Another excellent ECOHOST seminar this week. Professor Larry Brown, a political scientist from Columbia University in New York, chose a deliberately provocative title: “Why does the US health system not just collapse”. As Larry noted, people have been predicting its collapse for decades yet it still managing to limp on. I stress “limp” because, not only is it ridiculously expensive, but as Ellen Nolte and I have shown, it achieves appalling outcomes, with death rates from chronic diseases (the real test of a modern health care system) about 4 or 5 times worse than in any western European country. In passing, this highlights the rClearly this was a question that many people wanted an answer to – while we are normally delighted if we attract 30 people to our seminars in Russia, in this case there was standing room only, with the audience spilling out into the corridor!
So what is the answer? One reason is that the picture most of us have of the US system, characterised by employer- or individual-funded insurance plans, is really quite misleading. About 15% of the population have no coverage but they are able to receive care (of a sort), mainly from publicly funded facilities. A further 40% of the population receive care through other publicly funded mechanisms, such as Medicaid, Medicare, and the Veteran’s Administration, as well as the S-CHIP plan that covers children that would otherwise be excluded. Thus, a full 45% of health care funding, covering 55% of the population, is from government sources. In other words, the system that we think of has failed, but the state has taken action to pick up the pieces.
However, that is not the whole story. We heard of examples where sophisticated private hospitals had stepped in to help rescue county hospitals facing financial problems, either by direct financial help or by lobbying for local taxes to support them. This seems strange behaviour in what we are led to believe is a competitive market. The reason is, of course, clear. Some of those county hospitals have the greatest experience with trauma and, while the wealthy wouldn’t go there for their hip replacement, they want to know that there is someone with lots of experience if they are unlucky enough to get shot. However, even more importantly, if those county hospitals closed then they would have to do something to help the uninsured, people whom their normal customers pay good money to stay away from (except when they need a gardener or a maid). In other words, the US health system is clearly failing its citizens but it is not being allowed to collapse. What will happen in the future? One person in the audience asked about the proposal by Massachusetts to mandate universal coverage. An interesting idea, but will it be feasible given the enormous costs in the US health care system?
While it was great having so many students from LSHTM present, the people who really need to hear this are some of those advising our Prime Minister, who seem to have some idealised vision of health care across the Atlantic and who seem determined to introduce their distorted vision here. Still, given their ability to hear the same messages as the rest of us but to interpret it in a way that is completely different, maybe it would just be a waste of time.
That leads me nicely to a series of conversations I have been having this week. Patricia Hewitt has confidently predicted that the NHS in England will be in financial balance this year. Maybe it will. Yet maybe that is not the question we should be asking. Rather, will it be in a form that is recognisable. OK, maybe the consequences of present policies won’t become entirely apparent this year, but unless there is a major policy reversal they certainly will in a few years.
The problem is this. For the past few years we have been putting in place a system of hospital financing that is unique internationally in its inflexibility. New developments funded by private finance require the hospital to pay (very) large sums of money for years in the future (mostly 30 years but in a few bizarre cases, for 60 years). Now think how much hospitals have changed even in the past decade. Unfortunately, the contracts are so tightly specified that any changes will be prohibitively expensive. In other words, the costs facing hospitals are to a large degree fixed.
In marked contrast, the new funding system is, in international terms, uniquely volatile and unpredictable. Hospitals will be funded on the basis of the numbers of patients treated (adjusted for their severity and complexity). Sounds simple. Of course, it is not. While lots of countries have such systems in place, none have ever introduced one so quickly, covering such a broad range of patients (from the relatively easy to categorise, such as simple elective surgery, to patients with multiple complex chronic diseases that defy simple categorisation), and with such a high proportion of total cost being variable (100%). Everyone else has introduced it incrementally, and has included lots of safety mechanisms.
The implications of fixed costs and unpredictable income, with both largely outside the control of hospital managers, seem fairly obvious, but clearly not to everyone.
As if that was not enough, the NHS governance systems are struggling to emerge from a wide-ranging reorganisation that has led to the early retirement of many talented staff and the almost complete loss of institutional memory. However, just in case the NHS might be able to survive this situation, a large number of privately owned independent treatment centres are being funded, many benefiting from highly preferential funding packages, in which, in some cases, they don’t even have to do the work they were contracted for to be paid.
The Secretary of State may be right that the overall NHS budget will be balanced by the end of the year but there will be many winners and losers, with specialist services, and in particular children’s and orthopaedic hospitals, the most vulnerable. I cannot help but be reminded of the quotation from a US Army Major in Vietnam after the destruction of the village of Ben Tre - "It became necessary to destroy the village in order to save it." It is difficult to avoid concluding that a similar mind set holds sway in Whitehall.