Dr David Wainwright and Dr Alan Buckingham are Senior Lecturer and Teaching Fellow respectively in the University of Bath’s Department for Health.
It’s January, so the NHS is in crisis again. Waiting times in accident and emergency departments are ‘soaring’, elective surgery is frequently postponed, and there has been talk of medical students being ‘drafted in’ to help. Some commentators point to ‘Australian flu’ as a novel pressure, but the number of hospital admissions with the virus is so far only around 500, and this moderate increase in demand does not explain why the NHS has lurched from crisis to crisis for decades. The traditional response for many on the Left is to point to underfunding or ‘creeping privatisation’ as the root cause of the problem – an inevitable consequence of the electorate’s failure to respond to the warning, repeated at every election, that there are just X hours/weeks/months to ‘save the NHS’ by voting Labour. The belief that a substantial increase in funding and banishment of private sector providers will solve the problems of the NHS is a seductive one, but with each cycle of crisis/funding increase/new crisis, the old mantra becomes less tenable, and those with an interest in comparative health policy analysis begin to think the previously unthinkable thought: that the problem lies not in underfunding, but in a nostalgic commitment to a model of health care introduced in 1948 which, despite attempts at reform, remains fundamentally unchanged.
One of the reasons for this nostalgia is the deeply engrained belief that access to health care should not be constrained by inability to pay. The number of people who can recall health care before the NHS is rapidly shrinking, but the United States continues to provide a contemporary example of what can happen when universal coverage and collectivised risk are not provided. The US health care system serves the same purpose for the NHS as the Soviet economy served for American capitalism during the Cold War: providing a stark example of what can go wrong if we fail to defend at all costs the established model. The potency of this apparent dichotomy as a brake on reform cannot be underestimated. For many, any attempt to reform the NHS is seen as an existential threat to the values that underpinned its creation, and grounds for ‘circling the wagons’ in their defence. The fervour with which this belief is held to is almost religious in character. Deciding health care policy has become a moral crusade, replete with ‘angels’ and ‘daemons’, and the belief that any amount of suffering must be endured to preserve the faith and avoid damnation. In the past evidence based policymaking has failed to dent the belief that there is no alternative to the ‘true religion’ of the NHS. Only now, when people’s lived experience of the failings of the NHS is a daily occurrence, and the traditional solution of ever-greater increases in funding seems unachievable, has the policy window begun to creak open and allow different approaches to be considered.
Puncturing the myths
Before examining alternative models of health care provision it is worth considering the evidence behind some of the claims that are routinely made about the NHS. Again, comparisons with the US, which spends a great deal on health care, but achieves relatively poor outcomes have tended to dominate public discussion. The UK spends considerably less than the US, but if we look at all OECD countries, then the picture is rather different. The US spends a staggering 17.2% of GDP on healthcare, but the second highest, Switzerland, spends just 12.4% – and the average for the OECD is 9%. The UK spends 9.7% of GDP on healthcare, considerably above the OECD average and not far behind higher spenders with the exception of the US (OECD, 2017).
The amount that should be spent on health care is a moot point, but most would agree that whatever the amount, it is essential that the resources are used efficiently to achieve the best quality of care and optimal outcomes for the money spent. A second myth about the NHS is that it is the envy of the world in terms of achieving good health outcomes, but it is on this question of efficiency that the case against the NHS is strongest. Assessing efficiency is a complex task, not least in deciding what to measure. Health outcomes can be influenced by factors other than health care provision, which has led some analysts to focus on process measures, such as whether care is ‘patient-centered’, or the adoption of information technology. The much-publicised Commonwealth Fund study (Davis et al, 2014) claimed that on process measures of this kind the NHS is the greatest health care system in the developed world. Unfortunately, as Dr Kristian Niemietz, Head of Health and Welfare at the Institute of Economic Affairs, has pointed out, the Commonwealth Fund report only looked at one health care outcome: ‘mortality amenable to medical care’, that is how good the health care system is at keeping people alive. On this key indicator the UK came 10th out of the 11 countries analysed (Niemietz, 2016). The poor performance of the NHS on hard measures of health outcomes, like cancer survival rates, is often below the OECD average, often ranking alongside countries that spend far less on health care such as Estonia or the Czech Republic (OECD 2017).
