Face the facts: competition and profit don"t work in health, education or prisons | John Quiggin

Following a long series of unsuccessful attempts at developing a workable lightbulb, Thomas Edison is supposed to have said, “I’ve not failed. I’ve just found 10,000 ways that won’t work.” This quote comes irresistibly to mind when thinking about Tony Blair’s famous commitment to “what works”, as opposed to ideology, in public policy.

In retrospect, it seems that Blair, and like-minded reformers throughout the English-speaking world, have delivered an Edison in reverse. Edison experimented with many things that didn’t work, but ended up with a light bulb. Market-oriented reforms, particularly in the provision of human services like health, education and public safety, have begun with a working system and replaced it with a string of failed experiments.

Here are a few examples from recent news stories around the English-speaking world

These examples could be multiplied endlessly, and not as the result of a selective choice of reports. A Google search on terms like “PFI hospital” or “private vocational training” will produce dozens more reports, nearly all describing financial and human disasters.

Yet despite this string of disasters, the push for market-oriented reform goes on. In the US, the Obama administration continues to promote the failed idea of charter schools, and Obama allies like Rahm Emanuel have carried on the war against teacher unions. The conservatives in Britain have backed away from the worst failures of the PFI. However, they are still enamoured of other Blair ideas like converting local authority schools into “academies” despite the absence of any evidence of improved performance.

Even by comparison with these examples, the Baird government in NSW stands out. It is pushing ahead with the privatisation agenda in Tafe, despite the obviously disastrous nature of the results. It has outsourced teaching in prisons to companies whose staff lack teaching degrees.

Not content with that, the Baird government is outsourcing the provision of public housing. The likely winner, despite its failures here and abroad, is Serco, a firm prominent as both a beneficiary of, and advocate for, outsourcing of human services.

The Australian policy elite seem immune to evidence on the failures of markets in human services. The recent Harper review of competition policy in Australia suggested that, “Consumer choice should be placed at the heart of government service delivery, through policies to encourage diverse and competitive markets populated with innovative and responsive providers.”

But it is precisely the firms lauded as “innovative” and “responsive”, from the University of Phoenix to the shonky builders of PFI schools and hospitals, that have done most to hurt government service programs.

Sooner or later the advocates of reform will have to answer the Edison-Blair question: “What works?” And what works is traditional public provision. Through all of these failed experiments, the public sector, much-maligned and chronically underfunded, has carried on with the hard work of educating young people, treating the sick and providing the vast range of services needed in a modern society, on a the basis of an ethic of service to the entire community, and not merely those who can pay for premium service.

The only other model with comparable success is not-for-profit provision by organisations with a charitable or service mission. Church-run schools and hospitals, and activist-run services like women’s shelters and services for the unemployed and homeless, have complemented the public sector, meeting needs that have been unrecognised or underserved.

The issue is not, in the end, one of public versus private. Rather it is the fact that market competition and the profit motive inevitably associated with it is antithetical to the professional and service orientation that is central to human services of all kinds.

No matter how cleverly market reformers design incentive schemes, competition for profits will always find a way to subvert them. It is time we as a society recognised this, and returned to what actually works.

Face the facts: competition and profit don"t work in health, education or prisons | John Quiggin

Labour commits to "rolling back" competition in the NHS

Labour claims that principles forcing competitors, even when present NHS suppliers are carrying out a excellent work, waste assets. Photograph: Hugh Macknight/PA

Labour will on Thursday pledge to roll back the dramatic extension of competitors in the NHS that has occurred below the coalition if it wins next year’s basic election.

Andy Burnham, the shadow wellness secretary, will commit to scrapping Area 75 of the Well being and Social Care Act as part of a dismantling of rules which Labour claims waste essential sources. Segment 75 forces GP-led clinical commissioning groups to place local care solutions out to tender, even when current NHS companies are doing a excellent job.

In a speech to senior NHS managers attending the annual conference of the NHS Confederation, Burnham will also promise that Labour would eliminate the duty on Monitor, the NHS’s financial regulator, to market competition in the well being service.

Figures obtained by Labour underneath freedom of information laws show that hospitals in England are investing about £20m a 12 months in buy to guarantee they are complying with the much more onerous guidelines on competitors that the legislation brought in.

Hospitals now commit on average much more than £90,000 each a year on personnel and external skilled tips to deal specifically with competitors issues, this kind of as feasible mergers, acquisitions or alterations to companies, the figures display. For illustration, the hospital trusts in Bournemouth and Poole in Dorset between them invested £6.5m on a planned merger, like £1.3m on the competitors troubles raised. But the move was blocked as anti-competitive by the competitors authorities, in a decision that prompted serious concern in the NHS as it was observed as blocking a quantity of a lot-essential mergers meant to increase care.

