12th March: Ljubljana

Slovenia will have a general election in September. Health care is rising rapidly on the political agenda, largely because of the high share (about a third) of health expenditure now being paid directly. The Slovenian health financing system has a large co-payment element, which many people cover through complementary insurance but others pay out of pocket (See HiT profile).

I was invited to talk about the roles of planning and markets in health care, with particular reference to the UK. My host was the Friedrich Ebert Stiftung, a German foundation that supports dialogue on public policy issues.

The starting point was that markets have clearly delivered many benefits. No-one now would want to go back to the centrally planned system for distributing food in the Soviet Union. The question is whether the conditions for markets to operate apply in health care? Another issue to consider is the differing goals of the various actors. Governments seek to improve the health of their populations, to respond to their legitimate needs, and to do so fairly (or at least they should – this is the WHO definition). Private companies are legally obliged to maximise the returns to their shareholders. These goals may overlap, but it is unlikely that they will overlap completely.

Health care is not a commodity like baked beans, apples, or widgets. It has certain features that make it special. Many people who need care don’t realise it. Even if they know they need something, they may not know what. They are easy prey for unscrupulous providers. This is what we call information asymmetry. It is not only people who are ill who have an interest in being treated. The rest of us also have an interest. This is obvious where they are suffering from infectious diseases, which may infect us, or mental health problems that may lead them to harm us. But simple concern for others also leads us to want to see their suffering relieved – what we call externalities.

Then there is the changing nature of disease. Markets are fine where the transactions are simple, as was once the case in medicine, where an individual patient would go for a single visit to a doctor, who would make a diagnosis (often wrong) and prescribe treatment (often ineffective). The patient either got better or died. The situation now is quite different. A typical older patient may have arthritis, Parkinsons Disease, heart failure, bronchitis, diabetes, and depression. They go to their family doctor. They are then referred to a series of medical specialists, nurses, other health professionals, all working together in a network, collaborating with each other. They receive multiple powerful and effective medicines, all of which are affected by their organ function and by the other drugs they are taking (which will never have been evaluated in combination). They remain under continuing review for the remainder of their now active and fully engaged life. This is seriously complex and someone has to manage it. Unsurprisingly, private providers will run a mile from patients like this. Instead they concentrate on straightforward non-urgent surgery, where the costs are largely predictable, and if they do venture into chronic disease management, they select those people who only have one disease and are otherwise healthy. The public sector picks up the rest – what we call cream-skimming.

But does this matter, as long as everyone can get treatment somewhere? It can do. Think of situation where a family is injured in a high speed car crash. They arrive at an emergency department. There is no paediatric service – it has been moved into the community. Their eye injuries cannot be treated as the ophthalmologists have been relocated to an independent treatment centre to concentrate on waiting lists for cataracts. The complex hip fracture cannot be treated, because the orthopaedic surgeons have been relocated to an independent treatment centre to concentrate on waiting lists for knee replacements. There is no microbiologist to speak to about the wound infection because the service has been privatised and moved 200 km away.
However, perhaps the greatest challenge relates to preparing for the future. As Donald Rumsfeld famously said “there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns, the ones we don’t know we don’t know. And … it is the latter category that tend to be the difficult ones.” So when we are thinking about the competing strengths of public and private provision, a key issue must be which allows more flexibility to adapt to future challenges. Then there are the things that we can predict, such as the need to train the next generation of health professionals and the need to engage in research and development to generate new knowledge. Again, we need to ask which is better at investing in these future needs.

Taken with the conventional questions such as value for money, this then gives us a framework for looking at two of the developments that have taken place in the UK, the Private Financing Initiative (PFI) (as a means of funding new hospitals) and Independent Sector Treatment Centres.