Why is it, then, that despite spending above the OECD average on health care provision, the UK underperforms so badly in terms of health outcomes? For some, this is an inevitable result of ‘creeping privatisation’, as an increasing number of private providers put profits before patient care. Again, the suggestion is that the NHS is being undermined by private involvement and that this must result in US-style inefficiency and poor performance. Analysis by the King’s Fund (2015) suggests that the NHS is far from being privatised. Only 10% of NHS spending goes to non-NHS providers and this includes local government, not-for-profit organisations and the voluntary sector as well as for-profit organisations. With 90% of NHS care delivered by NHS providers, it seems unlikely that the recurrent crises are a consequence of privatisation. Other universal health care systems with better health outcomes than the UK, such as those found in France and Scandinavian countries, have a significantly higher rate of private provision.
The recent collapse of the Carillion Group, which among a broad portfolio of government contracts also provides services to the NHS, will doubtless be held up as an example of the instability of private providers and the need to bring such contracts ‘in house’ – but there are other factors to consider. If Carillion’s difficulties are a result of poor management, is it not preferable that the company should fold, and that its contracts and employees should be taken on by a more competent provider? State provision is rarely exposed to such ‘creative destruction’ and while this may avoid the costs and disruption of closure, it also means that badly managed services are allowed to continue unchecked. There are other lessons to be learned about how the private sector can be successfully deployed in providing public services. Not only is it important to have a plurality of different providers to compete for contracts, it is also important to ensure a plurality of commissioners. The NHS has a monopoly over the commissioning of public health care in the UK, which enables it to drive a very hard bargain with private providers like Carillion – thus reducing profitability to unsustainable levels and discouraging other providers from entering the market. Systems that have a pluralistic mix of social and private health insurance schemes avoid monopoly in provision and commissioning, thus enabling the market mechanism to work efficiently and equitably.
Towards the unthinkable
Comparative health care policy analysis shows us that other countries are able to achieve better health outcomes than the UK, often by spending a similar or lower proportion of GDP on health care. Many face similar pressures in terms of an ageing and increasing population and the rapidly escalating costs of high-tech medicine. There are several reasons why other countries are able to achieve this, but they have one thing in common: none have adopted the NHS model – a monolithic state provided system, funded from general taxation – even though most (with the exception of the US) are able to offer universal access to health care. A key to this success is the ability to embrace pluralism, by combining state oversight and moderate regulation with the dynamism of private provision. Compulsory social or private health insurance, with state provision to fill in the gaps, provides the basis for many health care systems that consistently achieve better outcomes than the NHS and avoid the recurrent crises to which the NHS is prone. Rather than a supplicant, waiting for an appointment or hoping for a referral, the patient becomes a customer able to shop around among different insurers for a form of service that is appropriate for them. Some might opt for a policy that reduces their annual premium by making a small charge for, say, attending a general practitioner, while others will choose free appointments but a higher premium. Similarly, some will choose plans that are expensive but provide better ‘hotel’ services, while others will choose to minimise costs.
The extent to which government chooses to regulate such arrangements is a matter for political discussion, and again there are varying degrees of regulation in different national systems. Ensuring free access to health care for those who are unable to pay is entirely compatible with the adoption of a pluralistic insurance-based health care system that allows genuine choice to the majority of patients, drives up standards through competition, and encourages providers to be more responsive to needs and preferences.
How do we get there?
