Why the NHS needs to be reformed
FOR once, some good news for the government’s proposed healthcare reforms. They may have been slammed in most quarters but members of our special panel of business and financial professionals love them. Over 500 took part in our latest survey (in partnership with PoliticsHome), as we report on page 1, and two-thirds backed the idea that a variety of organisations, whether NHS, private or voluntary, should now be able to provide NHS services. This is a sensible view to take, even if most other demographics in the UK disagree.
The NHS is very different to other health systems in other countries. For example, in Germany, a society which many would argue has a better overall health system than Britain’s (and retains universal access), just 31 per cent of hospitals are owned by the government. Slightly more – 32 per cent, and rising – are owned by for profit firms and 37 per cent are owned by the not-for-profit charitable sector. Over there, the idea that the state must own all hospitals is seen as a weird idea redolent of an archaic worldview. What matters are outcomes and ensuring the best bang for the taxpayer’s buck.
It is not just Germany which successfully involves the private sector to a much greater extent than we do to ensure that the whole population enjoys a higher level of healthcare. In Spain, the region of Valencia has called on for-profit companies in a big way since 1997. A private consortium provides all healthcare services for over 20 per cent of that region, covering nearly 1m people, under contract to the regional government. Various private sector contractors have improved services by providing longer opening times and using IT properly, with patients in many cases now able to view up to the minute waiting times for hospitals and GP surgeries over the internet, as a report from the Reform think-tank points out.
The future for Britain is to move down the continental European route: a social insurance system with mixed sources of financing and a variety of providers. There is no other way forward. As consumers become richer, they understandably want to spend more of their money on healthcare. The problem is that the government is out of money: the budget deficit remains vast and even its attempt to increase real terms health spending slightly year on year (rather than cutting it) is proving extremely painful. Taxes are nearing their maximum level: any more and the economy will wither away as mobile firms and workers quit the UK. So the only way to spend much more on health over the next couple of decades – and in 50 years’ time spend perhaps 20-25 per cent of GDP – is to allow consumers to contribute directly to the costs of healthcare, as is already the case in nations such as France or Switzerland.
Replacing one state-owned monopoly by a privately owned one would be stupid. What is needed instead is more competition, property rights and an incentive for new entrants to provide the best services at the cheapest cost to consumers, who need to be empowered. The coalition’s plan has flaws – not least the idea that GPs should be given so much responsibility for commissioning spending – but also contains many good ideas. It is time for radical thinking on how to build a world-class British healthcare system fit for the twenty-first century.
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allister.heath@cityam.com
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