Friday, 22 July 2016

NHS Shocks & Stocks

This week we saw confirmation in the media of something that those of us with market-friendly sexual charisma have been envisioning for ages - that the NHS has been hugely criticised for the bad health of its finances (including, for local readers, our own N + N hospital which has been placed in financial special measures).

By now everyone knows that the future of the NHS is very precarious - thanks to a number of factors (which I blogged about here). But what I didn't know until reading some stats by one of the Adam Smith Institute think tank members is just how much clinical negligence there is, and how shockingly costly it is proving to be.

Apparently just in the 2011-2012 financial year alone, the total cost for the NHS in clinical negligence claims exceeded £1 billion, with a further £50+ million in non-medical compensation claims. However much does this add up to if we factored in every year, even for just the past decade? Several billion pounds I'd suggest.

It's easy to see that this situation would improve in all sorts of ways with greater market efficiency (one wouldn't imagine so much negligence if the costs are picked up by the companies themselves, not British taxpayers). But there is another positive benefit to more private companies in our health service - we'll pay less tax and National Insurance, keep more of our money, and find generally better associations between actions (lifestyle choices, eating and drinking habits, smoking, etc) and consequences (poor health, obesity, liver failure, lung cancer).

By having a taxpayer funded health service we do not incentivise people to look after themselves as much as they would if they picked up the costs of their actions. I don't, of course, mean people whose illnesses are not self-inflicted - but there is a whole scope of work to be done in terms of accountability - whether it is incentivising the public to be in charge of finances that match actions to consequences, or improving the internal spending structure (like the case of Hitchingbrooke hospital where significant savings were made by spending more wisely on things like stationery in a competitive market).