A better way for hospital care II

Two years ago, the ASI’s No Need to Flinch set out a raft of proposals to shake up the NHS’ demand side. We called on the NHS to treat people as individuals with less heavily aggregated risk pools, we called for funding options to be widened, and we made the case for allowing co-payment on procedures the National Institute for Clinical Excellence would not otherwise fund.

Under this system most would be obliged to purchase insurance—like the car insurance regime in the UK—while end of life care and accident and emergency would be paid for by the state, as determined by a political consensus. The issue then becomes reform on the supply side—hospitals.

Governments have grappled with this for generations, giving rise to perennial complaints about “NHS reorganisation”. In fact, hospital doctors always see the civil servants off: they’re the smartest guys in the room, furnished with the best data and ruthless in exploiting the fear-factor. But the public would be best served if the components of secondary care were broken up to embrace a variety of approaches, so that best-practice emerged continuously from what Tim Worstall’s recent blog post called “market processes …an endless repetition of experimentation”.

This would include all secondary care: ambulances, labs, specialist clinics. Most of all hospitals, although it is often argued that full service calls for concentrating the required skills in big operations. There is something in this, but not so much as to render integrated hospitals beyond competition. In the first place the argument misses the mark. Even now, we accept some specialities in regional if not national settings. Meanwhile national guidelines impair the experimentation which makes for progress. More to the point, even the largest hospital is susceptible to competition. This is because even small reductions in demand threaten the specialist functions which justify its existence.

Disposals also promise relief to the Chancellor. ASI’s 2010 study of the UK’s intergenerational obligations, On Borrowed Time, showed Britain’s secondary healthcare to be worth around £200bn. Considering corporation tax reductions and market increases since then, it could now be worth £300bn.

Let’s recast integrated outfits to maximise choice for scheduled activities where patients have discretion. Let’s also contemplate several business models: overseas groups, newly-listed companies, professional co-operatives and charities or universities. And finally, let’s set aside a fraction of receipts for practitioners, following Bevan with the consultants when he “stuffed their mouths with gold” to win them over to the NHS. So the Exchequer might only get half the headline sum. That would be £150bn, not quite fifteen percent of the national debt, but well worth having.

Best of all, if hospitals failed to attract referrals from GPs, already at arms-length, even the largest would shortly find their specialist functions at risk: market discipline would enforce reform, something beyond seventy years of NHS control. So let's free up the rigid UK healthcare system and inject some innovation, competition and diversity in.

A better way for hospital care I

Relieving the State of a hospital sector it has never been able to control would raise standards and reduce Britain’s national debt by close to fifteen percent.

In the private sector, if outfits fail they are reorganised, we call this bankruptcy. In the public sector, if outfits fail they are supported with our taxes—heaven knows what to call this—solidarity? compassion? How about hokum?

Yes, they keep us alive; yes, they’re free at the point of use; but let’s get real. NHS hospitals are unwholesome—hospital infections are now an NHS commonplace. They're unfriendly—try getting a diagnosis from a consultant whizzing through ward rounds. And they're inharmonious—listen to front-liners talking about clinicians, consultants about GPs, or any of them about porters. Such ill-feeling leads at best to bloody-mindedness, at worst to irregularities like the mid-Staffordshire deaths or newly-disclosed lapses in late-week aftercare.

And the keeping alive thing isn’t going so well: two years ago, the ASI’s No Need to Flinch presented data showing that the NHS is undistinguished by comparison to its peers. It is certainly free at the point of use, but that’s one of the problems: without pricing we have centralised rationing, priorities set by bureaucrats using clinical pretexts for essentially arbitrary decisions.

The NHS has become an ethical dump. Ordinary people are assumed to be unable to make their own decisions. They face policies which second-guess their choices, ration healthcare surreptitiously, allocate provision according to the state of public finances, and deprive patients of treatments in a public setting if they want to fund them directly.

As to economics, for as long as healthcare is unpriced, it is subject to infinite wants, especially as populations age and new technologies emerge for diagnosis, treatment and bodily modification. Prices would help patients make informed choices, as in the private sector.

Looking at practicalities, as ever in public supply the producers have captured the system, running it for their own purposes. Doctors, nurses, radiographers and pharmacists collaborate reluctantly in an ill-tempered armistice covered by paperwork in triplicate. Compare private healthcare, where professionals co-operate promptly. This is because customers with choices ensure that private healthcare competes to meet their needs. By contrast the NHS monopoly prevents customers going elsewhere; instead the Department of Health creates tick-lists, demoralising practitioners who game them. The NHS needs the discipline and coordinating force of the price system.

