It is a wonder they haven’t called in Mary Portas, Raptor of Retail, to fix the NHS. Nice Gerry tried a while ago, but tea and biscuits, even Nice Gerry’s 24/7 tea and biscuits, failed to hit the fan when it came to fixing the NHS. Nice Gerry’s biscuits did what biscuits do when faced with a sea of NHS tea. They got dunked – and disintegrated.
Raptor, of the other hand, would know exactly what to do. Dressed by Dallas out of Star Wars, she would stalk the wards and clinics, skewering managers. Layabout staff would be rounded up, and their nail varnish stuffed where the sun don’t shine. A wand of retail magic would be waved, dull clinics transformed in a halogen twinkle into fun interactive experiences. Freshly botoxed greeters in Thunderbird uniforms would be drafted in, and the warmth of the Mall would embrace all. Everybody would win, and all would have prizes.
Which is fine – in a retail business. Better customer service really can mean happier customers and better profits. What Gerry missed and Mary would miss is that the NHS isn’t a business. The reason why The Raptor works in retail is because placing the customer as King serves the God of profit. The NHS, on the other hand, isn’t there to make a profit, or to make money, it is there with the single and sole purpose to spend money, our money, on that quaint notion that the money it spends might in some bizarre fashion benefit our health. It will always make a huge eye-watering loss.
This, in a nutshell, is why the NHS will never benefit from commercial privatisation. Putting aside the efficiency question for a moment, privatisation introduces a third player, a parasite that only ever takes: and the name of that parasite is profit. Even when shareholders invest, they do so ultimately so that they can reap better profits; any improvements along the way for the punters are merely means to ends – and that end is profit. And – and this is the crucial point – feeding that third parasitic player will end up costing more – or providing less for the same overall budget.
Ah but, I hear you say, the private sector is more efficient – and that can only be a good thing. Whilst the efficiency benefits may or may not be there – experience in other countries suggests that the transaction costs of market games can outweigh crude shop floor efficiency savings, the simple fact is that even if they do materialize, they will only ever – because the bottom line is profit – end up, at the end of the day, in shareholders’ pockets. If there aren’t any profits, they will drive down costs (and so services for patients) until there is a profit. That’s what shareholders do; it is why they are shareholders.
Dr No sometimes considers it like this. The state run NHS provider is not that efficient. It spends £100,000 to do 90 operations. Let’s call that 90% efficiency. Total cost: £100,000; cost per procedure: £1,111. The private provider is whizz efficient, 100% efficient! – and does 100 operations for £100,000.
On the face of it, the private provider is doing better – the unit cost has gone down to £1000 per procedure. But that is only part of the picture. We need to add in the transaction costs (the costs of running the market system) – say a very modest 7% of total costs, plus profit – dividends for shareholders – say another 5% – so making a total costs of £100,000 plus seven percent plus five percent, a grand total of £112,350 for the 100 operations – making a unit cost of £1123.50 – which is now more than the NHS provider unit cost. Going down the private route turns out to be more costly. And if we have the NHS unit do 100 procedures, as the private unit did, the total NHS cost will be still be less – £111,100, compared to private provider cost of £112,350. And the reason why the private route costs more is because of that third player in the game – the parasite of profit.
And to make matters worse – the only way the private provider can start to match the cheaper NHS provider total is by cutting costs. But they are already 100% efficient – so the only way they can drive down costs yet further is by cutting something concrete – less doctors and nurses to cover the same ward, cheaper staff from abroad, no blood on site when there should be – and all the other a thousand and one cracks and wheezes commercial private operators can and do use to force costs down. Don’t say Dr No didn’t warn you…
There is, Dr No accepts, an element of oversimplification in his economic analysis – sadly, he never got to do PP let alone E at Oxbridge. But the effect of the third player, the parasite, is inescapable to even the most economically illiterate mind
There may of course be a time and a place where private and NHS total costs will converge, with nothing much to separate them. The NHS provider is leaking efficiency though its ancient pipe work, while the private provider is bleeding profit to shareholders. It then becomes a matter of personal choice as to which system one prefers. Dr No may be a dinosaur, but he would rather see NHS money lost on good old fashioned inefficient NHS tea and biscuits for NHS staff, than see it line the pockets of the already rich and greedy.