Radical Reform of the National Health Service in the UK in 2011: Background, Proposals, Prospects, and Lessons for Russia

1
Radical Reform of the National Health Service in
the UK in 2011 Background, Proposals, Prospects,
and Lessons for Russia

• National Research University Higher School of
  Economics
• Masters in Management and Economics of Health
  Services
• Seminar Presentation 21 March 2011

Dr. Christopher Davis Department of Economics and
School of Interdisciplinary Area
Studies University of Oxford
2
Motivations for Medical System Reform

• Control rising cost of medical care, reflected in
  increasing health shares of GDP, driven by ageing
  populations and technological progress
• Improvement in access to medical care and
  reductions in health inequalities
• Improvement of quality of medical care
• Reductions in inefficiencies, duplication in the
  medical system
• Improvements in health outcomes (survival rates,
  raising life expectancy)
• Reducing public dissatisfaction with medical care
  and increasing patients choice of treatment

3
Health Reform Waves 1990-2000s

• Toth (2010) review of reforms in France,
  Germany, Netherlands, New Zealand, Sweden and UK
• Early 1990s Introduce market-style mechanisms,
  greater competition, purchaser-provider split,
  patients choice.
• Mid 1990s Criticism of market mechanisms,
  unclear impact on efficiency but worse equity and
  access. Emphasis on improving integration of
  components of medical system. UK abolishes
  fund-holding and adopts Primary Care Trusts.
• 2000s Emphasis on quality of care and patients
  rights. Patients in NHS can choose provider and
  funds follow.

4
Unexpected Health Reforms During Global Financial
Economic Crisis

• Russia 2008 Priority Health Project and
  Conception of Health RF to 2020
• China 2009 Implementation Plan for the Recent
  Priorities of the Health Care System Reform
  (2009-2011).
• USA 2010 Senate Bill 3590 Patient Protection
  and Affordable Care Act
• UK 2011 Health and Social Care Bill

5
Questions to be Answered

• What are the main problems in the UK health
  system?
• Have past health reforms worked?
• What are the features of the announced 2010-11 UK
  health reforms?
• What are the criticisms of the new health reforms
  and the prospects for their adoption ?

6
Structure of Presentation

• Concepts used in Analysis of Health Reforms
• Health in Political and Economic Systems
• Governance in Health Systems
• Health Production and Health Outcomes
• Priority of the Health Sector and Health
  Financing
• Measurement of Health System Coverage of
  Population, Benefits and Cost-Sharing
• Sources of Data
• Principles and Development of the UK NHS
• Health Reforms in UK and Russia 1990-2010
• 2010-11 Proposals for Radical Reform of the UK
  NHS and Criticisms of Them

7
Political System, State Priorities and Health

• Importance of politics in health reform
• Sheiman Shishkin 2009 After an unsuccessful
  start of the programme of monetization of
  benefits in early 2005 discussion of health
  reform legislation was minimized
  ..Transformations in organization, management and
  financing of the health service were moved to the
  back burner.
• Political system
• influences health sector (State bureaucracy,
  political parties, legislature, interest groups,
  voters, public opinion and expressions of
  discontent)
• State priorities
• influence allocations of resources, protection of
  health sector in a crisis, and degree of
  inequalities

8
Political Actors Influencing Health Reform
9
Governance in Health Services

• Health systems made up of many institutions
  (central and regional government, regulators,
  boards, medical facilities) that need to achieve
  objectives while maintaining standards and
  controlling costs.
• To achieve this requires good governance
  (Strategy, Leadership, Vision, Assurance,
  Probity) 2011 Governing the New NHS
• Governance different from, but related to,
  operational management
• Many UK NHS reforms aimed at improving health
  governance

10
Public Concern about Health in Russia, China, USA
11
Health Sector in an Economic System
12
Health Sector Production Process
13
Impacts of Reforms on Health System Coverage of
Population, Benefits and Cost-Sharing
WHO 2008, Fig. 2.2
14
Sources of Data for Presentation

