Lessons from the English NHS (and elsewhere)

1. Lessons from the English NHS (and elsewhere) Martin McKee London School of Hygiene and Tropical Medicine European Observatory on Health Systems and Policies www.observatory.dk

2. Let’s start at the very beginning… … a very good place to start What are health systems actually for?

3. Possible answers • The responsibility of government is to improve the health of the population, to respond to their legitimate needs, and to do so fairly • The responsibility of a private company is to increase the returns to its shareholders

4. … but not only responding to what turns up • Assessing health needs • Monitoring the outcomes of health care • Training the next generation of health workers • Generating the knowledge needed for technological development

5. It all seems rather complicated • Health systems are complex social systems • Involving real people, with hopes, aspirations, and motivations • They involve multiple interacting elements • Primary, secondary, specialist care • They involve multiple stakeholders • Health, education, industry, regional development

6. If it really is so complicated… • Surely we could simply leave it to the market • The invisible hand must be better at organising this complexity • No-one at the centre can possibly second guess all the individual decisions

7. … after all, haven’t we learned from the 50 year natural experiment “From Stettin in the Baltic to Trieste in the Adriatic, an iron curtain has descended across the Continent. Behind that line lie all the capitals of the ancient states of Central and Eastern Europe. Warsaw, Berlin, Prague, Vienna, Budapest, Belgrade, Bucharest and Sofia.”

8. … except…. • Markets in health care don’t work so well • Many people who need health care don’t realise it • Even if they do, they may be deterred from seeking it • They often don’t know what they want • Those providing care may not realise these people even exist

9. Once it was so much easier • An individual patient went to a doctor • The doctor: • made a diagnosis (probably wrong), • applied a treatment (probably ineffective) • The patient: • died, or • got better

10. … but now • A patient with arthritis, Parkinsons, heart failure, bronchitis, diabetes, and depression goes to a family doctor • The patient is referred to a series of medical specialists, nurses, other health professionals, all working together in a network, collaborating with each other • She receives multiple powerful and effective medicines, all of which are affected by her organ function and by the other drugs • She remains under continuing review for the remainder of her now active and fully engaged life

11. … but even in the old days … • Even when the state played a minimal role in health care … • It always intervened in some areas • Mental health • Infectious disease

12. The inter-relationship of practically everything • A family is injured in a high speed car crash • They arrive at an emergency department • There is no paediatric service – it has been moved into the community • The eye injuries cannot be treated as the ophthalmologists have been relocated to an independent treatment centre to concentrate on waiting lists for cataracts • The complex hip fracture cannot be treated, because the orthopaedic surgeons have been relocated to an independent treatment centre to concentrate on waiting lists for knee replacements • There is no microbiologist to speak to about the wound infection because the service has been moved 200 miles away

13. An analogy – air travel • You want to go from Stansted to Charleroi – no problem • You want to check your baggage in for a flight from Rome to Ljubljana via Milan – forget it

14. The double agency relationship • The patient • Knows that she is unwell, but not why and what can be done • The doctor • Knows why she is ill, what must be done, but not who else did not seek help, or how to put in place the complex arrangements for help to be given • The purchaser • Knows what type of people are not getting care and what the best (evidence-based) models of care are, and can put them together • The traveller • Knows where they want to go to • The airline • Knows how to get there • The travel agent • Knows all the different options available

15. Another area where markets have problems • Opportunistic behaviour • Cream-skimming • Enrolment for a HMO on 6th floor of a building without an elevator • Declining to treat complex and expensive, but inadequately reimbursed patients • Concentration on conditions with high returns • Short-termism • High volume elective surgery, but no provision of training

16. Reaching out to those in need • ‘[Doctors] tend to gather where the climate is healthy... and where the patients can pay for their services’ Ivan Illich • "the availability of good medical care tends to vary inversely with the need for it in the population served." Julian Tudor Hart

17. Uncertainty What single diagnosis for a patient with multiple pathology Clinical thresholds Data manipulation DRG creep And another – specifying the product

18. Looking to the future • To respond effectively we need to take a long time perspective and engage in sustained investment to meet future needs • We must increase dramatically our ability to forecast the needs for these resources • We must incorporate flexibility to adapt to changing circumstances

19. Changing circumstances:Known knowns and unknown unknowns “there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns, the ones we don’t know we don’t know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones.”

20. So in the end it is an empirical question • Markets beat planning where the conditions for a market exist • Less certain whether this applies in health care • Which gets the best results? • Planned services • Unplanned services (free market)

21. Type I diabetesThen and now • Discovery of insulin changed a rapidly fatal disease of childhood into a lifelong disorder • Now compatable with a normal life span, but large differences in actual attainment • Healthy survival requires co-ordination of efforts by many people and organisations • Pharmaceutical supply and distribution • Primary care • Specialist care • Self care

22. Value for money? US health expenditure: 15% of GNP Swedish health expenditure: 9% of GNP

23. Cheap, convenient, and deadly • “Some Hospitals Call 911 to Save Their Patients ” • A 44 year old man underwent thoracic surgery in a small specialist hospital in Texas • He developed respiratory problems • There was no medical care on site • The nurses called 911 to get help from a nearby full service hospital • He died New York Times, 2 April 2007

24. Preventing deaths from cervical cancer: more may not be better Number of cervical smears in a lifetime: • Germany – 50 • Finland - 7 5 4 Germany 3 2 Finland 1 0 1990 2000

