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Praise for this article
- Burritt S Lacy (1 December 2007)
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Market based health care - the US experience
- Douglas Seaton (1 December 2007)
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value for money is a key
- L Sam Lewis (1 December 2007)
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Don’t let the buck stop here!
- Mark Struthers (3 December 2007)
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US failures tell us nothing about markets
- stephen black (3 December 2007)
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Some of us don't want markets or consumers
- Neville W Goodman (5 December 2007)
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'Look before you leap' - Policy mistakes are expensive and difficult to rectify!
- Jane M Young (6 December 2007)
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Quarantine is an excellent idea!
- Alexander Spiers (7 December 2007)
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Prevention is the only answer to the Health Care Crisis
- Cleaves M. Bennett MD (7 December 2007)
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Brilliant - now what? I know.....
- Steven Ford (8 December 2007)
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resistance to evidence
- stephen black (15 January 2008)
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Many countries succeeded competition in publicly funded healthcare
- Janne Aaltonen (30 January 2008)
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Burritt S Lacy, retired psychiatrist n/a
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This article is totally compelling and should be widely publicized by responsible elements of the media. If only Kansas had Senators who would read it! Burritt S. Lacy, Jr., M.D., Manhattan KS 66502 Competing interests: None declared |
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Douglas Seaton, Consultant physician (retired) Retired from the Ipswich Hospital, current address 23 Park Road, ipswich IP1 3SX.
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The excellent analysis by Woolhandler and Himmelstein (BMJ 2007; 335: 1126) of the counterproductive effects of introducing elements of privately funded medicine, in an attempt to reduce cost and increase the efficiency of a publicly funded system, should be compulsory reading for all politicians and Department of Health planners and managers. One has seen ample evidence in this country of the application of "market segmentation" by private medical insurers as a ruse to increase their profit margins - for example, the enticement of young and probably healthy adults into insurance schemes by comparatively cheap premiums, which increase stepwise with advancing age until the point when the insured finds the premiums become unaffordable, therefore quitting the private scheme to rely instead on the NHS, at a time of life when the chances of a claim are naturally much higher. Similarly insurers who face a series of claims from an insured person may arbitrarily determine that their customer's condition has become "chronic" and is therefore no longer covered by the terms of the policy, so that the cost of any further management once again falls the doors of the NHS. Another methods by which the health insurance industry increases profit is its practice of offering payments to policy holders who choose to receive in-patient treatment under the NHS, rather than making a claim. Competing interests: None declared |
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L Sam Lewis, GP Surgery, Newport, Pembrokeshire, SA42 0TJ
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I enjoyed Woolhandler and Himmelstein's polemical dispatch of failed US systems. We can feel even more smug in the UK that we very little to learn from US capitalism. But we invented it ! Didn't we always know that commercial organisations worked for profit ? That without fully free enterprise, completely-empowered consumers, and the rule of law and fair trade, that markets always damaged the interests of the poor and needy ? That IS why we invented our NHS wasn't it ?? In order to remedy that glaringly obvious need, a socialist Bevan proposed to fund healthcare for ALL our citizens, free at the point of need, according to need and not ability to pay. Many US physicians believe that US healthcare fails precisely beacause it is not a free and fair market. They need to learn that healthcare can NEVER be a free and fair market. Let nobody pretend that the NHS tax-funded healthcare for all is not OBVIOUSLY the right way to optimise the possibility of equitable and effective care In Place Of Fear( see http://newportsurgery.mysite.orange.co.uk/NHSbyNye.doc. But both the US and UK still need to address waste, inefficiency, and ineffectiveness in the pursuit of public good. So what of Woolhandler and Himmelstein's "Lessons for other countries" ? "Market fundamentalists conjure visions of efficient medical markets partnered with government oversight