Supply and demand

Future NHS funding: kneejerk populism ≠ enduring strategy

This is an expanded version of a comment written in reply to an article in the Guardian of 19 June 2018 (http://tinyurl.com/yd5wcnp5).

Polly Toynbee is precisely right; not enough extra money, with dubious provenance, applied in a populist manner without any careful planning, will result in little change.

In system terms, the whole supply chain needs to be reviewed, and the incentives carefully applied to ensure any impact at all. There are four main stages in this supply chain, and they all need to be considered:

1. Demand is rising because of our increasing healthcare needs as we age and have to manage increasing numbers of co-morbidities (think of someone with diabetes, high blood pressure and chronic leukaemia who is (perhaps not surprisingly) also depressed, for instance), but there are also rising ‘wants’ as our expectations keep rising, often because of irresponsible political promises of ‘more and better’ services. These haven’t ever been addressed, with the result that health services are seen as a ‘free good’ used as we might use our cold water tap. As one might expect from politicians who depend on re-election to continue in office, there have rarely been any serious attempts to manage (for which read ‘contain’) demand, and the new rhetoric is no different, continuing to use the same language as before.

Screen Shot 2018-06-19 at 08.56.342. Primary care, in the shape of general practice, is the Unique Selling Point (USP) of the NHS, managing the vast proportion of most people’s diseases (and dis-ease), but perhaps more importantly, choreographing patients’ journeys through the intricacies of institutional care to ensure that their care is appropriate in human as well as clinical terms, and preventing duplication of investigation and intervention. GPs, who are seeing little recognition of, or encouragement to treat people (and not just physical symptoms), are currently leaving practice in their droves, and recruitment is becoming ever more difficult, as their sense of overwork and under-appreciation grows. Yet general practice is barely mentioned in the rhetoric about ‘increased performance’ and ‘reduced waiting lists’.

3. Acute hospitals continue to do what acute hospitals do, which is to treat diseases, not people. Their perspective on real life, and their ability NOT to intervene are both conspicuous by their absence; surgeons measure themselves by their operations, physicians’ fingers itch to treat, and the current markers of success generally drive activity ever-upwards, rather than measuring patient outcomes and (rarely sought on an individual basis) genuine user satisfaction. Giving new money to the acute sector will merely produce more of the same, yet that is precisely what seems to be intended…. and don’t get me started on the way that mental illness is considered as an entirely separate part of the NHS…

4. As patients become medically fit for discharge from hospital, many will continue to need some sort of social support, whether in the form of occasional visits from carers, or intensive support of their long term conditions (see co-morbidities, above), and not everyone can afford to pay for it themselves. Yet funding for social care has dramatically dropped over recent years, and the drive to balance the public expenditure books as quickly as possible means that these services are rapidly disappearing, without any apparent, viable alternatives appearing. The new initiative overtly turns a blind eye to this, expecting the health system to improve without any reference to this end of the supply chain.

Only if all these factors are taken into account can we have any chance of improving the health service, but we are not seeing any evidence whatsoever of a strategic approach to public spending in general, and health services in particular. Sure, more money is required, but more thought too, and an analysis driven by logic, empathy and long term thinking, rather than tomorrow’s headline in the Daily Mail.

Health services in the developed world: not waving but drowning

ImageLike most healthcare systems in the developed world, the British National Health Service is under constant scrutiny. However, such scrutiny is just the beginning of a much larger debate likely to exercise the whole developed world in the near future; are current health services sustainable?

Irrespective of whether funding and services are provided by the State or private sectors, a number of challenges are coalescing in such a way as to resemble a ‘perfect storm’, and all will need to be addressed if we are to avoid such a cataclysm.

These challenges have to be seen in the context of the countries involved: populations are reasonably stable, average incomes are well above subsistence levels, and population health (in terms of basic needs such as housing and nutrition) is good. Deaths from infectious diseases are low and life expectancy is high, but the negative impacts of affluence (such as obesity and diabetes) are growing. In such countries, several truisms can be highlighted:

The population demography is changing: as life expectancy in the developed world rises and birth rates slow, the demography alters, putting the emphasis of health services onto older people, who have the greatest demands; the increasing prevalence of long term conditions, co-morbidities, and rising hospital admissions all put increasing strains on health services.

Moreover, most health systems (both state and privately run) depend on the insurance principle: the ratio between those paying ‘premiums’ and those make ‘claims’, and that ratio is changing for the worse as older people pay less and claim more.

Medical technology is accelerating: medical science has become steadily more capable over the years, with a growing ability to treat ever more conditions. Some are life threatening and affect millions of people (the improvements in cancer diagnosis and treatment come to mind), some are extremely serious but affect very small numbers of people (the ‘orphan conditions’ such as Gaucher’s and Tay-Sachs Diseases), and some (the so-called ‘life style conditions’ such as baldness and erectile dysfunction) are changing our attitudes to health care so that ‘dis-ease’ of any nature is increasingly being seen as ‘disease’.

