Oireachtas Joint and Select Committees
Wednesday, 28 September 2016
Select Committee on the Future of Healthcare
Universal Health Care and the NHS: Discussion
I welcome Professor Allyson Pollock to this morning's meeting and thank her for making herself available to talk to the committee remotely and to share her experience of the National Health Service, NHS, with members. I believe the professor is aware of the task the committee has undertaken and we look forward to speaking to her this morning and learning from her experience. I invite the professor to make her presentation.
Professor Allyson Pollock:
Good morning. As I am having difficulties hearing, I hope members are not having the same difficulties. My name is Professor Allyson Pollock and I am professor of public health research and policy at Queen Mary University of London. I have an opening statement and if it goes on for too long, feel free to interrupt or cut me off.
Professor Allyson Pollock:
I cannot see the members and unfortunately can only see myself but I will continue.
The decision to have a universal public health care system always is political and that of course is what the committee is doing.
Many countries have decided that universal health care, by which I mean access to services on the basis of need and free at the point of delivery, is the hallmark of a civilised society and that it is necessary and affordable for governments to legislate for their citizens to that end. The question of how much any country should spend on public health care is inextricably linked to the chosen model of funding and provision, the degree of marketisation and how much risk selection and denial of care a government is prepared to tolerate in its health system.
I ask Professor Pollock to pause for a moment because the sound quality is not great. I have been asked by staff to remind those present to turn off their mobile phones, or turn them onto airplane mode, because they are interfering with the sound system. I apologise for interrupting.
Professor Allyson Pollock:
Okay. The sound quality is not great at this end either.
It is important to note that no country in the world has delivered a universal single-tier health care system through the market, for-profit provision or private insurance. That is because it is in the nature of markets to operate through selection and exclusion. They transfer risks and costs back to service users and inevitably deny care to those who need it most. Risk selection and exclusion is built into the design of market bureaucracies. By contrast, inclusion and redistribution must be built into the systems of public administration for universal health systems. As we all know, risk selection and risk avoidance mechanisms undermine the goal of access and universality.
I would like to refer to the United States, which is the best example of risk selection and risk avoidance at work. With health expenditure of approximately 18% of GDP, the US denies more than one in five of its population access to health care. A report from the Institute of Medicine has shown comprehensively that overtreatment and denial of care, health care fraud, catastrophic costs and spiralling health expenditure are features of the US health care system. Health expenditure in the US is out of control for both public and out-of-pocket payments. The countries that have adopted the US model of mixed public and private funding, together with public and private provision, have more marketisation, higher administration and transaction costs, the greatest inequalities in access and health outcomes, a lack of coverage and the highest out-of-pocket payments. As this committee has repeatedly seen and heard, out-of-pocket payments are major barriers to access in Ireland. They have a major impact on patients and their access to health care.
According to a report on the Irish health system published by the European Observatory on Health Systems and Policies, in 2008 the full out-of-pocket costs for primary health care were being paid by two thirds of the population. This committee has heard evidence from GPs involved in the deep end initiative about the operation of the inverse care law in Ireland. There is maldistribution of funds and services because resource allocation does not follow need. Of course the inverse care law is attributable to a Welsh GP, Dr. Julian Tudor Hart, who wrote in The Lancet:
The availability of good medical care tends to vary inversely with the need for it in the population served. This inverse care law operates more completely where medical care is most exposed to market forces, and less so where such exposure is reduced.
The second of those sentences is seldom quoted. To paraphrase, when health care becomes a commodity, it becomes distributed just like champagne: the rich gets lots of it and the poor do not get any.
The UK established its National Health Service in 1948. The legislation had been enacted in 1946. The NHS is a universal integrated public health system which is free at the point of delivery and funded through central taxation. It is generally agreed by all organisations, including the World Health Organization and the World Bank, that central taxation is the fairest and most efficient way of funding health care. There is consensus on this in all the reports. The NHS - the legislation underpinning it and the system itself - is important because it became the model for the health systems of many countries around the world. For the first 40 years of its operation, the NHS was the lowest cost, most efficient and fairest system. In Bevan's words, the NHS guaranteed health care to all citizens without fear of catastrophic health care costs or being denied care. This freedom from fear was very important.
In 2012, following over two decades of market incrementalism, the Government in England abolished the universal public model by removing from the Secretary of State the duty to provide key health services throughout England. Instead, it made commercial contracting virtually compulsory and introduced new mechanisms for fragmenting and dismantling care and reducing services and entitlements. The structure of the foundation trusts that had been brought in was changed in 2004 to make them 49% private. As a result, they can generate up to 49% of their income privately. This has diverted the attention of the boards of the trusts and, as a result, they now have a greater focus on private income. At the same time, US-inspired market risk selection mechanisms have been introduced over the past 20 years. Most recently, there was a switch to membership-based organisations, as opposed to planning services on the basis of need, and to diagnosis related groups, trusts and tax breaks. This has had catastrophic consequences for universal public health care.
It should be noted that Scotland and Wales have retained the universal single-tier integrated public NHS model. As the UK Treasury in Westminster controls funding through the block grant allocation, their systems are coming under severe pressure. However, they are experiencing nothing like the catastrophic chaos that is ongoing in England, where 75% of foundation trusts are in serious financial deficit. Barely a week goes by without a chief executive losing his or her job or a failure regime coming into play. By contrast, no hospital in Scotland is going to the wall because hospitals and community services there are integrated into and directly managed by health boards, which in turn are accountable to and responsible for local health needs. It might be worthwhile for the committee to look at an interesting experiment in Scotland that involves the integration of health and social care.
