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Press Release:
Top Health Economists Comment On The NHS White Paper

13 July 2010

In a series of recent studies, health economists at the Centre for Economic Performance (CEP) have demonstrated that the introduction of patient choice and hospital competition into the NHS from 2006 onwards has improved quality, improved efficiency and saved lives (see Cooper et al. 2010a; Cooper et al. 2010b and Bloom et al. 2010).

They draw on this body of work to comment on the White Paper. CEP researcher Zack Cooper says:

'We know that hospital competition has improved the performance of the health service. The new White Paper encourages competition, encourages transparency and claims to reduce bureaucracy. That's all reasonable, but are most GPs up to the task of purchasing care for their patients? Will GPs really be onboard with the idea of encouraging competition? Those are the real questions we need to focus on.

'In the abstract, these reforms sound sensible. Every White Paper is heralded as "the biggest structural change to the NHS since 1948". In practice, these reforms seem to promote the Blair legacy of choice and competition, which have thus far proved effective. The challenge is translating these abstract proposals into workable policies.'

The researchers note that the challenge for the new government in healthcare is to continue to introduce smart financial incentives across the NHS and to encourage transparency and competition on clinical performance. They find some encouraging elements in the White Paper.

The push to publish more information on hospital quality is vital to improving the health service. The health service needs clear measures of quality that benchmark how providers perform and allow individuals to make informed choices.

In addition, giving patients a choice over their GP should have a positive impact on care. GPs serve a central role in the health service and expanding choice of GPs will allow individuals to find a provider they can be comfortable with and encourage GPs to continue to improve their performance.

It is also encouraging that the government plans to allow more flexible wages. Recent CEP research shows that this could be an effective strategy to reduce chronically high death rates in London and the South East (Propper et al, 2010).

There is a risk, however, that the reforms will introduce turbulence into the health service. Ultimately, will pushing decision-making away from Primary Care Trusts and towards GPs really increase competition and flexibility of the NHS?

This has the potential to be disruptive organisational change of the kind that the Conservatives promised to avoid when they were in opposition. Such shake-ups typically cost substantial medical time and money - something that will be in short supply over the next few years.

Professor John Van Reenen, director of CEP concludes:

'Moves towards competition are a way of driving up performance and improving patient outcomes in the NHS - just as they are in other parts of our economy. The real question is whether these proposed NHS reforms will really increase effective competition and improve standards or, in fact, accomplish quite the opposite.'

There are also legitimate concerns about whether or not GPs are up to the task of negotiating with hospitals. "One of the reasons for moving away from GP Fundholding in the 1990s was the capacity individual GPs had in bargaining with hospitals. Will it really be any different this time around?" said Van Reenen.

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