BLAIR’S BRITAIN, 1997–2007
Page 64
In general the Blair government tended to concentrate on health services. Its policies for social services built on the earlier shift to a mixed
economy of care. Spending rose faster than before but only at about half
the rate of spending in the NHS. An excellent independent regulator
reported progress in access and quality. The mixed economy led to a
greater flexibility in developing new services. For example, increased
access to intensive home care was almost entirely met by private
providers, as was care for people with the most severe learning disabilities. Social services showed lessons about the gains to a real mixed
economy which were generally unheeded for the NHS.
17 Ibid.
18 Tony Blair, Our Nation’s Future – Social Exclusion, 5 September 2006.
19 Ibid.
Developing NHS IT. The aspiration of acquiring an electronic patient
record was a noble one. Connecting for Health could point to some
results including the introduction of access to broadband and digital
transmission of X-rays in the London area – but the programme as a
whole by 2007 was a long way behind schedule. It has also changed direction, aiming to develop previous legacy systems rather than replace
them.20 The previous achievements of GPs had been underestimated and
the top-down approach had not worked well. The aspiration was highly
praiseworthy but an approach which emphasised local initiative as well
as system integration would have got results far more quickly at a far
lower cost.
The missing dimension – reliable international comparisons
The changes were affected by the crucial problems faced by central planners that they may be implementing yesterday’s system. While The NHS
Plan pointed to a huge centralised system, international experience was
moving in a totally different direction.
The first funding wave of The NHS Plan was based on comparisons of
NHS spending as compared to GDP shares in the rest of Europe. The
policy conclusion was that the UK should move with extreme speed to
spend more than the European average. Such comparisons ignored some
crucial ‘health warnings’ about international comparisons.
Health systems can be divided into those with a strong primary care
base as against those with direct access to specialist care and fee-forservice. As Table 18.1 shows, the spending levels for the first type of
system, at 8–9% of GDP, are well below those for the second type, at
10–12%. Yet all studies of population health, treatment outcomes and
patient access show that the first type of system delivers results which are
at least as good and in many dimensions better than the second.
Recent research on the US health maintenance organisation Kaiser
Permanente sponsored by the Department of Health has itself confirmed
that the first type of system in a regional context can indeed deliver very
effective results. The original research showed that on an adjusted PPP
basis the NHS spent $1,784 per head while Kaiser Permanente spent
$1,984 per head.21 These results were fully adjusted for differences in the
20 Richard Granger, Director General of IT for the NHS, oral evidence to the House of
Commons Health Committee, 26 April 2007, HC 422–i.
21 Richard Feachem et al., ‘Getting More for their Dollar: A Comparison of the NHS with
California’s Kaiser Permanente’, British Medical Journal, 324, 2002: 135–43.
Table 18.1. Growth of expenditure on health 1990–2001, health
spending as percentage of GDP
1990
2001
Primary care-led systems:
Denmark
8.5
8.6
Finland
7.8
7.0
Netherlands
8.0
8.9
New Zealand
6.9
8.1
Spain
6.7
7.5
Sweden
8.2
8.7
United Kingdom
6.0
7.6
Fee-for-service-led systems:
Belgium
7.4
9.0
France
8.6
9.5
Germany
8.5
10.7
Switzerland
8.5
10.9
United States
11.9
13.9
Source: OECD Health Data, 2004
age composition of patients and in the differences in the range of services
provided by the two systems. Later comparisons sponsored by the
Department of Health showed that: ‘For the 11 causes selected for study,
total bed use in the NHS is three-and-a-half times that of Kaiser’s standardized rate.’22
The level of spending generated in the first system reflects the costs of
providing certain services involving primary care access, referral and protocol-driven secondary care. If this system is associated with higher levels
of spending, this implies either higher costs than could be prudently
managed or higher levels of activity. There is good international evidence
that high levels of health spending are often associated with the flat of the
curve – with waste and low quality in care. Detailed criticisms have been
made, for example, of the low standard of cancer care in Germany and the
poor quality of prescribing in France. An OECD summary concluded
that: ‘While richer countries tend to spend more on health, there is still
22 Chris Ham et al., ‘Hospital Bed Utilisation in the NHS, Kaiser Permanente and the US
Medicare Programme: Analysis of Routine Data’, British Medical Journal, 29, 2003:
1257–60.
great variation in spending among countries with comparable incomes.
