Transcript Structural markets and planning

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
Let’s start at the very beginning…
… a very good place
to start
What are health systems actually for?
Possible answers
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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
… but not only responding to what
turns up
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Assessing health needs
Monitoring the outcomes of health care
Training the next generation of health
workers
Generating the knowledge needed for
technological development
It all seems rather complicated

Health systems are complex social systems
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They involve multiple interacting elements
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Involving real people, with hopes, aspirations,
and motivations
Primary, secondary, specialist care
They involve multiple stakeholders

Health, education, industry, regional
development
If it really is so complicated…
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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
… 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.”
… except….

Markets in health care don’t work so
well
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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
Once it was so much easier
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An individual patient
went to a doctor
The doctor:
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made a diagnosis
(probably wrong),
applied a treatment
(probably ineffective)
The patient:
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died, or
got better
… but now
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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
… but even in the old days …
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Even when the state
played a minimal role
in health care …
It always intervened in
some areas
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Mental health
Infectious disease
The inter-relationship of
practically everything
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A family is injured in a high speed car
crash
They arrive at an emergency department
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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
An analogy – air travel
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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
The double agency relationship
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The patient
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Knows that she is unwell, but
not why and what can be done
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 traveller
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The doctor
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Knows where they want
to go to
The airline
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Knows how to get there
The purchaser
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Knows what type of people are
not getting care and what the
best (evidence-based) models
of care are, and can put them
together
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The travel agent
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Knows all the different
options available
Another area where markets
have problems
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Opportunistic behaviour
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Cream-skimming
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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
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High volume elective surgery, but no
provision of training
Reaching out to those in need
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‘[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
And another – specifying the product
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Uncertainty
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What single
diagnosis for a
patient with multiple
pathology
Clinical thresholds
Data manipulation
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DRG creep
Looking to the future
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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
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.”
19
So in the end it is an empirical question
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Markets beat planning where the
conditions for a market exist
Less certain whether this applies in
health care
Which gets the best results?
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Planned services
Unplanned services (free market)
Type I diabetes
Then and now
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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
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Pharmaceutical supply and distribution
Primary care
Specialist care
Self care
Value for money?
30
US black, m
Diabetes mellitus
deaths / 100,000
25
20
US health expenditure: 15% of GNP
Swedish health expenditure: 9% of GNP
US black, f
15
US white, m
10
US white, f
Sweden, m
5
Sweden, f
0
20-24
25-29
30-34
35-39
40-44
45-49
Cheap, convenient, and deadly
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“Some Hospitals Call 911 to
Save Their Patients ”
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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
Preventing deaths from cervical
cancer: more may not be better
5
4
Germany
Number of
cervical smears
in a lifetime:
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3
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2
1
0
1990
Finland
2000
Germany – 50
Finland - 7
Avoidable mortality
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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
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diabetes under age 49,
leukaemia under age 15,
Asthma under age 65
Change in avoidable mortality
1998-2003
Australia
140
Austria
Canada
120
Denmark
Finland
deaths/ 100,000
100
France
Germany
80
Greece
Ireland
Italy
60
Japan
Netherlands
40
New Zealand
Norway
20
Portugal
Spain
0
Sweden
1997/98
2002/03
UK
Still, maybe the private sector
gives better value?
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In Australia, after adjusting for case-mix,
public hospitals are more efficient than
privately operated ones
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Perhaps because private hospitals treat patients
more intensively
Systematic review of 149 comparisons of
US for-profit and not-for profit hospitals
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88 found not-for-profit better – cost, outcomes,
access
43 found no difference
18 found for-profit better
… and not just in health care –
more market “successes”
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Break up of UK telephone directory
enquiry service
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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
The English experience
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Recognition that the UK was lagging
behind similar countries
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Low cancer survival
Long waiting lists
Concern about future affordability of
health system
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Ageing population
New technology
Projections of future expenditure
on UK NHS under three scenarios
} €50 bn
Fully engaged = major commitment to health improvement
Source: Wanless Report
So what happened?
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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
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Limited scope to increase supply
Price inflation
Drive to increase capacity
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Patients sent to France, Germany,
Belgium for surgery
Private finance initiative to pay for new
hospitals
Independent Sector Treatment
Centres for elective surgery
Going abroad: cheaper and
faster
£9,000
£8,000
£7,000
£6,000
£5,000
£4,000
£3,000
£2,000
£1,000
£0
NHS
UK private
France
Cataract
The first nine patients sent to
France by the English NHS
Hip
Comparing prices
Knee
Building new hospitals
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Public Private Partnerships
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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
Suggested benefits
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Private sector intrinsically better at
managing projects than public sector
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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
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Except that this no longer applies as PSBR has
been redefined
…and also…
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More likely to complete on time
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Except time from project conception to
completion may be longer
Transfers risk to private sector
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Except, risk comparator “pseudoscientific mumbo-jumbo”
Official from United Kingdom National Audit Office
In practice
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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
The cost of private provision
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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
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Governments have AAA status
PFI bonds typically BBB+ (just above junk
status)
Flexibility:
The hospital of the past
Medical
Medical
Medical
Medical
Paediatrics
Pathology
Maternity
Surgery
Surgery
Theatres
ICU
Outpatients
Radiology
A& E
Geriatrics
Geriatrics
The hospital of the future?
Primary
Care
Imaging
Pathology
Minor
Injury
Children
Diagnostics
Ambulatory care
Intermediate
care & rehab
Medical
Major
trauma Assessment
Imaging Pathology
Imaging
Theatres
Medium
Maternity
Source: Edwards & McKee
High
Dependency
Theatres Imaging
ICU
Paediatrics
Specialist
Imaging
Pathology
The bed issue
n
Too few
contracted
Beds
Too many
requirements
0
Now
Now + 30 years
… and populations change
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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
Higher quality?
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Bishop Auckland Hospital
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Norfolk & Norwich Hospital
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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
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Generator and core electrical systems had to be redesigned
immediately after opening
Boiler house opened with no water treatment plant
Doors too heavy for the opening restraints
Seacroft Hospital, Leeds
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Mental health facility found to have breached “every section of the fire
safety code”
But we should look beyond Europe too
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La Trobe Regional Hospital, Melbourne, Australia
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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.
Dead but not buried?
ISTCs:
How are they performing?
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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”
In summary:
“Modernising” the English NHS
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“Creative destruction”
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McKinsey & Co
“We had to destroy the
village to save it”
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Peter Arnett quoting
unnamed US Army officer in
Vietnam
“Modernisation” …
or “The Great Leap
Forward”
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