Good news for patients

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According to the BBC, the number of NHS patients choosing to take their public funding to a private hospital (on the basis that the private provider matches the NHS price) has risen ten-fold in the last year or so, to more than 3,500 a month.

There is an obvious reason for that. Private providers, who are motivated by profit and whose livelihood depends on attracting more customers, are far more attentive to patient needs than the NHS monopoly. No waiting lists, private rooms, clean wards, more communication between patients and clinicians – in other words, a better experience all round. And at no additional cost too!

You might think that everyone would consider this a good thing, but unfortunately you would be wrong. Just read the BBC article I linked to above, the implicitly negative slant jumps off the page every bit as much as the organization's left-wing bias. Take the first paragraph as an example: "Thousands of patients a month in England are using a government reform to get what is effectively private treatment paid for by the taxpayer."

Couldn't they just have said, "Thousands of English patients are now getting better treatment at no additional cost to the taxpayer", instead?

And then we get Jacky Davis of the British Medical Association saying, "This is money that is being lost from the NHS. That can compromise services and patients should be told that by going private in this way they are potentially putting care they may need in the future under pressure."

But that's just wrong. The NHS is not 'losing out' here. Yes, they don't get paid for not providing the service, but then they don't have to spend anything providing it either. They come out about even. Meanwhile, patients see substantial benefits. And if does turn out that NHS hospitals end up getting squeezed out of the market, so what? It will only have happened because people are getting better care elsewhere. That's the whole point of competition.

Power lunch with Andrew Lansley MP

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Andrew Lansley MP, the Shadow Health Secretary, was our guest at a power lunch in Westminster this week. His topic was "Public Health – Personal or Public Responsibility?" 'Public health' used to mean environmental health, of course – sanitation, clean water, that kind of thing – but now its usage has changed. When politicians talk about public health these days they are normally referring to obesity, smoking, and 'lifestyle diseases' in general. It makes libertarians like me feel a little queasy, but I suppose it's inevitable when you have a national health service and rapidly rising costs.

The general Tory approach to public health was outlined by Lansley in a speech this summer, and is usually summed up as "no excuses, no nannying". The idea being that if you educate people and give them all the necessary information, they can really take responsibility for their own choices. I get the impression to Tories are committed to activism and 'engagement' in this area, but don't want to interfere too much with people's lives.

One obvious problem, however, is that the NHS is a sickness service, and not a health service. Will the NHS really be able to do something – i.e. promote health – which is so alien to its culture and ingrained bureaucracy? Probably not, in my view, so it's not surprising the Tories aim to separate 'public health', where they see a major role for government activity, from the day-to-day running of the health service, where they want to rely more on professional autonomy balanced by consumer choice and provider competition.

I'm still not convinced by the whole 'public health' agenda though. Yes, so-called 'lifestyle diseases' (triggered by eating too much, smoking too much, drinking too much, and so on) are a major burden on the NHS and, by extension, the taxpayer. But I'd much prefer the government to just leave us alone, cut our taxes, and got us pay directly for our own healthcare. If people bore the financial consequences of their unhealthy lifestyles, perhaps they would make more sensible decisions. Otherwise, we'll forever be fixing problems caused by too much government with even more government.

Trust me, I'm a doctor

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What previously was a matter of professional self-regulation is soon to be taken over by new government-regulated bodies. The conduct of GPs, in particular, will soon be subject to much greater bureaucratic scrutiny thanks to pending government legislation. The legislation will enforce the appointment of a ‘responsible officer’ for every doctor’s office in the United Kingdom.

This is all about risk. By comparison: GPs in Germany pay only about 400 Euro per year for professional insurance. British GPs pay as much every month. The best explanation for this huge discrepancy seems to be the strict gatekeeper role of GPs in the UK. Whereas in Germany everybody is eligible to see a specialist of his or her choice, in Britain NHS (and even private) patients need a referral from their GP for each contact with a specialist. This inevitably results in delays for state-of-the-art diagnosis, often leading to unnecessary suffering and postponed treatment. This is certainly the weakest point of the paternalistic NHS system, which incorrectly prides itself on equal access to health care.

