Efficiency in the National Health Service: lessons from abroad

Health Policy, 9 (1988) 59-74 Elsevier

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HPE 00193

Efficiency in the National Health Service: lessons from abroad

Michael Drummond’ and Alan Maynard*

‘Health Services Management Centre, University of Birmingham, U.K. and 2Centre for Health Economics, University of York, U.K.

Accepted 7 December 1987

Summary

Although the NHS gives relatively good value for money when compared to other countries’ health care systems, there are managerial initiatives from abroad that could potentially increase NHS efficiency. However, there is currently very little systematic evaluation of the impact of managerial interventions in terms of their benefits and costs. This paper considers four areas of current policy interest (evaluation of new medical technologies, quality assurance, primary health care and the public/private mix), reviews experience abroad and outlines how promising initiatives could be evaluated in the NHS setting. It is argued that if lessons are to be learned about the efficient management of the NHS from abroad or not, there needs to be more systematic evaluation of managerial interventions along the lines commonly proposed for clinical interventions.

Health economics; Health services management; Health technology assessment; Quality assurance; Public-private mix; Cost-effectiveness analysis

1. Introduction

There is much to admire in the National Health Service (NHS). In comparison with the health care systems of other developed countries, the NHS allows access to a wide range of specialist and primary care services for a large proportion of the population with few user charges. Yet it achieves this for a relatively modest

Address for correspondence: Prof. Dr. Alan Maynard, Director, Centre for Health Economics, Uni- versity of York. York YOl 5DD, U.K.

0168~8510/88/$03.50 0 1988 Elsevier Science Publishers B.V. (Biomedical Division)

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proportion of a gross national product (GNP), which is itself lower (per capita) than that of many other developed countries [ 11. One might be excused, therefore, for thinking that there is very little to be learned from other countries about improving value for money (i.e. efficiency) in the NHS.

Certainly the NHS does fare well in the aggregate comparisons of costs and outcomes, although Parkin et al. [2] have pointed to the pitfalls in simple analysis of the relationship between health expenditure and income at an aggregate level. In addition, Culyer et al. [3] have argued that the performance of health care systems needs to be judged in relation to the objectives inherent in the prevailing ideology in each country. For example, in the U.K. the community might take a different view about the importance of equity in health or health care compared to (say) the U.S.A. and hence the amount of efficiency it would be willing to sacrifice in order to obtain more equity.

Much of the discussion relating to experience abroad has been about whether the NHS would be more efficient if the role of the market were expanded [4,5]. Although the ‘market’ versus ‘state’ debate has often been viewed in ideological and idealistic (rather than actual) terms [6], it should be remembered that a market is merely a mechanism whereby buyers and sellers exchange goods and services, using prices as signals to inform exchange. Markets do not necessarily require private sector involvement; indeed the ‘buyers’ and ‘sellers’ can be public sector agencies, as will be discussed later.

However, increasing the role of the market is merely one potential managerial intervention that could be imported from abroad. There may be other initiatives in health service organization, budgeting, information or incentive systems that merit further investigation. It is unlikely that the U.K. has the monopoly of wis- dom on how to manage health care efficiently.

Over the years there have been a number of managerial changes in the NHS. These include the periodic reorganizations of structure and smaller changes like the introduction of management budgeting, joint finance, fee-for-service payments to general practitioners and performance-related payment for managers. In addition there is evidence of local innovation [7] and Hunter and Wistow [8] have pointed out that in the field of community care, differences exist across the country in both policy ends and policy means.

However, there is surprisingly little evaluation of managerial interventions, one major exception being the research into clinical budgeting and resource management [9,10]. Indeed, in considering evidence submitted following the Report of the NHS Management Inquiry, the Social Services Committee [ll] rejected a sugges- tion that there should be experimentation surrounding the implementation of the general management function, arguing that “we do not consider that experiments in management are a suitable response to the Report”. The Committee has recently returned to the question of the effectiveness of general management in the NHS; the evidence will be largely anecdotal because no controlled experimentation has taken place, although there are variations across the country in how the general management function has been established. At the local level, Hunter and Wistow [12] argue that there ought to be more intra-Britain comparative work

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aimed at evaluating the costs and benefits of service variations in different policy fields.

