Sunday, 28 December 2014

Thoughts on NHS finances - and why some doctors don't like privatisation


I've felt for a long while that there is something of a problem with the distribution of money within 'Our NHS' (this is, I understand, the official and approved title of the august organisation). Some of this is down to the pseudo-market created and elaborated upon by governments since the 1980s - the idea that instead of people making choices in a free system we use a proxy of commissioning. But another problem is that the money flows to the producer of healthcare (primarily doctors and senior administrators) rather than to benefit the consumers of healthcare (patients and their families).

This isn't to say that doctors should be paid less. I'm sure, like me, you're pretty cool about the way in which the high status and high income associated with medicine attracts the very brightest young people. Not because they are especially caring or sharing but because medicine offers the best rewards.

So it's clear that becoming a doctor is, at least partly, driven by the prospect of that high status and high income. And, like you dear reader, I have no problem with this (any more than I have a problem with the best and brightest being incentivised to go into other important work by that same high status and high income offer) but it carries a risk where the level of that remuneration is under the control - wholly or partly - of the particular high status, high income group.

And this, quite simply, is the problem with putting doctors in charge of the NHS. It remains in this groups interest to maintain, indeed enhance, the status and income of the group. Again I'm not making doctors out to be ghastly mercenary exploiters merely suggesting that they will always behave as any group behaves - in their own interests. Much of the time this is not a problem - the high status, high income stuff means we get better doctors clearly something that us patients desire. But the problem comes when the choice is between specific care and the remuneration of doctors.

Over the past year I've sat on Bradford's Health and Wellbeing Board and have tried to get my head around the way in which the budgets for health operate. We read about different parts of the NHS system 'making a loss' or 'overspending' but never ask how this is so given the nature of the system. I recall having a conversation with a senior council officer about this problem. Essentially the pseudo-market requires 'commissioners' to guess how much of a given type of health care is going to be needed. Obviously, for elective care this can be rationed - once we've used up the 100 knee operations the next patient has to wait until the next period for his op.

For non-elective healthcare the problem is that the commissioner has to contract for enough geriatric care, cancer treatment and emergency heart operations to meet the actual need. And this mean commissioning more rather than less. So every time - up to the number commissioned - a patient arrives at the hospital there's a big 'kerching' sound. The problem comes when the commissioners guess is wrong - either too many or too few patients access the service. If too many the commissioning body (currently 'clinical commissioning groups') has an overspend and if too few the hospital makes a loss because it has set on doctors, nurses, beds and so forth to meet the commissioner's guess.

If you're a doctor in a hospital - typically these days a Foundation Trust - then you want the hospital to do more very predictable and controllable elective surgery so as to protect from the financial unpredictability of emergency medicine. But if you're a doctor in general practice you want more of those knee operations and hip replacements for the money you've got to spend on them. And using general hospitals for this work therefore makes less sense - far better to pay efficient specialist (often private) organisations to do the elective surgery. You may call this 'privatisation' but it is clearly intended under the pseudo-market that more of this commissioning will be used - good news for patients wanting hip replacements, great news for the surgeons who do those hip operations and pretty good news for GP-led commissioning groups.

But if you're an oncologist working in a general hospital (or for that matter a doctor in accident and emergency) this 'privatisation' is bad news because it means less money coming into your hospital but little or no change in the numbers of patients. To add insult to injury those surgeons doing the elective surgery are earning fatter wages for doing (however efficiently) a repeated and routine operation. The hospital doctor (assuming he doesn't have a lucrative private practice) looks at the world, sees his peers getting fatter pay packets for a nine-to-five job in the private sector and wonders what he did wrong.

The responses to this disgruntlement vary. Some doctors swallow their pride and switch to the private sector, others focus on specialisation in the anticipation of building a private practice and a third lot get all political and oppose 'privatisation'. Even though the evidence seems to suggest that we get slightly better health outcomes from a mixed economy in healthcare. And it is absolutely in the interests of those hospital doctors to oppose privatisation because under the pseudo-market the big bucks are rewarding efficiency rather than skills or expertise. Because the private sector saves the commissioners money, the owners of those businesses are prepared to pay lots of money to doctors (and other health professionals) who can allow them to remove more cataracts, do more hernia operations and fix more knees.

All of which brings us back to those incentives. If we're right and the high status, high income thing matters then perhaps we should worry about a system that rewards doctors performing routine operations efficiently rather than doctors who manage more complicated care such as treating cancers. But the answer here isn't necessarily to simply oppose 'privatisation' but to create a market in those skills needed to provide complex surgery and multi-faceted care.

Much of our debate about healthcare is useless. Instead of asking how we will meet the demand created by an ageing population while continuing to innovate what we do is shout pathetic slogans at each other and make gushing pledges of loyalty to 'Our NHS'. It seems to me that the current financial system within the NHS privileges some doctors but not others and similarly rewards cost efficiency in medicine better than it does innovation and skill.

Currently about 80% of the NHS budget is spent in the acute sector - mostly by general hospitals and mostly on paying the staff of those hospitals. The problem is that the people spending this money (by doing whatever medical thing it is they do) in the hospitals have little say over how it is distributed with the result that there are places filled with sexy medical gizmos and gadgets while other places are making do with old - even jerry built - equipment and too few staff.

I'll be honest here and say that I don't know the answer. However, I also feel - with some good evidential support - that further liberalisation and a slightly less pseudo pseudo-market remains the right way to go. Not because I want to 'sell off the NHS to the highest bidder' but because we need to find a better way than central planning to manage the flow of money through the health system. I also feel that the commissioning of places rather than people sits right at the heart of the problem - we buy services from a big Foundation Trust not from a doctor or group of doctors. Yet it's the doctors' expertise that is central to the health care us patients demand.



Anonymous said...

"So it's clear that becoming a [...] is, at least partly, driven by the prospect of that high status and high income. [...] but it carries a risk where the level of that remuneration is under the control - wholly or partly - of the particular high status, high income group."

I am reminded of some job where this actually DOES exist... can't remember what the job actually is... not many do it, less than a thousand... but... oh, dang, the job-title has skipped my mind. Sorry.


Radical Rodent

MalcolmCog said...

I just happened to be talking this afternoon to a Doctor that ran an A&E department in the 1970s and early 1980s he said, for example, the daily number of broken wrists was 1 or 2. In the winter of of 1978/9 it went to 30. He dealt with that by having a nurse asses the injury, confirmed broken was treated by the fracture nurse followed by the setting nurse with plaster of paris. not certain/complex went for an an xray, and the confirmed were also sent for an xray. the patients waited while their casts set, and about the same time the xrays returned, confirming the break/fix. A sort of production line of breakages.