Trying to mend this with a validation system overseen by an imposed, personal ‘responsible officer’ for each doctor is likely to make things even worse. GPs managed to retain their basic freedom as self-employed contractors in 1948 when the NHS was set up, but are set to lose as responsibility for their conduct is transferred to a state-regulated officer. Inevitably, doctors will be infantilized in the same way as NHS patients have always been – and patients’ access to specialist care will be limited even further. Because GPs just don’t have the same diagnostic equipment at their disposal as hospital doctors, putting them in charge of specialist referrals is, at best, an imperfect system. But putting government-sanctioned ‘responsible officers’ in charge is even worse - ‘responsible officers’ will not be able to make effective clinical decisions because they will, most likely, not even be trained doctors.

A market-based solution would be to give patients open access to specialist care. They would be happy to exercise their natural responsibility for themselves.

Dysfuntional dentistry

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It was reported in The Times yesterday that NHS dentists will be forced to pay back £120 million to the government for failing to fulfil their assigned quotas of cases seen. Once again we see evidence of government quotas creating a poor quality service, neglecting the areas which really matter.

According to the article, NHS dental treatments targets were missed by 5 million in the year 2007-2008. Previously, dentists were paid per treatment giving them greater economic incentives to provide a better quality service. But, under the current scheme dentists are given a set income for completing an agreed amount of NHS work. This set income minimises any incentives for dentists to provide a quality service, resulting in a ‘drill and fill’ scenario. As I have written before, the inefficiencies of the NHS mean that patients are seen as numbers, rather then people.

The inefficiencies of a quota system are clear, but if the dentists are punished for the governments failure we could see more and more dentists refusing to provide NHS treatment – already about 1,000 dentists have opted out of the NHS scheme meaning that 9,000 fewer patients have been treated – or a brain drain with dentists moving to countries such as the US where they will be rewarded more generously for their talents.

Left to the market this healthcare service would be provided in a much more efficient manner, with dentists responding to consumer needs both in terms of quality and volume of treatments.

Negligent Health Service

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The NHS strikes again. It has been reported that since 1995, £2.1 billion has been given to mothers and babies as compensation for medical negligence during childbirth. Costs include lifelong treatment for children who have experienced brain damage, cerebral palsy and developmental delay. This news comes as the maternity services are suffering from cuts in spending, short-staffed hospitals and rising birthrates. In England, the NHS reduced spending on maternity by £55 million in 2006-07, while the birthrate has risen 16 percent since 2001.

NHS shortcomings have caused an increasing number of litigations from the victims of insufficient care. The cost of maternity-related claims has risen from £163 million in 2003-04 to £288 million in 2007-08. One in every six thousand births in the UK has resulted in legal action against the health service. For example, Tristian Blomfield was awarded just over £8.26 million after suffering permanent brain damage at birth. At eight years old, he has cerebral palsy in all four limbs and needs constant care.

So what needs to be done? Well, in the short run, money should be spent on improving care to decrease the ridiculously high compensation costs the NHS has had to pay. Yet the current health care structure just won’t cut it. For example, despite the fact that Labour has increased spending on the NHS by £57 billion since 1997, the productivity of consultants has fallen over 20 percent during the same period.

In terms of health care reform, privatization is holds the key. Only an increase in the role of the private sector would introduce the necessary competition and efficiency savings. These changes need to start soon – just ask Tristian and his family.

Unhealthy pay rises

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Upon opening my newspaper last week I was confronted by two headlines which typify public services within the UK. Firstly, there have been '38% pay rises for top NHS bosses'. This is absurd given the current economic situation and the government's fiscal marginality. But, this was coupled by the second headline that the 'NHS is worse than Estonia for care'. I'm not saying that Estonia is an underdeveloped, backward country, but I doubt their healthcare bosses receive the wages that ours do.