No healthcare tinkering can deliver the radical shake-up we need

Health minister Norman Lamb MP was our guest at an afternoon seminar in the House of Lords which we held in partnership with healthcare specialists LCS International Consultants. Lamb outlined the new measures on social care currently going through Parliament.

The measure has several objectives:

1. to provide services for the well-being of individuals, not the convenience of the providers;
2. a right to be assessed for state care services without being fobbed off;
3. encouraging innovation and promoting integrated services;
4. a focus on prevention;
5. diversity in service provision;
6. a cap on care costs (the so-called Dilnot proposals);
7. a commitment that nobody should be forced to sell their home during their lifetime to pay for care;
8. no postcode lottery and continuity of care if you move;
9. nobody loses care if a provider fails; 
10. better care for young adults, who often fall between child and adult services.

Who could disagree with the aims of all this? Trouble is, to the gnarled political insider, it all sounds like the same wish-list folk have been talking about forever—well, for at least the last thirty years in my experience. We published back then on individual-state partnerships for long-term care finance, basing our ideas on US models that were already working, a good quarter century before Andrew Dilnot discovered them. We are supposed to have had "joined up government" fifteen years ago under Blair, but still people languish in NHS hospital beds because local authorities don't want them on their budget. And as for putting people before providers—give me a break.

A state health and social care system is never going to deliver person-focused care. It's not the way governments work. State institutions are too big to manage, and individual needs are too diverse for a large bureaucracy to accommodate. When this law is passed, lots of new managers will be recruited and maybe a few people's care will be marginally improved: but there will be no radical and systematic shift to care being built around individuals. Providers will follow the new rules, but still will not be enthusiastic champions for the specific needs of each person they try to help. They are simply too big and too inflexible.

Private charities are much better at dealing with the manifold needs of diverse individuals. So are businesses, which only make money if they keep customers happy. Until we break the state's effective monopoly on funding and provision of health and social care, and empower individuals to buy in the services that they want, I fear we will be having the same conversations another twenty-five or thirty years from now.

Ten reasons why the Left should like the ASI, 9: Choice

The Left ought to support our campaigns to put power over these services into the hands of the people who use them.

Some elements on the Left want the state services used to mould an egalitarian society, but others should side with the ASI in wanting to concentrate instead on improving those services in line with the needs and wishes of their users.  The ASI views the centrally-planned top-down model as unsatisfactory and unresponsive, in that it delivers what its administrators think should be provided.  The ASI instead has advocated and backed reforms that have state services responding instead to the choices made by recipients.  Patients should have choices over where they are treated and, in consultation with their doctors, over which treatments they prefer.  Parents should be able to choose which school their child attends.  In both cases the state funding should follow from those choices and be directed to the institutions favoured by patients and parents.

Not everyone is equally equipped to make such choices, of course, but the ASI thinks that the choices made by those who are informed will lead the way in improving standards generally as others follow their lead.  Much the same effect happens in the production of private goods and services; it is the informed customers who improve the goods and services for everyone else as suppliers try to attract them.

This introduction of choice to allocate state funding is not only a superior model in theory.  It works in practice in some of the Scandinavian countries in both health and education, and succeeds there in raising standards as well as consistently attracting high levels of popular satisfaction.

Doctors and celebrities: the enemies of liberty

If asked which groups posed the greatest threat to individual liberty in modern Britain, I would unhesitatingly cite two groups. These groups are, broadly, the medical profession and those who are generally called 'celebrities' - pop stars, film stars and so on. You may think that I am being somewhat tongue-in-cheek (and in some ways I am), yet there is a serious set of issues at stake here.

Firstly, the medical profession. Hardly a day goes by without some group of doctors or medical scientists calling for a ban on this or some sort of government intervention in that. The latest example seems to be the attempt to set a minimum price of alcohol sales, a terrible idea which, hopefully, has failed. Consumption of tobacco, salt, sugar, fat plus associated advertising are all deemed dangerous and suitable subjects for medics to attempt to ban or circumscribe via price increases . Medics also see fit to spend public money to instruct us how to live our lives and what choices we ought to make.

