Roderick Pound owns a small bicycle repair shop in the north of England; he lives with his wife and two children. His sister Jennifer is a lawyer in Scotland. Roderick’s younger brother is a student at Oxford, and their widowed mother, a retired saleswoman, lives in London. Their cousin Anne is totally and permanently disabled from a tragic automobile accident. A distant relative, who became a US citizen 15 years before, recently arrived to help care for Anne.
Simply by virtue of existing on the soil of the United Kingdom—whether employed, retired, disabled, or a foreign visitor—each of the Pound family members is entitled to receive tax-supported medical care through the National Health Service (NHS).
In 1911, Great Britain established a system of health insurance similar to that of Germany. Approximately half the population was covered, and the insurance arrangements were highly complex, with contributions flowing to “friendly societies,” trade union and employer funds, commercial insurers, and county insurance committees. In 1942, the world’s most renowned treatise on social insurance was published by Sir William Beveridge. The Beveridge Report proposed that Britain’s diverse and complex social insurance and public assistance programs, including retirement, disability and unemployment benefits, welfare payments, and medical care, be financed and administered in a simple and uniform system. One part of Beveridge’s vision was the creation of a national health service for the entire population. In 1948, the NHS began.
The great majority of NHS funding comes from taxes. As in Canada, the United Kingdom completely separates health insurance from employment, and no distinction exists between social insurance and public-assistance financing. Unlike Canada, the United Kingdom allows private insurance companies to sell health insurance for services also covered by the NHS. Eleven percent of the population in 2012 purchased private insurance or had private insurance provided as an employment benefit. Private insurance is not accepted by NHS facilities but may be used to pay for care at private hospitals, allowing patients to “hop over” the queues that exist for some NHS services and receive expedited treatment at private facilities. People with private insurance are also paying taxes to support the NHS (Fig. 14-3).
The British National Health Service: traditional model.
Dr. Timothy Broadman is an English GP, whose list of patients numbers 1,750. Included on his list is Roderick Pound and his family. One day, Roderick’s son broke his leg playing soccer. He was brought to the NHS district hospital by ambulance and treated by Dr. Pettibone, the hospital orthopedist, without ever seeing Dr. Broadman.
Roderick’s mother has severe degenerative arthritis of the hip, which Dr. Broadman cares for. A year ago, Dr. Broadman sent her to Dr. Pettibone to be evaluated for a hip replacement. Because this was not an emergency, Mrs. Pound required a referral from Dr. Broadman to see Dr. Pettibone. The orthopedist examined and x-rayed her hip and agreed that she needed a hip replacement, but not on an urgent basis. Mrs. Pound has been on the waiting list for her surgery for more than 6 months. Mrs. Pound has a wealthy friend with private health insurance who got her hip replacement within 3 weeks from Dr. Pettibone, who has a private practice in addition to his employment with the NHS.
Prior to the NHS, most primary medical care was delivered through GPs. The NHS maintained this tradition and formalized a gatekeeper system by which specialty and hospital services (except in emergencies) are available only by referral from a GP. Every person in the United Kingdom who wants to use the NHS must be enrolled on the list of a GP. There is free choice of GP (unless the GP’s list of patients is full), and people can switch from one GP’s list to another.
Whereas the creation of the NHS in 1948 left primary care essentially unchanged, it revolutionized Britain’s hospital sector. As in the United States, hospitals had mainly been private nonprofit institutions or were run by local government; most of these hospitals were nationalized and arranged into administrative regions. Because the NHS unified the United Kingdom’s hospitals under the national government, it was possible to institute a true regionalized plan (see Chapter 5).
Patient flow in a regionalized system tends to go from GP (primary care for common illnesses) to local hospital (secondary care for more serious illnesses) to regional or national teaching hospital (tertiary care for complex illnesses). Traditionally, most specialists have had their offices in hospitals. As in Germany, GPs do not provide care in hospitals. GPs have a tradition of working closely with social service agencies in the community, and home care is highly developed in the United Kingdom.
Paying Physicians and Hospitals
Dr. Timothy Broadman does not think much about money when he goes to his surgery (office) each morning. He receives a payment from the NHS to cover part of the cost of running his office, and every month he receives a capitation payment for each of the 1,750 patients on his list. Ten percent of his income has been coming from extra fees he receives when he gives vaccinations to the kids; does Pap smears, family planning, and other preventive care; and makes home visits after hours. Recently, he also received a substantial bonus from the new pay-for-performance system.
Since early in the 20th century, the major method of payment for British GPs has been capitation (see Chapter 4). This mode of payment did not change when the NHS took over in 1948. The NHS did add some fee-for-service payments as an encouragement to provide certain preventive services and home visits during nights and weekends. Consultants (specialists) are salaried employees of the NHS, although some consultants are allowed to see privately insured patients on the side, whom they bill fee-for-service.
