Jon Sussex
Nuffield Trust and IFS seminar
13th September 2013
Discussion of Kelly & Stoye “More hips
please. Independent s...
Discussion of Kelly and Stoye
13/09/2013 2
5 results
1. NHS-funded hip replacements per year
up 40% (= +20,000) 2003/04-20...
Discussion of Kelly and Stoye
13/09/2013 3
3 main issues
Distinguish between effects of:
A. Increased capacity
B. ‘Choice’...
Discussion of Kelly and Stoye
13/09/2013 4
A. Capacity
• DH set out to increase capacity and activity and
succeeded becaus...
Discussion of Kelly and Stoye
13/09/2013 5
Deadweight loss
• 1/3-2/3 of ‘private payers’ switched to
NHS funded care
• => ...
Discussion of Kelly and Stoye
13/09/2013 6
B. ‘Choice’ and competition
• Confirms distance important for choice
• ‘Choice’...
Discussion of Kelly and Stoye
13/09/2013 7
C. Private ownership
• Study says nothing about impact of
ownership
[Would impa...
Discussion of Kelly and Stoye
13/09/2013 8
Other questions
• What happened to ISTC activity when
first round contracts exp...
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Jon Sussex: Capacity, choice and private ownership

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Jon Sussex: Capacity, choice and private ownership

  1. 1. Jon Sussex Nuffield Trust and IFS seminar 13th September 2013 Discussion of Kelly & Stoye “More hips please. Independent sector provision and the growth in NHS-funded elective care”
  2. 2. Discussion of Kelly and Stoye 13/09/2013 2 5 results 1. NHS-funded hip replacements per year up 40% (= +20,000) 2003/04-2010/11 2. Independent sector 62% of the extra 3. Growth faster when new ISP nearer than any NHS provider of hips 4. Substitution of NHS-funded hips for 1/3- 2/3 privately-funded hips at AQPs 5. Small crowding-out of NHS Trusts by ISTCs (not significant by AQPs)
  3. 3. Discussion of Kelly and Stoye 13/09/2013 3 3 main issues Distinguish between effects of: A. Increased capacity B. ‘Choice’ and provider (quality) competition C. Private ownership of providers   X
  4. 4. Discussion of Kelly and Stoye 13/09/2013 4 A. Capacity • DH set out to increase capacity and activity and succeeded because: • Premium prices (≥+11%) to cover set-up costs/risks and elective-only (=> lower cost) ensured new provider interest • Initial ban on poaching NHS clinical staff, so no crowding-out NHS capacity • Initially no private hospital companies already operating in the UK were awarded ISTC contracts, so no crowding-out private capacity • ISTC take or pay contracts meant zero marginal cost to PCT per patient at ISTC • Plenty of unmet demand and ISTCs aimed at it
  5. 5. Discussion of Kelly and Stoye 13/09/2013 5 Deadweight loss • 1/3-2/3 of ‘private payers’ switched to NHS funded care • => deadweight loss to the taxpayer: >4,000 out of 20,000 extra capacity • In addition to possible (in-)equity impacts that are mentioned • [Not sure supply effect vs demand effect distinction is helpful]
  6. 6. Discussion of Kelly and Stoye 13/09/2013 6 B. ‘Choice’ and competition • Confirms distance important for choice • ‘Choice’ of private pay vs NHS funded already existed • Cannot tell from the study, but ‘choice’ of NHS funded provider might have increased deadweight loss by increasing willingness to opt for NHS-funded care • Study does not investigate impact on provider quality
  7. 7. Discussion of Kelly and Stoye 13/09/2013 7 C. Private ownership • Study says nothing about impact of ownership [Would impact of increased capacity have been the same if all providers had been NHS owned/nationalised?]
  8. 8. Discussion of Kelly and Stoye 13/09/2013 8 Other questions • What happened to ISTC activity when first round contracts expired? • What happened to NHS Trusts subcontracting to other providers (and does HES data reflect this)? • NHS hospital site vs Trust HQ location? • ISP hospital site vs company HQ location?
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