Even more importantly the highest spending systems are not necessarily
the ones that do best in meeting performance goals.’23
Canada supplies a particularly strong example of how funding without
reform may in fact lead to increases in waiting times and greater access
problems. Between 1993 and 2003, average waiting times have risen 70%
over a period when real spending per head rose 21%, in constant 1995
dollars, from $1,836 to $2,223. New Zealand has had similar problems,
with a 40% increase in real-terms spending from 2000 to 2006 but a fall in
the number of elective procedures and a rise in waiting times. Thus higher
levels of spending are often taken to conceal problems of low productivity.
A more considered international comparison would certainly have
pointed to a strong case for some additional funding. UK spending was
in fact below the GDP shares found in tax-funded/primary care-led
systems. There were also serious deficiencies in some key areas of care
where a combination of new incentives with extra funding was required.
The international evidence, however, pointed to a phased increase in
spending to 8–9% of GDP. The increase to 10–11% of GDP was not supported by international evidence.
The Bla
ir diagnosis of under-funding was also hard to reconcile with
UK capability in primary care, its potential for lower-cost public health
programmes and the targeting of health spending on most cost-effective
programmes through NICE. It also tended to concentrate management
attention on the spending of extra funding rather than on making better
use of the funding that was already there. The various NHS plans have
ignored the real lessons of international experience which were recently
summarised by the OECD:
Ultimately increasing efficiency may be the only way of reconciling rising
demands for health care with public financing constraints. Cross-country
data suggest that there is scope for improvement in the cost-effectiveness of
health care systems. This is because the health sector is typically characterized by market failures and heavy public intervention, both of which can
generate excess or misallocated spending. The result is wasted resources
and missed opportunities to improve health. In other words, changing
how health funding is spent, rather than mere cost cutting, is key to achieving better value.24
23 OECD, Towards High Performing Health Systems (Paris: OECD, 2004).
24 OECD, OECD Health Systems – Measuring and Improving Performance (Paris: OECD,
2004).
Table 18.2. Waiting times for publicly funded patients in Spain (days)
1992
2000
Cataract surgery
68.0
47.6
Cholecystectomy
103.4
53.8
Hernia
84.6
48.3
Prostatectomy
119.4
42.7
Vaginal hysterectomy
71.9
52.5
Knee arthroscopy
51.4
53.8
Hip replacement
271.4
59.8
Knee replacement
91.3
63.4
Varicose veins
232.8
50.6
Source: OECD, Health Care Systems – Lessons from the Reform Experience
(Paris: OECD, 2003).
The case for this modified target has been strengthened by the evidence of the possible impact of incentives within primary care-led
systems. Without shifts in funding as shares of GDP such systems can
deliver very clear improvements in access and service. The achievements
in reducing waiting times in Spain between 1992 and 2000 are a clear
example.
The OECD attributes most of the decline to the use of financial incentives in achieving waiting time targets which were introduced after 1998.
A similar approach to financial incentives, allied to expansion in service,
was adopted in Denmark, leading to a fall in median waiting times for
cardiac procedures from thirty days in 1997 to fifteen in 2001, a period in
which waiting times in the UK rose rapidly.
Within the UK, reform has shown very positive results where it has
been tried. Key areas where changes adapted from Scandinavia have been
introduced include the introduction of new financial penalties/incentives
for reducing delayed discharge and the choice programme for cardiac and
other surgery in London.
Since local councils have faced cost penalties in paying for prolonged
admissions, the numbers of patients staying in hospital unnecessarily are
now more than 4,000 lower than in 2001. The Secretary of State has said:
A massive reduction in delayed discharges was the equivalent of adding
eight extra hospitals to the NHS. In fact more beds were created through
incentives than the total additional beds planned through extra funding
(2,500) over the next decade . . . These figures suggest that the introduc-
tion of the reimbursement scheme seems to have provided the extra incentive we needed to maintain momentum.25
In London, between 2002 and 2004, 12,500 patients were offered a
choice of where their treatment should take place and 7,480 accepted it.26
Among the results have been that:
• South-east London Treatment Centres in Orpington and Bromley now
have spare capacity and began advertising for patients from February
2004.