• Data for Empirical Assessments
• Official Russian sources
• OECD databank and reports
• Data for Diagram of Health Coverage, Benefits and
  Cost-Sharing
• Information about Current UK Health Reforms
• Official documents (White Paper and Parliament
  Bill)
• Think Tanks (Kings Fund, Nuffield Foundation)
• Academic Journals
• Newspapers

15
Empirical Estimation of Trends in Axis Variables
in Health Diagram

• X Axis Coverage of Population ( of population
  covered by a national health service (NHS) or
  health insurance (100 public, mixed
  public-private, or subsidized private)).
  Government statistics and reports. Reliable
  estimation of trends.
• Y Axis Coverage of Benefits ( of potential
  benefits in a country provided to the
  population). Measurement more problematic .
  Identify maximum standard in a country and
  evaluate how provision of the average citizen
  deviated.
•  Z Axis Coverage of Costs ( of health costs
  covered by public sources). Estimates of this
  indicator based on government statistics and
  independent reports. Measurement reliable.

16
Establishment of UK NHS in 1948

• First national health service in democratic
  system not based on insurance. Established in
  July 1948 with principles
• Universal coverage
• Free of direct charge
• General taxation source of finance for NHS
• Pooling of financial risk at centre
• Collective provision
• Promotion of advances in medical science
• Political struggle over the reform
• Government and medical professional in favour of
  reform
• Opposition by Interest groups (hospital doctors,
  GPs, other medical workers, trade unions,
  patients, NGOs)
• Local government opposed to centralisation
• Groups fights to maintain freedom of choice
  (patients have right to choose doctors, doctors
  have right to choose treatments)

17
Compromises and Actual Arrangements in
Establishing the UK NHS

• More a national hospital service than a national
  health service
• Compromises
• Teaching hospitals subordinate to centre whereas
  other hospitals under local government
• Doctors (but not other medical professionals)
  have key management roles
• Local government keeps control of district
  nurses, child welfare, public health
• GPs not salaried or employed by government. Sign
  contracts with Executive Committee run by GPs.
  Paid on capitation basis (related to patient
  list)
• Groups of GPs encouraged but not mandatory
• Private practice by hospital doctors allowed

18
Structure of UK NHS in 1948
19
NHS Developments and Reforms 1948 1980s

• Substantial growth of NHS and quantities of
  services provided
• Significant increase in medical technology in NHS
  and in quality of care
• Continuing increase in the cost of the NHS (HE
  GDP rises from 3.5 to 5.6 )
• Improvements in almost all measures of health
  outcomes (e.g. life expectancy)
• But shortages, queuing, rationing
• Reforms introduced to improve performance
• 1950 73 Technocratic change (planning,
  management)
• 1974 Unification/integration, Regional Health
  Authorities, Community Care Councils
• 1982 Introduce general management, outsourcing
  (contracting out to private sector of
  non-essential services)

20
UK Elections, Parties in Power and Health
Reforms 1945-1989
21
Structure of UK NHS 1974 and 1982
22
Comparison of the UK and USSR NHS in the 1980s
Davis 1990
23
Performance of the UK and USSR NHS

• Davis 1990 chapter in Social Policy Review
• Rising demand for medical care
• Successful cost containment in both countries
  1984 The Painful Prescription
• Shortages in both health services, but more acute
  in USSR
• Pervasive rationing of medical care in both
  health services
• UK lags behind most EC countries in availability
  of medical technology (71 average MRI), but is
  substantially more advanced than USSR
• Almost all health outcome indicators better in UK
  than in USSR

24
Russia Health System Coverage of Population,
Benefits and Costs in 1990
25
Male Life Expectancy 1980-2008 UK, USA, China,
Russia
26
Objectives of Health Reforms in UK

• Control cost of medical care
• Improve efficiency so that health spending has
  greater impact
• Reduce bureaucracy, strengthen purchaser-provider
  split, increase competition
• Devolve decision making and resource allocation
  to consortia of GPs
• Give patients greater choice of treatment paths

