Now It's Britain's Turn for a Health Care Reform Battle

LONDON -- At the height of last summer's heated debate over health care reform, the British National Health Service came under fire from those anxious about the prospect of a "public option" in the United States. For many conservatives, the NHS was the very embodiment of the sort of socialized medicine championed by many politicians and interest groups on the left (including, at times, President Obama himself).

How ironic, then, that barely a year later, the Brits are engaged in a health care reform battle of their own. At the heart of the debate is a proposal by the U.K.'s Conservative Party-led coalition government to fundamentally restructure the NHS so as to introduce greater choice and competition. And the government is fighting a war of words against a loose coalition of opposition politicians, journalists and NHS stakeholders, all of whom are worried about reducing the state's role in health-care delivery.

Billed in some arenas as "the biggest shake-up of the NHS in decades," the initiative is decidedly un-revolutionary in one respect: The NHS will remain available on the basis of need, free at the point of use and funded through tax revenues. In other words -- and in marked contrast to the U.S. -- universally available, publicly funded health care will still be the norm in the U.K. Equally significant, and consistent with a pledge Prime Minister David Cameron made during his election campaign, the NHS budget will be "ring-fenced" from budget cuts, even while other policy areas face reductions of up to 40 percent.

Within that overall financing framework, however, there are three significant changes afoot. The first will abolish two layers of bureaucracy and devolve authority over health care commissioning to general practitioners (GPs), who will take over the purchasing of care. Second, the private sector will be given greater scope to compete with the public sector to provide services to those doctors. Finally, an independent, non-governmental economic regulator will be put in place to ensure that such competition is fair.

In short, there will be less bureaucracy, greater competition and newly independent regulation over the next four years as these reforms take hold. There are also a number of subsidiary changes that reinforce this market ethos, including greater patient choice in the selection of doctors and hospitals, abolishing the cap on private-patient income at NHS hospitals, greater financial and operational autonomy in the way hospitals are run and the shuttering of numerous regulatory bodies in favor of a more streamlined approach.

Just how "revolutionary" these ideas are is open to interpretation. It's certainly true that some version of markets (or "quasi-markets," as they are referred to in the trade) has been around since the early 1990s, across Conservative and Labour governments alike. In that sense, as Julian Le Grand, a professor of social policy at the London School of Economics and former senior policy adviser to Tony Blair, puts it, these reforms are more "evolutionary than revolutionary." But according to Chris Ham, chief executive of the King's Fund, an independent health policy research center in London, "No government has been as bold as we're seeing now."

Why is it so bold? Well, let's take doctors, who will be at the heart at the British health care delivery system. The new plan does away with 10 Strategic Health Authorities, which currently oversee regional planning for the NHS, and also abolishes 150 primary care trusts that currently commission health care budgets. In their stead, Britain's 35,000 GPs would be obliged to band together by 2013 in groups of roughly 50. The 500-600 or so "consortia" that emerge from this framework will then commission treatments from hospitals on behalf of patients. Of particular note, GPs will be in charge of administering 80 percent of the NHS budget -- some 80 billion pounds (approximately $127 billion). The basic idea, as Le Grand put it to me, is that "the person who makes decisions about the allocation of budgets should also be the budget holder."

The second major prong of the reform initiative allows "any willing provider" -- private or public -- to bid for NHS contracts. It also compels hospitals to be much more upfront about their performance. Armed with information about, say, which hospital in London has the best record on treating strokes, the idea is that patients will move from a system based on bureaucratic targets (e.g. nationally mandated waiting times) to one based on outputs. More choice and more suppliers are thought to represent a fundamental change in orientation within the NHS, away from a norm of "collaboration," as one hospital administrator put it to me privately, and "towards a norm of competition."

Not everyone buys that any of this is all that novel. Patrick Dunleavy, a professor of political science and public policy at the London School of Economics, dismisses the idea that this reform initiative is anywhere near as bold as the press is making it out to be. He points out that the NHS gets reorganized every two-three years, and the latest initiative amounts to nothing more than "moving deck chairs around." By way of example, he points to the devolution of authority away from the Primary Care Trusts towards the GP consortia: "So you're getting rid of 150 bodies and replacing them with 630? I don't see how you're changing much except pushing the numbers up." For Dunleavy, this is instead one giant exercise in bureaucratic reorganization.

