My mission statement

The times we are working in now need a great deal of accelerated change and there must be no negotiating that down. So my mission statement for this part of my consultancy career is to be clear that there needs to be and will be a lot of change from the work that I do with individuals and organisations and if organisations don’t want that, then it is probably best to go somewhere else.

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Competition between GPs and its impact upon other local GPs

Filed Under (BMA, Competition, GPs) by Paul on 18-05-2011

This post continues my interest in the role that leading organisations in the medical profession have in trying to persuade the Government to come out against competition and especially the introduction of new entrants into the NHS.

If the BMA really believed in their position of being both against the private sector providing services and competition, there seem to me to be a number of powerful things they could do. The first would be to ban their members from taking part in private medicine. By this single action they would greatly restrict the impact of the private sector on British health provision, thereby advancing a policy they favour.

Why do I think that they will not do this?

Because a large number of their hospital consultant members would leave the BMA rather than lose their income from private health provision.

These members tolerate the bizarre stance that the BMA have taken against the private sector because they know it will have no impact upon their private income. They know that the BMA stance is against new competition that will shake up their earnings from private health. So it’s a sort of qualified dislike of capitalism. “We like it enough to make a lot of money out of it, but we don’t want to allow new entrants into the market upsetting our monopsony position”.

The same is true of their stance on primary care. The BMA could make a massive attack upon the free market in the NHS by suggesting that all GPs become salaried state employees. At one stroke they would deny the possibility of small business interests impacting on the NHS through the myriad small businesses that are GPs. If they really didn’t like the private sector having a role in the NHS, this would be a devastating blow.

Why do I think that they will not do this?

Because a large number of their GP members would leave.

So given the BMA could bring the private sector interests in the NHS to its knees and won’t, what are they trying to achieve with their policy against private sector work?

What they are trying to achieve is to stop any changes in the cartels their members are working with at the moment. They want the benefits from their current private sector experience without having the bother of dealing with new entrants that would create new ways of working. What worries them about competition is that it brings challenges from outside – challenges that must be met.

To meet that external challenge you have to change the way in which you work to come into line with new and better practices introduced by the external source. Or you don’t and give customers the opportunity to choose between your and the new way of working.

The interesting thing is that we actually have some evidence of the way in which GPs operate when competition moves into their locality.

In August last year one of the staff of the Co-operation and Competition Panel, Dr Chris Pike, published a paper which carried out an empirical anlaysis of the impact of proximity and competition on GP quality.

The full paper can be read here.

The abstract makes interesting reading.

An Empirical Analysis of the Effects of GP Competition – Dr. Chris Pike

Co-operation and Competition Panel August 2010

We analyse the relationship between the quality of a GP practice in England and the degree of competition that it faces (as indicated by the number of nearby rival GP practices). We find that those GP practices that are located close to other rival GP practices provide a higher quality of care than that provided by GP practices that lack competitors. This higher level of quality is observed firstly in an indicator of clinical quality (referrals to secondary care for conditions that are treatable within primary care), and secondly in an indicator of patient observed quality (patient satisfaction scores obtained from the national GP patient survey). The association between increased competition and higher quality is found for GP practices located within 500 metres of each other. However it would appear that the magnitude and geographic scope of the relationship are constrained by restrictions upon patient choice. As a result the findings presented here may only reflect a fraction of the potential benefits to patients from increased choice and competition.

The point made in that last sentence is important in looking at how a bigger impact could be developed by allowing greater patient choice of their GP.

One of the interesting issues that was revealed when the 60th anniversary of the NHS was celebrated in July 2008 was the uncovering of the first NHS leaflet that was delivered to every house in July 1948. When you turned over the first page, the very first thing that citizens were enjoined to do when they entered the NHS was to “First choose your GP”

This initial injunction always surprised me because I had fallen for the mistaken idea that the opponents of choice in the NHS had always promoted. They seemed to say that choice was a recent arrival in the NHS, and that in the good old days between the 40s and 60s choice had been anathema.

It transpires that this is untrue. Choosing your GP was there right at the beginning of the NHS.

What we now need to do is to resurrect the aims of the founding fathers of the NHS and recreate that choice for patients – to choose their GP.

In some places that choice is hard to make real. Given the minimum income guarantee (where GPs below a certain minima do not lose income when their registered population drops beneath a certain level) if patients do manage to choose a different GP, the GP may not experience any loss of income.

In most other walks of life this would be seen as really inefficient and wasteful of public money. We will go on paying for patient X even if patient X does not want to be registered with you.

As the above abstract says “the magnitude and geographic scope of the relationship are constrained by restrictions upon patient choice. As a result the findings presented here may only reflect a fraction of the potential benefits to patients from increased choice and competition.”

It must surely be right that citizens are free to choose their GP.

It must surely be right that unselected GPs are not paid for working with citizens who do not choose them.