Some of the rationale for this comes from the doctor's protective monopoly, the NHS. As the health costs of unhealthy lifestyles are born by the state, it seems quite justified for doctors to call for bans and price hikes. Naturally, this simply demonstrates the lunatic incentive structure that state-provision of healthcare creates, especially free-at-the-point-of-delivery healthcare which externalises the costs of unhealthy behaviour. However, the chief threat from doctors lobbying stems from their apparently impartial and expert position as guardians of health and security. Unfortunately, most of their calls ignore the Public Choice and Knowledge Problem implications of the state interventions which result.

Celebrities have an even less programmatic threat to liberty, unsurprisingly for such a diverse group. They usually adopt a single-issue approach. For a long time we have had Bob Geldof and Bono calling for state spending on international aid. The greatest current threat stems from Hacked Off's campaign against a free press. Celebrities will often lead opposition to reductions in public spending or state activity such as Arts Funding. They have a powerful ability to rally strong public opinion for or against a cause, no matter how strong the case against - whilst Joanna Lumley's campaign to allow Gurkha's to settle in the UK hardly represents a major threat to liberty, although it has had some unintended consequences for Aldershot, it serves to demonstrate the power without responsibility that celebrities wield.

In distinction to the recent past, where ideological opponents of liberty tended to possess a coherent ideological programme of state intervention and control, these groups are far more pragmatic and opportunistic. Thus, in many ways, they are far more dangerous because they cannot be so easily shown to be a threat. It must be said that both groups 'mean well' - they cannot really be accused of a malign plot to oppress people. However, both represent a serious threat to liberty.

Regulations and public spending, once in place, are rarely repealed and tend to expand as they crowd out private responses. Innovation is prevented and alternative solutions are foregone. Bans and prohibitions create black markets and often serve to create other problems without solving the first (viz. recreational drugs). Whilst everyone has a right to free speech, those lobbying for state intervention need to be aware of the consequences and problems created by their support for the insidious expansion of the state into yet more aspects of our lives.

It's time to legalize kidney sales

George Kirby is the winner of this year's Young Writer on Liberty Prize, beating out dozens of applicants. We are delighted to post his excellent winning pieces to the blog over the next few days, and look forward to seeing much more of him in the years to come.

Article 3 of the Universal Declaration of Human Rights holds that “Everyone has the right to life, liberty and security of person.” Through this right to power over one's own body, it is legal to donate a kidney, whether to a friend or relative (Human Organ Transplants Act 1989), or to a general waiting list as a 'stranger' donation (legalised in the Human Tissue Act 2004).

Yet these Acts stipulate that “making payments for the supply of organs for transplantation or advertising a request for, or offer of, such organs for payment” is an offence. Concerns about the possible exploitation of the healthy poor by the nephropathic wealthy have led to more state control of the free market. Meanwhile, “three people a day die on the UK kidney transplant list”, according to the BBC.

This should change. A surprising example of a legal kidney market is that of Iran. Two state-surveyed charities match those who need a kidney with those who are compatible and prepared to sell. The vendor “is compensated by both the government and the recipient”. This system means that “there is no shortage of the organs”. A similar system in the UK would save thousands of lives and help alleviate the financial strain on the NHS, which spends more than £1.4 billion each year treating chronic kidney disease.

Furthermore, selling a kidney helps the vendor. Sue Rabbitt Roff, a researcher at Dundee University, suggests students could use the money to pay off university debt.

Those who oppose such a proposal argue that the state is the best judge of the individual's interests. Dr Tony Calland, chairman of the British Medical Association's medical ethics committee, said,

"Introducing payment could lead to donors feeling compelled to take these risks [of donation], contrary to their better judgement, because of their financial situation."

As it is, the dangers are greater for those selling organs via the illegal market, where advice, safe surgery and support are lacking. The government's policy against the trade of kidneys makes it more dangerous for who will sell anyway, needlessly costs patients' lives and, most fundamentally, infringes on individual liberty on the grounds that it is for our own good.

One way to know that you're doing the right thing

Is to look at peoples' reactions to what you're doing. If, for example, you decided that you wanted to clean up the MPs' expenses system and every MP then started howling about how we mere ignorant citizenry aren't supposed to control them then we'd know that we were on the right track. Similarly, if every criminal in the country (to the extent that this is a different group from MPs) starts to complain about the length of sentences after just and righteous trials then you would at least begin to suspect that you might have created sentences which have a deterrent effect.