If universal health care is the goal of this committee, as I understand it is, it needs to understand how the principles of universal health care underpinned by public health need, redistribution, risk pooling and social solidarity are alienated by markets and marketisation. In addition, clear and strong laws are needed to enact universal health care. I disagree with the argument that incrementalism might be the best strategy for Ireland because the pace of change would be too slow and might take the health system in the wrong direction. There has been an erosion of entitlements since 2008. I refer, for example, to the introduction of means-testing for medical cards in 2009 and to the increases in the levels of payments and charges for some services. I accept that the eligibility criteria that apply to the GP-visit card were extended in 2015.
Of course every country must build on its existing infrastructure and take account of its own history and services. All countries with a national health service have put in place laws and strong legal frameworks to ensure that universal national health service happens and that parliament commits to it. It does not remain an aspiration. If what this committee seeks to do is to be done, a strong political consensus needs to be built to overcome the many vested interests that would retain the fragmented and marketised private elements of the service and jeopardise the health of many people for the benefit of a few others. My understanding is that given the committee’s commitment to articulating a vision for a universal single-tier health service, an NHS Bill for Ireland is the essential first step in a ten-year plan.
If a law is enacted which commits the Government to providing universal health care to all citizens and residents throughout the land, the Oireachtas will decide how much it will spend. It is the task of the administrative bureaucracy to determine how the functions will be implemented, to ensure resources are allocated fairly, appropriately and according to need, and to develop formulae accordingly.
A bottom-up approach to change can be adopted. Access to universal health care requires strong systems of public administration and adherence to six common principles: fairness of financing; fairness of resource allocation; risk pooling and social solidarity in service provision; political accountability and control; service integration through geographic units of administration; and public accountability through strong systems of information and monitoring and surveillance systems.
The committee has heard from experts representing the Irish Medical Organisation and many other organisations that primary care teams are essential because they are the gatekeepers to acute and specialist care and have a major part to play in prevention, rehabilitation and working with social services. A strong primary and social care system that is rooted in strong information systems is essential to ensure health care for all. As the committee has already heard, primary care is seriously underfunded and is under-capacity. This creates pressure on acute services, social services and the family. In my opinion, a Bill to put in place the necessary legal framework for a national health service throughout Ireland is essential. It would be the first necessary step in achieving the sustainable development goals for universal health care and access to rational, essential and affordable medicines.
We will struggle on and see how we manage. I would like to raise a couple of points before I bring in members. Professor Pollock has stressed that legislation is necessary to put a duty on the Minister for Health of the day to provide universal health care. I suppose the challenge for us is to work out how we get from where we are now - with a disjointed two-tier hospital-centric system - to a point where we can recommend a particular course of action. Given that the Irish health system is so hospital-centric, does Professor Pollock believe we should seek to change the model of care to move activity from the hospital to the community before we legislate for a basket of services to which people would have a legal entitlement, or does she think both sides of the equation can be done simultaneously? Does Professor Pollock think we should concentrate on providing a legal entitlement to community and primary care services-----
I will try again. My second question relates to how we can provide for a legal entitlement to services. I noted Professor Pollock's recommendation that we should not do this on an incremental basis. In light of the ground we need to make up here in Ireland, does Professor Pollock think we should seek to provide legal access to those services at community and primary care level before dealing with acute hospital care?
Professor Allyson Pollock:
Most countries that have put in a national health service began from an imperfect base. The UK was no exception. It was highly fragmented. There was a patchwork of services with significant inequalities. For that reason, a law is needed that places on the Minister a duty to provide services throughout Ireland. That is the only way to overcome the fragmentation, imbalance and inequity in resources. Of course there is a move to try to improve resources all the time, but that cannot be done without an Act of Parliament. This course of action would not preclude the committee from beginning to work to improve primary care services, to increase the level of funding and to take initiatives forward. I would argue that this needs to be part of the plan. There is nothing preventing Governments from putting more money into primary care by increasing funding from the current level of 3%, which is abysmally low, and by increasing cover. If the big picture and the big vision for this committee is universal health care, it must stick to that. There are risks associated with zooming in and out. If one zooms in too close, into the very micro-details of the health system, one has to cover everything from how primary care and acute health services are run in small areas to the allocation of resources. I feel that the committee's job should be to focus on the big picture - the big vision of how Ireland can get to universal access and how it can provide for the duty I have mentioned. There is nothing to preclude anyone from building up primary care as legislation is going through, or from putting the planning in place. I know it can take a couple of years or more for legislation to go through. I would not say it is a case of one or the other - I would do both at the same time.
The Chair also asked an interesting question about human rights. She seemed to be wondering whether individuals can argue that they have a legal entitlement to health care. I would caution against such an approach. Brazil, for example, provides for a right to health and to health care in its constitution, but it has not managed to address the huge inequities in its health system. The courts there have been used by individuals who can afford access to justice to exercise their right to health care, but that is not solidaristic. If those courts make very peculiar decisions under the Brazilian constitution, that creates even more chaos and inequality. I think I need to understand more from the committee about what it has in mind when it talks about a legal entitlement to primary health care and community care at the local level. My view would be that if the duty flows from the Minister - in the UK, the Secretary of State for Health - all the structures and resources would follow those duties, powers and functions.
I would like to get some clarification in that regard. If a duty to provide services is being placed on the Minister, I presume there is a need for the legislation to be quite specific about the services to which citizens are entitled.