25. Avoidable mortality • Idea goes back to Florence Nightingale • Concept developed in 1970s • List of causes of death at particular ages where death should not occur • Examples include • diabetes under age 49, • leukaemia under age 15, • Asthma under age 65

26. Change in avoidable mortality 1998-2003

27. Still, maybe the private sector gives better value? • In Australia, after adjusting for case-mix, public hospitals are more efficient than privately operated ones • Perhaps because private hospitals treat patients more intensively • Systematic review of 149 comparisons of US for-profit and not-for profit hospitals • 88 found not-for-profit better – cost, outcomes, access • 43 found no difference • 18 found for-profit better

28. … and not just in health care – more market “successes” • Break up of UK telephone directory enquiry service • Millions spent on marketing by new operators • Recouped by much high charges • Quality of service appalling • Customer confusion • Collapse in demand • 118118 (market leader) abandoning product • A complete disaster

29. The English experience • Recognition that the UK was lagging behind similar countries • Low cancer survival • Long waiting lists • Concern about future affordability of health system • Ageing population • New technology

30. Projections of future expenditure on UK NHS under three scenarios } €50 bn Fully engaged = major commitment to health improvement Source: Wanless Report

31. So what happened? • Wanless recommended sustained investment in health promotion and health care capacity over a 10 year period • Gordon Brown wanted results quicker (the tyranny of the electoral cycle) • Rapid increase in expenditure • Limited scope to increase supply • Price inflation

32. Drive to increase capacity • Patients sent to France, Germany, Belgium for surgery • Private finance initiative to pay for new hospitals • Independent Sector Treatment Centres for elective surgery

33. Going abroad: cheaper and faster The first nine patients sent to France by the English NHS Comparing prices

34. Building new hospitals • Public Private Partnerships • Nothing new • All hospitals (except in the USSR) have always involved some public-private involvement • New model involves private sector designing, building, and operating facility on behalf of state body • PFI in UK most widely applied model

35. Suggested benefits • Private sector intrinsically better at managing projects than public sector • If so, why leave public sector with even more complex task of managing the PPP? • Most important – removes funding from public sector borrowing requirement, so allowing Finance minister to achieve his “Golden Rule” of no net borrowing over economic cycle • Except that this no longer applies as PSBR has been redefined

36. …and also… • More likely to complete on time • Except time from project conception to completion may be longer • Transfers risk to private sector • Except, risk comparator “pseudo-scientific mumbo-jumbo” Official from United Kingdom National Audit Office

37. In practice • Higher cost (in some cases unaffordable) • Favours new build over refurbishment • Longer, costly, and more complex procurement • Inflexibility • Lack of real evidence due to secrecy • Problems with quality

38. The cost of private provision • High costs of preparing tenders, involving very extensive legal specifications to cover all foreseeable events • High costs of preparing tenders, with losing contractors passing costs on in next bid • Cost of borrowing higher for private consortium than government • Governments have AAA status • PFI bonds typically BBB+ (just above junk status)

39. Flexibility: The hospital of the past Medical Medical Medical Medical Paediatrics Pathology Maternity Surgery Surgery Theatres ICU Geriatrics Outpatients Radiology Geriatrics A& E

40. The hospital of the future? Medical Assessment Major trauma Minor Injury Primary Care Paediatrics Children Imaging Pathology Imaging Specialist Imaging Pathology Imaging Diagnostics Pathology Theatres Ambulatory care Intermediate care & rehab Medium High Dependency Maternity Theatres Imaging ICU Source: Edwards & McKee

41. The bed issue n Too few contracted Beds Too many requirements 0 Now + 30 years Now

42. … and populations change • Need for reconfiguration of hospital services in many places • Take an area served by 3 hospitals, which now needs only 2 • One is a PFI hospital • If it closes, the health authority still has to pay as if it was open • Already a problem with PFI schools

43. Higher quality? • Bishop Auckland Hospital • Generator and core electrical systems had to be redesigned immediately after opening • Norfolk & Norwich Hospital • Negative pressure rooms were not properly operational for 2 years • No ventilation in the kitchens so staff work in 30 °C temperatures (with 44 °C being recorded) • Hereford Hospital • Boiler house opened with no water treatment plant • Doors too heavy for the opening restraints • Seacroft Hospital, Leeds • Mental health facility found to have breached “every section of the fire safety code”

44. But we should look beyond Europe too • La Trobe Regional Hospital, Melbourne, Australia • Built by a private company to replace older public hospitals, having entered into a confidential contract with the government of Victoria to provide hospital services for 20 years. • In 1999 the hospital lost AUS$6 million and was projecting ongoing losses. • The Victoria health minister reported that the scale of losses was such that the hospital could no longer guarantee its standard of care. • In 2000 the company was released from its contract in return for an agreement to drop legal action against the government. • It sold the facility to the government for AUS$6.6 million (about half of what it was valued at) and made an additional payment of AUS$1 million.

45. Dead but not buried?

46. ISTCs:How are they performing? • Paid 11% above NHS rates plus a further subsidy to cover bidding costs • Compliance with contracts uncertain but estimated that only about 70% of contracted work being done • Data were so variable and incomplete as to render “any attempt at commenting on trends and comparisons between schemes and with any external benchmarks futile” • “increasing evidence” that they are “unable to manage complications”

47. “Creative destruction” McKinsey & Co “We had to destroy the village to save it” Peter Arnett quoting unnamed US Army officer in Vietnam “Modernisation” … or “The Great Leap Forward” In summary:“Modernising” the English NHS