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

R.G.Bevan@lse.ac.uk

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 R.G.Bevan@lse.ac.uk

* Bevan & van de Ven (2010). Choice of providers & Mutual Healthcare Purchasers: can the English NHS learn from the Dutch reforms? Health Economics, Policy & Law