Professor Allyson Pollock:
It is important to note that the original founding duty was to promote comprehensive health care. Underpinning the duty to promote comprehensive health care - this refers to the full range of everything - was a duty to provide key services under section 3 of the relevant legislation. I draw the Chair's attention to an NHS Bill that we have drafted and which will have its Second Reading in November. I sent the committee a link to it in advance of this meeting. The intention of this Bill is to reinstate the NHS for England. Part of its function is to bring together the legislation. It looks at the Secretary of State's duty to provide certain services, including mental health services and local pharmaceutical services. The full range of services has been listed in the relevant legislation since 1946. If the Minister is given an overarching duty to promote comprehensive health care, which is the real goal, and a secondary duty to provide key services, that should help to reconcile some of the issues the Chair is struggling with.
I thank Professor Pollock for her presentation. I am keen to ask a question with regard to the difference between Scotland and England. Obviously, there is a shift in England towards privatisation. It does not seem to be the same in Scotland. Will Professor Pollock explain this by way of a difference in legislation or in terms of legal obligations? Is it simply the difference of choices made by the Minister?
My next question refers to the strong information systems referenced by Professor Pollock in her document. To what extent are these systems underpinned, named, financed and funded? Specifically, how is this done under the legislation?
My third question relates to accountability. Professor Pollock referred in her presentation to accountability by the Minister. Is it only to the parliament or is there some further level of accountability that is not necessarily obvious to us?
I thank Professor Pollock for her presentation. I have two brief questions. Does Professor Pollock believe there is a role for private health care in any functioning health system, given that Scotland and Ireland have approximately the same demographic?
I thank Professor Pollock for her very interesting presentation. As we know, health is not only the absence of illness. What does the NHS do to promote or cultivate health as opposed to fighting disease? Are there specific programmes and initiatives around that?
I will try to repeat that, if you can hear me all right. Deputy Madigan is asking about particular initiatives that the NHS may be involved in relating to health promotion and prevention of disease.
Professor Allyson Pollock:
The first question was really about the difference between Scotland and England. One of the important things to note is that England introduced an internal market purchaser-provider split in 1990. That model was followed by Wales and Scotland. However, when devolution came in 2000, Scotland and Wales took the step of deciding to abolish their internal markets. That was pretty much a silent revolution. People do not realise it even happened. It took place through legislation. They abolished the purchaser-provider split and reintegrated hospitals and services into health boards, making them responsible for the needs of the population. This required legislation. It was a legislative process. They have now gone further in that they are now moving to integrate social services into health services using a bottom-up approach, which is an interesting approach. That is the difference between Scotland and England and what has been happening in the past 13 years. Scotland has gone further. There was a political declaration by the Scottish National Party not to have private provision.
The second question was about information systems. These are the lifeblood of any health system. Scotland operates an information system, ISD Scotland. It is part of a special health board or authority. That is how information is managed. It is superb. It is the jewel in the crown of the Scottish health service. It means we can undertake many comprehensive studies. It very much mirrors the systems in place in Scandinavia.
Committee members will be well aware of the debacle over information in England, not only fragmentation but the care data scenario as well. The intention of the Bill we are writing is to put information back under the direct control of the Secretary of State and a health authority. At the moment, information in England is deeply problematic, especially care data, what has happened with general practitioner practices and the ability to get data.
The Deputy asked a good question about accountability on the part of the Minister. Again, my view is that if Ireland were developing legislation, those responsible should strengthen systems of accountability. I am referring not only to the Parliament but to accountability to the people as well. This is an area where we have seen a major weakening in England. We used to have community health councils, which had a direct right of appeal to the Secretary of State. We had a number of good mechanisms at local, district and regional level whereby the Secretary of State and the Parliament could be brought to account by local people. I think the question about accountability is singularly important. This point should be worked out in legislation. I hope that answers the questions of the first speaker.
The question of the second speaker related to the role of the private health care system. I would put it the other way around. I will put the following questions to committee members. What evidence is there that incorporating private health insurance and private providers actually ameliorates the inequity we see in the system? What evidence is there that they can deliver universal health care and social solidarity? What evidence is there that they can keep the costs of health care and transaction costs low and ensure there is no subsidy from the public to private sectors? That is what I would be going on. What is the evidence for private health insurance and private provision in ameliorating and preventing inequalities in health care and in ensuring universal access? There is considerable evidence to the contrary. All the evidence points the other way and suggests it does not.
There was a question about the 44% of people covered by private health insurance. Work needs to be done to understand the extent to which people use that insurance and the extent to which tax subsidies exist. We know there are such subsidies for people who use private health insurance. We know there are tax breaks to private health providers.
It is about building political consensus such that people can believe the system will be there when they need it and such that they do not need private health insurance. I think if there was major legislation setting out the intention, people would find that private health insurance would wither on the vine. It should wither away. Indeed, in the United Kingdom in spite of all the chaos in England, coverage by private health insurance is less than 10%. The figure has been falling since 2008. That is partly as a result of the financial crisis, but the level is far lower than the level in the Irish health system. Some countries prohibit private health insurance, such as Canada. The set-up in Canada prohibits a two-tier system from existing. Under the Canada Health Act health care is provided in the public system and people cannot use private health insurance as an alternative route.
These are things that need to be debated and discussed. The central issue is whether private health care, private health insurers or private providers reduce inequalities, increase access, decrease costs and ensure social solidarity. I am happy to come back in on that.