This lack of evaluation is in contrast to the criteria that are proposed for clinical interventions such as new drugs, devices or procedures, where it is argued that controlled trials should be carried out before they are widely adopted [13,14]. It may be that some managerial interventions, because of their broad nature, are in- herently more difficult to evaluate in a controlled fashion, as is the case with some prevention programmes [15]. However, if no attempt at evaluation is made, managerial initiatives aimed at improving the efficiency of the NHS may be discredited in the long run, since no-one will know whether they do more good than harm. This is particularly true when the interventions are from other settings, such as from other countries or other public industries and the private sector. In order to assess whether such measures lead to improved efficiency they need to be evaluated in terms of their costs and benefits. If the NHS is to learn anything from abroad it needs to find ways of screening the wide range of initiatives overseas and then evaluating them in the NHS context.

This paper considers the following issues. (i) Are there managerial initiatives in other countries which could potentially in-

crease the efficiency of the NHS? (ii) How could promising initiatives be evaluated?

2. Initiatives abroad that could potentially increase efficiency in the NHS

In order to answer the first question a number of issues that are currently of policy interest in the U.K. have been selected and any relevant experience abroad examined. The policy issues selected are: evaluation of new medical technologies, quality assurance, primary health care, and the public/private mix. As will be seen later, the four issues are interrelated and several common messages emerge.

2.1. Evaluation of new medical technologies

A concern in many countries, including the U.K., is that new medical technologies, both large and small, often diffuse throughout the health care system before their costs and benefits are assessed adequately. In aggregate terms the problem does not appear to be as acute in the U.K. as in some other countries. Certainly financial controls and other restrictions over the purchase of medical equipment have meant that there has not been the same proliferation of C-T scanners, magnetic resonance imagers, lithotripters and the like, as has been observed in other countries. However, the U.K.‘s ability to exert aggregate control over health care expenditure does not necessarily mean that the most cost-effective technologies are being adopted and being used in the most appropriate clinical applications. For example, much imaging equipment has been purchased from charitable donations rather than as the result of decisions based on cost-effectiveness.

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Two initiatives from abroad are considered here. First, experience from abroad suggests that if more emerging medical technologies are to be evaluated appropriately, there needs to be a closer integration between the narrow clinical and other forms of health services research, including economic evaluation. In the U.K. the research councils, notably the Medical Research Council (MRC), have a free hand in the distribution of research monies and the priority to be assigned to health services research. However, relatively little is spent on economic evaluation. For example, at present the MRC Health Services Research Panel has a budget of only f150K per annum over the next 3 years, and this can be spent only on projects and not on programme support, despite the transfer of f2700K from the DHSS, much of which has been spent on basic research rather than on health services research. An economic component was added to a research effort on magnetic resonance imaging only after protracted negotiation and discussion. This, in addition to the f150K, is being funded by the Cell Board of the MRC.

In Canada (Ontario) and New Zealand there have been more concerted efforts to integrate the relevant research disciplines. For example, a clinical researcher applying for funds from the Ontario Ministry of Health would find that his or her proposal was assessed not only in terms of its methodological soundness, but also in terms of whether “the proposal is likely to have an important economic impact in reducing costs or increasing the efficiency of health services”. Furthermore, the grant application has to “provide, where appropriate, an adequate cost- effectiveness, cost-benefit or cost-utility analysis” [ 161. The guidelines in Ontario have had an identifiable impact, in that researchers are seeking to add an economic component to their evaluations. However, it has also become clear that further guidance is required on when to incorporate economic analysis in clinical trials, in order to minimize wasted effort [17].

Within the U.K. the DHSS does make some efforts to promote health services research, by sponsoring a number of research units and ensuring that the appropriate disciplines are included on their staff, but the Research Management Di- vision has a budget of only 213 million per annum, of which less than fl million is uncommitted. This budget, while a significant amount in absolute terms, appears small when compared to the budget of the Rand Health Insurance Study (over $70 million) [18]. At least the funds currently committed to research units provide some measure of security and career structure for researchers, although in genera1 terms and conditions of service are inferior to those applying in many other developed countries (some of which award career scholarships to proven health service researchers). In addition the Chief Scientist Committee in Scotland has recently identified areas of research interest which it feels should be given special attention, stressing that its remit is to stimulate, encourage, promote and support good quality research of relevance to the improvement of the NHS in Scotland [19].

