That tricky point about competition in the NHS


One of the more ridiculous pieces of wibble in the public discussion these days is the idea that competition inside the NHS is a bad idea. The likes of Polly keep on about how cooperation, rather than that competition, is the right way to go. To which there are two responses: the first being that competition is actually how you decide who you are going to cooperate with. We might think that Pepsi competes with Coke, but neither are competing with Tesco: they are competing to decide who cooperates with Tesco. The second is that cooperation is indeed good: it's just that in groups of more than perhaps 3,000 or 4,000 people (derived, not entirely accurately, from Elinor Ostrom) we find that it's not really possible to have central control of peoples' cooperation. We need to use the market to organise that cooperation. All of which brings us to this lovely experiment:

NHS hospitals in England are rarely closed in constituencies where the governing party has a slender majority. This means that for near random reasons, those areas have more competition in healthcare – which has allowed the authors to assess its impact on management quality and clinical performance.

The answer? More competition improves the health care service.

We know the same from other sources as well. NHS England is, as Polly would put it, more accursed with competition than NHS Wales or NHS Scotland. NHS England has been, by all the usual measures (whether financial, patient satisfaction, health outcomes) getting better faster than NHS Wales or NHS Scotland. And that's what we would predict too: for we do't in fact say that competition is necessarily a better way of running something. We do however shout very loudly that it's a good way of making something better over time. Competition incentivises productivity improvement that is.

So, every time we go out to test this we find that competition makes the NHS better. The case for not having more competition in the NHS is therefore what?