Tesco Waiting Times

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It’s Prime Minister’s Question Time and the Leader of the Opposition Harriet Harman asks David Cameron: “Can the Prime Minister confirm that the government will continue to guarantee that no customer of Tesco will have to queue at the checkout till for longer than 10 minutes?”

Mr Cameron responds that government policy is to ensure that British shoppers will always have ready access to sufficient and nutritious food supplies at the lowest possible cost but he doesn’t specifically answer Ms Harman’s question. She leaps to her feet again, repeats the question and demands a simple “yes or no” to her question. Again, Mr Cameron responds with the government’s overall objectives in its food supply policy but avoids a direct answer to Ms Harman’s question.

For the rest of the day, the country’s news media are dominated with the question of whether Tesco’s customers will soon find themselves queuing for more than 10 minutes at the tills. The nation goes to bed with Jeremy Paxman’s final pronouncement that the government clearly has no policy on Tesco checkout lines.

Absurd? Well, apparently not when the institution is the NHS and the subject is waiting times to see a cancer specialist. Yet that is the inevitable result with a bloated, highly politicised organisation that is managed top-down from the highest reaches of the government. Everyone becomes a micro-manager on the most arcane issue.
Delivering health care in the modern world is indeed a challenge to all governments everywhere. The new UK government’s plan to redistribute control from the top to the bottom may or may not work – the devil, as always, will be in the detail and there’s no shortage of details when it comes to the NHS.

However, the principle is correct and one truism should guide policy – the bigger an organisation, the more inefficient and less responsive to ground level needs it will be. Successful organisations recognise this and adjust management structures accordingly. Just as local managers of the nation’s supermarkets stock their shelves as and when they need to meet local demand, so local managers of the NHS need to set their own priorities.

Some will argue that healthcare is different from grocery stores. But surely the provision of adequate food supplies is a more critical necessity than healthcare yet Tesco and its competitors more than meet the challenge without ever featuring in PMQ.

The big difference between the two is funding – at Tesco, the customer pays at point of delivery while, in the NHS, the government does. The real arguments at PMQ should be on this aspect – how to deliver the same result as Tesco but with a different pricing mechanism.

Only when PMQ and Newsnight no longer feature bedpan shortages will we know that British healthcare is delivering the goods at an affordable cost.

Put the patient at the centre

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We are facing the “Biggest revolution in the NHS for 60 years” as the Telegraph put it. It means that £80 billion spent for hospital care will be transferred to family GPs, which could eventually make untold thousands of NHS bureaucrats redundant. Excellent move! However, this has been tried before under the label of commissioning by the Thatcher government with very ambiguous results. The lessons of that experience must be acted upon. One problem with commissioning that needs to be borne in mind is that is can simply increase the dependency of patients on the judgments of a single doctor. Adn there must be a worry that a solitary GP will have difficulty keeping up-to-date with all the medical disciplines required to make these judgments.

Furthermore, the patronizing and intrusive nanny state only adds only to the burden on GPs – something we should consider carefully now we are asking them to take on such a major role. There has to be some relief: at least put the patient/family in charge of the private aspects of his/their own health, by giving them the funds to do that. Mr Lansley should put an equivalent of several thousand pounds in health savings accounts, managed by every patient to fund their non-hospital health, preferably including a budget for medication. Patients could also book their surgery appointments online and free many thousands of receptionists for administration of the commissioning. This would be the perfect quid-pro-quo between doctor and patient and would also rid the government of any role of interference in our lifestyle, while making many more thousands of bureaucrats redundant.

Internal markets v Free markets

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Like Eamonn, I welcome the government’s plans to scrap Strategic Health Authorities and Primary Care Trusts and put consortia of GPs in charge of commissioning health services on behalf of their patients. As well as stripping out unnecessary bureaucracy, these reforms should create a more bottom-up health service and encourage innovation. Moreover, the Conservatives’ previous attempt at GP fundholding suggests that giving local practitioners direct financial controls is likely to improve productivity and help to deliver better services at less cost.

And yet… I can’t help feeling slightly uneasy about Health Secretary Andrew Lansley’s plans. The problem with ‘internal markets’ and ‘managed competition’ is that the devil is very much in the detail. Get everything right and, yes, you can bring about tangible improvements. But it is all too easy to get something wrong and end up worse off than you started – and discredit ‘market-based’ reforms in the process.

The trouble with internal markets is that, step forward or not, they aren’t real markets. They lack an effective price system and still rely heavily on central planning. As a result, while they may deliver better, more personalized services, internal markets are still prone to all the information and incentive problems that affect other bureaucracies.