The second lesson from abroad is that there needs to be a stronger link between research into medical technologies and decision-making, at the central or local levels, about those technologies. In the U.K., the recent study of the costs and benefits of the heart transplant programme, commissioned by the DHSS, is an excel- lent example of how health services research can be made relevant to policy decisions [20].

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However, it also illustrates the incomplete coverage of such evaluations; other major programmes, such as that in liver transplants, have not been evaluated. Also, in their review of economic appraisal of health technology in the United Kingdom, Drummond and Hutton [21] point out that while there has been some economic evaluation of health care alternatives, the majority of economic appraisals of health technology are undertaken by independent researchers who have no direct link with health services decision-makers at the central or local levels. Few appraisals are specifically commissioned and there is no formal mechanism for disseminating results. A great reliance is placed on publication of results in academic journals, many of which are not read by key decision-makers.

In some other countries there have been attempts to develop a more coordinated approach to the assessment of new medical technologies, including the commissioning of analyses, synthesis of evidence and dissemination of results. The best known example is the Office of Technology Assessment in the U.S.A., which has produced reports on most major health technologies. However, even one of the smaller developed countries, the Netherlands, has recently launched a number of initiatives in this field. The Ministry of Health has set up a Steering Group on Fu- ture Health Technology which will attempt to minimize the chances of the health care system being taken by surprise by technological advances. The kinds of issues it addresses are: what are the social and economic implications of the spread of self-diagnosis kits; will this enable more diagnostic work-up to be done in a primary health care setting; what are the implications for investment in hospital laboratories? In addition, two agencies in the Netherlands with the responsibility for the funding and provision of health care have been active in commissioning economic appraisals of health technologies. The intention is to ensure that the results are more relevant to the decisions that have to be taken [22]. Similar initiatives are underway in Denmark and Sweden [23]. It has also been suggested that Cana- da further integrates its approach to technology assessment [24].

At the local level in the U.K. it is difficult for health authorities to obtain advice about the costs and benefits of health technologies. For example, how does an authority ascertain whether purchase of a particular piece of major diagnostic equipment is justified and, if so, which kind of machine to buy? In some Scandinavian countries, where health care is provided by the county councils, these bodies have joined forces to establish institutes that provide advice on these matters (e.g. Spri in Sweden and the DSI in Denmark). Such moves are not without precedent in the U.K., with a number of Regions funding the Inter-Authority Comparisons and Consultancy Unit based at the Health Services Management Centre in Birming- ham. An important issue would be whether a more concerted effort in health technology assessment should be coordinated centrally by DHSS or led by the Service itself.

In short, in the area of evaluation of medical technologies, the picture is one of meagre investment in health services research and there is a dire need for more coordination if the maximum benefits are to be reaped.

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2.2. Quality assurance

In the wake of the Report of the NHS Management Inquiry [25] a number of health authorities have considered what initiatives can be taken to improve the quality of services, and many have appointed Directors of Quality Assurance. Quality assurance involves the specification of the objectives of care, the setting of standards and the monitoring of performance against the standards. If the benefits from improved quality exceed the cost of securing it, this would constitute an improvement in efficiency. Apart from the long-standing ‘inspectorate’ bodies like the Health Advisory Service, quality assurance is a relatively new area where it is likely lessons can be learned from abroad.

First, experience from abroad suggests that quality assurance can consume considerable amounts of resources. Over the years considerable investments have been made in the U.S.A., through the Joint Commission on the Accreditation of Hos- pitals and the Professional Standards Review Organizations (PSROs) and their successors, PROS. It is difficult to obtain estimates of how much the American approach costs, but it must be substantial. Also, when the government in the Neth- erlands approved the setting-up of an independent body to guide the introduction and development of peer review in hospitals, the CBO, it was specifically funded by an increase in the rates paid by third-party payers for hospital care [26]. Fur- thermore, the existence of a national body means that individual initiatives can be coordinated and lessons learned. In particular there has been a commitment to publicise the findings of local studies. In the U.K. the amount of effort and resources devoted to quality assurance has been largely a matter for health authorities themselves. Also, apart from the King’s Fund Quality Assurance abstracts, there is no concerted effort to ensure that those local initiatives that may take place are recorded and evaluated. The American experience further emphasises the importance of evaluation. Eisenberg [27] found that many of the attempts to change clinical behaviour, while seemingly promising on face value, had had little impact. The work by Fowkes et al.[28] is one example from the U.K. of controlled evaluation of strategies to change clinical practice.