In addition, there are other influences for change that may be less direct, but are often as powerful.

Rising expectations reflect the increasing medicalisation of health problems, fuelled politically and commercially; politicians generally win elections by promising more services rather than fewer, and commercial companies survive by marketing their services to generate business. Expectations have risen in terms of what services may be available, as well as where and when they may be delivered (the so-called ‘choice agenda’). Results are expected to be virtually guaranteed, and there is a growing emphasis on improving the healthcare experience as well as its outcome.

Comparisons are drawn between the delivery of health services and commercial ones such as banks or restaurants, even though these latter are self funded (with built in brakes once they become unaffordable), whereas health services are usually funded by third parties (at least in part), making the disincentives to demand much less visible or effective.

The way in which rising expectations have been driving demand exactly mimics the developed world’s wider consumerist philosophies: economies depend on growth which requires increasing demand, driven in turn by the public’s hunger for more goods and services, delivered more quickly, more cheaply, and with greater choice. Thus, just as next year’s smartphone has to be better than this year’s, so next year’s antidepressants have to be more effective, with fewer side effects, than those available now.

However, since health care is enormously emotive, and usually largely funded by third parties, the ‘can I afford it?’ question is rarely asked, either by individuals (for whom health is beyond financial measure) or by funders, for whom the penalties of reducing expectations and disappointing their clients (electoral defeat for politicians, and lost business for insurers) outweigh most possible future problems. As a result, efforts to manage expectations downwards have been few, and have generally failed to make much progress; experiments in prioritization, such as those in Oregon, have had little impact, so the only serious control mechanism to have been generally invoked is that of increasing efficiency: getting more bangs per buck.

The reality is that, whilst there is always room to improve efficiency in large systems, the pressures are such that society will have to challenge what services are provided as well as improving how they are provided. Genuine rising need, growing expectations, and medical technology’s ability to provide more, are creating a Tsunami of rising costs; once increasing risk aversion and reduced investment are factored in, then the notion of the perfect storm begins to make sense, a disaster that can be foretold but not avoided.

So are there ways of avoiding the storm? There are, but they assume that the human propensity for short term fixes can be overcome, which may be an assumption too far. Firstly, reducing public expectations would help; understanding that healthcare resources are limited, and that some things are more important to treat than others, would be an excellent start.

How one does that is harder to prescribe; raising awareness of the real cost of services may help, even if these were not actually charged. The UK ‘GP budget holding’ experiment in the 1990s was partly intended to increase cost awareness, and the current development of Clinical Commissioning Groups is an extension of this, but the funding mechanisms mean that the there is little alignment between effort and reward.

Actual charging, on a co-payment basis, is used in countries such as France and New Zealand to demonstrate the link between usage and costs, but this would currently probably not be acceptable in the UK. Creating ‘tiers’ of services has been partially implemented countries such as Canada, where everyone is guaranteed basic services, but more ‘luxurious’ products have to paid for separately; thus for example, basic cataract surgery is free, but the fancier lens implants are not.

Service rationalisation, as mooted by David Nicholson, is inevitable if hospital economies of scale are to be realized, and the risks of low volume services are to be mitigated, but this is an efficiency gain, and not the paradigm shift that is actually required. To achieve that, the obvious variables that could be adjusted are the availability of services, or their price; changing the third variable, demand, would require our societies to bring back a more collective ‘communitarian’ response to public need, which would imply a radical adjustment of the balance between ‘me’ and ‘society,’ a utopian aspiration, but unlikely to come in our lifetimes.

This is an expanded version of a piece published in The Conversation on 20 August 2013 at http://tinyurl.com/n62gloc

If you go down to the A&E, there shouldn’t be any surprise….

Teddy bearsOur increasing use of hospital services is out of control and unsustainable, and is contributing to the current crisis in accident and emergency (A&E). But the problem isn’t new and 30 years of NHS reforms have tried – and failed – to control it.

We now have figures that show a million more people went to A&E in England between February 2012 and January 2013 than had done the previous year – although changes in reporting may explain some of the increases we’ve seen in the past 25 years. There are also reports that trolley times are routinely reaching 12 hours in some parts of the country.

Now that GPs have been given control of some £80bn to plan and pay for NHS services (it’s what Clinical Commissioning Groups are for…),  many believe they should also be able to treat as many as 30% of people who come to A&E, more appropriately, and in a way that eases the burden.

The 1990s saw the creation of the ‘purchaser/provider split’, which separated those who planned and bought services from those who provided them – i.e mainly the health authorities and hospital trusts. With this came the half-hearted introduction of some elements of competition.

