforceable. This could involve asking the NHS Co-operation and Competition Panel to review existing provision (as well as changes to that provision).
- Incentivise service redesign through reform to make the NHS locally accountable and by clarifying the ability of Primary Care Trusts (PCTs) to retain some of the financial savings that they achieve from improvements in health outcomes and productivity.
- Incentivise service redesign through considering reforms such as giving patients a choice of PCT (to ensure that ongoing pressures for service redesign reflect the preferences and needs of consumers).
Fewer hospitals, more competition (PDF)
