Adam Smith Institute

Proposals to healthcare reform should be judged not on the goodness of their intentions but rather on the basis of there results – in other words: nobody washes a hired car

The focus on consumer choice within both major parties seems to respond to the core weakness of the British health system, as reported by patients (A Coulter, Picker Institute BMJ: 331, 19/11/05, pp 1199). The deplorable heritage of the NHS - its cold war bureaucracy and a paternalistic doctor-patient relationship – is the very opposite of choice. And there are many doubts whether the recently introduced patient choice between hospitals for elective surgery is the most urgent kind of choice that people are coveting. Over 500 consultants of Doctors for Reform have declared: “The NHS was conceived more than half a century ago, at a time of rationing and considerable poverty. We once believed it was the finest healthcare system in the world. Today few healthcare professionals would make that claim.” Indeed Britain seems to be coping worse than other Western countries with soaring health costs and is dramatically falling behind other Western countries in such crucial things as cancer survival rates.


The intangible revolution

Quite a different issue is to predict the future of the NHS in a competitive global health market. As everybody knows, here are economies of scale, particularly in purely knowledge-based goods. This is what some experts like Roger Boothe call the intangible revolution. They maintain that the economic potential and wealth creation of the knowledge-based technology of the future is enormous. This is especially true for the health sector which in the future will produce lots of intangible products and services. But today, as a closed market, the NHS simply cannot compete with the lower prices of the much larger international markets. That’s the bad news. The good news is that the globalization of healthcare services and products is the best way to contain exploding costs everywhere. Surprisingly loss of control over health expenditures happens in very many countries, regardless of ideology and the way health care is organized – from central Europe to the United States of America.

Big bureaucracies are notoriously difficult to reform. They have their own ways of working, and even though these might be 50 years out of date, the time and cost of moving to new ones can be seen as prohibitive by all who work in them. State bureaucracies have it harder than most, because they do not face direct pressure from customers, and do not see their finances ebbing away when they provide a poor service, since most users have no real alternative.