And when you're doing supply side reforms to the economy if you start to hear loud wailing from those suppliers being reformed then you've got a pretty good indication that you are achieving your goal. As with this letter to the Telegraph: 

As doctors and health-care workers, we are concerned about the Government’s proposed secondary legislation (under Section 75 of the Health and Social Care Act) to force virtually every part of the English NHS to be opened up to the private sector to bid for its contracts. These regulations were proposed on February 13 and will become law on April 1 unless MPs first insist on a debate and then vote them down. Parliament does not normally debate or vote on this type of regulation, but it is possible. We urge parliamentarians to force a debate and vote on this issue to prevent another nail in the coffin of a publicly provided NHS free from the motive of corporate profit.

There then follows 1,000 or so signatures. Which is, as I say, a signal that something is going right. The aim and point of the NHS reforms is indeed to introduce a market. Competition among suppliers that is. The reason for doing this is that in the absence of competition the producer interest will dominate, not that of the consumer. This is why we insist upon more than one electricity supplier in the economy, welcome that there are many sources of food (whether trivially in shops or more importantly from many different farmers and producers), sell off four licenses for mobile telephony at a time, not just one.

We desire to have this competition because it stops that producer interest from ossifying and then taking over the entire system. Very much to the detriment of the consumer who is the person we're actually concerned with.

As a result we've got those producers howling about how just ghastly it is that people will be able to compete with them. Screaming about how undignified it is that such august personages might have to consider what consumers want rather than what producers might deign to provide.

Great eh? It's working!

There’ll be no transparency in the NHS while the lawyers circle above

Complain about anything in an NHS hospital and you will face a wall of unknowing. Not sympathy, not a recognition of the mistake and certainly not an apology.  This has nothing to do with a lack of care or humanity by NHS staff and everything to do with the scale of legal costs and fines faced by the NHS.  The sums are now huge (£15bn in 2010 according to the Daily Telegraph, 3rd August) and rising fast, thus draining the funds that should be spent on front line care.

The reality is that transparency by the hospital (or whatever) will simply provide evidence for the ensuing law suit.  If patients and their relatives are given more information about their treatment, then that too can be used in evidence.

Harold Wilson is to blame.  When the NHS was set up, patients could not sue and everything was more open.   Those are the days of caring we look back on with a warm glow.  The reason they could not sue is because there is no contract between NHS and patient: the patient does not directly pay for NHS services, the state does.  So the patient had none of the usual customer’s rights.  Harold Wilson was lobbied by patients’ representatives saying this was unfair and they were entitled to recompense when things went wrong.  The law changed and the patient became the customer with a right to sue for damages.

The unintended consequences are now plain: lawyers instruct NHS staff not to admit liability, or indeed anything.  The costs to the NHS are not just the lawsuits but lawyer interference in management at all levels.  Sweep the cock-ups under the surgical gowns and no one will learn from mistakes or even know about them.

I had personal experience of this when a famous London hospital nearly killed my uncle by not following standard hygiene procedure during his operation. The infection was serious and kept him in hospital for quite a while. My uncle did not want to make a fuss, still less sue, but I insisted on having a discussion with the surgeon.  I hit a brick wall.  Most people would have given up but eventually, after giving assurances that we would not sue, we met.  He was accompanied by a young man whom I took to be a lawyer.  He tried to write everything down until, by now quite cross, I reminded them that we were not suing.  The meeting was entirely to ensure the surgeon understood what had happened, since we had no reason to believe he did, and to press him on how these things could be avoided in future.  I got some satisfaction on the former and none on the latter which was, in fairness, not strictly my business.  There was no apology.

The idea that mistreated patients deserve some recompense is now so ingrained that we are unlikely to revert to the pre-Wilson era.  But the present system is lose-lose: it contributes to the problems such as those now exposed at Mid Staffs whilst simultaneously destroying the NHS budget and the costs are escalating.  Following Mid Staffs all sides are issuing platitudes about transparency but, with the lawyers circling the sky like vultures, it will not happen.

One solution is to have a menu of damages that an ombudsman can award once the facts have been transparently exposed.  In the event the hospital, or the patient’s representative, is less than open, the damages are doubled or eliminated following the more arduous investigation.  Any hospital playing the odds, i.e. getting doubled too often, would be required to discipline, and possibly sack, the manager most responsible for the lack of transparency.  In this solution, no lawyers would be allowed to participate on either side.

