Tuesday, 5 April 2011

Cost controls in the new NHS


At a recent event I went to at the Kings Fund, Al Mulley, the Director for Health Care Delivery Science at Dartmouth College made two points that caught my attention.

The first was that the Health Bill does not answer the key challenge that faces healthcare systems around the world, namely that of allocative efficiency. The second point he made was that the method of delivery of healthcare does not matter, what matters is how that system influences the decision making of the professionals who deliver the healthcare. These are related points, but they are worth dealing with in turn.

The principle of allocative efficiency is a relatively simple one: it is a statement that the use of resources is at a level of efficiency which means that you cannot increase one person’s level of benefit (or utility) without decreasing another’s. That is, the system is getting the biggest bang for its buck. Now Al Mulley is suggesting that whatever Lansley’s reasons are for introducing the health bill, they are not going to make the service more efficient in distributing its resources. He didn’t state his reasons for this belief (at least not that I recall) but this viewpoint made me wonder therefore, how do the reforms of the Health Bill seek to control costs?

The answer would seem to be that this becomes the responsibility of GPs; after all, if costs are to be contained, then it will be the work of the people who control most of the budget to make this happen, and we all know who that is. GPs therefore, have been recruited to control costs, but this automatically leads to a second question: how are GPs qualified to control budgets and limiting expenditure?

My answer is that they appear to be amply qualified - afterall, the skill set of the GP is about managing patients over the long term, and living with uncertainty. The perspective of the GP is that the majority of people are OK, and any nasty disease process will reveal itself through a process of watchful waiting. This compares starkly with the viewpoint of hospital physicians, who only see the subset of patients who have become acutely unwell, or have been selected out by the GPs, and therefore investigate and manage their patients aggressively (and expensively).

The two ends of this spectrum translate into two different attitudes to dealing with patients: the watchful waiting of the GP and the aggressive investigation of the hospital physician. This is, of course, a caricature, but bear with me, because we now come on to Al Mulley’s second point which is that what really defines a health system is the decision making that results from the doctors working within it.

My argument today, is that by devolving the budget for healthcare to GPs, we have created a healthcare system that will instill in its doctors the attitude of fiscal control by waiting for pathology to reveal itself. With GPs holding the ring on budgets, the clearest way to maintain financial control is to reduce referral rates. This is a much simpler mechanism than instituting new care pathways to manage chronic disease, and does not rely on the perpetuation of expensive acute hospital trusts. The provision of acute and elective services can be left open to market forces, and will not rely on maintaining the number of acute trusts that we currently have: private organisations will provide most routine care, and the high risk stuff will that no one wants to do will be mopped up by centrally-funded, regional centres. This however, will be worth it, because two thirds of NHS money is spent on staff, and as soon as market forces apply, wage pressures develop.

We all know that market forces are good at controlling costs, but they are not good at delivering equitable health care. The losers in these systems are the sick, the poor and the under educated, and what chance do they have of being heard?

The goal therefore, is not a patient-focused health care service, but a cost-controlled one, and it is possible, just possible that Andrew Lansley has hit upon a brilliantly simple and effective means of carrying this out, and it is not his voters who are likely to lose out from it.

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