Competition sometimes raises quality. During the 1960s, Americans who were fortunate enough to be covered by medical insurance had their hospital bills met as if money was no object. This resulted in what one team of researchers called a 'medical arms race'. Since there was no ceiling on costs, hospitals competed on quality: to attract more customers and the best physicians. Patients appeared to benefit during that period. But when the insurers responded by setting a lower price for work done, the incentives for hospitals to compete on quality fell and in some cases it appears standards slipped. So the problem is not competition per se. It lies in the rules that govern it. And the devil is in the detail.
... choice of hospital is not necessarily the most useful form of choice ...
It is not the business of the ESRC team to speculate what will happen in England to the tariff that sets out how much the Government will pay hospitals for each type of treatment. But already there are moves to switch from the average cost across the NHS to the ideal cost, the amount trusts would need to balance the books if their clinicians adopted best practice. What will be the response of hospitals whose practice is not yet of the best?
The ESRC team found little evidence from the US and Europe that patients take advantage of choice to travel further for treatment. There was an impressive takeup when choice was piloted in England during Tony Blair's second term in office. Between 50 and 75 per cent of patients who had been waiting more than six months for treatment accepted an offer to switch to an alternative provider. But it is hard to know whether people would be so ready to switch once the Government has met its targets for slashing waiting times everywhere. The international research suggested that patients say they want more information about hospitals' performance, but seldom let it influence decisions about where to go for treatment.
These and many other caveats that emerge from research into the economics of choice do not invalidate its political appeal. But they help us to be circumspect about the likely benefits of the experiment.
They are also a reminder that choice of hospital is not necessarily the most useful form of choice that the politicians could offer. Mothers want to choose how their babies will be delivered. Mental health patients often say they would like to be able to choose a talking therapy instead of medication. Millions of patients with longterm conditions would like to be more in control of how their healthcare is managed. It seems there may be scope for economic research into the choices that are not yet available as well as those that are.
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