Deputy Madigan asked me about health promotion initiatives. As a result of marketisation, most public health functions in England have been transferred under Public Health England to local authorities. This has been catastrophic because local authorities have faced major cuts in social services expenditure and are facing cuts of £200 million in public health expenditure. Many vital health promotion and prevention programmes that were in place in areas like school nursing, health visiting, district nursing, smoking prevention and cessation and alcohol intervention are being seriously cut at the moment. Indeed, some of these services will no longer exist in local authorities. At the same time, because there is no longer a duty of provision on the Secretary of State, the individual clinical commissioning groups that have replaced the old primary care trusts and area-based health authorities are now decommissioning whole ranges of services. The criteria for hip arthroplasty and cataract procedures, for example, have been changed. Many preventative services, including some forms of surgery, can be seen as preventative. Hip arthroplasty, which is the most common elective surgery operation, can be preventative if it is done on time because it prevents people from falling and becoming disabled and enables people to continue to live at home. A range of services are being decommissioned, slashed or no longer funded in local authorities. I do not have a good news story for the committee from England. All of this flows from the abolition in 2012 of the Secretary of State's duty to provide.
I thank Professor Pollock for her stimulating presentation. I will ask a few quick questions. I was very taken by Professor Pollock's answer to my colleague's question about private health insurance. If we were to pursue a certain strategy and take a certain legislative route to provide for universal health care, would she recommend that we should work towards the Canadian model of ensuring no private health insurance is available? I have to say it is a very interesting theory. Speaking of theories, we are all familiar with the work of the NHS since its inception in the 1946 to 1948 period. There was a change in policy in the early 1990s with Thatcherism, etc. Has a lack of consistency in political thought under various Governments in the UK had a negative effect on how the NHS has been working in recent years? I refer also to the changes in the internal market, etc. Professor Pollock spoke in detail about primary health care and particularly the model that is adopted in Scotland, as opposed to Wales and England. Can she get into the details of the differences between what is done in Scotland and the rest of the UK? What does the NHS do so successfully to maintain staff in its system? This is a topical issue in Ireland because staff retention is a particular problem here.
This committee has been established to discuss how to provide a health service that is free at the point of entry and to which everybody can have equal access. There are interests in this country's health system that do not want such a service to be provided. Health care is a lucrative area for private companies, including private hospitals. We must base our recommendations on evidence. I would like more information about the US health care system, which is perhaps not a health care system. I would like to get evidence from Scotland, Canada and other places. We should be discussing such matters at this committee. I do not think Professor Pollock can deal with all of that today. She has given us an outline of the US system, which does not provide equal access for the people of that country. She referred to the UK example as well. I wish her well in her campaign to reinstate the NHS in Britain because I think it has been a beacon for many countries. I was very interested in her presentation.
I am moving in as close as I can. I thank Professor Pollock for her presentation. I would like to ask three questions. It has been suggested that there should be a shift in the Irish health service towards the establishment and strengthening of a model of hospital trusts. These trusts would have the power to raise their own finances independently and to outsource services from the private sector. I understand this has been a feature of the health system in the UK in recent years. I wonder if Professor Pollock can tell us whether it has been a good or bad experience. What has actually happened? Professor Pollock has argued that systems which are based on private health care are more expensive. Can she explain why she thinks that is the case? Is it fundamentally a case of profiteering or of wastage that might be associated with duplication or markets? Could Professor Pollock break down some of the information on that issue? In her book NHS plc: The Privatisation of Our Health Care, Professor Pollock argues that universal health care systems are superior to systems that target services and health care provision. Can she explain why she thinks that even though targeting of services and provision sounds fair, it often does not seem to work out that way?
Professor Allyson Pollock:
I was asked whether private health insurance should be outlawed for treatments that are being provided by the public sector, as in the Canadian health care system. There is a strong argument to be made for that on the basis of the evidence on private health insurance. I return to my original point about whether there is any evidence that private health insurance reduces or ameliorates inequalities. There is really no such evidence.
The Canadian health model is a very interesting one to look at, although it is under challenge at the moment. There is a constitutional court challenge being made in British Columbia on the very issue of private provision, private payments and private health insurance. Canada is under attack at the moment from a particular doctor, Dr. Brian Day, who has a very large private practice in British Columbia. All the available evidence shows that private health insurance does not reduce equalities or ameliorate health care, does not give the subsidy people argue it gives and results in greater inefficiency. Importantly, it also diverts staff and services. In Ireland, for example, I understand that 20% of beds in public hospitals can be used for private patients with private health insurance. That is a diversion of public capacity and it will get worse if hospitals are given more powers to generate private income. It means that staff and services that should be available for the public health and universal health system are being diverted and leads to distortions in the system.
The second question was on lack of consistency in government policy in England. The government has been entirely consistent in its policy direction. We had the Thatcher reforms on the Internal Market, which was followed by the period when John Major was Prime Minister. Apart from one small period when Frank Dobson was the Secretary of State for Health, the new Labour government was very consistent in pushing through greater marketisation. It introduced foundation trusts, for example, and continued with the private finance initiative, albeit against a backdrop of the largest ever increase in public expenditure. It was this increase that made these changes possible without hurting the system greatly. If one is marketising and privatising, one needs to push in a great deal of money, which is what has happened. We have, therefore, had an entirely consistent ideologically driven rather than evidence-based programme from the late 1980s onwards, culminating in 2012. The dismantling Acts of Parliament, which would not have been possible without all the implementing legislation that went before it.
