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Mark Britnell: the NHS funding model is no longer 'resilient'

A sophisticated discussion on how – and how much – the health service should be funded is badly needed to avoid undoing two decades worth of progress.

The expedient concessions to the Health Bill made by the government in the face of accusations of “privatisation” could be strategically limiting for the NHS.

Equally, the rapid jettisoning of price competition policy without any rational debate may also deny the NHS the opportunity to realise efficiencies in the short term.

It is no good pretending that the health sector can simply turn over and have its belly tickled to produce the scale of savings required for healthcare reinvestment.

It has been well chronicled that public sector productivity in the UK has been 20 per cent less than the private sector over the last decade, a lost opportunity in excess of £70bn. Repeated studies from the National Audit Office and Audit Commission demonstrate that equivalent services could be provided for less cost.

All over the world, the size of the state has been increasing but the global recession has forced all countries to think about the right balance between civil society and public expenditure.

In 1870, the UK committed 9.4 per cent of GDP on government spending; by 2009 this had risen to 47.2 per cent. Globally, the average increased from 10.4 per cent in 1870 to 47.7 per cent in 2009.

People are marching against public service cuts but the “smaller state, bigger society” initiative will only reduce the size of Britain’s state to its 2008 level.

The heated discussions over how revolutionary the health reforms actually are may be misguided. They are missing a much bigger point: namely, are the reforms the right ones in the face of ageing demographics, increasing long term conditions, rising consumer power and costly technologies and pharmaceuticals?

Countries all over the world have different blends of state payment and self payment, compulsory and voluntary insurance, high and low taxation, private and public investment and private and public provision. It may well be the case that truly radical healthcare reform in the future will look at the best balanced portfolio as citizens, taxpayers and patients debate the rights and responsibilities of individuals.

Eastern promises

It appears that countries that have a mixed blend of public and private provision, co-payment and social insurance are possibly more capable of providing resilient healthcare systems.

It is no coincidence that the Netherlands and France – two of the highest performing health systems in the world, as ranked by the World Health Organisation and Commonwealth Fund – have mixed insurance and provision systems, both underpinned by principles of social solidarity and universal coverage guaranteed by the state that lean more upon Bismarck than Beveridge.

It is also the case that developing countries are trying to learn from, and leapfrog, mature Western systems.

For example, Singapore, a small state of only 5 million people, is generally considered to run effective public services for only 19 per cent of GDP. Singaporeans value their public services but many are provided by private sector organisations.

The country’s economic growth, currently standing at around 8 per cent a year, is partly achieved by “good, cheap government”. The prime minister, Lee Hsien Loong, believes that the West’s mistake has been to set up “all you can eat” welfare states: because everything at the buffet is free, it is consumed voraciously.

Singapore’s approach, by contrast, is for the government to provide people with a sort of individual savings account that enables them to take greater personal responsibility. The central provident fund enables people to pay for their own housing, pensions, healthcare and even their children’s tertiary education. Singapore only spends 3.9 per cent of its GDP on health, yet its average life expectancy is over 80 years.

Singapore offers universal healthcare coverage with a financing system anchored on the twin principles of individual responsibility and affordable health for all. Market based mechanisms promote competition while tiered insurance covers all citizens. Provision is mixed, with the public sector providing approximately 80 per cent of care in the acute sector while the primary care sector is dominated by the private sector. It’s not ideological but it’s practical and it works.

So, back to the NHS. The debate about price competition was disingenuous. First, many areas of clinical activity do not have a tariff so price competition already exists. Second, many commissioners negotiate around tariff price to deliberately support organisations or services. It wasn’t price competition that confronted Mid Staffordshire: strong but narrow performance management, a distracted board with big financial challenges and weak internal clinical accountability all contributed to its problems.

Selective competition could improve some services and reduce costs. The rhetoric surrounding the Health Bill could potentially undermine progress that has been made over the past two decades. In the UK, we are dogged by polemic political hyperbole when a more sophisticated discussion might better serve the long term interests of the NHS and our global competitiveness.