27
Health Reforms in the UK in the 1990s

• 1990 NHS and Community Care Act of Conservative
  government
• 1991 Introduction of the internal market.
  Purchaser-provider split. Two models of
  purchasing health authorities and GP fundholders
  (non-urgent elective and community care for
  patients).
• 1994 Total Purchasing Pilot Scheme allows GPs to
  commission all services
• 1997 GP fundholders abolished in favour of
  Primary Care Groups and Trusts (PCG, PCT) that
  maintain Purchaser-Provider split

28
UK Elections, Parties in Power and Health
Reforms 1990-2010
29
Evolution of Purchaser-Provider Relationships in
UK NHS
30
Purchaser-Provider Arrangements in the UK NHS in
the 1990s
31
Health Reforms in Russia 1990-2008

• 1991-1993 Introduction of CMI and other health
  reforms
• Deterioration of economic performance, weak
  state, over-ambition means most health reforms
  fail in 1990s
• In 2000s more emphasis on health education,
  prevention
• Intensified reforms related to management and
  incentives in the medical system
• Improvements of CMI system
• Adoption of Federal Goal Programs in health for
  2002-06 to supplement normal activities
• Priority National Project in Health 2006-10
• Adoption in December 2008 of Conception of Health
  RF to 2020
• Real health expenditures from state budget, CMI
  and private sector increase substantially

32
Medical Systems in China, USA, Russia, UK
33
Russia Health System Coverage of Population,
Benefits and Costs in 1990, 2007
34
Male Life Expectancy 1980-2008 UK, USA, China,
Russia
35
Population 142 million Area 17 million ??2
Birth Rate 11.3 per 1,000 Crude Death Rate
14.6 per 1,000
1
36
Russia Health System Coverage of Population,
Benefits and Costs in 2007, 2020
37
Developments of Health in the UKin the 2000s

• In 2002 Phasing out of Health Authorities, move
  to 152 PCTs with ave pop of 300,000 and
  responsibility for 80 b (80 NHS)
• 2004 new form of commissioning Practice-Based
  Commissioning (PBC) GP practices given
  indicative budget by PCT and encouraged to make
  savings while achieving quality targets
• 2007 World Class Commissioning. Set standards for
  PCTs and PBCs

38
UK NHS Structure Late 2000s
39
2010 UK NHS Governance
40
Patient Contacts in NHS
41
NHS Expenditure Early 2000s
42
Primary Care Trusts

• 300 (reduced to 150) Primary Care Trusts are
  subordinate to the Strategic Health Authority and
  represent the local Primary Care community (GPs,
  dentists, public health).
• Objectives are to improve the health of the
  community, engage in partnership work and
  community-based health and care initiatives,
  implement population screening programmes,
  develop and integrate family health services,
  medical (primary care), dental and optical
• Have assumed responsibility from district health
  authorities of commissioning (purchasing) of
  community, secondary care and tertiary/specialised
  services
• Also responsible for mental health, emergency
  ambulance and patient transport services, NHS
  Direct and walk-in centres

43
NHS Trusts and Foundation Trusts

• NHS Hospital Trusts
• Hospital trusts subordinate to Strategic Health
  Authorities and need to satisfy annual
  accountability agreements
• More freedom of activities than previously
• Provide services to PCTs
• Must satisfy standards set by Care Quality
  Commission
• Foundation Trusts
• NHS Trusts that are promoted by Monitor because
  they satisfy stringent criteria concerning
  financial viability
• Greater autonomy in medical and financial
  activities
• Provide medical services to PCTs in accordance
  with contracts
• Must satisfy Monitor and Care Quality Commission