That takes me into general practice. One of the key Acts of Parliament in 2003-04 was not just the law on foundation trusts but the changes to the way primary care was organised and delivered. Previously, contracts for general practitioners were between the secretary of state and the individual GP. What the 2003-04 Act of Parliament brought in was legislation introducing new contractual forms. After this, in addition to the traditional general medical services, GMS, contract, we also had the alternative providers of medical services, APMS, contract and variants thereof known as personal medical services, PMS, contracts, which could be negotiated with GPs. The APMS contract resulted in companies coming in, running and owning GP practices and employing general practitioners. This has created major problems and schisms in England. General practitioners on conventional GMS contracts are being underfunded and are handing back to the keys to their practices, with the result that some areas of England will no longer have general practices. At the same time, large companies such as Virgin, Care UK and UnitedHealthcare, a big American corporation, came in to run and operate GP practices and to salary the GPs. Some of these practices are not doing very well and the companies in turn are simply walking away from the contracts. As there is no duty on the Secretary of State to provide any more services, there is a very real risk that whole areas of England will be without a service.
One must be very careful if one wants to corporatise and bring in commercial companies to run and operate GP practices. The legislation was accompanied by more recent legislation which will allow GP practices to take patients from anywhere in the country. Practice boundaries were dissolved as of January 2016 and a variety of complex changes have been introduced that have changed health care from being area based to being membership based. I can explain more about that.
In contrast, while Scotland also has a crisis in the recruitment and retention of staff, it is nothing like the crisis affecting England. This is partly because Scotland has refused to introduce the APMS contract form, which means there are no commercial companies providing and delivering care. This is the result of a battle and legislation introduced in 2010 or 2011.
One comes to the very interesting question of how Ireland will retain staff in its national health service. My understanding is that it appears from OECD figures - these may be skewed and I am not sure how true this statement is - that general practitioners and hospital consultants are among the best paid in Europe when compared with their counterparts. I do not know how true that is as there was a problem in that the OECD could not include private practice in its figures.
Retaining staff requires a number of initiatives to be taken. There is the idea of being salaried. Terms and conditions and pay are what the trade unions and Irish Medical Organisation negotiate. However, there are other initiatives to do with professionalisation of the workforce. Our royal colleges have played a major role in this regard. There are lots of other cherries that go with one's status, however. It is not necessarily only related to pay, but also to doing a good job, being appreciated and being able to take and drive forward new initiatives. In my experience, these factors are a much greater motivator for most doctors and clinical staff than money. Salaries are important but much more important for staff is the day to day job they are doing and having the resources and capacity to innovate and drive change. One of the greatest triumphs of the national health service for many years was its ability to drive innovation and, through clinical innovation, to drive change.
The committee heard a great deal about the motivation of doctors in the two most recent sessions of evidence. The retention and recruitment of staff is important. We need to put plans in place but this is difficult when junior doctors are leaving medical school with debts of €100,000 or €200,000. They may not share the public service ethos or commitment that I and all my colleagues had. I did not pay any charges or fees when I did my degree. These issues need to be thought about and one needs to have an education system that encourages people to have a public service ethos and an obligation to give back and pay back for the rest of their lives. This is something we lose sight of in the national health service where there is an extraordinary feeling of obligation and giving back among staff every day. This will be lost now that students pay catastrophically large fees. The health system in Ireland must also think about the higher education system and training.
Deputy Joan Collins commented on her interest in universal health care and the problems with the US health care system and referred to the need to look at the systems in place in Canada, Scotland and Scandinavia. I would advocate looking at the Scottish model. While no model is perfect, the Scottish model always aspires to be perfect and it is a good model to look at. The Canadian health system, which is under threat from the constitutional challenge to which I referred, is another model to look at and think about. It is a more federal system. The Institute of Medicine report from 2012, for which I can send the committee a link, sets out very well that the US health care system is not only the most expensive and unfair system in the western world but also one that has enormous transaction costs.
Up to $3 trillion has been spent in 2012. Almost $1 trillion was actually spent, or was wasted, due to administration costs, fraud, unnecessary tests and unnecessary investigations, including surgery.
I will now turn to the question of trusts and the move in Ireland to establish hospital trusts to raise their own finances and add some services. We have been there before. In 1990 we inaugurated the internal market and allowed hospitals to become corporate bodies and use private finance initiatives, PFI, and outsourcing. The whole idea of raising one's own money is to look to the markets and private finance and of course the private finance initiative is a totally discredited policy on all sides of government. We are left with these major debts and not just in health but also in education, the courts, prisons, roads and so on. We have this extraordinary debt that we are now servicing for the next 30 to 60 years and very little control. So, if one wants to look at the catastrophe of allowing trusts to raise their own finances look at where our foundation trusts are today. Most of them have PFIs. They have been allowed to raise their own finances, they are carrying these debts which must be serviced off their annual income and 75% of foundation trusts are now in deficit with serious financial difficulties.
Allowing trusts to rely on PFI in that source has been problematic. The private finance initiatives, or public private partnerships, PPP, also include a mechanism for outsourcing ancillary staff and services. That was a disaster and many, if not most, PFIs have actually brought their services back in-house when the contract has allowed that to happen. They found that when outsourcing quality and standards fell, the costs were high and they were getting very poor value. That was instrumental in returning services back in-house into the hospitals. Foundation trusts who outsourced and raised finances are left with a very big problem in that as much as 15% or 16% of their income will now be going to service the debts of PFI. Everybody knows it is much cheaper for the Government to raise the money either through Government borrowing or through taxation. Look at the histories and experiences of PFI, including the recent report by the UK's Treasury Select Committee. It is a totally discredited policy.
