National Research University Higher School of Economics

1. Radical Reform of the National Health Service in the UK in 2011: Background, Proposals, Prospects, and Lessons for Russia National Research University Higher School of Economics Masters in Management and Economics of Health Services Seminar Presentation 21 March 2011 Dr. Christopher Davis Department of Economics and School of Interdisciplinary Area Studies University of Oxford

2. Motivations for Medical System Reform • Control rising cost of medical care, reflected in increasing health shares of GDP, driven by ageing populations and technological progress • Improvement in access to medical care and reductions in health inequalities • Improvement of quality of medical care • Reductions in inefficiencies, duplication in the medical system • Improvements in health outcomes (survival rates, raising life expectancy) • Reducing public dissatisfaction with medical care and increasing patients’ choice of treatment

3. Health Reform Waves: 1990-2000s [Toth (2010) review of reforms in France, Germany, Netherlands, New Zealand, Sweden and UK] • Early 1990s: Introduce market-style mechanisms, greater competition, purchaser-provider split, patients’ choice. • Mid 1990s: Criticism of market mechanisms, unclear impact on efficiency but worse equity and access. Emphasis on improving integration of components of medical system. UK abolishes fund-holding and adopts Primary Care Trusts. • 2000s: Emphasis on quality of care and patients’ rights. Patients in NHS can choose provider and funds follow.

4. Unexpected Health Reforms During Global Financial Economic Crisis • Russia 2008: “Priority Health Project” and “Conception of Health RF to 2020” • China 2009: “Implementation Plan for the Recent Priorities of the Health Care System Reform (2009-2011)”. • USA 2010: Senate Bill 3590 “Patient Protection and Affordable Care Act” • UK 2011: “Health and Social Care Bill”

5. Questions to be Answered • What are the main problems in the UK health system? • Have past health reforms worked? • What are the features of the announced 2010-11 UK health reforms? • What are the criticisms of the new health reforms and the prospects for their adoption ?

6. Structure of Presentation • Concepts used in Analysis of Health Reforms • Health in Political and Economic Systems • Governance in Health Systems • Health Production and Health Outcomes • Priority of the Health Sector and Health Financing • Measurement of Health System Coverage of Population, Benefits and Cost-Sharing • Sources of Data • Principles and Development of the UK NHS • Health Reforms in UK and Russia 1990-2010 • 2010-11 Proposals for Radical Reform of the UK NHS and Criticisms of Them

7. Political System, State Priorities and Health • Importance of politics in health reform • Sheiman & Shishkin 2009: “After an unsuccessful start of the programme of monetization of benefits in early 2005 discussion of health reform legislation was minimized ..Transformations in organization, management and financing of the health service were moved to the back burner.” • Political system • influences health sector (State bureaucracy, political parties, legislature, interest groups, voters, public opinion and expressions of discontent) • State priorities • influence allocations of resources, protection of health sector in a crisis, and degree of inequalities

8. Political Actors Influencing Health Reform

9. Governance in Health Services • Health systems made up of many institutions (central and regional government, regulators, boards, medical facilities) that need to achieve objectives while maintaining standards and controlling costs. • To achieve this requires good governance (Strategy, Leadership, Vision, Assurance, Probity) [2011 Governing the New NHS] • Governance different from, but related to, operational management • Many UK NHS reforms aimed at improving health governance

10. Public Concern about Health in Russia, China, USA

11. Health Sector in an Economic System

12. Health Sector Production Process

13. Impacts of Reforms on Health System Coverage of Population, Benefits and Cost-Sharing WHO 2008, Fig. 2.2

14. Sources of Data for Presentation • Data for Empirical Assessments • Official Russian sources • OECD databank and reports • Data for Diagram of Health Coverage, Benefits and Cost-Sharing • Information about Current UK Health Reforms • Official documents (White Paper and Parliament Bill) • Think Tanks (Kings Fund, Nuffield Foundation) • Academic Journals • Newspapers

15. Empirical Estimation of Trends in Axis Variables in Health Diagram • X Axis: Coverage of Population (% of population covered by a national health service (NHS) or health insurance (100% public, mixed public-private, or subsidized private)). Government statistics and reports. Reliable estimation of trends. • Y Axis: Coverage of Benefits (% of potential benefits in a country provided to the population). Measurement more problematic . Identify maximum standard in a country and evaluate how provision of the average citizen deviated. •  Z Axis: Coverage of Costs (% of health costs covered by public sources). Estimates of this indicator based on government statistics and independent reports. Measurement reliable.