44
Foundation Trusts
45
Monitor

• Monitory established in 2004. Executive
  non-departmental public body
• Oversees performance of NHS Trusts (primarily on
  financial grounds) and grants selected ones
  licences to operate as Foundation Trusts.
• Has sole responsibility for overseeing Foundation
  Trusts to ensure their financial viability while
  maintaining agreed safety and medical quality
  standards
• Assigns each FT risk ratings on an annual basis,
  which influences detail of supervision
• Can intervene to direct activities of failing FTs

46
NICE

• In 1999 National Institute for Clinical
  Excellence established to provide information to
  patients, the public and medical professionals on
  evidence-based practice in the prevention and
  treatment of illness. Carried out
  cost-effectiveness studies of diagnostics,
  medicines, medical devices, clinical management
  of illnesses, and public health interventions.
• In 2005 old NICE merged with Health Development
  Agency to form the National Institute for Health
  and Clinical Excellence, but has kept the acronym
  NICE.
• Produces clinical guidelines concerning
  treatment, appraisal guidance on drugs and
  techniques, and guidance on safety and efficacy
  of curative and preventive interventions.
• Developing 150 new standards of treatment for
  specific diseases that will be used in National
  Service Frameworks

47
Care Quality Commission (CQC)

• In 2009 CQC established as new super-regulator
  to supervise and inspect the quality of all
  providers of secondary/tertiary medical care and
  social care
• Ensures that all organisations adhere to detailed
  Essential Standards.
• Promotes achievement of outcome measures.
• Rates the performance of NHS Hospital Trusts

48
UK Total Health Expenditure as of GDP 1980 -
2008
49
Health Expenditure Shares of GDP in International
Perspective
UK
Russia
50
Economic Significance of Health Sectors in UK
and Russia
51
Mortality and Life Expectancy China, USA,
Russia, UK
52
UK Health System Coverage of Population, Benefits
and Costs in 1990, 2007
53
Parliamentary Report on Commissioning
(Purchasing) in the UK NHS in March 2010
54
Conclusions from House of Commons March 2010
Report on Commissioning

• Expensive rise in share of NHS administration
  from 5 pre-reform to 14 (lack of
  transparency)
• PCTs lack necessary skills (analysis, clinical
  knowledge, management), do ineffective job in
  commissioning
• Weaknesses of PCTs force them to make extensive
  use of expensive outside consultants
• PCTs remain weak relative to providers and do not
  insist on hospitals using evidence-based
  procedures
• Adversarial system without benefits. After 20
  years of costly failure, the purchaser/provider
  split may need to be abolished.

55
Pre-Election 2010 Proposals for Change in NHS
Structure
56
Parliamentary Election, July 2010 White Paper,
December 2010 Health Reform Bill

• May 2010 parliamentary elections in UK. A
  government formed from a coalition of
  Conservative and Liberal Democrat parties.
• Neither party had radical reform of the NHS in
  its election manifesto
• July 2010 government published White Paper on
  Equity and Excellence Liberating the NHS
• Proposes radical reforms to organisation and
  functioning of the NHS

57
Health and Social Care Bill January 2011

• Abolish all 150 Primary Care Trusts and 10
  Strategic Health Authorities
• Establish GP Commissioning Consortia
• GP practices to continue to offer community based
  services as independent contractors
• But groups of GPs to form Commissioning Consortia
  that will be NHS organisations and to be given
  70-80 billion to purchase services
• Create new NHS Commissioning Board
• All NHS Hospital Trusts will become Foundation
  Trusts and be regulated by Monitor according to
  financial criteria

58
Proposed Changes in NHS Governance 2011
59
White Paper and Parliament Bill Proposals for
2013 NHS Governance
60
Political Actors Influencing 2011 Health Reform
Coalition government proposes radical reforms
Shadow government strongly opposed to reforms
Conservative party in favour, labour opposed, and
Liberal Democrats divided over reforms
Almost all comments from non-governmental groups
hostile to reforms
Many professionals within HS critical of reforms
61
Opposition in Parliament and Among Members of
Political Parties