The main lesson of NHS reform is that it is not possible; at least in terms of the top-down model of radical organisational change driven by bureaucratic imperatives. The system is simply too monolithic and the vested interests too powerful for this approach to succeed. Instead of another major re-organisation or five-year plan, what the UK health care system requires is a gradual process of incremental changes over time, which allows for bottom-up innovation and gives different parties time to adjust to change. The term ‘creeping privatisation’ is often used disparagingly, perhaps because it implies changes introduced by stealth – but as a model for change it has advantages over top-down planning. Rather than the radical privatisations of, for example, state owned utilities, it offers a more incremental approach. Opening up NHS provision to any competent provider is an important component, enabling commissioners to gain competence in commissioning and allowing the number of potential providers to grow over time. These small incremental changes at the margins, if properly managed, allow mistakes (such as incompetent providers) to be identified and dealt with while they remain small and peripheral. A similar approach should be taken to the development of social and private health insurance schemes. Rather than attempting to monopolise health insurance, government should limit itself to monitoring and regulation and creating a legislative framework that facilitates a gradual transition from the current tax-based system to a more pluralistic mixed economy of private and social insurance. Tax relief for people who choose to transition to an insurance-based system would be an example of such enabling. Existing NHS facilities should be allowed to gain greater independence from state ownership and, where appropriate, make the transition to the private sector.
This gradual process of health care reform, based on evidence of what works best in other countries, would not solve the problems of the NHS overnight or bring about an immediate end to the recurrent NHS crises. Inevitably, there would still be political battles to be fought and strong opposition from vested interests. There is, though, no feasible alternative. A radical shift towards an insurance-based system would be electorally unpopular and would almost certainly fail. But maintaining the status quo, propping up the NHS with above-inflation spending while relative performance deteriorates, is equally untenable.
Responses
What an interesting article. Just a few thoughts, if the average for the OECD healthcare spend is 9%. and the UK spends 9.7% of GDP on healthcare, I am not sure I would consider that considerably above the OECD average. I like the idea of shopping around for the best deal but my other observation is the culture of the UK end users of what some may call 'abuse' of the services by not taking any responsibility for themselves and expecting the NHS to come to the rescue for even the most minor of aliments. This may also apply an unacceptable pressure to the model we currently have.
Incremental change is very hard to achieve even in small organisation, with a behemoth such as the NHS, this change scale is maybe increased beyond a tolerable level. I am not sure of the answer but I like that you are considering the challenge and entering into the discussion. thanks
Thanks for your response Vanessa. 0.7% of GDP might not seem very great until you consider that the UK's GDP in 2016 was 1.6 trillion, so 0.7% is not an insignificant sum. For comparison, we spent 2.2% of GDP on defence in the same year. Our point though, isn't really about how much we should spend on health care, but what we get for our money in terms of improved health outcomes. Since the early 1990s spending on health care has nearly doubled, but there has not been a commensurate improvement in outcomes; the system has simply become more inefficient.
Moving on to your second point, I agree that where services are free at the point of delivery, there is a tendency for people to use them without good reason. I also agree that introducing modest charges (for those who can afford to pay), for say, GP appointments, can reduce inappropriate use. However, this is essentially a sensitivity-specificity problem. Even when services are free at the point of delivery, some people who should seek help don't do so until too late. Introducing charges is likely to increase the size of this group, which many would find unacceptable. It might be possible to find a 'sweet spot' where charges are sufficient to make patients think twice, but not enough to stop help-seeking for genuine need. Again, internationally there are examples we can look to, and generally insurance based systems have managed this problem more sensitively than those that are funded from taxation.
Finally, I take your point that even incremental change can be difficult to achieve, but the alternatives are to continue pouring additional funding (that we would have to borrow) into an inefficient system, or try to implement more radical reforms, both of which seem even more unfeasible than incremental change.
Dear Vanessa,
Thank you for your response. The UK does indeed spend above the OECD average on health. Whether 0.7% above the average is a large amount or not, I guess, is a matter of judgement. In money terms it’s about £13.5 bn or enough for 27,000 extra nurses. Regardless of whether we fund the NHS at, or substantially above, the OECD average the reason why we made a comparison with other nations is to dispel the myth that the NHS is underfunded. In relative terms, it is not.