It is now apparent to all but the most ideologically driven commentators that the UK PFI scheme has been a failure. Allyson Pollock has provided most of the evidence in a series of papers, in the process exposing herself to vicious personal attacks from the supporters of PFI (or in some cases from backbench Members of Parliament who probably never understood the issues but were doing what they thought might be appreciated as they sought to advance their careers). She has shown how the procurement process is expensive, complicated, and prolonged. One result is that several projects have been abandoned at an advanced stage, wasting millions of pounds. Several of the hospitals that have been completed have suffered major quality problems. However, for us the real problem is the inflexibility (see our paper in the Bulletin of the WHO). Because the contracts are negotiated in so much detail, it is virtually impossible to change the specifications, even though we know that the nature of health care is changing rapidly. One example is the ratio of operating theatres to beds. With short acting anaesthetics and minimally invasive surgery we need more of the former and less of the latter. Yet some recently completed hospitals (including one close to where I work) are already obsolete in his respect by the time they open. The accompanying picture illustrates the problem. Given the declining need for beds, a newly built hospital now may have too few (an example is the now notorious Norfolk and Norwich hospital PFI scheme). However, in 30 years time it will have too many. The situation is worse for schools. There are now quite a few examples of schools built under the PFI scheme that are now surplus because of falling birth rates (see article in the Guardian). Yet the local governments still have to pay for them to be maintained for the next 30 years, at a cost of millions of pounds each.

The Independent Sector Treatment Centres raise different issues. Here the evidence is rather less, largely because they have consistently failed to supply the data that were required from them. Consequently, a cartoon accompanying one of Allyson Pollock’s paper in a recent issue of the BMJ compared them to a black hole, with money and patients being swept into them but no idea what happened afterwards. One problem is cream-skimming. They only take the straightforward cases, leaving the NHS to look after the rest. Yet bizarrely, give the lower costs that result, the government pays them 11% more per case! (and this is on top of various other subsidies plus a guarantee to buy back the premises at the end of the contract). It then doesn’t even check whether they have performed all the procedures they have been paid for – a reasonable estimate is that they have performed about 70% of the contracted work but of course they received 100% of the payment.

Now I am not saying that markets have no place in health care. Of course they do. All that we have to do is ask whether, in a particular set of circumstances, the prerequisites for a market exist and then whether it will actually deliver what it promises. Fortunately, I don’t have to answer that question for the Slovenian population!

Footnote 1: Credit where credit is due. On Tuesday evening I passed through Terminal 2 at Heathrow. This is normally a deeply unpleasant experience, reminiscent of Douglas Adams’ comment about being drunk, as experienced by a glass of water. Amazingly, I got through security in only a few minutes because there was a security supervisor who was actually managing the process. No-one should underestimate the importance of this development. Could it be that the executives of the British Airports Authority have finally realised that they are meant to be managing an airport, rather than a shopping mall? Somehow I doubt it. Terminal 5 opens in a few weeks and we already know there will only be enough seats for about two jumbo jets’ worth of passengers, presumably with the intention of forcing people wanting a seat to buy food and drink from the many commercial outlets. No. I suspect that this was just an individual who takes pride in his job. I fear he won’t last long.

Footnote 2: I returned through Terminal 2 at Frankfurt. A 20 minute queue to get through security, having been screened only 90 minutes earlier at Ljubljana. It’s close, but in the competition to become the most incompetent airport operator, Frankfurt seems to be drawing ahead.

6th March: Brussels

In June, WHO is organising a ministerial conference on health systems in Tallinn, Estonia. The theme is “Health Systems, Health and Wealth”. The concept underpinning the conference is that all three are mutually linked. Health systems can contribute to better health and to economic growth. Better health reduces the burden on health systems while supporting wealth (economic growth). Wealthier populations are healthier and can afford better health systems. The challenge is to create virtuous circles in which each reinforces the other.


The European Observatory is producing the background material for the conference. This includes a set of policy briefs and two books, one on health system performance, edited by Peter Smith and Elias Mossialos, and one on Health Systems, Health and Wealth, edited by Josep Figueras, Nata Menabde and myself. We were in Brussels for a workshop with the authors of our book.
Many of the elements are already there. Marc Suhrcke, Lorenzo Rocco and I have now published extensively on the contribution that good health makes to economic growth through greater productivity and higher labour force participation. Ellen Nolte and I have shown, in our work on avoidable mortality, how health systems contribute substantially to better health (unless, as in the case of the US system, they are highly dysfunctional – see blog entry of 8th January 2008). The challenge is to bring it all together.



There are, however, some gaps. Although collectively those of us in the room have a great deal of direct experience of health policy in Europe, it is really difficult to find anyone who has made a comparative study of how health policies are made (or not made). One of my favourite quotations is Bismarck’s saying that “two things should never be made in public, laws and sausages”. It may be that the experience of observing policy being made is so awful that few people want to watch it twice! Whatever the reason, there is a desperate need for politician scientists with a comparative perspective who would like to study European health policy (aspiring PhD students please get in touch).