Readers' comments (22)

  • Intellectually sound, evidence based argument with a logical conclusion. Unfortunately sophisticated discussion and the NHS are an oxymoron; impossible where politicians continely respond to a public who expectations and beliefs regarding the NHS are set in 1948 and are supported by a media that sees feeding these beliefs as key to continued market share. The future of healthcare in the UK is not about changing funding but changing the population's beliefs. Politicians have no stomach for this and the media no commercial interest

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  • Jonathon  Tomlinson

    This is hardly surprising, and a salutory warning about the ideology guiding NHS reforms. Firstly the contempt for evidence and the enthusiasm for comparing apples with oranges. By this I mean the comparison of productivity in widget manufacture with productivity in providing public services. Secondly the comparison of a complex, liberal culturally diverse country (UK) with a culturally homogeneous, wealthy city state.
    Finally and most worrying, considering Mark Britnell's power and influence, is the effect of Singapore's tax on the sick, which is to widen inequality (google singaporemind healthcare burden for examples)
    Recent elections reported yesterday: "Singapore's ruling party suffered its worst-ever election result since independence in 1965 as youthful opposition parties tapped voter anger over high living costs and rising inequality in the wealthy city-state"
    I do believe that is the way we are being led by our present government.

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  • errr... Mark writes that in Singapore... "the primary care sector is dominated by the private sector"...

    but isn't that basically what we have in the NHS too? GPs are predominately private sector, aren’t they?

    Or did I miss something?

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  • Jonathon  Tomlinson

    This is hardly surprising, and a salutory warning about the ideology guiding NHS reforms. Firstly the contempt for evidence and the enthusiasm for comparing apples with oranges. By this I mean the comparison of productivity in widget manufacture with productivity in providing public services. Secondly the comparison of a complex, liberal culturally diverse country (UK) with a culturally homogeneous, wealthy city state.
    Finally and most worrying, considering Mark Britnell's power and influence, is the effect of Singapore's tax on the sick, which is to widen inequality (google singaporemind healthcare burden for examples)
    Recent elections reported yesterday: "Singapore's ruling party suffered its worst-ever election result since independence in 1965 as youthful opposition parties tapped voter anger over high living costs and rising inequality in the wealthy city-state"
    I do believe that is the way we are being led by our present government.

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  • Daniel Steenstra

    I hope that this article is not representative of the advice that Mr Britnell is giving the Prime Minister. Rather than a ‘sophisticated discussion’ we need intelligent and practical solutions; there’s no time for talking, it’s time to act.

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  • Six months ago Mr Britnell told a conference of private healthcare executives: “In future, the NHS will be a state insurance provider not a state deliverer", and that “The NHS will be shown no mercy and the best time to take advantage of this will be in the next couple of years."

    These words, playing to his home crowd in the world of big business, tell us all we need to know about this man and his views on the NHS.

    Could he tell us how this extraction in profits of billions of pounds of tax payers money from the NHS by global health corporations will lead to lower health care costs?

    If the NHS is inefficient could he explain why the UK *still* spends less than the OECD average on health care even with big increases in funding in the last few years?

    Could he explain why, despite this, we have the best end of life care in the world, the best heart surgery outcomes in Europe, one of the most equitable and accessible health systems in the developed world, the fastest improving cancer outcomes, MI survival rates set to equal or exceed those of France if current trends continue (although we have spent billions less per year for decades) and lower administration costs than comparable countries?

    No, because this would mean a departure from vague clever-sounding management speak and involve engaging with objective facts and evidence in the actual real world.


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  • Paul Haworth writes well and has some interesting viewpoints. Perhaps he should be writing an article for HSJ. I would like to read it. It would be a nice counterpoint to the overly positive spin that Is being written to make us think that our system is not as good as it actually is. Maybe we should think carefully about the interests of those who write about radical change versus continual improvements. Change often means personal gain, so look for the proxy, the agent of change who is selling the vision. It may not be immediately obvious how they will gain, but they will, eventually.
    Keep writing Paul.