The other big problem with allowing hospitals to raise more of their money privately is that they become much more keen on looking at income and they are no longer integrated into the health service. They are no longer putting the National Health Service services as a top priority. The income generation becomes really important. If the committee is really interested in the effect of allowing hospitals to do their own thing and to raise their own income only, look at the Mid-Staffordshire NHS foundation trust report, the result of an inquiry which lasted over 18 months. It is an enormous report which shows that at the heart of the problem was that the trust board were focused on income and income targets, including private income, to the detriment of patients and patient care. It is another argument for taking hospitals out of trust status and reintegrating them into the health service. The other argument is that while our hospitals are pursuing their own agendas, they are not now necessarily focused on the primary care, the rehabilitation and the prevention which is what we are interested in. They move further and further away into the risk selection and risk avoidance mechanisms when they are focused only on the bottom line.
Reference was made to universal health care programmes as opposed to targeting health programmes. It is a reality that in many universal health care systems one will also have targeted health programmes. One will have programmes such as breast screening, cervical cancer screening or immunisation. There will be programmes to target specific needs while under the umbrella of universal health care system. Problems arise when one does not have a universal health care system. This can be seen at its extremes in low income countries such as in Africa and India where one has practical health programmes with separate funding that are brought in but there is no universal health care system. They would have a focus, for example, on HIV and AIDS, on TB, malaria or diabetes, but they are not thinking comprehensively or holistically about the patient. Targeted health programmes have their place within the universal health care system. However, targeted health programmes have no place if one has no universal health care system. We should not be dealing with two.
The committee has not asked about the National Treatment Purchase Fund and our experience of using the equivalent of the National Treatment Purchase Fund, which was the fund for the independent sector treatment centres, ISTC. This was where doctors and patients could refer to the private sector under the rubric of choice. Some £4 million was top-sliced by the Government for the ISTC programme, which included NHS and private providers. However, the health select committee reports, of which there have been several, show that the ISTC programme did not provide value for money, it increased the costs, was inefficient and there was no evidence of innovation. That ISTC programme has been significantly rolled back.
I will stop there and I hope I have answered the committee's questions. If not then please come back to me.
Professor Allyson Pollock:
The Institute of Medicine report sets this out very well. The first issue is the huge transaction costs. Administration, billing, invoicing and the administrative costs of the market are, we know from the US studies, anything from 30% to 50% of the US dollar. That is very high indeed. In the UK, in the publicly administered services the transaction costs because of administration were only 6%. They were 5% if one looks at the first 40 years of the total budget, which is very low indeed. When we move to the internal market, with trusts and internal billing and invoicing, we move to 12%. It is very likely now, because we have compulsory contracting, that we are moving to the 20% or 30%. It is very likely because we now have teams of lawyers, accountants, management consultants on both sides - the trusts and the companies. Every time one has gone out to tender, there are six or seven bidders and all the process which that involves. That is the first big reason. It is the type of market which is very much more expensive than a public administration.
The second reason of course is the profit motive, which is hidden in all sorts of ways. One has profits but one also has to do marketing. If it is a commercial company it has to sell its goods so it will spend a lot on marketing and public relations. There are other costs. Given that there is risk selection and risk avoidance, one has to put in very expensive systems in order to select carefully the patients who will be treated, the more profitable patients and the healthier patients. Protocols would have to be developed and there would have to be risk management systems so that the costs are off-loaded when those patients get too expensive.
That in turn generates a new system of costs for the rump public sector that is left behind, which is inevitably the service that picks things up. In the UK, when things go wrong in our private treatment centres for elective surgery, and one needs to go back into intensive care, the first place one goes is back to the NHS. One always goes back there. Whether it is for outpatient or intensive care treatment, it is the NHS that picks up the pieces. Of course, the other thing is because the private sector is into risk avoidance, we will not get the same levels of primary prevention.
I noticed that in some of the evidence given to the health select committee Kaiser Permanente was cited. I will happily send the committee a paper we published more than ten years ago looking at the claims of Kaiser Permanente around its prevention and rehabilitation. Kaiser Permanente is a health maintenance organisation, HMO, in the US. It is highly selective in the patients it recruits to the insurance system and the patients it treats. It does not have a universal service obligation which means it selects out the more profitable patients, that is, those who can pay their health insurance, and the more profitable services. There is a huge mythology around Kaiser Permanente and I am happy to send the committee our published paper, which refutes and rebuts it.
I thank the Chairman and Professor Pollock for engaging with our committee. I have just one question. Our system is very fragmented, which reduces the quality of care to our patients, and there is a lack of integration, communication and information technology as well as a lack of resources in primary care and a lack of accountability in decision-making. All these factors lead to a very inefficient service, poorer outcomes, longer waiting lists and trolley queues in our accident and emergency departments. Many decisions in our system are made on an ad hoc basis and without consultation with the main stakeholders. We have proved, I think, that this cannot work given the state of our health service. My question relates to the incremental introduction of a new system. Professor Pollock suggested it is not a good idea. Is she suggesting that on a particular day, the system should change from what we have at the moment to a new system with a legislative framework and background? Further, would huge resources need to be put into primary care before such a transformation would take place?
I worked in the NHS in 2003 or 2004. Around that time, if my memory serves me correctly, there was a sort of realignment of the NHS, because the costs were getting out of control when it came to pensions, and there was a huge renegotiation of contracts. I was a junior at the time and I was not really thinking about a pension at that stage. My question is this. Has Professor Pollock any suggestions as to how we can anticipate such overruns and how we might manage those if we are looking at a universal health care model in this country?
