Chris Lancelot: Lansley wrong to abandon price competition

There are times when I understand neither the government nor the DoH: they issue such contradictory and illogical messages.

The GP Record, by Fran Orford
The GP Record, by Fran Orford

On the one hand, they say they want to achieve massive savings in referral costs (through increased efficiency, under the Quality, Innovation, Productivity and Prevention (QIPP) scheme). On the other, they undermine the valuable cost-cutting effects of the marketplace by preventing the development of effective competition.

Andrew Lansley recently declared that hospitals won't be allowed to deviate from the national tariff: they are to compete on quality markers alone. How ridiculous! In the real world, if you want to drive down costs, you encourage a price war among suppliers while continuing to monitor standards carefully (In fact, in the world outside the NHS, price fixing is illegal: it's called 'creating a cartel' and companies face heavy fines if caught doing it.).

How are hospitals supposed to entice commissioners if they can't compete on price? Better away days? Nicer foyers?

Does the government really want patients to choose between practices? Then allow GPs to advertise their strengths. Professionally, we are only permitted to say what we do, not how good we are at it. Even if our practice has the best QOF score in the locality, we can't say anything. If we have the highest patient approval rating in the area, we can't advertise it. So what can we say about ourselves that really helps patients to make an informed choice, other than that half of our doctors are female and one speaks Italian?

The true benefits of the marketplace are only seen when all - repeat, all - necessary information is available to consumers, and they can make a proper choice based on the relevant facts. This basic economic truth seems to have escaped the attention of the DoH, despite being so glaringly obvious.

If the government really wants to drive down NHS costs, increase efficiency and empower choice then it will have to do much better. Otherwise its reforms will go off at half cock and the inefficiencies of the NHS will continue to haunt us all - very expensively.

The government should insist that the GMC remove all restrictions on professional advertising, only retaining the general advertising rules of 'legal, decent, honest and truthful'. It should also immediately and permanently abandon the national hospital tariff.

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