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  • Daniel Steenstra

    On reflection I feel that this article demonstrates not only why the NHS is in the state it is now but also the real challenge it is facing – too many managers and not enough leaders. In this time of crisis the NHS does not suddenly need a debate about issues that managers –and politicians- have been avoiding for years. It needs true visionary leaders, who can step up to the plate and help it to find and implement radical and effective solutions –in other words: innovate.
    I understand that Mr Britnell has been a high flying career manager in the NHS, was recognised as best of breed and as a result poached by the private sector. His advice therefore can be considered to be symptomatic of how managers throughout the NHS are trying to deal with the current situation – let’s talk – whereas we all deserve clear thinking and workable solutions. If this is what the best of breed are working on, God help us all.

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  • Roger Steer

    Sophisticated discussion?
    Return government spending to Victorian times?
    Make the UK more like Singapore?
    Most people in this country think there is a state run collective Health insurance - its called national insurance. But the arguement was made that a hypothecated health fund wasn't sound public finance as it reduced the flexibility of government to move the money round according to the expediency of the day.
    This was a mistake because funding of healthcare ceased to be a political issue. Whatever spending was it was not matched to income.
    What is happening now is that the NHS is being asked to cut its spending because government income is reduced not because there isn't a need for healthcare or it isn't a priority for the population. It is said that we cannot keep on spending more on healthcare. Why Not? UK spending is still lower than the EU average(and with a massive backlog) and is almost half that of the US.
    This crisis is all of the governments own making. It could have said The country is in a pickle because of the decline of our banks to which state coffers became overly reliant but we are taking measures to get out of trouble. In the meantime spending on the Health service will be protected in real terms and increases allowed for to meet increased demand.
    There was already acceptance of the purchaser /provider split; the need for fewer better commissioners; and a tactical use of the private sector to overcome waiting lists ; bottlenecks and those areas the NHS hadn't kept up with the new models of care.
    What was the problem they were so desperate to cure?
    It's seems that many think that the public /private split in healthcare needs to be shifted more to the private sector. The problem with that is that the best ways to do that: tax incentives and running down the quality of the NHS are poltically unacceptable. Not able to do the direct proxies of handing commissioning to GP's (who are judged to be more sympathetic to the private sector) and hiving off FT's to enable them to make alliances with the private sector out of the public gaze(scrutiny powers over FT's are very limited) have been adopted.
    Would it have worked? It might have were it not for the reluctance of many gp's; and the coincidental launch of the £20bn savings programme.
    It is Sir David Nicolson who has scuppered the governments plans- no one can disentangle the effects of the Bill and the crisis on the ground as crude cost cutting drives the NHS. Sacking many of the managers that keep the show on the road hasn't helped.
    Sophisticated discussion? Return to basics I say.
    1.Fewer stronger properly governed PCT's without GP control.
    2. A commissioning Board with the power to achieve strategic change installed.
    3. More scrutiny and control of FT's but enhanced powers to borrow.
    4. Move from light touch regulation to stricter regulation to safeguard quality.
    5. Long term funding assurance

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  • For a comprehensive rebuttal to the this , check out
    http://www.healthpolicyinsight.com/?q=node/1090

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  • Mark is correct and his wider eastern experiences should make us reflect on what can be achieved. it must not be competition for ideological reasons but because it may be able to improve outcomes and increase choice. Why are NHS proffesionals so afraid of competition from providers other than themselves. If the NHS is as good as it believes it is it will win hands down by providing better outcomes and retaining surpluses for reinvestment. We all know that NHS reform is held up in the sameway as the print unions held up change to the newspaper industry. it needs a Mr Murdoch to drive change ensuring we have more choice and better services. the NHS needs more of Marks thinking turned into practice. An NHS for the age we live in not the age it was born in. Great to see enlightened doctors supporting reform in the Telegraph and Times .The reason we have a thriving newspaper industry is thanks to radical reform a lesson for the NHS.

