Why the NHS should be privatised
'The government can be a poor economic manager as they often make politically motivated decisions...'
Luis Hill | 10 November 2016

With the result of the EU Referendum causing a frenzy amongst politicians, combined with the renewed junior doctor strikes, it comes as no surprise that privatisation is a hot topic. With £138 billion to be spent on healthcare, amounting to around 22.6% of the government's total expenditure, will those in power opt to stick to the core values of healthcare – to offer free healthcare at the point of delivery - or will they opt to mimic those actions of the infamous Conservative leader, Margaret Thatcher, and privatise the NHS?

With UK population expected to hit 67 million in 2020, as well as with ever-more pensioners, the effects are starting to be felt. The NHS is under severe pressure. So much pressure, that Nigel Edwards (chief of Nuffield Trust) has said that “47,700 more nurses and 26,500 more doctors were needed to match the Organisation for Economic Co-operation and Development average (OECD)”, which involves much poorer nations than the UK, such as Chile and Poland. He added: “The extra staff would cost the NHS another £5bn a year.” The government, despite giving the NHS £11 billion extra through to 2020, also expects it to make £22bn in efficiency savings. There is a severe lack of government investment; something must be done. That something is privatisation: in basic terms, the government would sell the NHS, or part of it, to a private firm.

Now before we dissect the reasons for the privatisation of the NHS, it should be made clear that I am not proposing a complete privatisation of the NHS, merely a takeover in some of the sections which are not life threatening yet cause a massive strain on NHS finances, which is partly the reason that almost 90% of NHS trusts overspent in the last financial quarter, with a record deficit of £2.45bn.

Firstly, privatisation of firms has shown to increase the efficiency in which the firm operates, as can be seen by British Telecom and British Airways, who have shown signs of increased efficiency and increased profits since they were privatised. This is because private companies have a profit incentive to cut costs and be more efficient. Government-run industries and those who manage them often do not have any shares or financial incentives based on the results of the firm’s financial situation. This would reduce the NHS problem of severe financial difficulties. Furthermore, there would also be pressure from shareholders to perform efficiently in a private firm, as an inefficient firm could be subject to a takeover. A state-owned firm doesn’t have this pressure and thus there is less pressure for them to be efficient.

To continue, if there were to be a deregulation of the health industry to coincide with the privatisation of the NHS, then there is a possibility of increased competition. Increased competition causes firms to need to lower their prices to stay competitive, as well as maintaining their current quality of care, hence improving both patient care and cost.

On a more political note, democracies are known for their short-termism, being more likely to invest in short-term popular policies than the infrastructure and medicines that will benefit the NHS in the long-term, in order to stay in office for another term by winning the election and keeping their jobs. Thus, they miss out on a potential long-term gain in worker health and productivity from investing more in the NHS, something that would be overcome by the private sector. To elaborate, a lack of government interference can only be a positive thing in terms of their financial performance. The government can be a poor economic manager as they often make politically motivated decisions, such as not firing employees purely because they don’t want to be seen in a bad light – promoting inefficiency, something private firms will not do.

The economic incentives for improving efficiency, the lump sum figure the government would receive, the removal of political interference and the need to improve the financial situation to guarantee the sustainability of the NHS. All these reasons indicate why the quality of healthcare in this country would likely increase if privatised, meaning that the privatisation or at least partial privatisation of the NHS should not be considered an ‘if’ but a ‘when’.

 

Original Image by Oliver Hansen

James Routledge 2016