How NHS spending on iPhones reveals the usefulness of markets in medicine

(Source: Reuters)

Over at Guido Fawkes, they've revealed that NHS England, a body responsible for delivering health service reforms has spent £177,028 on 400 iPhones for staff members. At first glance, this may appear an extravagance. But in reality, we can't tell whether this spending is wasteful or not.

Perhaps these iPhones are delivering efficiency savings, making it easier for staff to access important information and react to it. The NHS could cuts costs by not buying any advanced technology at all, but most would accept that making notes with a pen and paper and sending messages manually would be less effective than using IT systems.

That the NHS is using outsourced technology is probably cause for celebration. The government is notoriously bad at developing in-house solutions, and the Telegraph's Willard Foxton makes a good case for government to grab devices straight from the marketplace. By the time state-built solutions are ready for issue, entrepreneurs have usually developed a cheaper and more powerful alternative.

"What governments have to do is resist the urge to go with single suppliers, avoid commissioning expensive purpose-built mobile hardware, and pick the best from the market," writes Foxton.

Yet it could also be the case that these figures illustrate wasteful expenditure of the worst kind, as bureaucrats with good job security do not need to worry about keeping costs down. Without the incentives of profit and loss to keep civil servants accountable, it can be hard to keep spending in check.

It is hard to imagine that all civil servants would be so self-centered, but because of the nature of the NHS even if they wish to ensure the highest standards for patients, they have no way to price the usefulness of the iPhone. Evaluating these innovations is essential to make sure that treatment is cost effective. But unless we have medical practicioners compete, we can not reveal which methods are best. It's that process of innovation and competition that can reveal better ways of delivering care.

Unless the NHS can become more competitive, and more market-orientated, we'll never know the value of an iPhone. Worse still, it will hold back healthcare provision in the UK, as politicians continue to spend money on a system which can't use prices to work out how resources are used best.