There is no sense in NHS bosses being given such a large pay rise, especially when many others are beginning to feel the strain of the looming recession. It is hypocritical that these massive pay rises for senior officers come from the same government that heavily criticised the investments banks for giving large bonuses to their staff. It could not even be said that these pay rises are 'performance related'- we are rated 13th for healthcare in Europe, well below our similarly wealthy neighbours.

This extra government expenditure has been poorly spent and shows a lack of regard for the efficiency of the NHS. On average, nurses and ancillary staff were only given a 1.9% wage increase. In order to boost the quality of healthcare within the NHS, we need extra nurses and medical staff rather than a growth in managers and extra bureaucracy. 

The solution to the inefficiencies of healthcare in the UK is greater privatisation. This would encourage waste to be reduced and competition would encourage firms to improve the quality of their service in order to increase revenue. Privatisation would also see firms giving greater incentives to medical staff and nurses who have a real impact on patient care, rather than on middle management.

In order to improve our healthcare to levels above that of Estonia, we need more effective strategies than simply pumping cash into the failing NHS.

Health care without borders

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There are new studies indicating that the number of people traveling abroad for medical treatment have been greatly exaggerated. This includes previous blogs of mine where I reported the figure to be 750,000 in 2006. This same number has re-emerged with the accounting firm Deloitte LLP for health tourists in 2007. However more recent sources come up with much lower numbers:

Josef Woodman, author of the consumer guide Patients Beyond Borders, puts the 2007 number closer to 180,000. (And the) global consulting firm McKinsey & Co. released a study in May that said the trend is far smaller than commonly reported: It put the number of all medical travelers – not just Americans – at 60,000 to 85,000 per year.

However, these numbers do not include patients seeking treatment in neighboring countries, such as people traveling from the US over the Mexican border for dental treatment.

Woodman has calculated the threshold for going abroad at $6,000 for the total amount of out-of-pocket cost for treatment in the United States including consultation, procedure and hospital stay. Only if you spend more than that are you likely to save money if you travel to get treatment abroad. In Britain with the legitmization of top-up fees,  it could be a while before this makes economic sense for most people. Although with better quality, service, speed and fewer attendant risks in healthcare abroad, those that can afford it may be tempted to splash out.

Sense at last

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As expected, the government yesterday decided to allow 'private top-ups' within the NHS. In other words, patients are now going to be allowed to pay privately for additional drugs and treatments, without losing their right to NHS care and having to foot the bill for all of their treatment.

Previously, the government had always put the NHS' soviet-era ideology ahead of the health of patients, arguing that, "co-payments would risk creating a two-tier health service and be in direct contravention with the principles and values of the NHS". In previous blogs, I have described that policy as immoral, irrational, and quite possibly illegal, so I'm glad the government has finally seen sense. I'm still not sure why they needed an official review to tell them it was wrong to actively prevent people from accessing life-saving drugs and treatments, but there you go.

The real shame is that Andrew Lansley, the Tory health spokesman, doesn't seem to see it that way, telling the media, "I find it astonishing frankly, that we seem, the government seems, to be drifting into a system where we’ll end up with a two tier national health service." The Tories' general lack of radicalism on health reform is probably sensible – politically speaking – but standing in the way of genuine progress to score a partisan point is just wrong. For the party of individual choice to speak out against letting people spend their own money on their own health is perverse.

And make no mistake: allowing top-ups is a very definite step in the right direction as far as healthcare reform goes. Firstly, it lets people pay out-of-pocket for things that are too expensive to be provided by the taxpayer – good. Secondly, it will encourage the growth of affordable top-up insurance plans, giving many more people access to those new and expensive drugs. But there's a more important aspect to this decision: it ends the long-running fiction that the state (or rather, the taxpayer) can ever provide everything.

The lasting impact of this decision will hopefully be that the NHS becomes a defined benefit, rather than an open-ended entitlement.