10 Responses to “Competition between GPs and its impact upon other local GPs”

  1. There are several important factors about competition in General Practice that are missing here. I’ve separted them into GPs competing and patients competing.
    The first is real life examples. My own experience is of bidding (and winning a tender) It took 9 months, cost over £40k and took 2 experienced doctors away from their patients for long periods of time. This is impossible for the majority of practices, impossible to repeat (it will take years to recoup our costs) and definitely impossible to repeat for practices that lose a tender process. The point being that there will be very few practices competing in this way.
    The likely winners in competing for practices will be companies like ATOS who won a bid on price in Tower Hamlets and then lost the contract because they could not come up with a quality service at that price. They had a very high turnover of inexperience doctors who refused to stay under the conditions ATOS demanded.
    The reality of competition is that large, disinterested private equity companies, rather than small, expericenced GPs will start running surgeries. The consequence will be loss of the ablility to tailor services and adapt to local conditions. As an American GP explains, in his defense of independent family practice: “I wonder what would be different if our business plan required the approval of a corporate board or CEO”
    Our experience of patients choosing their GP in Hackney is documented here:
    Patients that choose are more likely to have less wrong with them, leaving the poorer practices with the sickest patients, so the benefits are due to patient selection rather than doctors changing their practice. This could explain the results of the research you quote. This is the Inverse Care Law. It is the fundamental objection to markets and competition in healthcare. In Hackney by far the most vocal opponents of competition are the highest performing GPs who would find it easiest to attract patients.
    The suggestion you make repeatedly in your column is that the medical profession is concerned with vested interests rather than their patients. I have countered this in another post: The strongest GP advocates for competition are those with vested interests rather than the rank and file who in my experience (of urban, deprived general practice) are deeply committed to their patients. If we wanted money, we’d work where the patients are ‘more efficient’
    Whilst it is true that the BMA has campaigned for doctors interests for 60 years, as Julian Tudor Hart, no friend of the BMA said a couple of years ago, their Look After Our NHS was the first time in their history they had put patient rights before doctor rights.
    Lastly my own advert for patients is here:

  2. An excellent reposte from Dr Tomlinson. The inverse care law is exactly why choice for patients isn’t equal nor fair.
    POI – also an urban deprived area GP who’s in a popular oversubscribed practice.

  3. It is difficult to put into words exactly how wide of the mark this analysis is.

    It is quite scary that this kind of thinking is going on.

    I agree with Jonathan that a close reading of Julian Tudor Hart might be helpful to those wishing to understand General Practice. Specious generalisations like these in this article and the source material are indicative of a lack of understanding of general practice.

  4. Paul,
    Your thinking and arguments are deeply flawed. Private work in the private sector cannot be compared to private work in the public sector.

    There is no contradiction in BMA policy.
    We oppose the idea of private providers and markets in a publicly funded system. There is no problem with doctors working in a seperate private system as long as they don’t abuse their NHS work (which admittedly has been a problem in the past – but it gets worse with longer waiting lists which occur when you make £20 billion efficiency savings!). If done properly, a healthy seperate private sector can take pressure off the NHS

    The British primary care system does not actually operate like a market and can’t be used to justify increased privatisation. GP businesses are not like any other business: there is a limit to their earnings agreed by government – their so called profits are actually a salary equivalent for work they do; there are no surpluses to distribute to shareholders; they can’t buy and sell their businesses; advertising is restricted; they don’t generally provide any other services outside the NHS; they are professionals so they do this work because they are trained to and want to and not because it’s what happens to be profitable this year; there is no imperative on them to maximise profits; they build long term relationships with their patients and community which is not reducible to commodity values. Patients know this – they don’t consider their GP practices to be “private companies” and have expressed unease at the idea of their health care being provided by people whose primary aim is to make a profit.

    You are looking at the wrong people if you think doctors are the vested interests

  5. Surely one of the biggest differences between GP practices and private providers is that GP practices are not companies limited by shares, do not have shareholders therefore “savings” made go back into the practice and patient services rather than into share holders pockets.

  6. Dear Wendy
    Thanks a lot for your comment. That would be a real distinction if all other possible providers were all companies with shareholders. However there are a number of different organisations that may want to compete with GPs as providers of services which do not distribute surplus money to their shareholders. Charities would of course not do this and neither would Community Interest Companies. So there are a number of organisations that are not current providers, nor are publicly owned organisations, that could provide competition and are not shareholder driven.
    Paul Corrigan

  7. Paul – you are absolutely right. This is 2011 not 1911, to deny patients a choice and try and shut down competition is not only the worst form of restrictive practice, it is a monument to human smallness.

  8. Clive Peedell: “GP businesses are not like any other business: there is a limit to their earnings agreed by government – their so called profits are actually a salary equivalent for work they do; there are no surpluses to distribute to shareholders; they can’t buy and sell their businesses; advertising is restricted; they don’t generally provide any other services outside the NHS; they are professionals so they do this work because they are trained to and want to and not because it’s what happens to be profitable this year; there is no imperative on them to maximise profits; they build long term relationships with their patients and community which is not reducible to commodity values.”

    In that case no business is like a business.