I may not be right but my experience in the NHS was that there was a very good basic level of care, which was quite universal, and an extensive menu of services but that higher levels of treatment were not necessarily, in my experience, as good as perhaps we have here. There were huge restrictions. One thing that struck me when I returned to Ireland was that in Ireland, one got whatever treatment one required. Depending on the type of cancer one had, there seemed to be fewer restrictions. In the UK, there was huge input by the pharmacoeconomics departments into working out the cost-benefit of drugs. On the ground what that meant was that people did not get the same level of treatment that people in Ireland were getting for some complex illnesses. What is Professor Pollock's experience in that regard?
My understanding is that GPs in the NHS must reach specific targets when it comes to certain conditions. For example, they must do X amount of smears in a month and X amount of interventions with people with diabetes. I happen to have a family member who is a GP in London. From chatting about it, sometimes, in order to reach those targets for those specific and very important health measures, day-to-day bread and butter stuff like children with tonsillitis and other bits and bobs tend to get pushed to the side because GPs are so focused on meeting their targets for certain things within the basket of treatments that their surgery is to deliver. What are Professor Pollock's views on that and how it has trickled down and affected people's lives?
The prescription service in the NHS - I think the forms were called FP10s but the name may have changed - was free at the point of delivery. There were no prescription charges for pregnant women, army veterans or students as well as those who satisfied a means test. My experience as a pharmacist in Ireland is that sometimes we need a small barrier - not a massive one - at the point of delivery, so that people appreciate things and there is less waste. Does Professor Pollock agree?
I think that is it. Will Professor Pollock address the pitfalls in the GP contract, the levels of care comparatively between the two countries, that there are no barriers to access and the pressures unrestricted access to certain services put on a system?
Professor Allyson Pollock:
Yes. The question really is whether we should have a single piece of legislation to create a national health service for Ireland. I said my opinion is "yes". If one looks at all the countries that have introduced a national health service, theirs were usually fragmented, inequitable and a patchwork of services. However, that is not a reason not to introduce a single national health service. One builds on what one has got. Legislation will take a year or two years to enact and a further year to implement. During that time, the Civil Service and politicians need to be working in great detail to plan that service so that, as Deputy Harty said, it can open on a particular day. I think 6 July 1948 was the inaugural day for our national health service.
I would advocate having a single piece of legislation that makes the duty on the Minister very clear. Some of the best brains in the country are in the Civil Service and around this table and they could be working and planning for it. Of course, it does not just happen by enacting an Act of Parliament. It needs all the work that underpins it to thrash it out. I would go further in advocating that one would want to understand all the legislation that came before and bring it all together in one comprehensive piece of legislation. I worked with a brilliant barrister on our NHS Bill over a period of five or six years. I would say, "Go for it". Go for a really clean universal health care and a single tier health care system, I say, "Do it." One will never get there on the back of incrementalism. The lobbyists and vested interest groups are too strong and powerful and will always hold one back.
I thank Deputy O'Connell for the second set of questions. They were dating from 2003 and 2004, which was really a time of increasing marketisation.
This was the time of the new general medical services contract, which brought in the alternative providers of medical services.
I was asked a good question about pensions. Pensions in the NHS have always been pay-as-you-go. Actually, they have returned more to the UK Treasury than they have taken out. Last year, I gather £2 billion was returned to the Treasury, but I will need to double-check that. Anyway, more money was returned than taken out. Since then the UK Government has acted in a number of ways to put a brake on the total pension sum that a person can hold and to change benefit and pension entitlements. There are always things that governments can do if they believe pensions are out of control. However, pensions have never been out of control in the NHS. It is a pay-as-you-go model and it has been a good system, unlike other pensions.
The second question was whether Ireland was providing better specialist or tertiary services. If that was put to the people in our teaching hospitals, I wonder how they would respond. I have in mind Guy's Hospital and St. Thomas' Hospital, as well as St. Bartholomew's Hospital, where I work now. I think people can only make those sorts of claims in two ways. The first is using the research and evidence available. I would look at treatment rates for common things, including hip, plastics, cataract and cardiac treatment. I have a feeling that the United Kingdom is doing equally as well as Ireland. I am not meant to say we are doing better or worse unless I have the comparative data to say as much. In Scotland we recently finished a study looking at elective hip and cataract replacement. Can the health services here provide me with similar data to undertake a similar study in order that we could show that we are providing the same sort of access on the basis of need? That is why information is really important. We need to collect the data to look at that. Patients' perspectives are important as well. The Commonwealth Fund continues to rate UK health services highly, indeed, above Ireland, if we are to believe the ranking scores and surveys.
The third question related to phamacoeconomics. We have two issues. We have the dilemma of prioritisation and how we prioritise resources and services, as well as the issue of effectiveness, in other words, the evidence of effectiveness and benefit. The UK Government set up the National Institute for Clinical Excellence in 1999 or 2000 especially to examine evidence of effectiveness of drugs. The institute includes the quality and cost dimensions in its considerations. There is an issue here for Ireland because when I have looked at the health systems and transition reports, it appears that Ireland, even though it could be a monopsony purchaser on the part of Government, has very high drug costs. Of course those costs get passed on to patients. If those involved were to do more negotiation with the drug companies, they might be able to get drug costs down and that would have a significant impact on the budget in Ireland.