Save health savings accounts

Adding insurance to the mix creates a whole host of problems. First of all, it imposes significant administrative costs, which often exceed the price of the actual medical service. Secondly, insurance gives both the doctor and the patient an incentive to maximise costs – the patient because he's paid his dues and wants his money's worth, the doctor because he wants to increase his income. Thirdly, it blunts incentives to keep yourself healthy, because that's what you've got insurance for.

Moving to a more rational system, where people pay their doctors directly for routine services and insurance is confined to its natural role, is the key to reforming healthcare the world over – to keep costs under control, free doctors and empower patients. I hope policymakers realize that.

For a more detailed explanation of the benefits of health savings accounts, have a look our 2001 report Medical Savings Accounts.

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According to the Investor's Business Daily, a Democrat controlled US Congress could attempt to drive Health Savings Accounts (HSAs) out of the market. They won't roll them up overnight, the article says, but they could tie them down with lots of regulation and paperwork, and cap the tax deductibility of savings at a low level – essentially rendering them useless. Given that healthcare is meant to be one the Democrats' priorities, it is hard to think of a more counterproductive step they could take.

According to a presentation I saw from the (US) National Business Group on Health a couple of weeks ago, 27 percent of large employers already offer health plans including HSAs, with a further 9 percent intending to do so for 2009. The reason for this is simple: consumer-directed health plans or CDHPs (which tend to include a savings/direct payment element and high-deductible insurance) are much more cost-effective than traditional group insurance options, coming in at an average $5970 a year compared with $7120 for health maintenance organizations (HMOs), $7252 for preferred provider organizations (PPOs), and $7714 for point of service (POS) plans. CDHPs, which are used in one guise or another by 55 percent of large businesses, can produce 3-year total savings of $1m per 1000 workers without compromising quality of care. In an era of uncontrolled medical inflation, that is nothing to be sniffed at.

The reason HSAs are so important is that unlike most proposed reforms they actually address the fundamental problem with healthcare today – the absurd overuse of comprehensive insurance. This applies as much to government systems like Britain's NHS as it does to mixed or private systems elsewhere in the world. Think of it like this: insurance is very useful for protecting us against unanticipated and costly occurrences, but is completely ill suited to the funding of predictable expenses. Why rely on insurance for a run-of-the-mill doctors visit or a bog-standard prescription? You know these things are going to happen from time to time, so you can plan for them. [Click 'read more' to continue]

Tiptop

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So the BBC reports that hospitals are already allowing top-up healthcare. Frankly, most people have known this for a long time, but politicians and the media have largely ignored it, in much the same way that they have ignored the costly failure of the NHS.

Of course, professor Mike Richards will present his review of co-payments at the end of this month. Given the pressure coming from the general public, one can only assume that this will formally allow them.

The results of this will be twofold. Firstly, it will finally lay to rest the hugely misguided idea that government could ever provide a comprehensive health service completely free at the point of use. Secondly, it will transform NHS care from an open-ended entitlement to a defined benefit. The inevitable spread of co-payments and private top-up insurance that follows will surely lead to a revaluation of the future role the NHS.

Certainly, a safety net should always exist to guarantee a basic standard of healthcare for all UK citizens, but beyond that minimal guarantee the state, and politics, needs to be taken out of healthcare altogether. People should be free to take control of their own healthcare by redirecting largely wasted taxes into personal health saving accounts, and paying their doctors directly for services rendered. That would be far more efficient, and far more likely to encourage healthy living, than the bureaucratic monolith we have at the moment.
 
Systemic NHS failure is starting to force the hand of politicians, yet they are not keeping up with events. Labour has poured money into healthcare to little effect, the Conservative’s are not prepared to rock the boat, while the Liberal Democrats have a long way to go in their tentative exploration market based solutions.

In fact it is the Liberal Democrats who are best placed to put healthcare reforms on the agenda. With the Conservatives focussing on the less divisive educational reforms, health reform could (and should) form the central pillar to sell the party to the nation. Now where did that orange book go?