Ultimately, there’s no substitute for letting real people spend real money, and letting a health ‘system’ develop in a truly spontaneous way. To put it another way, empowering doctors may be better than empowering bureaucrats, but empowering patients is better still.

What I’d really like to see is demand-side reform, and in particular the introduction of Health Savings Accounts (or something like them) in the UK. It could be that you compel people to save a certain amount each year, as occurs in Singapore. Or you could expand the system of tax-funded direct payments system that has been successfully pioneered in social care, and make everybody responsible for their own 'health fund'. In either case, you can still use tax-transfers to support those who can’t support themselves.

Such reforms would couple equitable and universal provision with a genuinely consumer-led system. They would also encourage greater individual responsibility when it comes to healthier living – something the current proposals manifestly fail to do. The downside is that they would require us to abandon our free-at-the-point of use healthcare dogma. And is the British public ready for that?

John Spiers’ excellent IEA book Who Decides Who Decides? explores these issues in detail, and is a highly recommended read for anyone interested in healthcare reform.

Why we should have a paid market in kidney transplants

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One of those little secrets (well know to us illuminati of course) is that Iran is the only country in the world where it is legal to pay donors for organs for transplant. Iran is also, not all that surprisingly, about the only country without a long waiting list for kidneys for transplantation. One point that I hadn't realised:

It is well documented that RRT is cost effective treatment as compared to dialysis. For example the UK national health system (NHS) data reveals that the average cost of dialysis is £30,800 per year while the cost of kidney transplantation is £17,000 following by a £5,000 annual spend on the drugs. That means over a period of 10 year (the median graft survival time: the time that transplanted kidney survives in patient’s body), the average benefit of kidney transplantation, comparing to dialysis, is £241,000 per patient (UK Transplant, 2007).

The payment to the donor amounts to roughly two years' minimum wages in Iran: some £24, £25,000 say here in the UK.

That there is no waiting list means that kidney disease sufferers are not wasting hours upon hours each week in dialysis: they are also much more likely to survive said kidney disease. Many here do die on the waiting list for an organ. But as you can see from the figures, one other thing a paid market is is cheap. Astonishingly so, for even if we include the payment to the donor (making the assumption that it would come from public funds), the saving over the 10 years is some 70% or so of the usual cost of treatment by dialysis. And yes, there are those who wait that long.

Even if we look at more realistic waiting times of a few years, it's still true that the transplant is cheaper than only 18 months of dialysis. Less death, better health and all for less money, what could possibly be wrong with this idea?

Well, other than the fact that the Great and the Good in our own dear Blighty seem infected with the idea that money, lucre, is just so icky and shouldn't be used to solve some problems.

Something of a pity for those who will die waiting on dialysis really as as the above shows, there really are some things which are too important for us not to use markets in.

Andrew Lansley: Health reform

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Congratulations to the new Health Secretary Andrew Lansley, for what could be the biggest revolution in the UK's state-run National Health Service for 60 years. Mirroring what Michael Gove is doing for schools as Education Secretary – short-circuiting the bureaucracy and instead letting school boards decide how their money should be spent – Lansley has bravely revived the idea of giving the lion's share of the funding to family doctors (GPs) to spend on their patients as they deem fit. It's the next best thing to giving it to the patients themselves.

We knew that the Conservatives favoured GP budget-holding: at one stage, their leader David Cameron made no bones about it. He and many of his colleagues were convinced that family doctors could spend the budget far better than officials in the Department of Health, or the local Health Authorities, or the bureaucratic Primary Care Trusts that were set up under the last administration. But then everything went quiet, and we feared that Cameron's crew were going to baulk at serious healthcare reform, reckoning that shaking up education was a big enough job for any incoming government.

But there were signs that reform might happen in the coalition agreement between the Conservatives and their government partners the Liberal Democrats. The agreement vowed to end the top-down management of the NHS and give more responsibility to GPs. Now that has happened.

Why is this change so important? Because it means that decisions are made by patients and their family doctors, rather than well-meaning but distant bureaucrats who do not know the individual and local circumstances. And it is the first step towards making the NHS the funder, but no longer the provider, of healthcare. After all, GPs can decide to use their budget to send patients to non-state providers if they choose. And if instead they select state-run hospitals, it puts a competitive pressure on those facilities: instead of being able to rely on guaranteed funding coming down to them from the central authorities, they will have to win GPs' custom by providing the best possible value for money. And that, surely, is what we want from a healthcare system, whether it is taxpayer-funded or not.

On regional inequality in lifespans

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You'll have seen the headlines yesterday: The National Audit Office report showing that people in poor areas die younger, on average, than people in not poor areas and that the government and NHS has been failing to do something about it. The report is here.