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  • Let's be clear about this. Mark Britnell does raise some interesting points, but his argument is a bit like decorations on a Christmas tree; look pretty but don't really hang together. Couple of examples:
    - endlessly banging on about productivity is meaningless unless its given a proper menaning and context. Do we want more activity or do we want a different type of activity (with maybe less throughput) ? This is one in a whole load of comments in which he's flung the P word around without any real context and it's a far too one-dimensional approach to the challenges wer're facing
    - Britnell acknowledges the importance of long term conditions (and I agree), but this is reall an argument for difficult descisions and service-reshaping, not modes of funding. Try and match the answer to the question
    - his quote on 'equivalent services' shows also that he's missing this trick
    - mark Britnell may have been an NHS manager (and from what I hear, a pretty darn good one). But let's not pretend he's representative or symptomatic of what NHS managers currently think. He's not - he's working in the private healthcare sector and if I was doing his job, that's the audience I would be plyaing to and that's what his article reads like. Nothing wrong with that, but no one voice speaks for all of managers
    - he's right to question the reforms; it could be argued they aim to tackle a current acute elective agenda, but fail to think coherently about long term conditions and the need for service change. Unfortunately, I feel that Mark's solution tends to do the same.

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  • I passionately oppose Mr Britnell's proposal, however I agree that the funding model MUST BE DISCUSSED.

    This is what the government is refusing to do. Ministers repeat "free at the point of use" as a meaningless mantra whilst advancing ideas, e.g. personal choice and the unqualified pursuit of quality, which ensure that it is unsustainable.

    (Simon Burns referring to PCTs as having the responsibility of stopping GPs charging for access to NHS services, whilst describing them as "unnecessary", is a good example - see http://tiny.cc/SimonSays55).

    Important matters like choice and quality need to managed very carefully (perhaps expensively) in a tax-funded system.

    If we do not want to pay that price we must honestly dismiss "free at the point of use" as too expensive. It is wickedly dishonest to pretend that the principles of the NHS are compatible with the current proposals for future health service provision in England.

    This is far too big an issue to be addressed by tweaking a largely complete piece of government legislation. The simple clause that needs to be added is for a referendum on the implicit decision for England to opt-out of the NHS, once the Bill has been passed, but before it can be implemented.

    I am sure that Mr Britnell will be ready to brief Mr Cameron. It will be interesting to see which side Mr Clegg takes on this referendum!

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  • Sorry, this debate is far too intellectual for me - but a point for clarification please. If a country legislates that private individuals must subscribe to private health insurance that then pays for private health provision, presumably none of that money appears in the country's public spending figures - so the effect is the same as a tax and spend system but the % of GDP spent by government is much lower? So comparing the UK's % of GDP with Singapore (or even France) is misleading at the very least.

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  • Martin Rathfelder

    Moving to an insurance based system appears, in other countries to lead to the consumption of more healthcare, not less, by those who can afford the insurance. The problem in most countries is that in sufficient attention is paid to public health. Efficiency, as far as patients are concerned, comes from prevention.

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  • Daniel Steenstra

    It should really come as a surprise that this article is coming from the private sector. A continuously changing environment is a given. You have 2 options – or you develop the capability to deal with these changes and innovate your products or services (Apple – Virgin) or you don’t, in which case you’ll go bust (MG Rover, Woolworth). Going back to your shareholders and asking them for more money and suggest different sources of funding is simply not an option, unless you can demonstrate that you have the capability to deliver a return on their investment and increase value. The NHS cannot demonstrate this, despite having spent millions with the big four consultancies. The fact is that the 288% increase in funding the NHS has received over a 12 year period, courtesy of the previous government, has not resulted in a proportionate improvement in services. So how much does it need to improve – 500%? 1000%?? And where does it get this sort of money from?
    The much more fundamental challenge therefore is how the NHS can develop its capability to innovate and improve its services as without it any investment will be throwing good money after bad. The White Paper and the Health and Social Care Bill quite rightly put the onus for this on the NHS itself. I get the feeling that that the NHS better get on with it and should not rely on its management consultants as it appears that they do not have anything constructive to contribute to this much more fundamental discussion.

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  • phil kenmore

    At last! An interesting, reasoned and well argued debate across a series of readers comments above from lots of different viewpoints. Mark has a 'marmite' affect - with those loving or hating his views in equal measure - but at least he has stimulated the beginnings of a proper debate. Which was the real point.

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  • Reasoned, well-argued and interesting it may be. Politically savvy it certainly is not.

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  • Jonathon  Tomlinson

    My detailed response is here: http://abetternhs.wordpress.com/2011/05/12/patients-responsiblity/

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  • What a refreshing contribution-the shame is that politicians will not dare be honest about the NHS less it costs them votes.

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