can the english national health service learn from the dutch reforms? meeting the medium term...

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