The UK National Institute for Health and Care Excellence is important because it brings some evidence of efficacy and effectiveness, as well as the cost-benefit analysis. It has been an important body in terms of negotiation on the entry of drugs into the public system, as well as helping as part of the negotiation around cost. It is a model we should look at to see whether it is something that would suit Ireland. One of the major problems we have with drugs in all countries arises when we give a drug marketing approval. Our regulators give approval for the market and then, it is a free-for-all. One of the issues for a public system is the nature of the evidence of the benefit and on what basis should we give access to the public system. That is always a dilemma, whether for vaccines or drugs. That is why we need a scientific approach. We also need to negotiate hard with the manufacturers, because the prices of drugs and technologies are one of the greatest inflationary costs, much more so than staff costs. They are an enormous inflationary driver. We have to control those costs and ensure far more rational medicine and diagnostic use.
I was asked a good question about targets for general practitioners, GPs, and whether the targets were actually preventing them from being more holistic in their approach. Indeed most GPs would argue in favour of this view. The NHS quality and outcomes framework, QOF, has been greatly disliked by GPs because it links payment to targets. They believe this undermines their more holistic role. The system was brought in as part of the new corporate framework, the alternative provider medical services and general medical services contract revisions. Scotland now has abandoned and got rid of its QOF and England is beginning to move away from it more and more. I hope that answers the question. Targets were part of a market critique. The idea was that we had to have market incentives and payments but what resulted was that these market mechanisms created perverse incentives to focus not on the patient but on the numbers. The focus was on the numbers rather than what the needs of patients were and whether given treatments were the right treatments.
I was asked about FP10 prescription charges. In England it is indeed the case that the majority of people who receive a prescription are actually exempt because they fall in to the category of pregnant women, children under 18 years of age or older people. Scotland and Wales have now abolished prescription charges completely. There has been no obvious evidence of an inflationary effect. I will offer some anecdotes here. Some GPs argue that it has actually improved their prescribing. Before, they were conscious that patients had to pay for the prescriptions and therefore gave the patients double or triple courses and far more drugs than they needed for longer periods. Now, they can give short courses, see the patient again and, as a result, there is less waste in the system. The evidence of prescription charges is that they curtail access. They are a major barrier to access. There is no evidence that having a prescription charge is a good thing or that it results in rational medicine prescribing or use. Again, Scotland and Wales would be good to look for. There is still a movement in England to abolish prescription charges. There is also evidence that the cost of collecting those charges is problematic. The cost of the administration is greater than the prescription charges income. There is good evidence on that as well. I can send the material to the committee. I hope I have dealt with those questions.
Thank you very much, Professor Pollock. I have one further question. You referred earlier to the geographic organisation of health services. In Ireland, the HSE is a national organisation, but it has recently reorganised the hospital sector into six hospital groups - these were referred to earlier - with some intention to move towards hospital trusts. At the same time, the primary and community care services are organised in nine different community health organisations. I would welcome your opinion on whether that is a viable way of organising services when there is no alignment between hospitals and primary and community services.
Professor Allyson Pollock:
This is horizontal integration. The market moves towards vertical and horizontal integration. This is rather reminiscent of what happens in the United States, where there are hospital groups and primary and community care service groups. I think it is deeply problematic because the idea of the Secretary of State having a duty to provide is that this duty is then devolved or delegated down to contiguous areas that cover all the population in a country. We really want those areas to be responsible for providing and delivering the services their residents need, including primary care, community care, mental health, acute services, rehabilitation and prevention.
That cannot be achieved if silos are created like hospital groups which become increasingly powerful, or primary care community groups. The funding, 3% of the budget for primary care, is so small that they will never be able to withstand the hospital groups and it is much more likely that they will be incorporated into the hospital groups in a sort of accountable peer organisational model. That is the real risk because these accountable care organisations, ACOs, like the American health maintenance organisations, HMOs, which were the forerunner of ACOs, are coming into play. What is needed are area-based populations with responsibility in those areas for providing and ensuring universal services which are integrated in that area. That can never be achieved through hospital groups and silos of primary and community care. If anything there is a risk, under the HSE, of creating the American type of ACO which would have mechanisms for cherry-picking and risk selection. I think that is a very worrying development, especially if hospitals and these hospital groups will be given more powers to raise their own income through private finance and private income generation. That is a very worrying and disturbing development.
That development has been paralleled in England which has now abolished its area-based structures. We had area-based health authorities, which became primary care trusts but they were always area-based, and in place of them are clinical commissioning groups, CCGs, but they are membership-based and look after only the residents who are members of their CCGs. One becomes a member by joining a general practice. The legislation is in place for us to move much more to the sort of grouping the committee describes. We are seeing this happen with our hospitals and our primary and community care organisations with federated structures in order that hospitals and primary care and community trusts are merging across large areas. We are seeing that under the guise of the national system but it is a move towards a US HMO accountable care organisation with all the dangers and warnings that brings from the Institute of Medicine. If this is happening in Ireland, it makes the case for legislation to bring in a national health service even stronger.
That completes the questions from the committee. I thank Professor Pollock very much for her contribution to the important work of this committee, for being so generous with her time and answering our questions so thoroughly. We appreciate it very much.
Professor Allyson Pollock:
I thank the Chairman and wish the committee very good luck with its deliberations. It is so important for the people of Ireland to get this right. It is marvellous that there is cross-party political support for this. I wish the committee very good luck in its endeavours. If there is anything I can do now or in the future to help, please let me know.