and funding to assure fairness and universality." Hmm. I believe many 'market fundamentalists' actually see government involvement as a dead hand. It is mixed-economy pragmatists who seek partnership and diversity, competition and cooperation. Because government regulation is indeed overmatched. "Incentives for optimal performance align imperfectly, at best, with the real goals of care. Matrices intended to link payment to results instead reward entrepreneurs skilled in clever circumvention. Their financial and political clout grows" - Quite so, unless the purchaser insists on keeping real value-for-money as his goal. "..those who guilelessly pursue the arduous work of good patient care.. " would not then " lose in the medical marketplace ". Are our NHS managers capable of appreciating a balance can be struck between measurable effective performance, and the unmeasurable , but highly-valued , good patient caring that GPs do every day ? " remedies imported from commerce consistently yield inferior care at inflated prices. " Except in France , Sweden or Demark, for example !! " Instead we prescribe adequate dosing of public funds; budgeting on a community-wide scale to align investment with health priorities and stimulate cooperation among public health, primary, and hospital care;" Quite unlike NHS funding, then ? Consistently the poorest in Europe... " encouragement of local innovation; explicit empowerment of patients and their families;" Like British Civilisation, it would be a good idea. " intensive audit for improvement, not reward or blame;" how then is improvement engendered ? " a system based on trust and common purpose;" we had that - and it was inefficient, not least because we were trusted to do it on the cheap. " and leadership not by corporations but by "imaginative, inspired, capable and . . ." Ah yes - you mean our NHS Apparat ? ".. joyous people, invited to use their minds and their wills to cooperate in reinventing the system, itself . . . because of the meaning it adds to the lives and the peace it offers in their souls." ah yes - I remember the Golden Age - when we sang hymns and played on harps .... Gosh - what a dream. I must get back to work. Competing interests: I am a GP - driven by a desire to help people effectively - whilst holding a 'private' nGMS commercial contract, in a publicly-funded NHS. |
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Mark Struthers, General Practitioner Bedfordshire, UK. mark.struthers@which.net
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These are joyous words from an all too quiet American – or two – all succinctly summarised in the last paragraph of healthy lessons to be learned by countries outside the US. “Health systems in every nation need innovation and improvement. But remedies imported from commerce consistently yield inferior care at inflated prices.” These fine words should be tattooed on the Prime Minister’s forehead for the Health Secretary to read when he gets the urge to move his lips again. The people of the UK have learned that the American dollar is a busted flush: our beloved leaders must realize that plotting the ‘American Way’ is plodding the wrong path to fiscal wellness or any sort of healthiness otherwise. If only that particular penny would drop heavily … on the government and the department of health in this country. Competing interests: None declared |
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stephen black, management consultant london sw1w 9sr
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As an account of the abysmal failures of the US health system, Woolhandler and Himmelstein's article is a useful contribution; as an account of why markets don't work in healthcare it is worse than useless. Worse, even Fiona Godlee fails to see the logical chasm between the evidence in the article about US failure and the point it was supposed to be proving about the universal failure of markets in health. For the article to prove its point that we shouldn't use markets anywhere in health care, it would have needed to address some of the following arguments. We know that markets sometimes work to deliver big universal benefits: so what are the features of health that mean markets can't work there? What is it that distinguishes sectors where markets are successful from those where they fail? How does the structure of health in the USA compare to other countries' proposed or existing systems? How do regulatory standards influence success or failure in markets? The article simply doesn’t bother to address these key issues. Anti- reformers in the UK have a long history of using the comparisons with the USA as a key rhetorical trick to oppose market-based reforms in England. Everybody knows how bad the US is and if we use the rhetorical sleight of hand of equating the US system with "markets" then significant debating points can be awarded. But it is a rhetorical--not logical--step as detailed comparison of the structures and regulatory environment in the USA with anyone else will show few real similarities. Right at the start the article