But only if we properly understand the underlying issues can we develop a coherent strategy to deal with them. And these issues can be encapsulated in three words: poorly aligned incentives.

A question of supply and demand

The dynamic between supply and demand drives many aspects of the human condition, and this applies to the NHS too. It has always been demand led, as it was created to respond to and meet our health needs.

There are elements of preventative care, but they’ve never been as prominent as ‘sexy’ acute services such as saving babies or heart transplants.

However, demand for any service is based on knowledge of that service, and in healthcare (as elsewhere), this kind of intelligence lies mainly with those who provide them, who use it to drum up business. Until we knew that 3D televisions existed, we didn’t realise how much we needed one. Similarly, in the NHS, until we know that treatments are available for heart disease/depression/impotence, we don’t ask for them.

As in every other industry, the supply of health services tends to drive demand. Hospital funding has moved away from opaque ‘block contracts’ – crudely, an annual allocated amount – to a system based on ‘payments by results’. As this is actually payment for activity, it tempts hospitals to increase supply to drive up demand.

In commercial industry, demand is largely regulated by price: “I’d love that 3D telly, but I can’t afford it right now”. But NHS services are largely free for us to use.

They are also free to GPs, who control most of our access to hospitals through patient referrals – except A&E of course, where we decide whether or not to visit.

Traditionally, GPs referred cases to their hospital consultant colleagues that were complex, or needed high-tech interventions. It’s always been assumed that referrals are driven purely by clinical criteria (what patients need) and specific skills (of a particular hospital specialist), not serendipity or whimsy. Patients’ needs and clinicians’ expertise are supposed to matter – not consumer choice or doctors’ golfing schedules.

However, if the balance between supply and demand has depended on these assumptions, they have been eroded over the years; it’s been assumed that patients seek help when they need it (though the tension between ‘need’ and ‘want’ increases as we’re encouraged to become consumers of a ‘free good’ like the NHS); we’ve also assumed that hospitals respond to demand (and are not incentivised to increase it) and that GPs are professionally driven only to refer patients when there is an absolute need.

But with GPs’  contracts now based largely on listed activities,  they are less prepared to absorb the grey areas where no explicit activities or payments are described – for example a home visit to a bereaved widow.

Apply these criteria to the A&E situation and the results are obvious:

  • Patients, now consumers used to instantaneous service in other aspects of their lives, are bound to prefer going to A&E than waiting for an appointment with their GP. Not only is A&E open 24/7 but tests that would take weeks to arrange through normal channels are instantly available. Sure, the care is neither continuous or holistic in A&E, but these concepts have been increasingly devalued because they are so hard to measure.
  • Hospitals receive payment for every attendance at A&E, and get addiitonal sums if patients are then admitted to the wards. They are also punished for keeping patients in A&E for more than four hours, so admitting patients becomes a no-brainer. It’s only now, when demand for hospital services is starting to outstrip supply – and the cash to feed it – that the cracks in the system are beginning to show.
  • If there are no disincentives for GPs to refer patients into hospital then why wouldn’t they do it, when they feel disenfranchised and de-professionalised by the reforms that have been churning round them for three decades?

This is all easy to analyse, but harder to repair. The basic precept underpinning the NHS has been that it’s free at the point of delivery, so the mismatch between consumerism and the welfare state is bound to expand, unless the notion of corporate responsibility in health can be re-introduced or until services cease to be free.

One mooted idea has been to increase public awareness of NHS costs, on the basis that this might make them think twice before (ab)using the ‘free’ service.

Activity-based hospital funding isn’t sustainable, and a return to some kind of risk sharing between service providers and those who commission services (the GPs) is a prerequisite to managing demand at an institutional level.

GPs’ incentives must be better aligned so that it becomes truly in their interest (professionally and morally, as well as financially) to restrict referrals to those that are really necessary.

The biggest issue is that of managing service availability; as long as we increase the supply of hospital services (particularly in A&E departments) this will feed demand. We have responded to the supply side constraints in clinics and investigation facilities by increasing that supply, so it is hardly surprising that this has in its turn encouraged higher demand.

The obvious corollary would be to deliberately restrict services, but that would be very hard to sell politically to an already disillusioned electorate. However, if GPs and the CCGs were allowed to do what they were first intended to do, their core purpose would be to extract the optimum health benefit from the public funds allocated to NHS Trusts.

Managing demand would be high on their list, and most of them would tell you that given the right tools, they would manage to do this in a much more coherent fashion, albeit at the cost of reduced health consumerism. The challenge is to loosen the stranglehold from central government sufficiently to allow this to happen before all the breath of enthusiasm for doing anything is completely cut off. And that really is a Political decision.

This is a modified version of an article published in ‘The Conversation’ under the title of ‘A&E is in crisis because we all take it for granted.’ That piece is available to view at http://tinyurl.com/mp8esp6