However radical this reform agenda is or is not, the question is whether any of it will work. And here, there is a fair amount of skepticism, even among those, like Ham and Le Grand, who think that the reform is moving the country in the right direction.

First of all, are GPs up to the task at hand? They're about to inherit an 80 billion pound budget. That's a whole lot of money to turn over to a bunch of family doctors. Ham, who's studied physician-led medical services in the United States, is generally supportive of the concept, but also emphasizes that it can only work if GPs are motivated and competent.

Commissioning will require managerial, negotiating and data-analysis skills that many GPs neither possess nor signed up for when they trained to become doctors. Moreover, Dunleavy is not at all convinced that a bunch of "little guys" are going to negotiate better contracts than a few larger players. "It's like saying, 'Let's have all our contracting done by family shops instead of by big supermarkets,' " Dunleavy observes. "The whole point is to have expert fire power."

A related issue is the perennial political science question: "Who guards the guardians?" Even assuming that GPs can hit the ground running with sound negotiating skills, who's going to ensure that they are managing their budgets well? To be sure, some quality control will be secured through the market itself, insofar as the new system will enable patients to leave their GPs if they don't like the service provision (something that's not possible under the current system, where GPs are geographically assigned).

But Le Grand isn't certain that "the threat of exit" will be powerful enough to ward off an incentive for doctors to under-treat, particularly when you've just eliminated two layers of bureaucratic oversight. And even if most GPs are honest, Ham is skeptical that the government's proposed independent commissioning board will be able to hold 500-600 GP consortia accountable at once.

Ham also worries about what he calls a gap in "system leadership" to address broader, strategic planning questions confronting the U.K. in health care right now. London is famous, for example, for its mismanagement of acute hospital care. (By way of example, 25 percent of patients in "acute" hospital beds don't need to be there.) But without the Strategic Health Authorities, it's not clear who will decide, for example, which hospitals in a given region should have maternity wards and which should not. It's also an open question whether the government, and its newly empowered economic regulatory agency, will actually pull the trigger when (and if) it emerges that certain public hospitals just can't cut it in a more competitive environment.

Which brings us to politics. In theory, allowing greater competition from the private sector will result in an innovative model of service that will in turn pressure public organizations to do a better job. In practice, however, and as Chris Ham points out, there's a "zero-sum quality to this competition, because it takes place within the context of a fixed budget." Because if more money flows to new market entrants, by definition less money will flow to existing health care providers. And that may bring with it staff reductions and/or budget cuts to the NHS. "That might be unpopular and difficult to explain politically," Ham points out. "Think of the MP [member of parliament] who has to close down a local hospital."

It's already clear that the British Medical Association -- the trade union for doctors in the U.K. -- is not wild about the market reform agenda. Ham thinks that GPs alone may block effective implementation unless they are given something sufficiently attractive in exchange for the new responsibilities that now await them. Moreover, Patrick Dunleavy points out that by 2012 -- (because of a two-year pay freeze at the NHS) -- every NHS worker will be poorer by 10 percent in salary. If you add that to the general spending cuts contemplated by the current government, public sector unions will be "hopping mad by 2012 and 10 percent poorer."

Ham is also concerned about the transition period, although less for political reasons than for administrative ones. "It's easy to write a scenario where over the next 12-18 months, a series of problems arise around funding, balancing budgets, short waiting times, performance deteriorates and creates problems before a new structure is in place," he warns. Dunleavy is almost certain that this will happen and kill off the reform in the process. And then, in his opinion, the whole thing will amount to nothing more than "a huge waste of time."

In this sense, however different the American and British health care reform initiatives are on the ground, they share this crucial similarity. Will the changes envisioned by each government deliver -- and deliver fast enough -- to confer benefits before the inevitable opposition and/or administrative missteps kick in? Or will both reform programs die before they have a chance to prove themselves?

Only time will tell.

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