has fundamental problems as their definition of what a market must be like is deeply wrong. Markets are not- -as americans often believe while giving dangerously inappropriate advice to others about how to run their economies--characterised by inalienable property rights and private-sector profit-making entities. The real essentials for markets that work to benefit us all (as John Kay argued in his book "The Truth about Markets") are variety and discipline (evolutionary biologists would use different terminology: variation and selection). But markets rarely deliver benefits without the right legal and regulatory environment (eg the european mobile phone market is more competitive and has delivered more consumer benefit than the US market because of tighter and better designed regulation). It is quite easy to have american style markets without any corresponding public benefits in quality improvement and cost reduction; but its also possible to construct well regulated markets with the right incentives that drive improvement and deliver equity. Again the article just doesn’t address this and buys the american model as the only one possible. Fiona Godlee summarises some of the other supposed characteristics of markets: they need rational decisions by consumers; they can't deliver fairness; and they ration by price an consumer income. The first is blatantly untrue or every consumer's brain would explode instantly on entry to a supermarket or car showroom. Since people apparently get by making seemingly highly complex choices every day in the face of uncertainty and limited information, it is a false objection to say they won’t be able to in health. They might not always make the same decision as a doctor, but that is not necessarily a bad thing and is certainly irrelevant to the question of whether a market can function. Godlee compounds the second and third errors by stating: "a true market has no room for equal access for equal need...". Yet the reform model in England has no element of co-payment or dependence on consumer income. In fact by design every patient has the same spending power: a powerful drive for equal access to health. By design, the market gives patients the power to allocate government money to providers who must compete for that money. The American failure to serve the poor is irrelevant as everyone is covered. What about some of the more specific criticisms of how things work in the USA? They are no more relevant to any debate about reform in England or the rest of the world. Much of the article criticises cherry-picking by insurers: an egregious flaw in the US system that is a direct result of poorly thought through structures and regulation which has wisely not been copied elsewhere. English reform retains universal government funding: there is simply no option or incentive for anyone to engage in selective enrolment. The regulatory structure in the US basically incentivises wasteful gaming by insurers by structurally encouraging insurers to be “not cost minimisers but profit maximisers”. Even other countries with compulsory insurance have systems that virtually eliminate that behaviour by strictly limiting the scope for cherry picking. The article says a lot less about competition for provision. But even here it misses important points of comparison and regulatory distortions characteristic only of the US. Uwe Reinhard pointed out some of this just two weeks ago in his article "US Health Cares stands Adam Smith on his head” in this journal (BMJ 17 November 2007 p1020). Hospitals in the US must provide emergency care even to the uninsured, but government doesn’t have to pay for this. This legally enforced market distortion prevents weak-willed politicians facing the real consequences of failure to provide universal coverage. Oh, and English reform doesn’t envisage much privatisation, which the article alleges is the driving force behind reform (putting public money in the hands of “private firms needing new markets”. Half the independent sector bidders for new treatment centres in the UK were non-profit. And the most share they are ever likely to achieve is a lot less than 10%. We don’t need privatisation to drive competition and get its benefits. A properly regulated market among (mostly) NHS hospitals offers most of the benefits that come in competitive markets. So we can’t compare the market for payment to the US, the market for provision isn’t similar, the entire regulatory structure is different and the article doesn’t have a realistic definition of what constitutes a market or why, specifically, markets can’t work in health. OK, so the USA is a basket case: but we knew that already and almost every other country has avoided their worst mistakes. Exactly how an article with so little new to contribute got past peer review as a serious contribution to the debate is a mystery to me as is why Fiona Godlee thinks it should giver reformers “serious pause for thought”. Competing interests: Has been paid advisor to UK government in areas relevant to competition in health provision. |