Second, it is clear that many of the initiatives abroad tackle questions of clinical practice directly, either in a regulatory fashion (as in the U.S.A.), or through peer- review initiatives (as in the Netherlands). So far the majority of initiatives in the U.K. have approached these issues indirectly, by examining process topics such as waiting time in outpatient departments. Few seek to change or influence the nature of the medical care outcomes that are produced. One exception to this rule is the work on quality assurance in Brighton health authority, which was developed after study of the U.S. experience [29].

Third, it is important that resource questions are considered when quality im- provements are discussed. The cost of the quality assurance initiatives themselves has already been highlighted. However, the resource consequences of any result- ant recommendations may be even more significant. The review of experience abroad indicates that it is not generally the case that cost and quality are considered jointly (as opposite sides of the same coin), a sin which may have also been

committed in the U.K. during the attempts to implement management budgeting. Would clinicians have reacted differently if initiatives, which are, after all, con- cerned with cost and effectiveness, had been quality-led rather than cost-led? This is the basic philosophy behind the model health care programmes that have been promulgated in Scandinavia (most notably Sweden and Finland) [30]. Here groups of professionals are assembled to discuss how the provision of care could be improved, in both primary and secondary care sectors, for a wide range of conditions such as hypertension, stroke, low back pain, diabetes and breast cancer. The brief is to improve quality within given resources (or with a slight increase in resources in priority areas). The government, or the health service through the institutes mentioned above, provides administrative support for this exercise and encour- ages the dissemination of any recommendations. One such programme has been evaluated in terms of whether the benefits produced justify the costs [31].

The consensus conference initiative at the King’s Fund Centre is partly meeting this need in the U.K., but does not place the same emphasis on disseminating findings and evaluating results implicit in the Scandinavian approach. Evidence from the U.S.A. suggests that considerable thought needs to be put into the dissemination of findings if there is to be any hope of a change in behaviour patterns [32]. A similar message has emerged from the task force considering periodic health ex- amination in Canada [33]. The use of alternative mechanisms to promote higher quality or more cost-effective care requires further exploration [34,35].

2.3 Primary health care

In the U.K. the government has recently launched two initiatives in the primary health care field, the recent Green Paper [36] and the Report on Neighbourhood Nursing Services [37]. The Green Paper was novel in that it included, in an ap- pendix, discussion of alternative approaches to financing and organizing primary health care, some of which can be found abroad. An approach of particular interest was the North American health maintenance organization (HMO), where groups of physicians assume responsibility for all the patient’s health care (including secondary care) for an annual premium agreed in advance. Some HMOs in the U.S.A. are rather like large group practices of general practitioners, who have contractual links with specialists and hospitals. Other HMOs are more broadly based, owning their own hospitals. The GP-based HMO is probably more relevant in the U.K. context [38,39].

When one considers the range of managerial interventions that have been made in the secondary care sector, primary health care has been left as a great un- charted waste with practically no activity data. Yet it accounts for around 25% of total health care expenditure and, through the ‘gatekeeper’ role of general practitioners, has a major influence on resource use in secondary care.

The search for lessons from abroad inevitably begins with discussion of the HMO, a theme taken up recently by Enthoven [40]. Although dismissed rather curtly by one group of U.K. health economists [41], Enthoven provides a good review of the achievements of HMOs in the U.S.A., where the changed incentives for phy-

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sicians implicit in the pre-paid group practice have led to large reductions in total costs (by around 25%), the majority of which have been achieved through reduced hospitalization. Other features claimed for HMOs are the promotion of interest in systematic quality assurance, the careful evaluation of new technology, the increased emphasis on health promotion activities and the efficient use of paramedical personnel such as nurse practitioners.

Against these achievements has to be set the evidence that there is undoubtedly self-selection into HMOs by the young healthy and the findings of one controlled trial that some health outcomes were inferior for a subset of HMO patients (the poor with health problems), when compared to those from other practice settings [42]. However, the overwhelming evidence on the operation of HMOs is favour- able [43-45]. Self-selection has been shown not to be a major factor in mature HMOs [46] and the evidence of inferior outcomes in reported health status was not confirmed by other measures of physical health [47]. Enrollments in HMOs increased in the first half of the 1980s and they have acted as a catalyst for a series of other changes in the health care market in the U.S.A., which have reduced the HMOs’ comparative advantage. Some of these are discussed below.

