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«Edited by ANNE MASON Research Fellow, Centre for Health Economics University of York and ADRIAN TOWSE Director, Office of Health Economics Radcliffe ...»

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Another controversial policy in Britain is the use of the private sector as a provider and, in the near future, as a commissioner of health care. In order to create uncertainty and augment capacity to hit elective waiting time targets (Stevens, 2004), the government has contracted private providers who are typically paid at PbR rates plus a premium of 15% to encourage market entry. While such providers appear to be exploiting both economies of scale (e.g. purchasing limited ranges of prostheses) and tighter clinical pathways, it is inevitable that they cream-skim, e.g. taking routine hip and knee cases, leaving the NHS with complex patients and revisions. In primary care, only one general practice in Derbyshire has been ‘privatised’ to date, with United Health of the USA contracted to provide local NHS care.

Those with an egalitarian perspective want the public sector to be stronger and the private sector weaker because they are concerned that social solidarity will be undermined, allowing the affluent and the articulate to opt out. This threat can be minimised if the regulatory framework is robust and efficient, which is not the case in the current NHS, as private entities are contracted to carry out some NHS activities. However, there is a risk that such work will produce profits from NHS funding that will be used to advantage private patients, and that once private entities have a share of NHS business, they may exploit this through the legislative processes.

As Williams argued, there is scope to learn managerial techniques from other systems. However (he argued), ‘I observe that many of the supposed “improvements” in “efficiency” contain implications about priority setting in health care which seem to me to have a quite strong (though implicit) ideological component and which I feel bound to reject because of their distributional implications’ (Williams, 1988).


As Williams would have argued, the crucial ingredient absent so far in the discussion of demand and supply-side failures is patient outcomes, i.e. do clinical interventions improve patients’ mental and physical functioning? As he remarked, it is strange how the medical profession usurped the role of economists in being ‘dismal scientists’ with their focus on failure indicators such as mortality, complications and readmissions, while our ‘noble profession’, at least the health economists, wished to focus on success and the improvement


of the patient’s health status! His innovative work on outcomes with colleagues such as Paul Kind tackled what is an old problem.

The Babylonians were clearly interested in what the Americans now call P4P, or payment for performance; this ‘health indicator’ can now be found in

the Louvre:

–  –  –

Subsequent generations of physicians have advocated the systematic recording of activity and success including Thomas Percival (1740–1804), a Warrington practitioner who wrote a pamphlet on the internal regulation of hospitals in 1771, the editor of the Lancet in 1841, who repeated the advocacy of Francis Clifton, physician to George I in the previous century, by calling for systematic data collection and management, and EA Codman, an early 20th century product of Harvard, who lost his staff privileges in 1914 when Massachusetts General Hospital refused to institute his plan for evaluating the competence of surgeons. Codman was an advocate of an ‘end result system of hospital standardisation’.

Percival in 1803 argued:

By the adoption of the register, physicians and surgeons would obtain clearer insight into the comparative success of their hospital and private practice; and would be incited to diligent investigation of the cause of such difference.*

Codman in 1914 argued:

Every hospital should follow every patient it treats long enough to determine whether the treatment has been successful, and then to inquire ‘if not, why not?’, with a view to preventing similar failures in the future.†

And finally, Kind and Williams in 2004:

–  –  –

* www.thornber.net/cheshire/ideasmen/percival.html † www.whonamedit.com/doctor.cfm/2558.html


While Florence Nightingale’s advocacy of ‘dead, relieved and unrelieved’ as outcome measures (Nightingale, 1863) had some temporary impact in the 19th century and, prior to the establishment of the NHS in 1948, especially in psychiatric hospitals where such monitoring was obligatory, the last three decades have seen the proliferation of generic and specific quality-of-life measures, their translation into dozens of languages and their application in thousands of clinical trials, but an absence of their routine use in clinical practice.

Thus a necessary criterion for measuring and managing the success of the competing ideologies, namely applying existing generic and specific patientreported outcome measures (PROM) in routine primary and secondary care, is absent. How that could be incentivised is a nice issue, e.g. obliging commissioners to contract on the basis of PROM performance and incorporating routine PROM assessments in primary care via the QOF. Without such incentives, the measurement of success will focus on limited measures of failure (e.g.

cardiothoracic surgical mortality rates, where technology (e.g. stents and statins) may make the procedure redundant!), and the policy debate will return to futile arguments about funding and access targets, which alone are of limited relevance.


Williams’ exposition of libertarian and egalitarian viewpoints clarifies the differing maxims in their social welfare functions: libertarians are concerned primarily with freedom of choice, and egalitarians with equality of opportunity (perhaps in health care, with equality of access). Recent research has shown that what patients in England want is not so much choice, but quality (Burge et al., 2006). Choice in the English NHS, (surely a means to an end and not an end in itself?), is one of a range of government reforms that need careful scrutiny by adherents to the competing ideologies. Like PbR, private sector competition and foundation trusts in Britain, choice may have distributive consequences that thwart egalitarian goals. Choice appears largely irrelevant for emergency and chronically ill patients, who want a guarantee of local quality in healthcare delivery. The other reforms may distort local priorities and reduce the equity of the NHS. For those of an egalitarian perspective they are disruptive, although for the libertarians they represent the sighting of a distant oasis where freedom of choice may reign and resources are allocated on the basis of willingness and ability to pay!

The purpose of each of these reforms is to improve efficiency, although evidence of their success in achieving this goal is poor. Their success in upholding egalitarian principles will depend not just on their marginality, so they act as temporary catalysts for needed improvements in resource allocation, but also on their regulation within a coherent framework that measures and manages success. Both these conditions appear to be absent at present in England.


The internal reform of egalitarian systems such as the NHS requires both improved measurement of outcomes, a subject close to Williams’ heart, and incentives that address clinical and cost-effectiveness uncertainty, the variations in clinical practice that result from this uncertainty, and the clinical ‘discretion’ which protects variation and the reluctance of doctors to measure and manage patient-reported outcomes.

As Williams outlined, adherents of each ideological position tend to criticise the actual performance of their opponent with the idealised characteristics of their own system. The objectives of healthcare systems and reforms are typically cost containment, equity and efficiency, but these objectives often conflict, and the priority assigned to each differs with economic and political cycles. In Britain, the strengths of tax-based egalitarian systems (cost containment and equality of access) remain, but attempts to improve efficiency (using techniques derived from more libertarian systems) have potential to undermine both objectives. The appropriate balance in healthcare systems of public and private, of choice and equality, and of equity and efficiency, is still determined largely by ideological debates, but should increasingly be informed by hard evidence, particularly on patient-reported health outcomes.

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