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Neville W Goodman, Consultant Anaesthetist Southmead Hospital, Bristol, BS10 5NB
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In his wonderful book, Wonderful Life, (1), Stephen Jay Gould wrote “I have labored through the details of Walcott’s interpretation and its sources because I know of no finer illustration of the most important message taught by the history of science: the subtle and inevitable hold that theory exerts upon data and observation. Reality does not speak to us objectively, and no scientist can be free from the constraints of psyche and society. The greatest impediment to scientific innovation is usually a conceptual lock, not a factual lack.” Gould was writing of science, in which evidence has at least some claim to objectivity. In discussions of the large-scale economics of health care, or of the “best” way to fund a country’s health service, I am not sure it is possible to separate evidence from prejudice. I have read Allyson Pollock’s book, whose title, NHS plc,(2) is an ironic statement of how she interprets the evidence. I have read Julian Tudor Hart (3), whose book’s central theme is “that rational and effective health care cannot follow the pattern of market competition for profit”. These books between them answer Stephen Black’s question about the features of health that mean markets can’t work. If Stephen Black rejects the conclusions of these books, then we can never agree: we are each bound by what Gould termed “the constraints of psyche and society”. Black criticises Fiona Godlee for having a naïve (my word) view of markets, but some of us believe that the very idea of patient as “consumers” – surely the essential feature of health as a market – is flawed. Hogg (4) quoted Richard Titmuss saying this in the 1970s, and there are others who have written similarly (5,6). However, I have heard Julian LeGrand supporting the idea, and clearly Black does also, but it is outside the constraints of my psyche. Of course, Godlee’s column was only a brief introduction to Woolhandler and Himmelstein’s article. Given more words, any sentence can be expanded, or riders added. People don’t necessarily have to make rational decisions at all for a market to work: for the market to be stable, they have to make consistent decisions, but they don’t have to be rational. And as Black implies, whose rationality? Patients may well not make the same decision as doctors, and indeed sometimes that may be a good thing, but there are times when it is a very bad thing. Black is therefore probably right that rational decisions are irrelevant to whether a market can function, but a national health service must ultimately be based on some public health rationality. Black agrees with one of Woolhandler and Himmelstein’s main themes, of cherry picking, and claims that “English reform retains universal government funding: there is simply no option or incentive for anyone to engage in selective enrolment.” That is not my experience, in which simple operations on healthy patients are the ones done in the independent treatment centres, where there is no time spent training and teaching, with complications left to be picked up by the NHS. This may not be exactly the same type of selective enrolment undertaken by HMOs in the US, but it has the same effect. It does not have to - given fair tariffs, and insisting that teaching and training are not ignored. But in that case, why not just set up treatment centres fully within the NHS? Black writes “English reform doesn’t envisage much privatisation”, a statement with which Pollock would disagree. When the first of a set of four papers appeared in this journal in 1999 (7), I heard a health minister rubbish it on the Today programme before anyone in government could have had time to analyse it properly. As she details in her book, her department was threatened with loss of funding because her work was “unhelpful”. If this really were a rational decision, then the arguments could be put forward and that rational decision reached. But it isn’t. It is a political decision. The facts are difficult, so all we have is conceptual lock. It is constrained by psyche and society. Black writes “We don’t need privatisation to drive competition and get its benefits”, but competition is the rival of cooperation (8), and even if he is right there are many who believe that we are getting privatisation anyway. Black finishes (ignoring the snide comment about Woolhandler and Himmelstein’s article containing nothing new) by saying that we know the USA doesn’t work, and we won’t make the same mistake. So why are there so many US-based companies over here, where the better regulation Black promises should reduce their profits? 1 Gould SJ. Wonderful life. The Burgess Shale and the nature of history. London: Hutchinson Radius, 1989, p 276. 2 Pollock AM. NHS plc: the privatisation of our health care. London: Verso, 2004. 3 Tudor Hart J. The political economy of health care. Bristol: Policy Press, 2006. 4 Hogg C. The customer isn’t right. Health Matters 2000, issue 39, p 18-19. 5 Anonymous. The unspoken issue that haunts the UK general election. Lancet 2005; 2005: 1515. 6 Fitzpatrick M. A patient-led NHS? Br J Gen Pract 2005;55:973. 7 Gaffney D, Pollock AM, Price D, Shaoul J. NHS capital expenditure and the private finance initiative - expansion or contraction? BMJ 2000; 320: 250- 2. 8 Arnold PC. Point of view. Price competition, professional cooperation and standards. Med J Aust 1996;165:272-3. Competing interests: None declared |
