Monday, 24 November 2014

Why the NHS is like a Porsche 911.

The Porsche 911 suffers a fundamental design flaw: it's engine is in the wrong place, over the rear axle, leaving the car struggling for grip at the front, and tail happy. Decades of development have seen the engine's weight move towards the middle (where it should be), and by the 1990s Porsche was successfully keeping stockbrokers from going backwards through hedges, while keeping the overall shape that people seem to like.


The NHS is a lot like this car

"The NHS is being Privatised" is one of those perpetual political tropes, wheeled out by the hard left when Labour's in power, and everyone to the left of David Cameron when the Tories are. This is an example of 'the political class' (broad definition; which probably includes political obsessives like me, who're reading this blog) speaking a different language to the average voter.

What the NHS means to most people is a healthcare system, funded out of general taxation, free at the point of delivery, at which they can rock up when ill, no questions asked. Whether or not it is state-owned matters not a jot, so long as they don't have to pay when they're hurt. What the NHS means to a left-wing political activist on the other hand is 'the only thing on earth which is both state-run, and popular'. The NHS, following the triumph of Thatcherism, and the utter failure of traditional, trades-unionised municipal socialism, is all that is left of Atlee's post-war consensus and so critical to the left's image of itself.

But contrary to the Lefties' belief, the NHS has always made use of significant private business. Thankfully, even Atlee didn't nationalise the pharmaceutical companies. Most GPs are private-sector businesses which generate their business through NHS contracts. Services like cleaning and catering are often outsourced to private companies and have been for decades. And following reforms by the Labour party, some medical services are now run by for-profit businesses too. So the NHS is being privatised, a bit, by piecemeal and where appropriate.

But since the basic 'free at the point of use' structure of the NHS is not under threat (even the morons of UKIP don't want to fight the electorate over this), the ranty lefty screaming about 'profit' just seems ridiculous. I too support free(ish) at the point of use healthcare funded out of taxation. But I suspect private businesses competing to deliver services, especially if reforms can mean money follows patient choices, will deliver improvements in the standard, efficiency and responsiveness of care. I hope the reforms continue, backing success and learning from failure. Eventually, the state will control the spine of the NHS, guarantee the principles, and provide funding; but leave the actual provision to people and companies who aren't owned or employed directly by the state.

Which also brings us neatly to the Private Finance Initiative - something the left thinks is 'privatisation' too and the right thinks is state spending "off balance-sheet". The purpose of PFI is to deliver hospitals now, with the private sector bearing the delivery risk, and generating the financing. In return, the state offers a long-term delivery contract. The contract rolls up the cost of delivering, managing, maintaining and often cleaning a facility, so cannot be compared directly to build costs.

The PFI is delivered by a special purpose vehicle, a company whose shareholders might include a bank, a construction company like Balfour Beaty, a service company like Capita and various others. Investors typically bear the delivery risk should costs over-run. And this is why PFI projects have a good track-record, better than that of the state, in bringing things in, on time and on budget. This is why the ONS said they were good value, despite slightly higher financing costs. The state is a lousy project manager; the private sector, when it stands to lose big money if a project over-runs, has a good track-record of delivery. The rapid spread of PFI round the world (another successful British innovation in political economy, like privatisation) wouldn't happen if it didn't deliver benefits.

And the NHS will survive, and the left will still rant and rage about "privatisation", and the public will still raise an eyebrow, suspicious of politicians' motives; but so long as the NHS remains free at the point of delivery, the electorate will demonstrate their 'false consciousness' by studiously ignoring the silly, shouty people demonstrating and their Socialist Workers' Party placards.

The NHS is slowly being "privatised" and has been since it was founded. The Trans-Atlantic Trade and Investment Partnership may open the NHS to American healthcare companies, if they aren't already here. This is a good thing. Standards improve with the input of new ideas, and the abandonment of bad ones. Hospitals are built with the input of private capital and project management. An internal market improves responsiveness to patients' needs. All this is ultimately underwritten and financed by the state from taxation. The problem with the NHS is not "privatisation", it's the fact it was ever nationalised in the first place. Like the Porsche 911, the NHS's engine is in a fundamentally wrong place (Way out behind the rear axle, on Whitehall, rather than somewhere between the patient and the GP), but with decades of development and tinkering, that design flaw is being been overcome, as the engine is moved closer to where it should be. The NHS will remain Free at the point of use, just as the Porsche keeps its shape, but however good they are now, no-one's copied the underlying design of either.



2 comments:

Luke said...

"..by the 1990s Porshe was successfully keeping stockbrokers from going backwards through hedges.."

It would be wrong of me to pass up the opportunity to make the cheap gag about that not necessarily being a good thing.

Jackart said...

I set 'em up, you slam 'em into the back of the net.

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