The 'Internal Market' of Doom

Fundamentalist Islam seems to grab all the headlines these days, however there is another kind of fundamentalist lurking in our midst: the market fundamentalist. The latter type of fundamentalist have the dogmatic belief that the wondrous market will rescue any situation, no matter what the context. It doesn't take more than a little research to find some rather gaping flaws in this market-based ideology; market fundamentalists also exhibit similar characteristics to the worst religious extremists as they react with disproportionate vitriol when confronted by reasoned argument that questions the validity of their unerring faith in the market.

The 'free market' has taken a lot of credit for various successes, even when state protectionism has had a far more prominent role in the development of certain successful economies throughout the world. Even today 'free trade' is only engaged in by the wealthy developed nations in their areas of strength, state protectionism is still a vital tool which countries such as the US rely on in several key areas. Organisations such as the the WTO enable complex negotiations between countries as regards trade barriers and tariffs, compromises between tariffs and protectionism are haggled over at great length. The 'Washington consensus', a virtual bible of the 'free marketeers,' has arguably been to blame for several recent economic crashes, including the Argentine recession of 1999; the consensus consists of certain economic policies including privatisation, deregulation and trade liberalisation.

This moves me on to the relevance of the market to the NHS, the internal market was created by Thatcher in 1990 and it set out to improve the service by promoting competition between NHS providers. Before coming to power Blair and New Labour were fierce critics of the internal market, but following their election to power in 1997 they only went about strengthening this market-based strategy. The idea behind the 'internal market' is based around the assumption that competition between providers will drive down costs and hence improve the service provided. Unfortunately there is precious little evidence of this happening since the internal market's introduction, as productivity and efficiency have been on the slide ever since. Some leading economic opinion has also criticised the assumptions behind this approach, arguing that cooperation between providers combined with a 'competitive' environment is needed for the cure. Interestingly the internal market has arguably left to a breakdown in cooperative relationships in the NHS and a less 'competitive' environment in many cases, as contracts are frequently handed out in an uncompetitive manner.

Reform programs such as Choose and Book, the gimmicky 'Patient Choice', NPfIT, Payment by Results, Practice Based Commissioning, PFIs et cetera are all part of the same privatisation agenda that is claimed will improve the service by deliberately pushing more work to the 'super efficient' private sector. The fundamentalist proponents of the internal market assume that the private firms involved in PFI, ISTCs, WICs et cetera will automatically do things cheaper and better. It may surprise them to learn that there are numerous examples of the exact opposite being true, there is also an embarrassing lack of audit and quality control in place to monitor the performance of these private sector operations. It must be noted that there is virtually no similarity between the way in which the private sector is used to provide health care in the UK compared to the best health care systems in Europe; private health care providers in France for example are bound by law to a form of social contract to ensure that a certain standard of service is maintained.

The phenomenal cost of creating and maintaining the internal market is something that is rarely commented on by the government, this may well be why the billions wasted on centralised initiatives in CFISSA are conveniently brushed under the carpet. It is therefore very revealing that the NHS deficits, that the government has been enforcing upon the NHS, are scarcely out of the news; these deficits are a very convenient way of reducing NHS capacity so that more work can be spooned to the private sector.

The appalling value for money obtained from PFI deals has already been excellently deconstructed by Professor Pollock, incidentally she is someone that the government should not be ignoring. The poor value for money and the poor quality of work provided by ISTCs and WICs is also never far from the news. The poorly though out payment systems are also driving good services into the ground, this is expertly explained here; even the NHS confederation is speaking out against the never ending march forwards of the faulty payment systems:

"NHS Confederation policy director and PbR supporter Nigel Edwards agrees. The idea is in the latest PbR discussion document, although only as an idea. ‘I am concerned that the PbR team’s approach is to unbundle, unbundle and unbundle and put a price on everything,’ he says. ‘They seem to recognise the problem but not do anything about it."