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Jane M Young, Consultant Radiologist Whittington Hospital, London,
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We should discount the views of Woolhandler and Himmelstein, with caution. Stephen Black’s assertion that‘OK, so the USA is a basket case: but we knew that already and almost every other country has avoided their worst mistakes’ should also be taken with a pinch of salt. The problems of ‘market forces’ not only produce inequalities with the most vulnerable being at the bottom of the pile in terms of access, it distorts provision of services with overprovision of the more profitable and under provision of less profitable ones. This has been demonstrated in the USA with the example of paediatric radiology (1) which has a dearth of trainees and poor provision due to the low incomes (in comparison) with other subspecialties. This is partly due to the low tech nature of investigations used for this patient group (plain films and Ultrasound) the longer time needed for the exams, and the lower volume of referrals. (Most sick people are adults). As a result most children’s exams are interpreted by adult radiologists with limited experience of this specialised group. Distortion in terms of distribution occurs. In France (where most doctors are self-employed) the Interns (equivalent of Sprs) went on strike in October 2007 (2,3) in protest at the attempts of the Sarkozy government to discourage doctors opening practices in areas of high provision, (such as the sunny south of France) and encourage more to the less popular, poorly provided areas (such as the centre of France) In the '80s in Australia, private practice became eligible for government reimbursement for Imaging and Pathology investigations. This led to the easy-to-do and cheap investigations being done in the private sector and the public sector being left with the difficult and expensive. This led to difficulties delivering training and eventually partnerships set up with private laboratories to offer training to the next generation of pathologists (at a premium). Policy ‘mistakes’ can be very expensive, and difficult to rectify. As a jobbing Radiologist who enjoys travel, I have had the pleasure of working in 4 developed countries during my training and early consultant life. France, Singapore, Hong Kong and Australia. I have worked for short periods in public hospitals and private practice in the late 80s and early 90s. I also was a travelling fellow in the US(Yale). Nothing I have seen or read so far has made me think that a ‘market- forces‘ system is the answer to problems with healthcare provision in the UK. 1 Robert T. Bramson and George A. Taylor. SOS: Can We Save Pediatric Radiology? Radiology 2005; 235: 719-722 2 La grève des internes se poursuit à Paris et en province: Le Monde, 17 Octobre 2007 3 http://libcom.org/news/france-medical-interns-strike-over- conditions-06102007 Competing interests: None declared |
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Alexander Spiers, Professor of Medicine (Retired) N/A.
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Drs. Woolhandler and Himmelstein are to be congratulated for their fearless and scathing article. It is not surprising to find it in the BMJ; I suspect it would be difficult to induce a major American journal to print it. I worked in the United States for twenty years, in a university setting and also with appointments at consultant level in the Veterans Administration (VA) medical services. The Health Maintenance Organisations (HMOs) reared their ugly heads four years before I retired. Several colleagues commented that I had chosen a good time to retire and escape the system. I had already seen enough of the drawbacks of HMOs to agree with them. Despite their name, HMOs are not concerned primarily with maintaining health or even with treating the sick. They are businesses with employees and shareholders and their task is to generate profits and pay dividends. Thus they resemble pharmaceutical companies. There is an even closer resemblance to life insurance companies, which are not eager to insure the elderly or the sick, because they are bad risks. Parsimony, under the guise of "financial management" is a feature of HMOs. I worked in a tertiary care cancer centre. HMO patients could be seen there for a second opinion, but in most cases could not be treated there because of costs; treatment was carried out by hospitals and clinics that were owned by HMOs or had contractual arrangements with them. Thus patients were at risk of receiving inferior care. The practice of enrolling healthy people and removing sick