The increased use of paramedical staff by HMOs merits further discussion in the context of the report on neighbourhood nursing, which recommended that the principle should be adopted of introducing the nurse practitioner into primary health care. There has been considerable research in North America on the cost- effectiveness of substituting medical manpower by nurse practitioners [48-521. The North American evidence would be useful in seeking to define which tasks it would be both effective and efficient for nurses to undertake, and the training required. Furthermore, one of the lessons from the North American literature is that the incentives for physicians need to be right in order for them to use nurse practitioners appropriately [53]. It is clear that in the U.K. the incentives for employing or attaching nurses to general practice have not been fully explored or evaluated,

Enthoven also had some interesting observations to make on primary health care in the U.K. In particular, in examining the relationship between general practitioners and specialists he commented that ‘I was told that they communicate mainly by mail’. Under the U.K. system, with its rigid distinctions between medical roles in primary and secondary care, a woman can wait over 6 months for a gynaecology outpatient appointment after being referred by her GP. It may be that the specialist opinion can establish that there is nothing to worry about, but in the mean- time significant anxiety may have been experienced. In many other countries access to the specialist is more immediate, either through an HMO or, as in the French system, free access to any licensed doctor of any specialty participating in the national health insurance scheme. It is hard to envisage the latter approach being efficient so it would be important, when comtemplating any changes in the U.K., to preserve the ‘gatekeeper’ role of the primary care physician.

Of course it would be naive to suggest that HMOs would bring about exactly the same changes in the U.K. In particular the previously-existing fee-for-service system in the U.S.A. was likely to produce perverse incentives for family physicians to increase the amount of care given and retrospective reimbursement of

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hospitals on an agreed per diem basis in the U.S.A. provided few incentives for reducing hospitalization. The system currently existing in the U.K., which uses ca- pacity constraints (on beds and medical manpower) and waiting times as a way of limiting the amount of care given, offers less scope for cost reduction. Also, there is evidence that the British doctor is by nature more conservative in making medical interventions than his or her American counterpart [54], although even within Britain there is evidence of wide variations in practice which suggest that there is some scope for improved resource utilization [55].

Rather the main impact of the HMO in the U.K. may be to increase the quality and range of services provided to patients within the resources available, as a result of the different incentives introduced. The Green Paper sought to achieve the same aims through the relatively innocuous ‘good practice allowance’ and by improving the information flows to patients.

The main lesson to be learned from the HMO experience in the U.S.A. is the way in which different incentives to health care professions produce different patterns of practice. Evidence on this is not confined to the U.S.A.; in Bavaria (West Germany) a change in the reimbursement rates, allowing general practitioners to retain savings made in the expenditure on drugs, hospital care and physical ther- apy, led to dramatic reductions in the consumption of some of these items [56]. The Bavarian experiment also highlights the fact that changes in the primary care sector have major implications for the secondary care sector. Some hospitals experienced financial difficulties as a result of the change in physician behaviour. Any major changes in primary health care in the U.K. should not be viewed with de- tached disinterest by health authority officers, as there will undoubtedly be knock- on effects in secondary care. Even if there are no major organizational changes, technological developments such as the basic radiological system and desk top analysis may reduce the demand for hospital diagnostic services.

It was noted above that in the U.S.A. the advent of HMOs had been accompanied by a whole host of other changes. Preferred provider organizations (PPOs) use existing providers but involve contracts for service, with quality surveillance and regular review, between providers (physicians, hospitals) and insurers (e.g. Blue Cross), producing discounts in the costs of care. Also some of the major in- dustrial concerns, who in the main provide the funds for the care of those in employment, have shown an increased interest in self-insurance [57]. Here they enter into direct arrangements with the providers, thereby cutting out the (insurance) middle-man, except as managers of their self-insurance funds.

The health care system of the U.S.A. is increasingly characterised by a range of organizations competing for contracts to provide services and for enrollment of patients/families. This should be contrasted with the ‘independent practitioner status’ enjoyed by GPs in the U.K., where competitive pressures are slight, and are indeed frowned upon. The experience in the U.S.A. with contracts for service in the medical sphere provides other lessons for the U.K., which are discussed below.