16. Establishment of UK NHS in 1948 • First national health service in democratic system not based on insurance. Established in July 1948 with principles • Universal coverage • Free of direct charge • General taxation source of finance for NHS • Pooling of financial risk at centre • Collective provision • Promotion of advances in medical science • Political struggle over the reform • Government and medical professional in favour of reform • Opposition by Interest groups (hospital doctors, GPs, other medical workers, trade unions, patients, NGOs) • Local government opposed to centralisation • Groups fights to maintain “freedom of choice” (patients have right to choose doctors, doctors have right to choose treatments)

17. Compromises and Actual Arrangements in Establishing the UK NHS • More a national hospital service than a national health service • Compromises • Teaching hospitals subordinate to centre whereas other hospitals under local government • Doctors (but not other medical professionals) have key management roles • Local government keeps control of district nurses, child welfare, public health • GPs not salaried or employed by government. Sign contracts with Executive Committee run by GPs. Paid on capitation basis (related to patient list) • Groups of GPs encouraged but not mandatory • Private practice by hospital doctors allowed

18. Structure of UK NHS in 1948

19. NHS Developments and Reforms 1948 – 1980s • Substantial growth of NHS and quantities of services provided • Significant increase in medical technology in NHS and in quality of care • Continuing increase in the cost of the NHS (HE % GDP rises from 3.5 % to 5.6 %) • Improvements in almost all measures of health outcomes (e.g. life expectancy) • But shortages, queuing, rationing • Reforms introduced to improve performance • 1950 – 73 Technocratic change (planning, management) • 1974 Unification/integration, Regional Health Authorities, Community Care Councils • 1982 Introduce general management, outsourcing (contracting out to private sector of non-essential services)

20. UK Elections, Parties in Power and Health Reforms: 1945-1989

21. Structure of UK NHS: 1974 and 1982

22. Comparison of the UK and USSR NHS in the 1980s Davis 1990

23. Performance of the UK and USSR NHS [Davis 1990 chapter in Social Policy Review] • Rising demand for medical care • Successful cost containment in both countries [1984 The Painful Prescription] • Shortages in both health services, but more acute in USSR • Pervasive rationing of medical care in both health services • UK lags behind most EC countries in availability of medical technology (71 % average MRI), but is substantially more advanced than USSR • Almost all health outcome indicators better in UK than in USSR

24. Russia Health System Coverage of Population, Benefits and Costs in 1990

25. Male Life Expectancy 1980-2008: UK, USA, China, Russia

26. Objectives of Health Reforms in UK • Control cost of medical care • Improve efficiency so that health spending has greater impact • Reduce bureaucracy, strengthen purchaser-provider split, increase competition • Devolve decision making and resource allocation to consortia of GPs • Give patients greater choice of treatment paths

27. Health Reforms in the UK in the 1990s • 1990 NHS and Community Care Act of Conservative government • 1991 Introduction of the “internal market”. Purchaser-provider split. Two models of purchasing: health authorities and GP fundholders (non-urgent elective and community care for patients). • 1994 Total Purchasing Pilot Scheme allows GPs to commission all services • 1997 GP fundholders abolished in favour of Primary Care Groups and Trusts (PCG, PCT) that maintain Purchaser-Provider split

28. UK Elections, Parties in Power and Health Reforms: 1990-2010

29. Evolution of Purchaser-Provider Relationships in UK NHS

30. Purchaser-Provider Arrangements in the UK NHS in the 1990s

31. Health Reforms in Russia 1990-2008 • 1991-1993 Introduction of CMI and other health reforms • Deterioration of economic performance, weak state, over-ambition means most health reforms fail in 1990s • In 2000s more emphasis on health education, prevention • Intensified reforms related to management and incentives in the medical system • Improvements of CMI system • Adoption of Federal Goal Programs in health for 2002-06 to supplement normal activities • Priority National Project in Health 2006-10 • Adoption in December 2008 of Conception of Health RF to 2020 • Real health expenditures from state budget, CMI and private sector increase substantially

