Wednesday, 9 November 2011

My First Post: YOUR NHS needs YOU!

So welcome to my blog, I was hoping to have something profound to say and I’ve been working on posts about proper economics in the context of the ‘Euro Crisis’. However, as always perhaps, events just move too fast and, as usual, I got so annoyed by this idea that I simply had to rant.

If you hadn’t guessed by now I can’t write very well so bear with me!

Today the government looks likely to announce that an NHS hospital will be taken over by a private company. If ever there was a clearer sign of what actual Tory policy is then I haven’t heard it- yes I’m political get over it. Circle 50.1% is owned privately, and 49.9% owned by a ‘partnership of employees’. In other words 100% not owned by the tax payer and therefore patients it will be treating.

The claim is that it will be paid exactly the same for procedures as NHS hospitals and that Circle will take all of the financial risk. Without making cheap puns about John Lewis, their preferred business model, I have some very grave concerns.

It all comes down to economics. Why is it that the ‘free market’ is considered such a silver bullet for all the worlds ills? Why is it that even a Labour government saw competition in every field as a good thing? And why is it that every fibre of being frowned a little at the idea of this announcement? These are the questions that I hope, in time, this blog will answer.

So, Free Markets, I’ll be writing about this more in weeks to come but it basically comes down to something called the Fundamental Theorems of Welfare economics. This is the mathematical proof that Perfectly Competitive Markets make exactly the same allocation of resources that would be made by a Benevolent Central Planner who knew everything about everything. Clearly neither of these abstract situations arise, markets have transactions costs and planners lack information (and often benevolence).

But the proliferation of Neo-Liberalism seems to suggest that consensus is that markets get closer to this ‘optimal’ situation than planners. A hospital run private company with all of that competitive behaviour will automatically be better than one run by civil servants. I believe this is to fundamentally misunderstand why markets deliver efficiency. The simple fact is that most private companies fail. More than 90% if you’re interested. Obviously we only know about the ones that make it, the others no longer exist.

And this is the problem with allowing private interference in health care. If you want to gain the benefit of competitive markets then you have to allow for this weeding out, you have to allow companies to fail. Are we really prepared for a hospital to fail?

These patients can’t vote with their feet, perhaps even literally, like they would when choosing between supermarkets. I don’t want to choose my hospital, I want to go to the closest one and it be of the same standard as all the rest.

Lets make this the first and last NHS hospital to be run by the private sector:

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