Thursday, 26 May 2011

Health reform anyone?

As the "pause" in Andrew Lansley's health reform bill enters its final week, the argument doesn't really seem to have moved on. You still have the conservatives, backed up by institutions such as the NHS confederation, saying that these reforms will bring greater patient choice and competition and which will drive up standards. Whereas the Liberal Democrats (to an extent) and Labour, backed up by institutions such as the British Medical Association are claiming that these reforms constitute "privatisation by the back door" and will lead to private companies "cherry picking" NHS services, which will irrevocably damage the fabric of the NHS.

How does the NHS work at present?

The National Institute for health and clinical excellence (NICE) currently decides which treatments, drugs etc. can be administered by the NHS, there is no proposal to change this institution or how it works. At present, about 80% of the NHS budget is spent by Primary Care Trusts (PCTs). These are executive bodies which cover specific regions of the UK and are responsible for "buying" treatments from hospitals and other providers, employing (or, more commonly, contracting out) GPs, ambulance and other services. This is a rather simplistic explanation but a comprehensive one would take far too long and this is enough to understand most of what the bill is doing.

So what's going to change? 

The bill itself runs to a little under 380 pages so I'll try and summarise it. The bill would essentially allow, even encourage, all hospitals, clinics and medical institutions to become private "trusts" whilst abolishing PCTs and putting groups of GPs in charge of buying healthcare from these private groups. The bill also allows GP consortia to buy from "any willing provider" but does not allow companies to compete on price. The NHS regulators, as they do now, would still put a set price on each treatment and private companies then have to convince GP consortia that they would carry out the best treatment at that price.

Is it a good idea?

I'm generally a pretty free-market guy. Pro consumer choice, pro competition and all the rest of it. However, I think that this bill hasn't put anywhere near enough safeguards in to prevent all the myriad market failures you might get in healthcare.

The first big one is accountability. This bill puts the "choice" of healthcare at a more local level, but it doesn't give it to the patient, it gives it to GPs or, as is more likely, whichever contractor GPs employ to do their commissioning for them. Who is going to hold GP consortia to account? It won't be the patients. At present, if the NHS doesn't do its job, the health secretary is ultimately responsible. There is a very clear line of responsibility and accountability. But if all the power is given to a group of local GPs, how are you supposed to complain? Would you even know who to complain to? So, we're going to give these groups some £80 billion to spend without any way of making sure they spend it effectively.

The second big one is conflicts of interest. The vast majority of GPs aren't public sector workers but are either private employees self-contracted to the NHS or are employed by large trans-national health companies who have contracts with PCTs to provide GPs. In other words, most GPs are private individuals or private employees or both. Yet they are going to be put in charge of spending almost £80 billion a year of public funds. The potential for conflicts of interest is staggering. There are no laws or regulations to prevent GPs holding shares in private medical companies. You wouldn't want the people in charge of defence procurement holding large stakes in companies like BAE systems, yet there are absolutely no safeguards to stop the same happening with GP commissioning. Indeed, in the part of Britain where some of these proposals have been trialled, it was found that 73 GPs in a local consortium had shares in a company which was providing healthcare in the same area. So far as I know there is no accusation that this influenced their choice of providers but there is absolutely nothing in the bill to stop this happening.

Because of the nature of healthcare, most of us rely entirely on health professionals to tell us what treatment we need. We wouldn't have a clue if we needed a gall bladder removed, or heart surgery or a million other drugs or treatments. We just go to our GP, who decides if we need treatment, or tests or anything else. So, GPs would be in charge of deciding how much treatment we need, who gets paid to provide it and we wouldn't have any way of knowing if they were acting in our best interests, let alone be in a position to hold them to account if they weren't.

Moreover, there might be incentives for GPs to change how they decide who needs treatment. At present they just decide if we need treatment based on our health needs, then send that information to PCTs who decide who provides the treatment. There is no incentive for GPs to do anything other than diagnose whether or not we need treatment based on our medical needs. However, if they were also in charge of the budget there are all sorts of perverse incentives. For instance, there might be less incentive to prescribe very expensive treatments. Or indeed, incentives to prescribe more treatments than are needed to create revenue for companies they have financial interests in.

At present, we trust GPs to do their job because there is no reason not to. Their pay and employment aren't related to how they diagnose patients so there's no reason for them to do anything other than diagnose who needs what treatment. If you put them in charge of the budget as well, without putting in some pretty comprehensive safeguards, then there are suddenly all sorts of reasons for them to act in a way which is not in their patients best interests.

This is my real problem with this bill. It just throws the whole system open to free-market influence with virtually no safeguards to ensure the NHS remains about providing the best, or even the most efficient, healthcare to citizens.

So, not really a good idea, why are the government trying to do it then?

There are all sorts of reasons why we need more competition in healthcare. The cost of healthcare is sky-rocketing. As people live longer, generally less healthy, lives this puts greater demand on healthcare, without providing any greater benefits to public resources. If everyone lived to 81 rather than to 80, they wouldn't contribute any extra to the economy but would put several billion pounds extra burden on the healthcare system. There are three solutions. Either you simply spend more on healthcare, which means less money for education, for police, for transport, for defence, for everything else. Or you limit the healthcare on offer. I rather suspect the majority of the population would not be in favour of leaving the elderly to just fend for themselves, I certainly wouldn't. The only other option is to drive down the cost of healthcare.

That's where competition comes in. The whole premise of free-market economics is that whichever provider provides the best service at the cheapest price gets all the business and less efficient providers either become more efficient or go out of business. If it was applied to healthcare it would hopefully mean that healthcare providers gave better service at a lower cost. We need competition in healthcare, but we need to ensure that there is an actual market created, where companies can't influence how much business they get through favours, bribery or other means.

So we need competition in healthcare and the government are right to be trying to bring it in, but this bill, as it stands, hasn't done anywhere near enough to ensure that this would occur. Like with so many other things the government are doing, the principles are good ones, so are the motivations, but the implementation is dangerously inadequate. If free schools don't turn out well, it will only affect a small proportion of the education system. If police commissioners aren't particularly effective then at least they won't have been too much of a detriment to police forces either. If the government gets it wrong on the NHS, the effects are going to be catastrophic.

Any market needs near parity of information, free and fair competition, good incentives and consumer choice in order to work well. At present, this bill delivers none of them. So that's my opinion, yes to health reform, yes to competition, yes to consumer choice but an emphatic no to this health bill because it is in danger of destroying all the good work the NHS does. It needs to be drastically reformed or completely re-done. the government are heading in the right direction, but the route they are using to get there is in great danger of leading them astray. That needs to change.

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