32. Medical Systems in China, USA, Russia, UK

33. Russia Health System Coverage of Population, Benefits and Costs in 1990, 2007

34. Male Life Expectancy 1980-2008: UK, USA, China, Russia

35. Population: 142 million Area: 17 million км2 Birth Rate: 11.3 per 1,000 Crude Death Rate: 14.6 per 1,000 1

36. Russia Health System Coverage of Population, Benefits and Costs in 2007, 2020

37. Developments of Health in the UKin the 2000s • In 2002 Phasing out of Health Authorities, move to 152 PCTs with ave pop of 300,000 and responsibility for £ 80 b (80% NHS) • 2004 new form of commissioning Practice-Based Commissioning (PBC): GP practices given indicative budget by PCT and encouraged to make savings while achieving quality targets • 2007 World Class Commissioning. Set standards for PCTs and PBCs

38. UK NHS Structure Late 2000s

39. 2010 UK NHS Governance

40. Patient Contacts in NHS

41. NHS Expenditure Early 2000s

42. Primary Care Trusts • 300 (reduced to 150) Primary Care Trusts are subordinate to the Strategic Health Authority and represent the local Primary Care community (GPs, dentists, public health). • Objectives are to improve the health of the community, engage in partnership work and community-based health and care initiatives, implement population screening programmes, develop and integrate family health services, medical (primary care), dental and optical • Have assumed responsibility from district health authorities of commissioning (purchasing) of community, secondary care and tertiary/specialised services • Also responsible for mental health, emergency ambulance and patient transport services, NHS Direct and walk-in centres

43. NHS Trusts and Foundation Trusts • NHS Hospital Trusts • Hospital trusts subordinate to Strategic Health Authorities and need to satisfy annual accountability agreements • More freedom of activities than previously • Provide services to PCTs • Must satisfy standards set by Care Quality Commission • Foundation Trusts • NHS Trusts that are promoted by Monitor because they satisfy stringent criteria concerning financial viability • Greater autonomy in medical and financial activities • Provide medical services to PCTs in accordance with contracts • Must satisfy Monitor and Care Quality Commission

44. Foundation Trusts

45. Monitor • Monitory established in 2004. Executive non-departmental public body • Oversees performance of NHS Trusts (primarily on financial grounds) and grants selected ones licences to operate as Foundation Trusts. • Has sole responsibility for overseeing Foundation Trusts to ensure their financial viability while maintaining agreed safety and medical quality standards • Assigns each FT risk ratings on an annual basis, which influences detail of supervision • Can intervene to direct activities of failing FTs

46. NICE • In 1999 National Institute for Clinical Excellence established to provide information to patients, the public and medical professionals on evidence-based practice in the prevention and treatment of illness. Carried out cost-effectiveness studies of diagnostics, medicines, medical devices, clinical management of illnesses, and public health interventions. • In 2005 old NICE merged with Health Development Agency to form the National Institute for Health and Clinical Excellence, but has kept the acronym NICE. • Produces clinical guidelines concerning treatment, appraisal guidance on drugs and techniques, and guidance on safety and efficacy of curative and preventive interventions. • Developing 150 new standards of treatment for specific diseases that will be used in National Service Frameworks

47. Care Quality Commission (CQC) • In 2009 CQC established as new “super-regulator” to supervise and inspect the quality of all providers of secondary/tertiary medical care and social care • Ensures that all organisations adhere to detailed Essential Standards. • Promotes achievement of outcome measures. • Rates the performance of NHS Hospital Trusts

48. UK Total Health Expenditure as % of GDP: 1980 - 2008

49. Health Expenditure Shares of GDP in International Perspective UK Russia

50. Economic Significance of Health Sectors in UK and Russia