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Can the English National Health Service learn from the Dutch reforms?
Meeting the medium term challenge of the financing of health & aged care in England
27 January 2011 The Royal Society, London
Gwyn BevanDepartment of Management, LSE
Objectives of health care reforms in OECD countries*
2. Cost control: rationing & expenditure caps
1. Equity: access by need not ability to pay
3. Performance: incentives & competition
* Cutler (2002) Equality, Efficiency, & Market Fundamentals: The Dynamics of International Medical-Care Reform. Journal of Economic Literature.
UK from 1990s
Law of requisite variety: 3 goals 3 instruments
Cost control
Equity
Performance
NHS 1980s: 3 goals & 2 instruments
Health authorities run providers
Above target income: cuts not ‘efficiency’ savings
Below target income: no ‘efficiency’ savings
‘Efficiency’ savings
Cost control: fixed total budget
Formula funding equitable allocations
From 1991: purchaser / provider3 goals & 3 instruments
Purchasers
Private providers
NHS providers
Efficiency by competition
Cost control: fixed total budget
Formula funding equitable allocations
Internal market (1989 -97): Design*
Purchaser / Provider Provider competition
‘money follows the patient’
Selective contracting health authorities GP fundholders (no patient choice)
*Working for Patients
Internal market (1989 -97): Impact
Le Grand (1999)* Little evidence of change Incentives too weak & constraints
too strong
Tuohy (1999)** NHS logic
Ministerial accountability Collegial decision making Poor information on prices & quality
* Le Grand (1999) Competition, cooperation, or control? Health Affairs** Tuohy (1999) Accidental Logics. Oxford University Press
Patient choice & competition (2006 - 10): Design*
Provider competition ‘money follows the patient’ (PbR) standard tariff: quality competition
Selective contracting Primary Care Trusts World Class Commissioning
Patient choice Provider diversity
Foundation Trusts & Independent Sector Treatment Centres
*Delivering the NHS Plan
Patient choice & competition (2006 - 10): Impact
Failure to create functioning market* political interference weak purchasers barriers to exit &
entry changing policies reorganisations
No
* Brereton & Vasoodaven (2010) http://www.civitas.org.uk/nhs/download/Civitas_LiteratureReview_NHS_market_Feb10.pdf
Impact both NHS markets? Overview of literature*
No good evidence reforms produced beneficial outcomes classical economic theory predicts of marketsprovider responsiveness to patients &
purchasers large-scale cost reduction innovation in service provision
NHS incurs transaction costs of market without benefits?
* Brereton & Vasoodaven (2010) http://www.civitas.org.uk/nhs/download/Civitas_LiteratureReview_NHS_market_Feb10.pdf
NHS from 2010?
We will stop the top--down reorganisations of the NHS that have got in the way of patient care
If reorganisation of purchasers is the answer …
0
100
200
300
400
500
91-94 94-97 97-01 01-05 05-11 11-13 13-?
GP Authority
Population ('000s)
Liberating the NHS: Objectives?*
NHS commissioning board Steering not rowing?
GP Consortia GPs involved in shaping services?
Independent providers Choice & managed competition?
Reorganisation Evolution not revolution?
* Equity and excellence: Liberating the NHS
Reflections: 20 years ofmarket reforms
The Netherlands
1 agreed policy Dutch procession of
Echternach
MHP competition as yet little selective
contracting
Model exported Germany &
Switzerland
England
5 blitzkriegs (SW1) army of occupation in
hostile territory?*
Provider competition limited impact
Model abandoned New Zealand,
Scotland & Wales*Shock (1994) Medicine at the centre of the nation’s affairs, BMJ
Going Dutch: Provider Purchaser competition?
Mutual Healthcare Purchasers (MHPs)
PCT clusters
Efficiency by purchaser competition &selective contracting /integration
Cost control: fixed total budget
Risk-adjusted funding equitable allocations
Mutual Healthcare Purchasers (MHPs)
Plurality PCTs / GP consortia Insurers? Foundation Trusts?
Define catchment areas Guarantee duty of care Selectively contract / integrate
Explicit insurance contract Choice of packages
Restrict choice? Charges?
NHS Commissioning Board: Regulation of MHPs
Entry key competences & duty of quality
Competition sufficient numbers & information
Equity funding & open enrolment
Insurance solvency & transparency
Can the English National Health Service learn from the Dutch reforms?*
Thank youGwyn Bevan
Department of Management, LSE [email protected]
* Bevan & van de Ven (2010). Choice of providers & Mutual Healthcare Purchasers: can the English NHS learn from the Dutch reforms? Health Economics, Policy & Law
