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3 March 2011

The coalition’s NHS U-turn

Andrew Lansley abandons plans to introduce price competition.

By George Eaton

Two weeks ago, when I listed the coalition’s ten biggest U-turns, I suggested that the NHS was next in line. “The smart money is on the government watering down its reforms,” I wrote.

Sure enough, Andrew Lansley has announced a major U-turn over NHS price competition. The Health Secretary is planning to amend his own bill to prevent providers from charging a maximum, as opposed to a fixed, price for treatment. In other words, the private sector will not be handed free rein to offer temporary loss leaders and undercut the NHS.

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The NHS Operating Framework, published in December, stated that hospitals would be free to offer services to commissioners “at less than the published mandatory tariff price”. But Lansley now tells the Financial Times: “We want the tariff to be a nationally regulated price, not a starting point for price competition. These amendments will put our intentions beyond doubt.”

It takes some chutzpah for him to claim that he never wanted to introduce price competition in the first place, but the U-turn should be welcomed all the same. As studies by the LSE and Imperial have shown, the limited experiment with price competition during the Major government led to a decline in standards of care.

One doubts that this will be the last concession. The “mad” decision (in the words of the British Medical Journal) to introduce the biggest upheaval in the service’s history, just when the NHS is required to make unprecedented savings of £15-20bn, will return to haunt the coalition.

Here’s the key passage from the BMJ’s must-read editorial on the subject:

Sir David Nicholson, the NHS chief executive, has described the proposals as the biggest change management programme in the world — the only one so large “that you can actually see it from space.” (More ominously, he added that one of the lessons of change management is that “most big change management systems fail.”)

Of the annual 4% efficiency savings expected of the NHS over the next four years, the Commons health select committee said, “The scale of this is without precedent in NHS history; and there is no known example of such a feat being achieved by any other healthcare system in the world.” To pull off either of these challenges would therefore be breathtaking; to believe that you could manage both of them at once is deluded.

How long will the coalition remain in denial?