While the basic contention, that poor people die younger than rich people (or people living in poor places die younger than those in rich places), is clearly true, there's a great gaping hole in the methodology used to monitor all of this. It's the same error made in the recent Marmot Review which should be read alongside this NAO report. The error comes in two parts.

1) There is no acknowledgment at all that people migrate over the course of a lifetime. Not everyone does, of course, and yet it's also true that not everyone doesn't. So concentrating on particular local areas (local authorities in this case) will take no account of the way in which, say, someone hale and hearty in their 60s might leave some industrial Midlands town and move to Bournemouth upon retirement. Reducing the life expectancy in that Midlands town by removing someone likely to live long (for life expectancy of someone hale and hearty in their 60s is longer than that of the general population) from the pool we're measuring and similarly increasing it in Bournemouth.

2) No acknowledgement or discussion of the point that while poverty might lead to ill health and shortened lifespans, it is also true that ill health can lead to poverty. Being struck down by a chronic illness during your working years will make you poor: and will ally with point 1) to make it less likely that you will move from a poor area to a rich one.

As I say, I've no doubt at all that a shortened lifespan is yet another indignity that is heaped upon the heads of the poor. But as I constantly try to point out, we have to measure these things (as I've been shouting about for years about the gender pay gap) properly before we can decide what, if anything, we're going to do about them.

Unless we know how much of the poverty is caused by ill health as opposed to the ill health being caused by the poverty we're fumbling around in the dark. And unless we account for the way in which people move around, migration as a result of both health and wealth, we're similarly blind to what is actually causing the inequalities we can see.

We're not, as yet, measuring this properly so we cannot, as yet, decide what to do about it.

Not so NICE

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In a country where the state controls healthcare to such an extent, the National Institute for Health and Clinical Excellence (NICE) really has to exist in some form. Death panels or not, without serious reforms it is necessary that someone somewhere decides which medicines can be afforded and which can’t. However, NICE does more than this, it also makes recommendations on “how to improve people’s health and prevent illness and disease”. Much the pity.

In the space of a week they have made two headline-grabbing recommendations. First was their suggestions that:

• manufacturers should stop using trans-fats
• a maximum intake should be set set for salt of 6g per day for adults by 2015 and 3g daily by 2025
• hidden saturated fat substantially reduced
• efforts be made to make unhealthy food more expensive than healthy food
• restrictions should be enforced on unhealthy food television advertisements until after 9pm
• planning restrictions should be imposed to time-limit fast-food outlets
• unhealthy food should have traffic light labelling

To top that, yesterday they suggested that all pregnant women should have their breath measured for carbon monoxide levels when booking to see a midwife. The Department of Health is keen on the idea, stating: "We welcome the publication of these new guidelines. Smoking in pregnancy is a major public health concern posing risks to both mother and baby. We want the NHS to use this guidance to develop the best possible services for pregnant women."

It is no surprise that liberty is not a factor in the proposals of a Quango, but even they have to draw a line somewhere. Clearly on this occasion they have gone too far and should have been shot down. There are clear arguments to be made on unintended consequences – whether increased food prices for the poorest or vulnerable smoking mothers avoiding health professionals for fear of condemnation – but ultimately the argument of ‘enough is enough’ needs to win through.

Utility and efficiency are not the only measures of effective policy. Like all Quangos and regulators, their remit needs to be cut down to what is purely necessary in areas that the state is near monopolistic provider and removed entirely from nannying us.

Rethinking organ donation

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In a world were information is almost as expensive as time, why are we limiting it? A woman recently died after receiving a double lung transplant according to this BBC article. The lungs were unfortunately unhealthy.

Patient confidentiality is a right of individuals, no doubt. It also gives incentive for more people to donate. However, if personal contact information is withheld, what’s the harm in publishing medical records? It seems the price of having someone know whether or not I’ve smoked or have a history of cancer is lower than the price of a medical mishap like Ms. Griffin experienced.

In fact, why don’t we privatize the organ market? Firms, due to specialization and reputation, would better screen donors. Firms would also find the right level of information patients need to make an informed decision. Another solution, introduced by economist Robin Hanson, is to use futures markets in relation to a procedure’s success. It could be applied to almost any aspect of the medical market. This would collect, organize, and analyze published data to give patients quick indicators about medical decisions.

Patients may not want to go through another transaction when they’re in peril, but I think it’s worth a try. Especially in the midst of an economic crisis, we should be looking for innovative changes, not cuts alone. There is more to gain by thinking outside the box for problems like these. The beauty of the free-market is its ability to crush bad ideas extremely efficiently.