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2.4. Public/private mix

In the U.K. there is now considerable experience with the contracting out of certain support services. Experience is mixed; some authorities can point to significant savings through the use of private contractors or, more often, through the revision of working methods which accompanied a successful ‘in-house’ tender. On the other hand, some authorities have had bad experiences with particular contractors or, more often, have found that the contracting procedure has uncovered a number of issues surrounding the specification of quality of service required and how this is monitored.

Also, there is some experience in the U.K. with using the private sector to clear backlogs in waiting lists for surgery and, more recently, a growing private market in the provision of long-term institutional care for the elderly [58]. In the latter case, where health authorities are required to inspect private nursing homes in their locality, issues of how to specify standards of care and to monitor adherence to them have also arisen [59]. Can the NHS learn anything from those countries with more experience of managing the public/private mix?

The first point to note, made repeatedly but ignored continually [60,61], is that the public-private debate is a red herring which diverts attention from the real issues. It has all too little to do with the achievement of efficiency in the provision of care. The real issues concern the incentives and disincentives given to key ac- tors under each of the approaches and the extent to which decision making au- tonomy is accompanied by financial accountability. As was pointed out above, ‘markets’ can be both public and private, and ‘competition’ can just as easily be encouraged between public providers as it can between private companies. The central question is whether publically organized competition can lead to more efficiency in the NHS, when used alongside, or instead of, more traditional managerial initiatives.

For example, general managers are being encouraged to manage the clinical in- terface in the interests of more cost-effectiveness. However, in doing so they face the difficulties posed by being on a short-term contract themselves, while trying to bring about change in individuals who have long-term contracts, usually held by a third party. This is not to say that the U.K. is devoid of mechanisms for bringing about change; services in each district are now subject to annual review and general managers have individual performance targets. However, there is currently no evidence on the relative effectiveness of these measures in bringing about more efficiency in health care when compared with employing market forces.

A number of health authorities have already employed a contracting procedure at the margin, by using it for allocating extra monies for reducing waiting lists. Of course, a movement towards a competitive HMO approach would imply a much more radical use of market forces. Here it would be the HMOs, through their ability to attract premiums from patients, that would have the buying power [62]. One of the key management tasks would be to ensure that these funds were spent wise- ly. Health Authorities, or sub-sections of them, would have to compete for contracts to provide certain specialist services. Depending on the rules, they may or

may not be in competition with private hospitals and nursing homes. Although some of the policy issues associated with extension of internal and external market transactions in the NHS have been explored (631. such a radical change could not be advocated without experim&tation and evaluation. The evaluation would have to consider both efficiency and equity criteria. It would be wrong to assume that such an arrangement would necessarily lead to a more inequitable provision of health care than exists in the U.K. at present. Indeed, such a rationalization of care would provide the opportunity to review the current approach, where there are two routes into NHS hospitals, one involving additional payment.

The evidence from abroad is that the competitive approaches, whether they involve public or private agencies, are effective in bringing about change. However, there are increasing concerns in the U.S.A. about the maintenance of quality, given the pressures for cost-cutting that are induced. This appears to be the case both in the primary health care sector (with HMOs) and in secondary care, where pro- spective reimbursement of hospitals (as typified by the diagnosis-related group (DRG) approach pioneered by Medicare) has brought about pressures for short- ened hospital stay and some reorganization in the hospital industry [64]. However, competition has thrown into sharp relief the issues of cost and quality, the need to be explicit about standards of care and the need for good financial information. It has been well documented that widely different standards and service levels exist between health districts in England [6.5]. In addition, one of the issues arising from the inspection of private nursing homes in the U.K. is that of whether NHS long- term care ought to meet the standards that are being applied to external, private, suppliers.

3. Evaluation of promising initiatives

In the last section a number of promising managerial interventions were identified based on experience abroad. In this section a number of proposals are made for evaluating these in the NHS. The discussion of evaluation concentrates on the economic aspects; that is, assessment of the costs and benefits of interventions. This is not to say that other components of evaluation, such as acceptability to professionals, are not important; however, these are not within the realm of our experience.

3.1. Coordination of health technology assessment

Following the lead of the U.S.A. and other countries, a number of initiatives in health technology assessment should be launched. Although these need coordination, they need not necessarily be located under one roof, in a British Institute of Technology Evaluation (BITE). Activities that should be considered are:

(i) synthesis and dissemination of evidence on the costs and benefits of major health technologies;

(ii) production and testing of guidelines on when and how to undertake economic analysis alongside clinical trials;

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(iii) controlled studies of the methods of presenting evidence on the costs and benefits of health technologies and the ways in which these change behaviour; and

(iv) controlled studies of the effects of different’incentives on the adoption of health technologies.