The book will not, however, just be a rehash of what is already there. One of the most interesting areas is the relationship between the health system and the macroeconomic environment. We are often told about the need to ensure a profitable pharmaceutical industry because of its contribution to the economy. But given finite resources, is this really the best use of money? On the available evidence, the jury is still out. On the other hand, there is growing evidence of other ways in which health systems contribute to the economy. Peter Smith cited evidence from China where, especially in rural areas, the health system has largely collapsed. As a consequence, families are hoarding money as a form of insurance against ill health. This is sucking huge sums out of the economy, with serious macro-economic consequences - a warning, for those who seek to shrink the scope of publicly funded systems.

25th February, Sydney
To Sydney for the annual summit of the Oxford Health Alliance. The Alliance brings together participants from industry, academia, NGOs, and governments to tackle the epidemic of chronic disease. They come from many backgrounds, not just public health but the law, the media, the built environment among others. The message is simple – 3four50:

• 3 risk factors – smoking, poor diet, lack of physical activity, lead to


• 4 diseases – heart disease, type 2 diabetes, lung disease, and many cancers, accounting for


• 50% of deaths in the world.

We were allocated to groups, at tables, and asked to discuss the issues raised in a series of plenary presentations (speeches, panel discussions and video clips). OXHA has always had a strong emphasis on understanding (and changing for the better) the environments that people live in and how they impact on their health. This year we focused on cities where more than half of the world’s population now lives. A key theme, developed in particular by

Tony McMichael, was the issue of sustainability. Too often policies create sick people and sick environments. Greater car use leads to obesity, heart disease and diabetes and pollutes the immediate environment while contributing to global warming.

Of course, even in an audience that is committed to tackling chronic diseases, there is scope for disagreement. One area of contention was about how much evidence is enough. Should we delay calling for action until we have all the evidence? Or should we adopt the precautionary principle, even though we may occasionally be wrong? Those favouring the former highlighted the danger of unintended consequences, while the latter reminded us that that it was many years after the original epidemiological studies before we understood, at the biological level, of how tobacco causes lung cancer but it would have been a disaster if we had waited until we had it before acting to reduce smoking.

My role was two-fold. The first was to speak on a panel on getting evidence into policy, something I have spoken about many times. It was an exceptional panel and I was accompanied by Larry Gostin, Fiona Adshead, and Simon Chapman. You can hear commentary on the session by Richard Smith on the conference web-site (click on the Day 2 pm tag). I was arguing that we need to understand where politicians come from, recognising their personal agendas and trying to find win-win solutions. Yet that does not mean that we should not challenge how the political process works. In recent years there has been an enormous amount of soul searching by researchers about issues such as interpretation of evidence and research fraud. This is entirely justified. Yet the sins of a few researchers pale into insignificance in comparison with much everyday politics.

Unfortunately, few health-related decisions are subject to the scrutiny that we need to understand how they came about. Instead, we need to look for insights from other areas of policy. Our sources are some recent books, such as Anthony Seldon’s biography of Tony Blair. Bob Woodward’s State of Denial, and Carl Unger’s The fall of the house of Bush. These well-referenced books remind us of the importance of personal relationships. Unger shows how many of George W Bush’s policies were driven by his determination to go down in history as a greater president than his father. Woodward describes how the decision to go to war in Iraq took place in a US cabinet where, when Donald Rumsfeld was speaking, Colin Powell ignored him and vice versa, while George W Bush seemed incapable of understanding what either was saying. In the UK, Seldon describes graphically how policy making was dominated by the visceral and mutual hatred of each other by supporters of Tony Blair and Gordon Brown, to the extent that some of their senior advisors would not even sit in the same room. The relation was summed up best by Gordon Brown’s now famous remark to Tony Blair that "There is nothing you could ever say to me that I could ever believe."