• Private hospitals in the area have become concerned about declining
patient numbers.
• The National Heart Hospital, bought to increase NHS capacity in
cardiac surgery, found that it was short of patients because waiting lists
had been reduced by the choice programme and it had to convert to
non-surgical uses.
Thus within a very short time the choice programme was successful in
reducing waiting times even before new capacity in Treatment Centres
was introduced. There was similar success with choice in surgery for
cataracts in the south of England.
There has also been a tendency to attribute success to funding when it
should have been attributed to reform. Thus, in coronary and heart
disease, the government stresses that the fall in the death rate – 41% over
the last decade – is the result of NHS modernisation. Much of the work in
introducing the National Service Framework and extending the use of
statins, however, has been carried out in primary care where spending
has been rising more slowly. And within secondary care waiting times
for cardiac surgery have been reduced, mainly as a result of the choice
programme.
The National Audit Office has come to a similar conclusion in regard
to accident and emergency services. Its recent report found that the
Department of Health had allocated less than £30 million per year to
improving A&E services compared to an annual spend on those services
of over £1 billion. Rather than extra funding, A&E departments have
improved waiting times by developing new working practices, in particular by treating patients with minor injuries quickly rather than making
them wait until patients with more serious injuries have been treated
25 Department of Health press release, ‘Dramatic Fall in Delayed Discharges’, 17 May 2004.
26 Department of Health press release, ‘NHS in London Advertises for Patients’, 4 February
2004.
(‘see and treat’), by giving more clinical responsibility to experienced
nurses and by improving access to diagnostic services.27
Within the service for cancer patients, there has certainly been some
improvement in access and survival for patients with breast cancer. Better
funding of new drug therapies is likely to have contributed, but research
in the US has clearly shown that detection of cancer at an earlier stage
through screening is the most important reason for better survival. The
successes in improving survival owe more to long-term investment, since
the 1980s, in what is now one of the world’s most advanced systems for
population screening, than to funding increases under The NHS Plan. So
far, indeed, the results of funding increases have been disappointing. A
survey by the Royal College of Radiologists in 2003 indicated that wa
iting
times have not improved since 1998, and that only a minority of patients
are receiving treatment within recommended waiting times.28 A later
review showed that by 2006 radiotherapy services were only delivering
61% of the recommended levels of treatment.
The future of the NHS will be one of great funding pressure. The NHS
Plan and the following four years have seen the announcement and design
of future policies and commitments. In the next phase these new policies
will actually have to be funded. However, the problem is greater than that
of short-term funding pressure due to the inconsistency between the
various key policies. The NHS must manage the effects of five key policies:
• the introduction of competition between providers through standard
tariffs where money follows the patient;
• the rising costs of the hospital system through PFI and new staff
contracts;
• a range of new providers, including Treatment Centres and Foundation
Trusts, operating to much more compelling budgetary incentives by
which they have to increase activity in order to survive;
• a strong supply response to the new primary care practice contract
resulting in many more services at a higher cost;
• commitments to integrated care for chronic illness through Evercare
and other systems.
This range of policies results from the gradual shift from central planning towards local initiative. The PFI schemes are the result of central
27 National Audit Office, Improving Emergency Care in England (London: NAO, 2004).
28 Royal College of Radiologists, Equipment, Workload and Staffing for Radiotherapy in the
UK 1997–2002 (London: Royal College of Radiologists, 2003).
Table 18.3. The policy framework to 2010
Policy
Comment
National tariffs
Full introduction in 2007. Paid at standard rates
with gainers (costs below tariff) and losers.
New consultant
Long-term costs (improved lifetime pay and leave
contract and Agenda
allowances) will be greater than immediate costs.
for Change
PFI schemes
New providers
First wave of contracts will be ending in 2010.
Treatment Centres and Foundation Trusts with
room to expand activities (such as Royal Marsden
and Bradford) will be gainers under the national
tariff.
The new GMS contract