Excellent NHS services are being closed as a direct result of Payment by Results not rewarding them proportionately for trickier more complicated work, while private providers cherry pick the easiest work and get paid fully even when they don't fulfill their contracted obligations. This is symptomatic of HMG's woeful program of reform based solely on upon flawed ideology. It is also impossible to put a price on the damage done to the morale of the NHS workforce thanks to this destructive reform program, the spirit of cooperation that used to exist in the NHS is also dying. Any attempt to create a better system must do better as regards retaining the most skilled staff, current reforms are forcing many brilliant doctors abroad or into the city.

The internal market would still be doomed to failure even if it wasn't run as badly; this is because a state funded health care system must be rationed effectively to provide the greatest net health gains overall, meaning that 'patient choice' and market mechanisms are anathema to any purely state funded health service. That is not to say that the private sector has no role to play, far from it, but we have seen an abundance of evidence showing this type of direct funding of the private sector with tax payers cash is an incredibly bad idea.

There is no ideology that will magically solve the NHS' problems, this is an extremely complicated problem that will take a massive amount of expertise to solve and even then there is certainly no perfect solution. The advantage that state run care has is that it can be incredibly efficient as it can be rationed to provide a good basic standard of care for all, this is provided that the money burning 'internal market' is binned for good. The private sector can be used in a way that will benefit us all, provided that the government rethinks the way it goes about this; the current direct funding of private providers in a way that is running the NHS into the ground is clearly not the best way to do this.

Lessons should be learnt from the overt failings of the internal market so that a more workable solution can be reached. Ideologies will not dig us out of this pit of doom. The essential beast of capitalism needs to be kept in check, otherwise short termist economic gains will have a disproportionate emphasis placed upon them in the design of new government policy; slash and burn capitalism can quickly lead to a situation where the long term health of society is placed in grave danger as inequality and social problems exponentially balloon. It must be remembered that there are many things that cannot be measured in absolute economic terms, understanding these limitations in our understanding will be key. In any potential successful solution the state must have a key role; whether this is as a provider of good rationed services for all or as a tough regulator of private providers, or possibly both, remains to be seen. There is a diverse mix of health care systems around the globe, with no particular system being acknowledged as the divine champion. It is very hard indeed to compare system to system, as there are so many unclamped variables; for example the NHS has been massively underfunded for many years when compared to other health systems, this factor alone makes it very hard to tease out any possible cause and effect.

Whatever the solution, it is key that all future policies and reforms are brought to us in a thoroughly democratic manner. This means that the government must consult the public properly and not railroad through reforms against the will of the majority. It means that the government must debate these issues and formulate policy out in the open, as currently policy making is done behind closed doors in a way that allows the real motives of reform to be hidden. The anti-democratic nature of the free market must be remembered so that unaccountable power bases do not grow in a way that can damage the health of the nation. The successful use of the private sector in the future can only be done with tight regulation that ensures all health care providers respect the social contract and provide a high quality equitable service; this will ensure that a productive dynamic is set up that sees public and private sectors working cooperatively towards the same goals. Whether public or private, the key factor seems to be that the long term needs of the population are considered when providing the service; absolute short termism will be the death of any system.

Of course the actions of 'the state' are not necessarily democratic, this is very much dependent on the strength of a number of key democratic pillars. In fact Tony Blair's rule has seen a rather worrying erosion of several of these pillars; policy making decisions are now routinely hidden from the public thanks to new legislation, while a network of unelected unaccountable hand picked special advisers have a massive amount of power as regards pushing through this flawed Blairite ideology. A lot of progress could be achieved by making statistics independent of government control, as the current government stifles progress by concentrating on spinning propaganda as opposed to actually improving services.

The debate about the direction of reform needs to be had, even if the politicians do not agree; in fact some very interesting ideas are appearing on the horizon, sooner or later the politicians will have to engage. The only way forward is with open and transparent democracy, as without this both state and private health care systems are doomed to failure because they will not be set up to serve the interests of the majority. As far as how to achieve a functional mix between public and private, I'm open to suggestions however it is clear the current 'internal market' is doomed to failure.