In 2004, a major new payment mode began for GPs: pay for performance (P4P) (see Chapter 10), known in the United Kingdom as the Quality and Outcomes Framework. NHS management negotiated the program with the British Medical Association (BMA), and the success of the negotiations was in large part because of the government’s policy of increasing payment to GPs, whose average income rose by 60% from 2002 to 2007, with GP incomes approaching those of hospital specialists (Doran & Roland, 2010). The NHS and BMA agreed on dozens of clinical indicators measuring quality for preventive services and common chronic illnesses such as coronary heart disease, hypertension, diabetes, and asthma. In addition, physician practices are measured on practice organization—involving such measures as documentation in medical records, ability of patients to access the practice by phone, computerization, and safe management of medications—and on the patient experience as measured by patient surveys. Physician practices were awarded points for GPs who performed well on these measures with each point worth a sum of money. In 2005, GP practices achieving maximum quality could increase earnings by approximately $77,000 per physician, though the size of performance-related payments has since declined (Roland & Campbell, 2014).
In preparation for P4P, UK GP practices employed more nurses, established chronic disease clinics, and increased use of electronic medical records. In the first year of the program, quality appeared to improve, largely due to nurse-run chronic disease management. The extent of improvement is unclear; successes may have been related in part to improved documentation rather than improved quality. An analysis of performance improvement prior to and following the introduction of P4P suggests that performance had been increasing before P4P, but that quality increased slightly faster after P4P for some chronic conditions.
By 2007, many practices had reached the quality benchmarks for such conditions as diabetes, asthma, and coronary heart disease, which meant that the financial incentive to continue improving was blunted. Moreover, performance for quality measures removed from the Framework fell in some cases, suggesting that practices might neglect quality of care—for example, comprehensive care for elderly patients with multiple medical conditions—unassociated with financial rewards. No significant changes were found in patient reports of access to care, continuity of care, and interpersonal aspects of care (Roland & Campbell, 2014).
Health expenditures in the United Kingdom accounted for 7.0% of the gross domestic product (GDP) in 2000, far below the US figure of 13.4%. Believing that the NHS needed more resources, the government of Prime Minister Tony Blair infused the NHS with a major increase in funds. Between 1999 and 2004, the number of NHS physicians increased by 25%. In addition, the pay-for-performance system channeled the equivalent of several billion new dollars into physician practices. By 2012, health expenditures as a proportion of the GDP had risen to 9.3% and per capita spending had increased from $1,837 (2000) to $3,289 (2012), an 80% increase (OECD, 2013). In 2005, as a result of this growth, the NHS found itself in a serious deficit and scaled back NHS funding (Klein, 2006). From 2010 through 2015, tight budgets have created stress throughout the NHS. Queues have lengthened for some nonemergency consultant visits and elective surgeries, though wait times for hip and knee replacements dropped substantially between 2006 and 2011 (OECD, 2013; Commonwealth Fund, 2015).
Two major factors allow the United Kingdom to keep its health care costs low: the power of the governmental single payer to limit budgets and the mode of payment of physicians. While Canada also has a single payer of health services, it had traditionally paid most physicians fee-for-service. In contrast, the United Kingdom relies chiefly on capitation and salary to pay physicians; payment can more easily be controlled by limiting increases in capitation payments and salaries. Moreover, because consultants (specialists) in the United Kingdom are NHS employees, the NHS can and does tightly restrict the number of consultant slots, including those for surgeons. Overall, the United Kingdom controls costs by controlling the supply of personnel and facilities; for example, in 2011, the United Kingdom had 5.9 MRI scanners per million population compared with the US rate of 31.5 (OECD, 2013).
The United Kingdom is often viewed as a nation that rations certain kinds of health care. In fact, primary and preventive care are not rationed, and average waiting times to see a GP in the United Kingdom are significantly shorter than those for people in the United States seeking medical appointments (Schoen et al., 2010). A striking characteristic of British medicine is its economy. British physicians traditionally do less of nearly everything—perform fewer surgeries, prescribe fewer medications, order fewer x-rays, and are more skeptical of new technologies than US physicians (Payer, 1988).
Reforms of the National Health Service
Over the past 2 decades, England has diverged from the classic NHS model that remains largely in effect in Scotland and Wales, and implemented a series of dramatic structural changes. In 1991, the Conservative government of Margaret Thatcher implemented market-style reforms in England requiring hospitals to compete for business by reducing delays for specialty and surgical care, and allowing GP practices to receive a global budget to purchase all care for their panel of patients. In 1997, Tony Blair’s Labor government abolished GP fundholding and replaced it with primary care trusts—networks of GPs working in the same district that contracted with hospitals and specialists and implemented quality improvement activities.
The British National Health Service: recent reforms.
In 2012, with a Conservative government back in office, the primary care trusts were abolished and GPs were required to belong to “clinical commissioning groups” which in 2014 controlled about half the NHS budget (Fig. 14-4). These 212 groups of GPs receive large budgets from which they fund primary care and buy specialty care for their patients. As the third major upheaval in 25 years, with each turnaround requiring several years to implement, it is unclear how health care providers and patients will fare in this constantly changing environment with critics complaining about a pattern of repeated “redisorganization” of the NHS from one governing party to the next (Roland & Rosen, 2011; Commonwealth Fund, 2015).