As regards the ‘abuse’ of the services, you have highlighted a fundamental flaw built into the free at point of use UK NHS service. Where a service is free at the point of use, over-use is likely to happen. This derives from an economic principle know as ‘the tragedy of the commons’. Imagine an unregulated tract of common land which any farmer can use. It is in every farmer’s interest to allow his or her cattle to graze the land as much as possible. In time the land will become over-used, and its resources depleted so that all farmers suffer with hungry, underfed cattle. If that land had been partitioned and privately apportioned to each farmer, then it would have been in each farmer’s interest to maintain their private plot of land and not over-graze.
The same logic holds for the NHS. It is not that people are being selfish or abusing the system. They are simply behaving in a rational way to use free resources which are depleting because other people who do not pay are also competing to use the NHS. Without a price for access (either though payments for appointments/treatments or health insurance premiums which vary with usage, as happens in many other countries), then the only way to cap demand is through things like long waiting times and the rationing of drugs and services.
As to your final point about reform, I agree that reform of the NHS is extremely difficult both because of the size of the organisation and because of the many vested interests resistant to change. There is no easy answer here!
Dear Dr. Wainwright, Dear Dr. Buckingham:
I would like to take the time to share a few thoughts, however, first I need to frame my comments with the following limitations: While having extensively worked in the American Health Care system and having observed challenges through the lens of an Information Technology (IT) data professional when the United States moved to the Affordable Care Act (Obamacare), I have virtually no background concerning the unique challenges the NHS experiences. But perhaps looking at the issue from a bit of a removed position provides some benefit.
Firstly, I tried to dig into the challenges you describe by looking at some literature concerning “health care systems” and “change management”. I came across the concept of using Personal Health Budgets (PHBs) to establish a personalized patient-based strategy (Welch et al., 2017; Alakeson, 2013.). While these studies referred to pilot studies in small subsections of the health care service sector, I feel they might provide some food for thought about valuable change management dynamics in the health care industry. Their focus is on taking small sections of the system and testing change implementation through pilot-programs. This meshes well with what is, possibly the most feasible approach of provoking change through “a gradual process of incremental changes over time” or a “bottom-up approach”.
At a high level, while the overall conclusion seemed to be that the PHBs produce positive results, primary concerns fell on the change management processes used to establish or implement the studies. Particularly, 1) underestimated timeframes of implementation, 2) poor management of cultural changes across impacted organizations, and 3) gaps in training staff of new policies, rules, and definition seemed to be recurring notions (Welch et al., 2017).
Whether you refer to the monolithic NHS system or any other organization requiring substantial change, these three components are the most common and most significant trip wires or point of failure. From the IT perspective, these together, but also in isolation, can be deal breakers to the successful implementation of systems. In this day and age, without an underlying data system that performs smoothly and reliably, no significant changes will be sustainable.
However, here is the bummer: Even IF these components were all provided in a timely and effective manner, incremental, but significant, changes to systems established such a long time ago are often an insurmountable logistical and technical challenge. At the companies I helped re-engineer data systems, change implementations were severely stunted because the legacy systems were so butchered and patched over the last 10-15 years of their life cycle that small adjustments could bring whole sections (such as an entire payment system dealing with the infamous “Donut Hole”, the Medicare prescription drug coverage (Part D) coverage gap!) to their knees. Short of completely ripping out and building a system from scratch (which still is not without challenges) these issues will arise.
To the detriment of the companies which often struggle with prioritizing assignment of resources between continuing services under the status quo and revamping their systems and structures under often too tight deadlines and with too limited resources, the scope of these dilemmas is mostly misunderstood or undervalued by policy makers who do not have the necessary technical or logistical background to really understand the implications of these efforts. This magnifies the concern # 1 “underestimated timeframes of implementation”. Unfortunately, peoples’ health and lives depend on smooth transitions and functioning and jeopardizing this immediately plays into the fear of change.