• Labour Party official position is strong
  opposition to the radical health reforms. All
  relevant members of the shadow government have
  publicly criticised the proposals and members of
  the parliamentary party will vote against it.
• Liberal Democrat party is divided. 12 March 2011
  LD party conference supported resolution
  condemning the reforms and putting forward
  alternative proposals (restrict power of GP
  consortia, limit private sector involvement,
  reduce use of market mechanisms)

62
Coverage of Health Reforms in Media

• Most recent television reports and articles in
  printed media have been critical of the health
  reforms
• 7 March The non-national health service
• 10 March Lib-Dems from top to bottom are in
  revolt over NHS reforms
• 15 March Doctors gunning for Lansley over
  reforms
• 20 March David Cameron's health reforms risk
  destroying the NHS, says Tory doctor

63
Opposition by Groups of Medical Professionals

• 15 March Special Conference of British Medical
  Association to discuss reforms. Almost all
  motions before conference are negative.
• Most doctors opposed to reform and believe it
  will result in a worsening of the quality of
  patient care and increased inequality
• 7 March Chairman of BMA Consultants Committee
  argues that reforms will damage management of the
  NHS, waste resources, and give the private sector
  the most lucrative components of treatment, with
  the NHS responsible for the unprofitable residual
  care

64
David Cameron's health reforms risk destroying
the NHS GP in Conservative Party

• "It is one thing to rapidly dismantle the entire
  middle layer of NHS management but it is
  completely unrealistic to assume that this vast
  organisation can be managed by a Commissioning
  Board in London with nothing in between it and
  several hundred inexperienced commissioning
  consortia.
• New commissioning consortia are "doomed to fail
  and will have to hand over their commissioning to
  the private sector".
• An organisation responsible for 100 billion
  needs people who seriously understand accountancy
  and, trust me, GPs do not.
• "It is no use 'liberating' the NHS from top down
  political control only to shackle it to an
  unelected economic regulator. If Monitor, the new
  regulator, is filled with competition economists
  with a zeal for imposing competition at every
  opportunity, then the NHS could be changed beyond
  recognition.

65
Critical Analyses of Health Reform Proposals by
Think Tanks (Nuffield, Kings Fund)

• Financial environment of reforms
• Tight constraints on real health spending in NHS.
  PCTs facing 2 cuts in real health spending. Need
  efficiency savings of 20 billion 2011-14.
• UK health spending (8.7 GDP) low by OECD
  standards.
• Difficult to keep financial control during time
  of reorganisation
• Reforms require better management, but overall
  NHS target of 45 cut in management costs over
  next several years.
• GP Consortia
• Past experience with GP fund-holding reveals many
  deficiencies. Years needed to develop necessary
  expertise. GP Consortia wont have necessary
  competence in commissioning and planning.
• GP Consortia should be subjected to same critical
  evaluation as NHS Trusts currently receive.
  Should have to prove themselves.
• Need safeguards to prevent conflicts of interests
  of GP Consortia

66
Critical Analyses II

• NHS Commissioning Board
• New Board will play important role. Will be able
  to intervene in work of GP Consortia.
• But lack of clarity of functions and
  accountability of Board. Experience from New
  Zealand reforms not positive.
• Unclear if Board can ensure high standards in
  both GP commissioning and provision of medical
  care.
• Abolition of Strategic Health Authority
• Huge reorganisation will distract management and
  entail substantial additional costs
• Will result in loss of experience leadership with
  long-term vision because not many managers will
  transfer to GP Consortia
• NICE
• New freedoms to GP Consortia raise possibility
  that they will not adhere to standards developed
  by NICE
• Conservative government not supportive of
  quasi-governmental organisations

67
Conclusions

• UK NHS has been performing well over past several
  decades given tight financial constraints
• NHS has been subjected to many reforms, not all
  of which have been successful
• New radical health reforms promise to reduce
  bureaucracy, improving efficiency and quality of
  care, providing more choice for patients
• But most independent analysts highly critical or
  reforms and most political forces against it
• Modified version of bill is likely to be adopted,
  but the reforms will not deliver promised results