Health spending shouldn't be ring-fenced

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In a column in the Yorkshire Post on Saturday, I argued that we could not afford to ring-fence health spending while trying to make big cuts to public expenditure. After all, the NHS is our second biggest expense after social security, eating up more than £100bn of taxpayers' money every year. Moreover, real terms health spending more than doubled between 1999 and 2009, while productivity fell - a clear sign that the health service is not providing value for money. Bearing this in mind, it should be clear that any attempt to dramatically reduce expenditure without looking at the health service is doomed to fail.

Indeed, our most recent report - The Party is Over: A Blueprint for Fiscal Stability - called for a £10bn reduction in health spending over the next five years, as part of a £91bn package of cuts that are needed to eliminate the budget by 2015. But how could these savings be achieved? In the Yorkshire Post, I suggested that payroll and bureaucracy was the place to start, and pointed to potential savings from a mixture of pay cuts and pay freezes, almost halving the number of managers in the NHS (i.e. returning us to 1999 levels), and getting rid of the Strategic Health Authorities. But I also made it clear that this would not be enough:

But this kind of tinkering only takes you so far. Because one of the other lessons we need to learn from Canada and Sweden is that making spending cuts sustainable in the long run means completely re-thinking the role of government, what it does, and how it does it.

When it comes to health, the key question we need to ask is this: can we still afford to provide everyone with comprehensive healthcare, free at the point of use? Or should we focus scarce resources on those most in need, using government as a safety net and guarantor of minimum standards, rather than a provider of universal services?

Our answer will become increasingly important in the years ahead, as baby boomers age and technological advances drive a spiralling burden on taxpayers. And yet, in a way, the question is misleading. The NHS has not been truly comprehensive and free at the point of use since 1951, when charges were introduced for prescriptions, dental care, and spectacles.

For now, we should take that precedent and run with it, gradually introducing user charges throughout the NHS. Britain is virtually unique in the world for not charging people to visit their GP, for instance, and even a modest fee of £10 would save the NHS around £1.5bn a year.

Direct payment would have a powerful effect on the way people see the NHS. Realizing that healthcare is never really ‘free’ would make them use services more judiciously; knowing they would bear some of the cost of their lifestyle choices might also encourage people to take greater responsibility for their own health.

Eventually, most medical services could be paid for directly by patients, with various exemptions and spending caps in place to ensure that the disadvantaged do not suffer unfairly. The NHS would become a ‘people’s insurance policy’, covering Britons against unpredictable, big-ticket health expenses, and ensuring no one went without, but no longer providing comprehensive services itself.

Of course, there’s no question that these are radical suggestions. But the government has promised us a ‘once-in-a-generation’ re-think of government. Will it be brave enough to think the unthinkable?

Paying for healthcare

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During the question and answer session that followed his Adam Smith Lecture on Thursday, Irwin Stelzer was asked what he would do about the NHS. His response was interesting.

Although he was strongly opposed to President Obama’s socialization of healthcare in the United States’, he didn’t see much point in attacking the NHS in Britain. It is too much of a national icon to be tackled head-on, and has a ‘social solidarity’ effect that many Brits are deeply attached to, he said. Instead, you need to nibble away at the edges.

His main suggestion was that we accelerate the process that started in 1951, when Hugh Gaitskell introduced charges for prescriptions, dental care, and spectacles. In short, we should gradually introduce user payments throughout the health system, increasing them over time so as to rely more on direct payment and less on tax revenue.

This is a sensible idea, and would certainly save the taxpayer money – by bringing in funds directly, by reducing the number of missed appointments, and by stopping people from using services unnecessarily, simply because they are free. This US study, for example, found that introducing a $5 ‘co-pay’ within a Health Maintenance Organization (HMO) resulted in an 11 percent drop in primary care visits, and a 3 percent reduction in specialist visits, without causing any negative health impacts.

Furthermore, Britain stands more or less alone in the world by not charging people anything at all to use medical services. Even countries with very egalitarian, Beveridge-style health systems – like Sweden – tend to charge, for precisely the reasons outlined above.

If combined with the supply-side NHS reforms that look set to accelerate under the new government, and which would free hospitals from central control and allow both private sector competition and patient choice, user charges could slowly tranform the NHS into a completely different institution.

Indeed, it is possible that we could eventually reach a point where the NHS was simply a universal insurance policy covering Britons against unpredictable, big-ticket health expenses. Most day-to-day funding would be private and, crucially, paid directly by patients to providers, without adding the unnecessary bureaucratic costs of governments or private insurers. Moreover, all provision – even when NHS-funded – would be independent of government.

As far as I’m concerned, that would be a pretty ideal set-up, which could deliver a high standard of care while also keeping costs under control. We just need to abandon the idea that "free at the point of use" is a sacrosanct principle that can never be infringed.