If we paid for doctors we'd forget the stiff upper lip

This week a medical journal reported that the British 'stiff upper lip' contributes to its low cancer survival rate. It seems that people simply don't want to bother the doctor when they feel ill. So their cancer goes undiagnosed, and the chances of survival diminish.

I know the feeling. I am registered with an NHS general practitioner, but now I usually go instead to a private doctor when I am ill Yes, it's expensive at £100 a go. Yet I find myself going to the fee-for-service doctor more than I ever did to the 'free' NHS one. It's not that I'm sicker. I am just more inclined to go.

Why? Well, there are costs other than money. With the NHS doctor, the first problem was getting through to the surgery on the phone. The line nearly always seemed to be busy. When you did get through, you could rarely get an appointment within the next two days. You did not know which doctor you would see. When you were seen, and discovered you needed antibiotics, the doctor would be reluctant to prescribe them. If you did coax out a prescription, you would have to traipse along to the chemist and wait to pick it up. Add up all that time and hassle, and visit to the 'free' NHS doctor became very expensive indeed.

For my £100, though, I get a phone that is answered immediately, an appointment the same morning, the doctor of my choice and, if I need medicines, they are handed to me there and then. Job done.

But there is something other than mere financial and time/effort cost in this equation. I reckon that there are many people with more serious conditions than my niggling cough. I can well see that, when medical services are rationed by queuing rather than by price, responsible citizens like me might well figure that we don't want to waste the doctor's time when there are much more deserving folk. It's another reason why I found myself simply not going, when I should have done.

I have no qualms at all, though, in going to my private doctor. It is a straight commercial transaction: I want medical treatment, this person is prepared to sell it to me. The price clears the market, and no other patients of that doctor are denied appointments or told to come back in three days. And I am treated as a valued customer rather than a necessary inconvenience.

Just maybe, if people were expected to pay for general practitioner services, they might forget the stiff upper lip and demand the medical care they actually needed.

Booze and fags and fat bastards save the government money

It does get very annoying when we've all the usual prodnoses telling us that we must eat our five a day, stop puffing on the gaspers and limit ourself to one small brown ale a week for the sake of our livers. This is all to "save the NHS", or to save the public accounts from the costs of dealing with us cancerous lard tubs as the cirrhosis explodes. Other than the ghastly nonsense of the puritans (you know, the worry that someone, somewhere, might be having fun), the despicable reduction in the freedom and liberty to chart our own course the the inevitable grave, there's really only one other major problem with this point.

It ain't true.

Most certainly it's true that treating these diseases of a life well lived costs the NHS money. But not hacking out the pickled and fatty liver in our 50s costs the NHS much more. For people do go on to survive a decade or more of senile dementia, just as one alternative and even more awful fate. This costs more.

Some will recognise this as the argument that Philip Morris paid to be presented to the Czech Government. It was roundly condemned at the time as being a quite disgusting piece of pro-tobacco propaganda. It could even have been so but it did have the saving grace that it was actually true. For as a rough and ready guide, those things which kills us from chronic diseases around and about our retirement date cost the state much less than our surviving to a google old age does. And we've even got a Congressional Budget Office report making the case for us now:

In terms of the policy's effect on the budget, lower health care spending per capita would push down federal spending, but increased longevity would have the opposite effect. Throughout the first decade of the policy, reduced health care expenditures (primarily for Medicare and Medicaid) would mean that the federal government would spend less than it would have otherwise. The reduction in federal outlays would total $730 million over the period between 2013 and 2021. During the second decade, however, the effects on longevity would begin to dominate and federal spending would be higher than it would have been otherwise — an effect that would continue through 2085. The two principal drivers of that increase in spending would be Social Security and Medicare. Improvements in longevity from a reduction in smoking tend to have their greatest effect on the size of the elderly population and thus tend to boost spending on programs aimed at that population. Spending for Medicaid, by contrast, would be reduced throughout the period of the projection — a reflection of the wider age range of that program's beneficiaries.

The odds are that if you want to live a long life you shouldn't smoke. Nor eat nor drink as I do. But it still is really true that those of us who go out in our 50s and 60s from these diseases of an excess of indulgence save everyone else money by their not having to pay our pensions or health care bills for decades.

Stopping these behaviours may well produce longer lives: not that it's any of your damn business how other people decide to treat themselves. But it most certainly won't save any money.