The problem is though that highlighting the 'incentive' for profit as something that's inherently good is a one-sided, biased view. And it also presumes all hospital's are working under the same set of conditions - a public hospital in a poor area with higher levels of obesity, alcoholism, smoking-related problems etc is going to inherently face more problems than one in an affluent area where people are living longer and live in better conditions. That strikes me as a basic fact - your system though would inherently favour the latter type of hospital because of course you're going to see better hospital results in an area where certain health problems aren't as prevalent.
It's not necessarily just the incentive for profit, it's an incentive full stop. The ability for a manager to grow his hospital if it performs well is an incentive. The ability for a manager to replicate his success in another location is another incentive. The reward of knowing replicating his success is helping more people is an incentive.
In terms of hospitals in poor area's having more users I agree; which is a problem with the current system. My proposal would be to pay hospitals based on the procedures and care they carry out (adjusted for local population density), so hospitals who have more procedures to carry out due to a poor standard of living would get greater funds than hospitals who were comfortable. Therefore my system would do the opposite of what you suggest: it would financially favour hospitals in poorer area's who carry out more care, over the affluent ones who carry out less. This alone would be a positive change.
There are a ton of private companies which are just as inefficient and as poorly-run as the NHS. Giving people incentives to earn money doesn't necessarily mean they're going to do a better job for the company; all it means is they'll try to use shortcuts to earn more money for themselves. The idea that the private sector operates on a basis of people getting more money than someone else because they're inherently better at their job is a bit of a fallacy; like everything in life plenty of well-connected people who suck up to the right bosses will get prioritised over people who are perhaps more deserving but don't play the system as well. And the private sector is (again) rife with bosses who're ultimately out to increase their own wage without any real concern for the service they're running. Which is a problem when it comes to healthcare.
Of course their are inefficient private companies. However in the medium and long term these companies will dissolve, as other companies provide better service for a cheaper price. That's the reason Netflix is doing very well and Blockbuster has dissolved. In terms of people essentially "blagging" their way into high up positions it does happen, particularly for reasons such as nepotism. However this is generally the exception to the rule, rather than the rule. My salary for example is based off my departments profitability; so I am always going to be aggressive in getting the best people for the job, for a selfish reason. If I promote based on any other factors my own salary is negatively affected. The second my salary has nothing to do with the success of my business is the second that I'll stop working 60 hour weeks in favour of a standard 8-5, I'll stop being aggressive in getting the best staff and I'll stop managing poor staff out of the business. It would be far too much grief for no incentive, which is where NHS bosses find themselves.
Ultimately I feel you can't really try to introduce 'competition' into hospitals because if it's still going to be public that competition is ultimately all artificial - unless you support complete privatisation (which clearly isn't the way to go) then you're still going to be favouring that public sector industry and therefore it's not really competition. Your solution also ignores the inevitability of protests, discontent which would come with certain hospitals closing. Or with the idea that this would be done on a merit-based system - a powerful politician, say the PM, would likely have a lot more sway in keeping their hospital open than an unknown backbench MP would have in an area that no one's all too bothered about. Hospitals shouldn't be treated like a normal business because they aren't one; you're not selling stuff to someone but fundamentally aiming to keep them in good health and keeping them alive. You can't just shut down a hospital without unrest because while people can make a slightly irritating travel to their next nearest supermarket after their local one closes down, having to go to a hospital that's further away is a potentially life or death situation.
It is artificial competition, but the people in charge of individual hospitals couldn't see it that way. Their careers, salary, pensions etc would all depend on their success. In terms of hospitals closing down there would then be plenty of "customers" that other hospitals would then expand to cater for. In fact the successful hospitals would already have expanded and taken customers from the poor hospital, which would be the reason for it closing down. Like any private company - when a competitor is clearly struggling, it's the perfect time to invest in order to compete.
The reason we have to put more money into the NHS is because we have an ageing population who're living longer because of the success of the NHS. That's just a consequence of the system. If we're not willing to pay more for it then we don't get to have it. And, yes, there's plenty of bureaucracy and the like within the NHS which likely needs cut down (although I can't claim to be an expert on it) but it's still a fantastic system and one of the best healthcare systems in the world. It may be strained but the service it gives to patients is still fantastic and the vast majority of staff who work within it are highly-dedicated and skilled at what they do in spite of the fact they're overworked and underpaid, something which rightfully frustrates them when the government can easily find money for things it genuinely wants to spend on whenever they feel like it.
The aging population is of course a key point, but this is offset by the incredible savings brought about by technology and likewise future key savings it can bring about. The NHS though is so far behind the private sector in investing on technology... Because there is no incentive for them to do so. Why would an NHS boss risk investing in a £500k piece of technology which would save £200k in bureaucracy per year, but that of course would take 30 months to pay for itself? He wouldn't - it's far easier and less risky to spend that £200k on expensive agency staff for short term relief; then after the 30 month period complain about a £200k shortfall in his budget.
In terms of healthcare systems the NHS is nowhere near one of the best in the world. Look at the OECD outcomes for cancer, cardiovascular or just life expectancy; we're miles behind some other countries. The likes of Japan, South Korea, Singapore, Canada, Norway, Iceland, Sweden, Australia, Denmark, Switzerland are way ahead and in many instances we're closer to the likes of worst performers than the best. Naturally the fact that we have a greater than average OECD expenditure on healthcare per capita, compared with a much worse than average level of doctors, nurses and beds is a key problem; which highlights the inefficiencies - where's the money going if not on key things like doctors, nurses and beds?
Bit of unfortunate timing for
@finneh really, with Carillion and that. I take Cheesy's point, if I've understood it correctly, that the vaunted incentive for private company owners is in reality purely to make money for themselves, which may be good for the user or taxpayer, but then again may not.
It's up to finneh to give examples of countries with something like his proposed system to see if it is more efficient really. I'd advise not the US, but feel free.
Carillion are a fantastic example of my point - a terrible company that has now dissolved as a result of their inefficiencies and bad practices. Their work will be picked up by a much better and more efficient company who won't run themselves into the ground. The problem with UK Healthcare is that we have dozens and dozens of Carillion's spread across the UK; the problem is that instead of letting these hospitals and doctors practices rightfully close down, we continue to pump vast sums of money into them.
Can you imagine the uproar if the Government announced that it was pumping £5b extra into Carillion to keep it affloat? That's exactly what has been done with the NHS because they hasn't been able to hit their own targets and expectations. But instead of people revolting against this extra money and saying it's down to poor management so should have to find it's own solutions (as they would have done with Carillion), they're saying we should give them more.
And with the geographical constraints, what you'd probably end up with is something analogous to railway privatisation rather than...telecoms for example.
Absolutely and I agree it would have to be looked at in terms of coming up with a "Barnett formula" for healthcare in comparison to the population density of the area. Naturally you couldn't give a hospital in the Scottish highlands the same per procedure as a hospital in Central London.
As a whole though the UK (particularly England) benefits hugely from it's population density. We regularly hear that France or Germany invest more per capita than the UK and this is used as a stick to beat the Government with. However what they don't say is that the UK and particularly England have a substantially greater population density and so should need to invest far less to achieve the same outcomes.