Viewpoint - Choice and competition

Paul Corrigan discuses the economic repercussions in the extension of patient choice.

Recently I attempted to tackle some of the arguments against the extension of patient choice into the NHS on my blog. One of the reasons for extending this much further is to demonstrate that socialised medicine, paid for out of general taxation, can provide the taxpayer/consumer with the kind of experience that used to be only available to those that paid privately.

Mrs Thatcher famously said that she used private health care in order to choose which doctor at which hospital she would see - and at a time and date of her choosing. Now we can provide that choice for NHS patients. This is a victory for the NHS against its enemies.

Repercussions of patient choice
Today I want to discuss the repercussions for the NHS that follow from patient choice. Whilst I think there is a social and moral argument for the extension of choice for NHS patients (just as there is a social and moral argument against it) the repercussions of that choice are economic.

And there are some people who, despite being in favour of extending choice to more and more NHS patients, do not like or want the economic outcomes that flow from exercising that choice.

If reform is going to encourage NHS patients to make more and more choices between different providers and services, then surely economic problems will arise from the consequences for organisations that are not selected? The repercussions for those organisations that are not selected by patients are that they do not get the resources that go with that choice.

In the rest of our society this seems a pretty obvious outcome. When I chose to buy the computer I am using to write this blog I only paid for this one, and did not pay for those I chose not to buy. The economic repercussions of choice are obvious and inevitable and we have learnt to live with it.

No one would suggest I should pay Apple because I chose not to buy a Mac. In fact that would seem pretty weird.

But what are normal repercussions in other markets have much deeper repercussions in public services. Since the 1990s parents, in choosing their children's school, have ended up, as result of that choice, making an economic choice in favour of the school that receives money for their child and against those unselected.

This economic repercussion is an inevitable part of choice. The only alternative would be to pay organisations the same amount of money - even though they only did half of the work; and conversely paying another organisation the same amount of money for doing twice the work.

Equalising resource distribution
Let me stress the point that there are some who believe that this is the correct way of distributing resources. Equalising resource distribution amongst institutions - irrespective of how much work they do - was one of the ways in which resources were distributed in the old communist countries.

But this had bad repercussions in dis-incentivising organisations. If everyone receives the same amount of money irrespective of the work that you do, it makes a lot of sense to do as little work as possible. It makes no sense to struggle and strive to cut costs and increase productivity.

The other problem is that if patient choice is not distributing resources, then another mechanism is needed to work out that distribution - and that is the state. The state tells people where resources should be directed - irrespective of where people's choices want it to go.

So there is a world view that argues against the idea that resources should be distributed according to patient choice, and that the state should take over this responsibility and tell us where to go.

But let's be clear, as I don't want to smuggle through an outcome from this argument without being open about it. People making choices and resources following those choices is a form of market behaviour. It was this reform, introduced under Alan Milburn, that led to people saying we were introducing market behaviour into the NHS.

There are all sorts of things that you can do to limit the impact of such patient choices, but the simple fact of choice plus economic repercussions is at the core of a lot of market experience and creates market outcomes.

Clash of views
People on the left see the extension of this behaviour into the NHS as morally wrong.

Those of us who argue for the extension of patient choice into the NHS believe that it is morally right.

This is a clash of world views that forms an important part of the politics of NHS reform.

There is no ducking this clash of world views.

If you believe in patient choice then there have to be a range of institutions and treatments from which patients can choose. Offering me a choice of obtaining exactly the same treatment from exactly the same organisation isn't really offering me much in the way of choice.

If you are to have choice there have to be different institutions and services from which to choose.

And, as we shall see, that's where competition comes in.

  • Paul Corrigan is a management consultant and former special adviser to Tony Blair. More at

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