It is, however, when we get into the detail of the decision-making process that we can really understand how some politicians understand the concept of evidence. The best described example is, of course, the case for invading Iraq. Here our sources are Woodward and Unger. It is now apparent that the “uranium from Niger” story was manufactured by the Italian security services to ingratiate them with the Americans. The flaws in the story, such as the fact that the French authorities were in complete control of the Niger mining operation and the story required that 500 tons of uranium ore be transferred between ships on the high sea (if not impossible certainly extremely difficult) was conveniently overlooked by the US and UK security services. The mobile chemical weapon factories, later found to be trucks for filling weather balloons with helium, were known to be harmless from the beginning. Interestingly, we now know, from an analysis by Ronan Bennett, that it was not French obstruction that prevented a UN resolution in favour of an invasion of Iraq but rather the role of the Mexican Ambassador to the UN, Adolfo Aguilar Zínser, then on the Security Council, who was the only one not to be taken in by the “intelligence” and to ask serious questions. One was whether there was any correlation between how well hidden weapons were and the speed with which they could be deployed. The admission that this was true suggested some contradiction between the two arguments being made that a) the weapons were so well hidden that they could not be found yet b) they could be made ready within 45 minutes! He was not persuaded, and as a result, neither were the ambassadors of the other undecided countries. At this stage, French support would have been irrelevant. So how was this peer-reviewer rewarded for his diligence in exposing this appalling example of research fraud? The US authorities put pressure on the Mexican government and he was recalled. While of course we need to continue the struggle against fraudulent researchers, we should not let politicians get away with the same crimes.

I did, however, have a second role. OXHA has been at the forefront of exploiting the opportunities offered by the media, thanks to the expertise of an extremely innovative production company, Joose TV. The summits are web cast live and, if you have followed the links above, accompanied by webcast commentaries. In an innovation this year I did a series of interviews with some of the participants: Larry Gostin, Srinath Reddy, Judith Mackay (Bloomberrg Tobacco Initiative), Abdullah Daar (leader of the Grand Challenges project), Claire Lyons (Pepsico Foundation), Viliani Tangi (Health Minister of Tonga), and Christine Hancock (OXHA). You can view them on the 3four50 site.

18th February: Izhevsk, Russia
Not an auspicious start. Shortly after we arrived at Moscow airport it was announced that our Izhavia flight was delayed two hours, then another two hours, and then a few more. Izhavia only has a few planes and several of them were out of order. Our Yak 42 that should have left at 7pm finally took off, in heavy snow, at 3 am. The joys of travel…
We have been working with colleagues in Izhevsk, an industrial city near the Urals, for about 5 years. It was there that we undertook the research showing the major role played by surrogate alcohols (aftershaves, fire lighting liquid and the like) in the Russian mortality crisis. In our earlier work we reported that these substances were drunk regularly by about 8% of working age men and their consumption was very strongly associated with premature death, even after taking account of consumption of other forms of alcohol. There are, of course, a few sceptics who are unconvinced of their importance but the evidence is now overwhelming.
The obvious next step is to do something about this problem. In fact, the Russian government did introduce a package of measures in 2006 that reduced supply of these substances, mainly by making it more difficult to get licences to sell them and the monitoring equipment needed to assess tax on them. Since then, life expectancy has increased markedly although it is still too early to say if it is a direct result of the new legislation or not.
Our current research involves following up those men who were the controls in our earlier study, to see how they have fared since we last spoke to them. We are also inviting them to come for health checks, where we can advise them about problems such as high blood pressure – a major problem in Russia. Those who are drinking heavily are being invited to participate in a randomised controlled trial of motivational interviewing, a brief intervention that has been effective in changing behaviour elsewhere.
By coming back to the same place for several years it is possible to see how things are changing. When we first came to Izhevsk we stayed in a trade union hotel for health workers that had changed little since Soviet days. Like other buildings of the period, no two steps on the stairs were the same height, something that we tend to take for granted in the west. Now we stay in a lovely little hotel that could easily have been transported from Vermont, with its beautiful wood panelling, comfortable bedrooms, incredibly helpful staff, and even WiFi. But it is not the only thing that is changing in the city. This time we got stuck in a traffic jam, something that was previously unimaginable. We heard that there are now quite a few Porsche cars in Izhevsk and there are now some very up-market cafes serving food from around the world. Yet many people still live in the wooden barracks built before WW2. This is definitely a society in transition.
On the way back, I took a brief trip into Moscow to catch up with colleagues at the Open Health Institute. With funding from the Bloomberg tobacco initiative, they have created the Russian Antitobacco Advocacy Coalition (Ataca), something I described a few weeks ago on this blog, following my last trip here. Ataca has already made enormous progress. The Russian government is well on the way to ratifying the Framework Convention on Tobacco Control and a much strengthened law on tobacco advertising has just been passed. There is a long way to go but it is great to see so much happening so quickly.