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Data Source http://www.irdes.fr/EcoSante/DownL...

GDP Expenditure

With the new coalition government in the UK, we are seeing early signs of a serious assault on public spending on the state run NHS. Similar challenges await other European countries with bloated public debt. Part of the debt run up by Greece, for instance, arose from efforts to off-shore hospital debt.

In the end the question remains, as it always has, how much money should a country spend on healthcare. The answer, as has always been the case, is as much as you can afford. Research shows that levels of spending (in terms of percentage of GDP, for example) do not correlate well with health status, outcomes and other key indicators of the performance of a health system. Indeed, it can be said with some degree of confidence that GDP spending is NOT an indicator of health system performance.

What does appear to be a factor though is HOW that money is spent and HOW the system is organised to deliver health services.  Recent OECD work has clarified various characteristics of health systems. What is striking are a couple of already familiar features:

  • Not all countries pay 100% of the health bill from the public purse; many, such as France, use co-payments. Countries with socially unacceptable waiting lists have tended to be those with the highest levels of pure public expenditure (such as the UK, Norway and Canada). What this suggests is that there may be important features in how health systems organise themselves to deliver care that is adversely affected when the system is funded from general taxation. Efforts to introduce purchaser/provider separation, for instance, is an effort to create distance between the two quite different objectives, which in tax funded systems have been merged and caused considerable policy confusion, as well as operational difficulties. (I can mention the situation in the Canadian province of Alberta, where the response to funding constraints has been essentially to ‘nationalise’ the system, thus removing key drivers for reform. I can also refer to the Nuffield, UK, study that showed poorer health outcomes in the centralised health system in Scotland compared to now quite devolved purchaser/provider based system in England; and this despite having higher per capita expenditure in Scotland.)
  • Most countries have mixed economies of provision and relatively easier ways for new types of providers to emerge. Lower performing health systems seem to discourage new providers of care to enter the health market; this is an element of overall system design, perhaps regulatory over-reach and dated statist thinking.  But perhaps we are becoming smart enough to know how to design more responsive health systems, which in the end are almost chaotic given the nature of human beings and illness (random?) and so need to be understood as complex adaptive systems rather than tightly managed and controlled (think of the tightly coupled banking system which lacked the ability to realign itself quickly and effectively in response to a financial shock; Homer-Dixon’s remarkably prescient work here is worth looking up).  Managed designs usually end in tears, as they fail to deliver the responsiveness and flexibility that is critical for healthcare to respond to changing demand and fluctuations caused by shocks to the system.

There is no right number of doctors or nurses or hospitals or beds. What there is, though, is the right number of these for the design and structures necessary to deliver effective care.  And these can be designed and developed to use human talent differently, and more effectively.

In the UK, we will hear a lot about ‘front line services’ and protecting them from cuts. I have no problem with protecting front line services, but that does not mean that they will not be delivered in different and novel ways, that may be a better use of the expertise available.  The health professions will undoubtedly circle the wagons and predict dire consequences to the public, so called shroud waving. But what is better is a recognition that healthcare systems are highly inefficient; they are weak adopters of revolutionary change, and they are protective of established working practices — part of the reason for this protectiveness arises from the health professions having become co-dependents to the addiction to public money on the one hand and protected ways of working on the other. In a nutshell, they have become resistant to innovation and reform, and in some respects lost control of the their profession and the profession has ceased to evolve to meet the care needs of people — an emergent adaptive response characteristic of complex systems.

Hospitals are artefacts of industrial era organisational design principles — they embody craft mentalities in the organisation of care, and build on public support to protect their infrastructure (from closure, for example), rather than the public demanding better services, which may not require a hospital in the first place. The difficulty people have in unbundling a hospital (it can be done and I can share the algorithm with you in another post if you like) simply reinforces the protected nature of healthcare work. In part, the emergence of e-health (more precisely, the use of digital information and communication technologies, artificial intelligence/neural networks, predictive algorithms, smart devices, etc) offers a serious challenge to established patterns of working, as these various components have the collective effect of redistributing knowledge, embedding knowledge and skill in devices, and altering the use of bricks and mortar infrastructure — a high-tech/low touch outcome is not the necessary outcome if we are clear on our outcomes.

It is also not just a matter of a cost-effectiveness study of whether an e-consultation is better than a face-to-face consultation.  The evidence for this is actually quite easy — when the telephone was invented, businesses might have one, on a stand, which people would queue up to use. Now, a modern business would hardly do a business case to put a telephone on everyone’s desk — indeed, it hardly needs a business case to ensure everyone has a smart phone — yet in healthcare, smart phones are still rare, yet have the potential to radically alter information flows and hence work flows — 25% of US doctors now have one and ePocrates is one of the most downloaded clinical apps from Apple store, so it is coming. You don’t do a business case when the underlying business logic itself is what will fundamentally change and that is really what e-health is all about.

They say, in capitalism, that it works partly through a process of creative destruction. Otherwise, we’d still be riding around in horse-drawn buggies, and you wouldn’t be reading this note on a computer linked to the internet. There is, however, a general reluctance to apply that process to publicly funded institutions, and by extension to publicly funded ways of working.  The words government and entrepreneur are an oxymoron for many people. But that does not have to mean that public funding cannot be used to incentivise new ways of working and new forms of healthcare delivery. The challenges, in the end, lie in our heart and willingness to change, to create and innovate.

And so to austerity. There is little to fear, except our ability to resist change, protect legacy ways of working, and failing to grasp the real prize, that of doing things better and more effectively.  We will, no doubt, hear the opposite.

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