    Many businesses have capped revenues. Many businesses don’t have shareholders (eg local builders). Many businesses can’t be bought/sold (eg McDonalds franchises). Many businesses are restricted in advertising (eg food or tobacco). Many people do paid work because they enjoy it, are trained to do it and are not in it for avaricious profit (eg professional photographers). There is no imperative on any businesses to maximise revenues, other than simple greed, and doctors are not saints – otherwise why else would they do paid private consultancy work? Many businesses also have sophisticated long-term relationships with their clients which cannot be reduced to a commodity (eg Architects, Auditors, Lawyers).

    So none of your points about Doctors being supposedly exempt from the laws of competition hold water.

    Your other idea that because the Primary Care system doesn’t work like a market now, therefore it would be a terrible idea if we made it more like a market, is self-evidently ludicrous.

    Furthermore if Doctors stand to gain from the status quo and lose from reform, then they are by definition a vested interest. Like students protesting fee rises or Tube drivers striking over pay freezes, Doctors opposed to changes that would make their lives less comfy are vested interests.

    People get frightened of markets being an opportunity for incompetent shysters to milk profits from poor taxpayers. A properly functioning market does the opposite – only those who are good at their job and satisfy their patients can retain their cash. What patients don’t realise is that a market mechanism means they can vote with their feet, and not just once every 5 years at the ballot box.

  9. Charles,
    I was talking about businesses/corporations in healthcare, not in general. (I accept that the post above does not make that clear, though).
    As for vested interests, I agree that not all doctors are saints and there is clearly a significant percentage of doctors that will have some vested interests. However, many of those vested interests will actually be best served by the reforms, because waiting lists will increase and there will be increasing opportunity for private practice income. The more you make a healthacre system function like a market, the more you will see vested interests from the medical profession. During the commercialisation of the US healthcare system, the American medical profession lost public support faster than any other profession. (Blendon R. JAMA 1989).
    Kenneth Arrow also recently noted this problem:
    “And one problem we have now is an erosion of professional standards. In a way there is more emphasis on markets and self-aggrandizement in the context of healthcare, and that has led to some of the problems we have today.”

    Market failure is an inherent problem in healthcare. The idea of a properly functioning market in healthcare is nonsense. For example, it is widely recognised that price competition is detrimental and Lansley has already abandoned this for much of the NHS. Hence, the price mechanism for driving the invisible hand is already disabled. The market is thus rendered inefficent, by definition, right from the off. Add in all the oversight required to avoid further market failure, plus the transaction costs, and you have an expensive mess.
    New Labour were just as guilty by the way.

  10. Clive,

    I would make the further point that when I refer to a ‘market mechanism’, I do not mean that we should provide healthcare in the same way that one buys groceries. When I say ‘market mechanism’ in the context of healthcare I mean one in which decisions of allocating resources are not made solely by managers, but in response to the dynamics of patient demand.

    Complicating factors which create elements of market failure can be overcome while providing a basic market mechanism. For instance, monopolies can be very efficient and fair in providing resources. While Microsoft owns 90% of the market for PC operating systems, the threat of a competitor entering prevents them from exploiting their customers. When consumers are not able to evaluate the implications of their decisions fully, regulation can be enacted to protect them (eg mortgage loan rules).

    There are two fundamental differences to healthcare that creates difficulties in market mechanisms. The first is the near-total ignorance of the patient on the detail of their health. The second is that GPs are on both the producer and consumer side – they ‘purchase’ care on behalf of patients but also ‘sell’ it to their patients – creating a conflict of interest, which in some countries (notably the US) has led to great expense being lavished on frivolous tests, because doctors get paid money for providing these.

    But these complications do not mean that no market mechanism, nor even the specific proposed reforms, can even succeed in the NHS. (As an aside, there is a branch of game theory, called mechanism design, which looks at how imperfect markets can be made to function – eg how best for governments to procure goods or tender contracts)

    The fact that the price of all goods in the NHS are invisible to the patient is not important. Patients in the context of the NHS do not use this unobserved parameter in their decision making. Instead they use more subjective criteria – is this doctor listening to me, is he polite, have his treatments ‘worked’? The laws of demand and supply can work even in the absence of a known price. (Otherwise how would sealed-bid auctions work???)

    Moving from the general to the specific, the Lansley reforms seem to me (I do not know much about the detail, I admit) to be fairly harmless. GP commissioning is obviously a product of Lansley’s frustration at important decisions being made by those with little knowledge or sensitivity to the needs of patients. While the transition period needs to be handled properly, the experience of NHS Cumbria suggests it can be made to work effectively.

    Additionally allowing non-price, or even price competition, while ideologically unpalatable to some, will not lead to the collapse of the NHS system. If someone can provide the same quality of care (#1 priority of patients) for less cost to the taxpayer, why should we hesitate to shift resources away from others and towards them? I suspect private providers would be subject to the same regulation as traditional primary care providers, meaning they can’t cut corners to profit (eg give placebos instead of the actual pill).

    Additionally having a diversity of providers cuts both ways – while public providers will be forced to improve on the basis of cost and efficiency, private providers will be forced to compete on the basis of quality and sensible remuneration.

    So to conclude. Market mechanisms work, and can be made to work, in a variety of imperfect and complex situations. Improper implementation will cause severe difficulties. The Lansley reforms seem to me to be a step in the right direction.

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