The fear of change within organizations (who must implement the changes successfully to maintain or gain the support and confidence of the population) can only be mediated by proper leadership and organizational prioritization. Here issue # 2 of “poor management of cultural changes across impacted organizations” plays a role. To establish buy-in of the proper leadership it is essential to involve these same leaders in the decision process of what changes need to be made, when and how. Asides from the emotional impact and increased support that involving these individuals has according to Betancourt et al. (2017) these leaders often have information policy makers do not, cannot have. In short, to facilitate change more effectively, I suggest a more involved two-way communication process should be established where leaders of the organizations in the industry do not simply receive the orders of change, but are more actively involved in the “rework” decision processes themselves.
During this “rework” process leaders, who really are the true subject matter experts, can help prioritize which changes can be supported by the state of the organizations’ structures and create the greatest “bang for their buck” in quick succession. This facilitates issue # 3 by allowing a more reasonable and valuable but “gradual process of incremental changes over time”. In a sense, by not sufficiently involving industry leaders and industry representatives, policy makers are not sufficiently creating “willing stakeholders” going against Kotter’s Model of Leadership Step 2 (Kotter, 2012).
This approach of direct leadership involvement aligns with a well-established and mostly successful methodology in the IT world, which is receiving increased application in the business areas (at least in America) as well. The methodology I am referring to is known as “Agile Management”.
One of the best-known notions, a core philosophical mantra, of Agile is “Fail fast!”. This goes with what you mention as an important factor: You need to find a way to “allow [mistakes] to be identified”. Best quickly and without hesitation. Approach small increments of change, if it doesn’t work, it fails, you move on. You also check whether you are on track with your stakeholders’ expectations, allowing for “misunderstandings” or discrepancies to be identified quickly. This ongoing, almost symbiotic communication between the developers and the stakeholders, is invaluable in creating efficiency and smooth transitions between old and new. Lastly, if done properly this builds confidence not only in the product, but also into the process, through short-term wins representing Step 6 of Kotter’s model and anchors the change in the culture and with that follows Kotter’s model of change last and final Step 8 (Kotter, 2012).
The bottom-up, small increment approach I feel most definitely is the only reasonable way to provoke change as it has established itself as a sound approach in various settings inside the NHS system and outside. However, I feel an additional component that needs to be considered is the overall paradigm of the drivers and facilitators behind changes in the health care industry. Policy makers still will fulfill their roles and functions, still hold the power, but they might want to consider allowing for greater communication and involvement from the leaders of the industry. The question is, how can you make them feel “not undermined” or side-lined, but rather empowered and provided with an “easier” function by allowing a different group of stakeholders do some of the “grunt” work?
Some of the studies looked at:
Alakeson, V., 2013. The individual as service integrator Experience from the personal health budget pilot in the English NHS. Journal of Integrated Care, 21(4), pp. 188-197.
Betancourt, J.R., Tan-McGrory, A., Kenst, K.S., Phan, T.H. and Lopez, L., 2017. Organizational Change Management For Health Equity: Perspectives From The Disparities Leadership Program. Health Affairs, 36(6), pp. 1095-1101.
Kotter, J.P., 2012. Leading change. Boston, Mass.: Harvard Business Review Press.
Welch, E., Jones, K., Caiels, J., Windle, K. and Bass, R., 2017. Implementing personal health budgets in England: a user-led approach to substance misuse. Health & Social Care in the Community, 25(5), pp. 1634-1643.
Dear Drs. Wainwright and Buckingham,
I read your blog post very carefully. Your observations are a friendly reminder of a global need to reevaluate socialized medicine, healthcare spending and patient involvement. Your call to action about the NHS can be proven useful to many healthcare systems around the globe and even reversed engineered to apply to extreme cases like the US.
Thank you sharing your thoughts,
Savvas