Giving NHS patients the right to choose where to be treated for free by any qualified healthcare provider, including private ones if they can meet NHS standards and costs, is one of the most potentially transformative policies of the Coalition Government. It will empower ordinary people to make the kinds of healthcare choices that, frankly, only the rich have been able to make thus far.

While few would disagree with the progressive aspect of this, the competition between providers needed to deliver the choice patients want has been controversial. This controversy has largely been manufactured, however, by vested interests on the Left who do not want other providers undermining their political control of the NHS. The reaction from the hard Right has been similarly ideological, with calls to go much further towards open competition without reference to any actual evidence on what works for patients.

The first thing to understand about competition in healthcare is that, like competition in all social markets, it has to be properly managed to be of real benefit to patients, rather than just creating budgetary efficiencies for the system.

For example, studies show that open price competition in healthcare, where providers can bid to run services and negotiate their payment for doing so, leads to lower costs and greater efficiencies, including shorter waiting times for patients. While that sounds great, the downside is that price competition can also lead to lower quality care as providers undercut each other in a race to provide the cheapest possible. While that may be good for NHS bureaucrats, it clearly isn’t in the interests of patients.

Thankfully then, this is not the central focus of competition in the current NHS reforms, which are primarily about patient services paid for at the NHS fixed-price tariff. Evidence both from home and abroad shows that competition at a fixed price, which most NHS care is moving onto, increases both efficiency and the quality of care patients receive. This is because providers have to compete on the basis of delivering as much benefit as possible for the fixed price paid.

The right regulation around competition is therefore crucial. The London School of Economics last year published a review of the effects of the competition and private sector provision introduced by the previous Government. It showed that while NHS patients benefited as well as private providers, it had a negative financial effect on some NHS providers in the market. This was because private providers were allowed to take easy, high-volume types of work, like simple hip operations, leaving complex and more expensive cases to NHS providers. Private firms were also allowed to negotiate far higher payments than NHS providers, even when doing exactly the same work.

It is important to note, however, that the expansion of private provision under the last Government was met positively on the ground. The Institute for Fiscal Studies very recently reported that, while the previous Government introduced private firms into the NHS, actively expanding private provision year-on-year since leaving office in 2010, patients were also actively choosing this option. It thus increased rapidly: by the time the present Government took office, one in five NHS hip operations was conducted by a private firm.

The sensible conclusion to reach from all this is that while competition expands choice and can benefit the NHS, it must be carefully managed, directed towards the interest of patients not bureaucrats, and fair to all providers. And this is exactly the aim of the present reforms.

Far from being the “market free-for-all” the more militant wings of the Left often claim, the competition elements of the reforms are designed to be targeted at patient benefit and closely managed to ensure that focus remains. Indeed, the specific problems mentioned above are explicitly outlawed in the Act which brings in the new reforms. The reason the Left lost credibility in the battle of ideas over NHS reform is precisely because their arguments relied far too much (and some still do) on pushing false caricatures. The reason the hard Right achieves no traction calling for more agressive competition is that the evidence doesn’t merit it.

There are some perfectly legitimate concerns remaining, however. One has been the effect of competition on ‘service integration’ – i.e., the need for different bits of the NHS involved in a patient’s care to be joined up, co-operating with each other. The Office of Health Economics recently undertook a major study which addressed this, concluding: “Competition can help the integration of care and there is no evidence that competition hampers integration.” Services provided in competitive markets will in fact ordinarily converge around consumers’ demands for convenient, joined-up services, which is why so many retail services are offered in bundles made up of different providers. The real question people should be asking is how long it takes competition to deliver this. As a transition measure, further initial system-led integration schemes should be used until the choice market matures.

Another area to focus on is local GP practices. As largely-independent enterprises, they’re effectively in competition anyway, but there is clearly more to do to make this market more open to patients’ choices. It is a scandal that the provision of decent information that ordinary patients can understand on the quality of GP services is so difficult to extract from the NHS establishment. This is due largely to fear of the huge variation in quality and outcomes it will expose to the general public. The job is, however, essential.

A ‘competition panel’ set up by the previous Government published in 2010 a study showing the more competitive pressure GP practices faced – i.e., the easier it was for patients to find and choose local alternatives – the better quality the care patients received was. But this competitive pressure is currently very low. While people can easily look up the quality of local schools via official league tables, they still cannot find out something as important as which GP practices are good at managing diabetes or a child’s asthma. So few ‘shop around’ or switch providers. Better GP information should be an urgent priority and would lead to a transformation in care quality, as well as choice.

Given the clear benefits to patients of properly managed competition, the most important job is to make it happen fairly, in an appropriately managed way, backed by better information for patients – and above all, quickly. The NHS is still stuffed with ideologues who oppose change on the basis of their own vested interests. We can only hope that Monitor, the Commissioning Board and all others overseeing the NHS changes will be alert to that and prepared to act against it as champions of patients, not the system.