ones from the HMOs may be good business but it is appalling Medicine. As Woolhandler and Himmelstein have shown, HMOs do not save the taxpayer money but inflate medical costs met by the state. The VA medical centres are the nearest thing to a National Health Service (NHS) to be found in the US. They are not infected by the profit motive, but they do suffer from underfunding and frequently have problems similar to those reported in the NHS. For example, at a VA hospital the waiting time for an abdominal CT scan was six weeks for outpatients and ten days for inpatients. As a result, patients were admitted to hospital merely to obtain a CT scan more quickly. Despite initial enormous opposition to its establishment, the government-funded Medicare programme for the elderly has been a success. The same cannot be said for Medicaid, which was designed to care for younger people without medical insurance. Medicaid is slow to pay and its reimbursements are not generous. As a result,some hospitals and physicians are reluctant to accept Medicaid patients. A Medicaid patient with advanced Hodgkin's disease could not obtain treatment for three months after diagnosis, and this contributed to his death. While conceding that market forces, in the shape of HMOs, promote inferior care at inflated prices, they are not the only fault in the US medical system. The VA has problems resembling those of the NHS, and Medicaid may provide too little, too late. By all means quarantine these suboptimal programmes of health care. Competing interests: None declared |
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Cleaves M. Bennett MD, Founder: No More Medicines Austin, TX 78669
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In the usual sense of the word, health "insurance" is not insurance, it is an entitlement. Everyone wants it, needs it and feels they are “entitled” to it. All of the politicians foster that belief. Here is the real problem: everybody needs to use it. That is why the system is broken. I have fire, flood, earthquake, auto and life insurance and I’ve never had any claims. That is how insurance works; only a few of the 1000’s of insured ever make a claim. That keeps the cost down for all the rest of us. Try to buy flood insurance in New Orleans or hurricane insurance in Jamaica and you will see what I am talking about. If we took as poor care of our automobiles as most of us do ourselves, auto insurance would be unaffordable too. Even if all the profit was taken out of the Health Care system it still goes broke. (see below) Just takes a little longer. But this is America. Do you really think we are ever going to accept socialized medicine? Doctors prescribe multiple meds for years to people who aren't sick. That costs a lot of money. Then those same patients (who never did take all those pills correctly) get sick anyway and end up needing expensive, life prolonging medical care with specialists in hospitals and nursing homes. That costs a lot more money! Life prolonging care can drag on for years. 78 million baby boomers are coming, and they are going to break the health care bank. There is a shortage of primary care doctors, nurses of all types, and nursing instructors, who are going back to nursing because the pay is so much better. Hospitals are closing down trauma centers and ER’s because that kind of care is so expensive and their waiting rooms are full of poor people who can’t be turned away. Doctors don’t take care of poor people any more. In part because they have a lot of debt from school, malpractice insurance is expensive, and a new Lexus every year can become addicting. There are many reasons why our system is so expensive. But Socialism is not a viable solution. Canada, England and Europe face the same crisis. The aging Baby Boomers are going to break the bank in most developed and even developing countries. Doesn’t matter how the HealthCare system is financed, they all go broke. What’s to be done with this mess? Well, there is one dream solution. Everybody has to take a lot better care of themselves: eat healthfully, exercise regularly, keep their weight down, moderate on the alcohol, stop smoking, fasten their seatbelts, etc. Everyone knows the routine, but too few follow it. Every doctor and every politician must tell the public, living healthfully is the only thing that can work. Else 78 million baby boomers are going to suck the US Treasury dry over the next 10-15 years. Well, at least that will end our misadventures in Iraq. Competing interests: None declared |
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Steven Ford, GP Haydon & Allen Valleys Medical Practice
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Editor Thank you for publishing this article and thanks too to the rapid responders for their insights. How do we translate the broad consensus that appears to be present into action? The NHS is half broken by 'reform' and the need for rationality to reassert itself could hardly be more urgent. May I humbly promote the potential benefits of a course of action that I ventured in the BMJ a few weeks ago - we need an articulate healthcare worker to stand as an Independent candidate in every constituency in the UK at the next general election. At the very least, the issue would be pushed up the agenda and - who knows - we might win. Steven Ford Competing interests: I am a UK GP |
