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Are private hospitals more efficient?

Which way for the NHS?
Image by Paul8032

It’s in the news today that Hinchingbrooke hospital in Cambridge is to be run by a private company. But in basic terms, are privately run hospitals actually better than public? Not necessarily…

Since neo-liberalism took hold, market mechanisms, from competition between service providers (encouraged through introducing school and hospital choice) to full privatisation of public services have been thought to increase efficiency, productivity and innovation. The implicit picture here is that public run services are so strictly controlled by the government that their employees do not have enough flexibility to suggest better ways of doing things – either to tailor services to local needs or to tackle inefficiencies. It is not in the interests of such organisations to find solutions, especially when they would entail losing jobs because of the high level of Unionisation. But surely public managers still want to provide as much service as possible on their budgets, and workers want to feel their jobs are worth something?

There have been quite a few studies into whether private or public hospitals are more efficient, with varied results. In the 1990s, German public sector hospitals were shown to use fewer resources and provide care more efficiently than private hospitals. A study in Senegal found that private hospitals provided better quality care and hence should be encouraged but were not necessarily more efficient (in fact Catholic health posts were better than both at providing effective services). In Canada it was found that private for-profit ownership meant a higher risk of death for patients. A study from 1990 found that public hospitals in the US were more productive, but that this was likely to be because of government constraints on their funding. An old study of managerial efficiency from 1980s North America finds that there is no evidence it is higher in private firms than public firms. Indeed, in the provision of some public goods such as electricity, private firms are discernibly less efficient, and this is unlikely to be simply because of overbearing regulation in this sector. Public firms do make less profits and are more open to being used as a tool in elections. However, the conclusion to this book, written in 2000, finds that privatisation has often proved its worth and has only failed where it has been too speedily introduced, and that it is unstoppable anyway.

Perhaps, then, if this trend is unstoppable, it doesn’t matter which is more efficient since privately run NHS hospitals are coming whether we like it or not? Nonetheless it’s important to scrutinise the reasoning behind policy. The few pieces I’ve quoted above are simply the result of a little while spent searching academic journals, and I don’t pretend to understand all the techniques used – if anyone can improve on these or give me a systematic analysis let me know. However, it certainly seems that the scholarship is not conclusive, and better justifications, backed up by solid research, need to be given for the running of hospitals by private companies.


The Open Left project – allowing dissent?

James Purnell

As well as my tweets from the lecture, here are some thoughts on James Purnell’s Open Left talk at LSE tonight.

One of his main arguments, basically a reassertion of Third Way ideas, was that powerful individuals and a good society with a high level of reciprocity could go along together. He chose to use different language from the government he left, and it is perhaps pertinent that he didn’t use the word ‘responsibility’, a favourite of both the Labour and now Conservative leaderships.

Purnell talked of the need to revitalise the Labour movement throughout the country as a way to accomplish Communitarian ideals, and said that associations would play a key role in creating the reciprocal society he is asking for. He also shifted away from talking about using these organisations to deliver public services, and said that they should be empowered because they were good in their own right- indeed he was the first politician I’ve heard to say the government should be able to work with those organisations who actively campaign against the government. He also wants Labour politicians to be able to campaign locally somewhat independently from the central party. Allowing dissent in this way is something that’s been missing from all parties’ adjustment to localism, and most discussions of (my own research topic) social capital creation in public policy.

As well as creating space for civic groups, he suggested a guarantee of a job after one year of unemployment, community banks to loan for community projects and a cap on lending interest rates. Although disappointingly he argued that new social networking technologies were not useful for creating the reciprocal society he wants, most of his ideas seem determined to revitalise local communities and economies.

All of this was premised on the ideas of Amartya Sen and R. H. Tawney, especially social capabilities and how to achieve real freedoms, and on an idea of producing ‘active equality’ by tackling injustices and empowering people, not just redistributing resources.

We’ve heard similar from New Labour before, but allowing dissent and the real building of reciprocity in society are good things, if they actually happened. Purnell is clearly willing to act independently of his party, not just by walking out of government but also by voting with the Lib Dems on electoral reform last week. This independent thinking seems likely to also help Labour in the long term.

Update: Purnell has now said he won’t be returning to front-line politics, and has released an edited collection with Graham Cooke at Demos on the theme of power.

Expenses, trust and electoral reform

Trust in the UK Parliament
has halved in recent years.
Image by Tony Moorey

The Expenses scandal has damaged support for politics in the UK. We’ll see the full extent of any disengagement when we can track it long term – especially voter turnout, but all parties have already put forward responses. Although the inquiry and reform processes have themselves been less than straightforward, Parliament is making moves to repair the system – including increases in transparency, a more powerful independent body in charge of expenses claims, and changes to entitlements. The Tories repeatedly call for a general election, so do the Lib Dems who also want a proportional electoral system to ensure MPs can be more easily held to account. Labour won a vote on holding a referendum asking citizens whether we want to adopt the non-proportional AV electoral system, although it is not clear that this bill could be passed before an election.

It seems to me that in order to provide the best long term solution, we need to understand what specific effects on our attitudes the Expenses scandal has had. If we blame all politicians, a general election should go some way to remove those who have become unpopular. The same goes if the British people tend to see this scandal as part of the narrative of a failed government, a conflation, but a plausible one. If confidence in the whole of parliament, or even the whole political system, is permanently damaged, then changes like the recent proposals for electoral reform might be necessary.

Political trust

Political trust does tend to be rather a generalised phenomenon – if people start to lose trust in the government, they are pretty likely to say they also distrust the parliament, and vice versa. At the moment, Labour’s unpopularity means that trust in the Government is down, and this may have had some effect on trust in all politicians. Nonetheless, the figures for the UK Parliament are very bad indeed, and they are lower than levels of trust in Government for the first time I’ve seen. I don’t always trust survey responses but they can obviously be a way of getting a crude feel for opinion, and are good for comparison. Bearing in mind that these questions were asked in the middle of the expenses scandal, but according to the surveys undertaken by the EU, trust in politicians as a profession was down to 13%, the lowest ever recorded. At 17%, the level of trust in our Parliament had halved since 2007. It was also down 27% from the mid 1990s. This is therefore a general trend as well as a result of last year’s events (from which it can be assumed that trust in Parliament will recover somewhat). Many will blame the media for the effects of this, and indeed it has been shown that it is the reporting of corruption which affects attitudes rather than the act itself. But there is no denying that when seen through the filter of the spin given to stories, confidence in both the way our Parliament works and politicians is damaged.

Changes to the political system are therefore necessary

Although it might be that altering the system of expenses is enough, it seems unlikely these changes will really change general perceptions of how politics is run. It doesn’t necessarily follow that electoral reform would be an adequate a solution to corruption – an aspect of behaviour and values – but it will increase accountability by reducing safe seats. It is also a major change, which allows Labour to give the appearance of responding in a big way, and has also been fairly popular for a while. Any increase in support for the party proposing these radical reforms will, of course, occur even if the reforms don’t get through. The same cannot be said for confidence in politics in general if the system stays as it is. We won’t know for sure whether electoral reform will help without knowing how it would play out in voter turnout. Indeed political trust could be restored by itself once the memory of the scandal fades. But for now it does seem that people have lost a good deal of confidence in Westminster, and that reforms such as changing the electoral system may be an effective fix.