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Alan M. Garber
STANFORD HEALTH POLICYCenter for Primary Care and Outcomes Research/School of Medicine Center for Health Policy/Freeman Spogli Institute for International Studies
Royal Society of Medicine, London20 July, 2011
I doubt the NHS will be able to deliver on all these demands and expectations. At least on the present lines of fiscal policy, there won’t be enough money. There seems to be little support for higher taxes and no easy source of funds elsewhere in the budget to raise health services spending to the level of other northern European countries.
Alain Enthoven
The challenge health care poses to the wealthy nations of the world
The search for efficiency: three key components
Competition: Accomplish allocative efficiency with markets or alternatives
Integration: Gain economies of scope and often scale
Incentives: Getting them right is necessary to achieve internal and external efficiencies under imperfect information
Equity and Excellence: Liberating the NHS
Promote competition and choiceRaise qualityEliminate layers of bureaucracyEmpower physicians (ie GPs)Integrate services
Health and Social Care Bill introduced in January of 2011
From Nuffield Trust, Snapshot Survey of Health Leaders on the Government’s NHSReforms, March 2011
Competition and integration for greater efficiency
“…competition has often been interpreted as the opposite of integrated services. However, it is possible to have responsive, joined-up services working in patients’ interests and competing for their choice, and this is what we are seeking to achieve.”
Section 5.3, Government response to the NHS future forum report
Competition
What is the definition of product or service, and therefore market?
Levels of potential competition in NHSCommissioningGP servicesSpecialist servicesHospital servicesCommunity servicesIntegrated services
“Competition” does not always increase choice
Inadequate demand for some choices
Economies of scale
Welfare loss from monopoly usually results from increased prices
When more choice isn’t: Any Willing Provider in U.S.
Is competition good?Under idealized conditions, competitive markets lead to a powerful form of optimality
But effects on quality are generally indeterminate
Literature: mixed results, but good studies suggest that competitive pressures lead to better health outcomes
Competition brings political risk
The role of integration
Integration widely believed to be crucial to good care
Evidence base heavily tilted toward specific coordinated care programs
Rand Health Insurance Experiment: capitation prevents hospitalization. Does result generalize?
Integration requires scope and may require scale
Can we tolerate the loss of competition?
Geographic limits on commissioning groups limit competition
Pricing in an integrated system is challenging
Incentives
Physician, commissioners as agentsDesire to increase qualityPbR, QOF designed to increase efficiency and quality of care“Tariffs based on best clinical practice” (Government response, section 3.82)
Performance-based incentives in medicine have had mixed success
Premier Hospital Quality Incentive Demonstration
Begun in 2003Combined financial rewards and public reporting2% premium for achieving top decile, 1% for 2nd
decile(Process) quality improvements maintained for about first 4 years
Quality and Outcomes Framework
Sizable incentives for GPsTargets attained rapidly
From Tim Doran, NHS Information Centre (www.qof.ic.nhs.uk)
Results for Years 1-6Points scored and remuneration
Paying Physicians for Quality
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2004/5 2005/6 2006/7 2007/8 2008/9 2009/10
Rem
uner
atio
n
Perc
enta
ge o
f tot
al p
oint
s sc
ored
Income
Points
Paying for performanceThe Quality and Outcomes Framework
US programmes
The UK contextThe FrameworkQuality of care under the QOF
High performance organizations use a mix of incentives
Competition, integration, and incentives: US and UK approaches to health reform
Goal is better health, not simply more health services
Give physicians and hospitals more financial responsibility
Measure and reward quality
Competition
In US, competition among health insurers and among providers
In UK, competition among providers and limited competition among commissioners
Extensive regulatory controls in both nations
Challenges of setting prices
Integration
US: bundled payments and incentives for creating integrated provider organizations (ACOs)
UK: some change in payment, change in commissioner organization
Incentives
Both nations are changing payment mechanisms – do they go far enough?
Provider acceptance key to changes in payment
What the reforms can tell us
Many unknowns about how to organize and pay for care – the reforms in both nations will lead to new informationCompetition creates variation – we must learn from it
Thank you
To the many people who generously gave of their time and thoughts about the NHS and NICE, and especially Jennifer Dixon and her colleagues at Nuffield Trust