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stephen black, management consultant london sw1w 9sr
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I find it ironic that Neville Goodman quotes Steven Jay Gould to illustrate the point that people often find it hard to see evidence contrary to their world-view. While Gould’s book “Wonderful Life” (Stephen Jay Gould, Paperback edition published by Penguin in 1991) is one of the best pieces of writing about science in the last 3 decades, it is also a superb example of ideology-driven interpretation of evidence and one where further evidence completely undermined the basic argument. For those unfamiliar with the arguments they go a bit like this. Gould argued that evolution is driven by contingent chance and, if a different set of creatures had accidentally become extinct in the cambrian, the world today would look very different (this fits with his world view—his critics allege this was driven by his Marxist leanings though this is probably unfair). His argument was that the fossils of the Burgess shale—a rare fossiliferous deposit in Canada where traces of the soft parts of fossils are often preserved in exquisite detail—contained many whole categories (phyla) of animals quite unlike anything known today. The world today depends on the chance survival of only a handful of those categories. Unfortunately for his view, further probing of the fossils revealed that most could be fitted into existing phyla and many of the interpretations Gould relied on were just wrong. The story is best told by Simon Conway-Morris whose book “Life’s Solution” (Cambridge University Press, 2003) argues that evolution will tend to produce similar results if rerun as there are tight constraints on what works. His book The Crucible of Creation (Oxford University Press, 1998) is, essentially, a criticism of the Gould interpretation based on his own later evidence. And it is worth noting that Conway-Morris was one of the key players whose incorrect reconstructions originally looked so good in the light of Gould’s theory. Gould’s book is a perfect illustration of how better evidence can refute a strongly held ideology. Goodman argues that views such as mine cannot be readily debated as it is “impossible to separate evidence from prejudice.” This is not only a council of despair but a serious retreat from the debate we ought to be having. It is one of the most unfortunate characteristics of the debate about health reform that few seem to want to conduct it on the basis of evidence. Allyson Pollock, for example, starts many of her arguments with the assumption that profit is evil (she probably believes this as a universal truth, but certainly believes it in health). She then adds the additional assumption that significantly improved efficiency in healthcare delivery is impossible (a belief of staggering naivety she shares with the BMA. See Pollock et. Al. “NHS plc,” Verso, 2004 where she writes on page 37 “Given that healthcare is by its nature labour intensive, the scope for achieving savings through greater efficiency was limited.” Or the BMA’s discussion paper “A rational way forward for the NHS in England”, BMA, May 2007 where in paragraph 9 on page 10 they assert “Given that efficiencies can only account for relatively small savings…”). She then uses these assumptions to demonstrate why no private involvement can be good (profit can only come from reduced patient care). This is an axiom of her position. The thing is, we live in a world where the majority of goods an services are provided by profit making companies in mostly well regulated competitive markets and they have brought big collective benefits to us all (we get cheaper stuff, a wider variety of stuff and better stuff than we did 20 years ago or 50 years ago). So there is pretty good case for rejecting her thesis as a general one (I don’t see much support for the idea that we should nationalise food distribution or car manufacturing to make them better). IF her case depended on the specific characteristics of health then we could bring some evidence into play and have a proper debate, but she chooses to beg the question. Now I’m not saying that everything she says is wrong: she has made very good criticisms of PFI deals (though she entirely misses the underlying source of the problem which is that central planners’ assumptions underestimate risk especially when they are spending someone else’s money: no sane independent provider operating in a market would plan PFIs like the typical NHS trust). Its not that I couldn’t be bothered to read the anti case, its just that I don’t put much weight in arguments that assume what they try to prove. Moreover, if everyone sticks with their ideological positions and fails to engage properly in the search for evidence, they won’t be able to influence the current system which is far from being perfect. For example, Pollock’s solution to PFI is just don’t do it and her solution to market incentives in provision is to abandon them and revert to central planning. Government policy in both areas has serious flaws but they won’t be corrected if the criticism is pure vitriol. Future PFI schemes desperately need to be based on more realistic and risk-aware planning assumptions, and the market for provision is crying out for effective regulation. Competing interests: None declared |