Once the cost-effectiveness of these various activities has been established there should be discussion about the nature of any technology institute and its funding.

3.2. Reviews of cost-effectiveness in clinical practice

Following the approach adopted in the Netherlands and linked to the health technology assessment activities outlined above, reviews of the cost-effectiveness of clinical practice should be stimulated by giving research funds to those groups willing to carry them out. Within the hospital sector the reviews might concentrate on frequently applied diagnostic procedures, with a view to developing guidelines for practice based on cost-effectiveness considerations. An example of this approach already applied in the U.K. is the work by the Royal College of Radio- logists (1981) on routine skull radiography for patients admitted to accident and emergency units with head injury [66]. As well as carrying out such studies, there should be investigation of the most cost-effective way of disseminating the findings.

In primary care, consideration should be given to developing and evaluating a pilot model health care programme along Scandinavian lines [67]. Given the current interest, screening for cervical and breast cancer could prove ideal initial top- its .

3.3. A trial of prepaid group practice

Given the rejection by the medical profession of a number of the key proposals in the recent Green Paper on primary health care, it is clear that comprehensive changes cannot be made at the present time. Therefore an alternative approach would be to sponsor an evaluation of a pilot health maintenance organization, compared to a matched control. The evaluation of this initiative would consider issues such as:

(i) does the HMO make increased and more cost-effective use of paramedical manpower?

(ii) does the HMO make investments in appropriate health technology, thereby averting hospital referral?

(iii) does the HMO engage in more health promotion activities? (iv) does the HMO negotiate with specialists and public or private hospitals to se-

cure more cost-effective hospital-based treatments? Only if such evaluation is undertaken will the lessons of HMO-type innovations

be learned and information acquired to inform future policy formation.

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3.4. Extension of contracting procedures to clinical services

There should be evaluations of extensions of contracting procedures for clinical services, such as that currently being undertaken by a number of health authorities. Does the contracting procedure lead to more cost-effective provision? Are contracts honoured? How are quality standards set?

Consideration should also be given to tendering for clinical support services, such as laboratories, pharmaceutical services and radiology, or for services designed to meet Regional priorities, such as those clinical procedures that have been shown to represent cost-effective uses of health care resources [68]. Contracting procedures could be applied in two ways. First, health authorities could negotiate with the suppliers of tertiary care services (‘regional specialties’) regarding the number of patients to be treated and the unit cost. Secondly, contracting could be used to ensure that the clinicians within a given district undertake the kind of clinical work that is in line with the district’s priorities. Indeed, it may have considerable implications for consultants’ number of contracts of employment [69]. A number of such initiatives have been taken, or are under discussion, in the U.K., but little or no evaluation is taking place. Unless more systematic study is undertaken it will not be possible to assess the relative cost-effectiveness of the use of market forces, compared with more traditional managerial mechanisms such as the annual review process, in bringing about change.

4. Concluding remarks

In this paper a number of promising managerial initiatives from abroad have been identified and the ways in which they could be evaluated within the NHS outlined. Although based on the experiences of only a few countries, this review shows that important lessons can be learned from abroad; these may concern new managerial interventions that could be made in the NHS, such as a prepaid group practice, or new interpretations of initiatives that are already underway in the U.K., such as quality assurance or contracting procedures. In particular, lessons can be learned from evaluations that have been carried out overseas.

Although there was no systematic basis for the choice of the four areas, other than their topical interest, several common issues emerge. These include the need to pay attention to incentives and the need for good information on costs and outcomes of health care interventions.

However, the main message is that if lessons are to be learned about the efficient management of the NHS, from abroad or not, there needs to be more systematic evaluation of managerial interventions along the lines commonly proposed for clinical interventions. For this to happen more funds need to be allocated to health services research and those proposing changes in health service management need to be more committed to their evaluation.

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Acknowledgements

We are grateful for helpful comments made by members of the Health Econom- ics and Policy Analysis group of the Department of Clinical Epidemiology, McMaster University, Canada, and the Health Services Management Centre, Uni- versity of Birmingham. Any remaining errors or omissions are our responsibility.

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Documents

Efficiency in the National Health Service: lessons from abroad