Can the English National Health Service learn from

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 Bevan Department of Management, LSE R. G. Bevan@lse. ac. uk

Objectives of health care reforms in OECD countries* 2. Cost control: rationing & expenditure caps UK from 1990 s 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.

Law of requisite variety: 3 goals 3 instruments Cost control Equity Performance

NHS 1980 s: 3 goals & 2 instruments Cost control: fixed total budget Formula funding equitable allocations Health authorities run providers Below target income: no ‘efficiency’ savings ‘Efficiency’ savings Above target income: cuts not ‘efficiency’ savings

From 1991: purchaser / provider 3 goals & 3 instruments Cost control: fixed total budget Formula funding equitable allocations NHS providers Efficiency by competition Purchasers Private providers

Internal market (1989 -97): Design* o Purchaser / Provider o Provider competition n ‘money follows the patient’ o Selective contracting n health authorities n GP fundholders n (no patient choice) *Working for Patients

Internal market (1989 -97): Impact o Le Grand (1999)* n Little evidence of change n Incentives too weak & constraints too strong o Tuohy (1999)** n NHS logic o Ministerial accountability o Collegial decision making o 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* o Provider competition n ‘money follows the patient’ (Pb. R) n standard tariff: quality competition o Selective contracting n Primary Care Trusts n World Class Commissioning o Patient choice o Provider diversity n Foundation Trusts & Independent Sector Treatment Centres *Delivering the NHS Plan

Patient choice & competition (2006 - 10): Impact No o Failure to create functioning market* n political interference n weak purchasers n barriers to exit & entry n changing policies n reorganisations * Brereton & Vasoodaven (2010) http: //www. civitas. org. uk/nhs/download/Civitas_Literature. Re view_NHS_market_Feb 10. pdf

Impact both NHS markets? Overview of literature* o No good evidence reforms produced beneficial outcomes classical economic theory predicts of markets provider responsiveness to patients & purchasers large-scale cost reduction innovation in service provision o NHS incurs transaction costs of market without benefits? * Brereton & Vasoodaven (2010) http: //www. civitas. org. uk/nhs/download/Civitas_Literature. Review_NHS_market_Feb 10. 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 … Population ('000 s)

Liberating the NHS: Objectives? * o NHS commissioning board n Steering not rowing? o GP Consortia n GPs involved in shaping services? o Independent providers n Choice & managed competition? o Reorganisation n Evolution not revolution? * Equity and excellence: Liberating the NHS

Reflections: 20 years of market reforms The Netherlands o 1 agreed policy n Dutch procession of Echternach o MHP competition n as yet little selective contracting o Model exported n Germany & Switzerland England o 5 blitzkriegs (SW 1) n army of occupation in hostile territory? * o Provider competition n limited impact o Model abandoned n New Zealand, Scotland & Wales *Shock (1994) Medicine at the centre of the nation’s affairs, BMJ

Going Dutch: Provider Purchaser competition? Cost control: fixed total budget Risk-adjusted funding equitable allocations PCT clusters Efficiency by purchaser competition & selective contracting / integration Mutual Healthcare Purchasers (MHPs)

Mutual Healthcare Purchasers (MHPs) o Plurality n PCTs / GP consortia n Insurers? Foundation Trusts? o Define catchment areas n Guarantee duty of care n Selectively contract / integrate o Explicit insurance contract n Choice of packages o Restrict choice? Charges?

NHS Commissioning Board: Regulation of MHPs o Entry n key competences & duty of quality o Competition n sufficient numbers & information o Equity n funding & open enrolment o Insurance n solvency & transparency

Can the English National Health Service learn from the Dutch reforms? * Thank you Gwyn 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