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Janne Aaltonen, Project Director Helsinki University Hospital
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Editor, It was quite interesting to read Woolhandler’s and Himmelstein’s article on one of the leading scientific medical papers, the British Medical Journal. Perhaps “Analysis” section on the paper, where this article was placed, allows more than conventional freedom in scientific argumentation? I have always thought that open and unprejudiced attitude where evidence directs the conclusions is the landmark of scientific debate. I may have been wrong. Woolhandler and Himmelstein say, that there is no room for markets in healthcare, and as an example they use U.S. system. U.S. system is poor, most healthcare professionals - also in the USA - know that. Does it mean, that markets fail? No. When we discuss about markets, we have to define, if we mean financing, delivery, or both. Most of the concern in the paper is focused on combining public funding (taxes or social security payments) and private production, so let’s concentrate on such a combination. May Woolhandler and Himmelstein know, that actually most of the developed countries belong to this group (yes, there are also other countries in the world than USA and British Commonwealth)? In Japan 80 percent of healthcare is provided by private producers. Japan spends 8.0 percent of GDP on health. Less than U.K. In Korean Republic 90 percent of healthcare providers are private. Korea spends least of the OECD countries – 6.0 percent of GDP – on healthcare. Both these countries have universal access and good quality results. Why they don’t fail? Because the problem in the U.S. system is not combination of public funding and private production. What is the problem, is unfortunately beyond the scope of this writing (see “Redefining Healthcare” by Michael Porter and Elisabeth Teisberg). Woolhandler and Himmelstein say that in market model transaction costs are higher that in socialistic model. True. It would be cheaper, if there were no counters in the shops. They are there for a reason. There is no industry or product where socialistic production has been proven more efficient than market oriented production. If a company bankrupts, you cannot blame the market system. USA is only one example, look at Korea and Japan, or look at any other industry than healthcare. Woolhandler and Himmelstein say that the decision to unleash market forces is a decision to divert healthcare dollars to paperwork. They believe in zero sum game. There is no such a thing. Money is an incentive. You can use it right or wrong; the results depend on which actions you promote. USA has used it wrong, no blame to markets itself, Japan and Korea have used it right. Woolhandler and Himmelstein say that strategies that bolster profitability often worsen efficiency. Is it so? No, and there is conclusive economic evidence about the subject. Of course, in the circumstances of private monopolies such a situation may apply. But are healthcare providers natural monopolies? There are no substantial scale economies in healthcare. Healthcare professionals are licensed – and therefore there is no total freedom in access to markets – but so are many other professionals in other industries too. Also, many other industries, which are much more vital to health than healthcare have functioning markets, such as water supply, waste disposal, electricity production, etc. At the same time many service industries where information asymmetry is much more apparent than in healthcare rely on markets, for example juridical services . If there are highly profitable niches with questionable value to the customer, as Woolhandler and Himmelstein argue, either the product definitions or pricing is wrong. It is not the failure of market mechanisms as are not frauds either (cases listed in the article). Enron made a fraud. Should we therefore socialize all the production? At the end, we should also ask, what is competition? Competition is customers’ freedom to choose (provider). It is actually quite widely accepted - I have understand also in Brittain - that patiens’ freedom of choice spurs efficiency and quality. Such has happened in most countries, which have applied this mechanism. There are many people, Woolhandler and Himmelstein among them, who do not believe in markets in healthcare. There is, however, very limited evidence supporting that obsession. Competing interests: None declared |
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