Competitors is the incorrect method when the demands of dealing with an increasingly elderly population imply the distinct elements of the NHS need to have to be doing work ever more closely with each other, Burnham will say.

“At a time when NHS funds is tight, squandering money on competition lawyers can’t be justified in any way, form or form. This kind of is the scale of the economic and demographic pressures that we ought to be bringing down the barriers to integration, not building far more.

“Markets are a barrier to the actual reform that the NHS needs to make. We ought to be constructing 1 group all around the man or woman, not growing the number of providers dealing with the person’s care and intensifying their frustration of telling the same story to absolutely everyone who comes by means of the door,” Burnham will inform the 2,000 delegates.

Labour commits to "rolling back" competition in the NHS

Competition in healthcare doesn"t have to be a case of winner takes all

Like opponents in a judo match, neighborhood NHS providers are interdependent with every single other in spite of currently being in competition. Photograph: David Finch/Getty Images

Numerous commentators market competitors within the NHS as a key lever in efforts to boost good quality. However, the continued policy route toward competitors has also been met with resistance given that its inception in the 1990s.

Most just lately, this was illustrated by criticism of the government’s draft laws for commissioners on procurement of NHS providers, patient selection and competition under section 75 of the Well being and Social Care Act 2012. The laws empower financial regulator Keep track of to ensure clinical commissioning groups act to shield patients’ rights and prevent anti-competitive behaviour.

Many take into account competition as a “winner takes all” proposition, rather than seeing the prospective for a number of winners in the marketplace. Distinct forms of competitors can exist in business, and healthcare is no various. Competition in the market place exists exactly where individuals are ready to decide on the ideal place or physician for their therapy. Competition for the market can also exist for instance various providers doing work collectively to supply longer-term integrated care contracts for systems, as implemented in musculoskeletal care in Bedfordshire, or the care of older individuals, as implemented in Cambridgeshire and Peterborough and Oxfordshire.

Commissioners may possibly in truth maximize value for money by embracing a nuanced technique encouraging each competition and co-operation. In their guide Co-Opetition, Adam Brandenburger and Barry Nalebuff offer the analogy of a judo match – rivals use their personal strengths and their opponents’ weaknesses as they face each and every other. The fate of 1 individual is interdependent with the other the move one particular person can make influences the moves produced by the other. Suppliers will fare far better if they function with each other rather than working in isolation.

They say co-operation and competitors are each needed and desirable when undertaking business. Co-operation might advantage all players by escalating the size of the market place although competitors divides the benefits.

With this strategy in thoughts, commissioners should generate a strategic framework for each pathway or bundle of care, in order to help them comprehend which providers can supply the very best well being outcomes specifically for their nearby population.

Commissioners provide a flow of sufferers to the providers inside of their nearby health economic system. Rivals are individuals companies who supply the very same elements of the pathway of care. For instance, imagine two hospitals delivering joint replacements to the very same population of patients needing musculoskeletal care. Improvements in worth are developed when the competition amongst the two drives up good quality in that element of the care pathway for the very same or lower fees.

Complementors include worth to a services by providing diverse actions in the all round pathway of care – for illustration, podiatrists and diabetologists complement every other in the care of people with diabetes. Their personal merchandise are more valuable when combined simply because they provide far more of the care pathway together than they do individually.

Suppliers should comprehend that they could have more than 1 position concurrently. A support can be the two a competitor and complementor at the identical time. For illustration, in the management of low back pain, both physiotherapy and spinal surgical procedure can be efficient interventions both simultaneously, or at distinct points on the care pathway – and 1 supplier might supply both services.

So, competition in healthcare is not automatically a “winner will take all” situation. Providers can concurrently have a competitive and a co-operative partnership with each and every other. As commissioners start to use new contracting types, such as prime contracts and final result-based contracting, suppliers will increasingly need to define their spot in the co-opetition market landscape if they are to obtain the very best outcomes for sufferers.

Dr Na’eem Ahmed (@DrNaeemAhmed) is a clinical fellow at the Faculty of Healthcare Leadership and Management. Dr Diane Bell is director of strategy and technique redesign at NHS Bedfordshire Clinical Commissioning Group and advisor at Far better Worth Healthcare. Dr Farooq Rafique is a London GP companion with a background in method consulting.

This write-up is published by Guardian Skilled. Join the Healthcare Pros Network to acquire normal emails and exclusive provides.

Competition in healthcare doesn"t have to be a case of winner takes all