Kaiser California, is it better value for money than the NHS, or, is it creative accountancy?
Rapid response to:
Papers
Getting more for their dollar: a comparison of the NHS with California's Kaiser PermanenteCommentary: Funding is not the only factorCommentary: Same price, better careCommentary: Competition made them do it
Kaiser California, is it better value for money than the NHS, or, is it creative accountancy?
To the editor,
Feachem et al (1) attempt to answer the question of whether, or not,
the NHS provides good value for money, in comparison to a system mainly
based in California.
Since the answer could have wide reaching implications, particularly
in the current political climate of looking for alternatives based on
other countries experience, this paper deserves the strictest of scrutiny.
The authors admit to the great difficulties encountered in making the
comparison between the two systems, but they give the impression that the
comparison, after the adjustments they made, is fair.
However, it seems to me that one of the adjustments they made, namely that
for ‘medical cost environment or purchasing power parity (PPP)’ was one
adjustment too far.
As shown in table (1), the authors reached an estimation of the
annual per capita health expenditure of £876($1402) and $1951, for the NHS
and the Kaiser California systems respectively. They then made the
mentioned adjustment to reverse the balance between the two systems to
$2130 versus $1951. The authors then made a justified adjustment for the
more elderly population looked after by the NHS, thus reaching a final
estimation of per capita expenditure of $1764 and $1951for the two
respective systems.
This adjustment for PPP is justified in the paper on the basis that
it “corrects for the underlying price difference in medical inputs- that
is, if the NHS operated in California or if Kaiser operated in Kent”. This
adjustment is ludicrous as it corrects for the difference in the cost
factor that the paper is supposed to measure. In other words, it assumes
an increase in the cost of the healthcare system in the UK to parallel
that in California, for example by increasing the salaries of G.Ps by 43%,
hospital specialists by 115% (we wish!) and an increase in the price of
pharmaceuticals by 20-60%. None of this, particularly the salaries
increase, is even remotely possible in practice.
If this adjustment for ‘medical cost environment’ is omitted, as it
should, to make the comparison meaningful and realistic, then the final
comparison between the per capita expenditure in the two systems should be
$1161 and $1951, for the NHS and Kaiser California respectively. This is
hugely different from the authors’ conclusion that claims a parity of cost
between the two systems.
As a worker in the NHS for over 20 years, I am aware of its
deficiencies like any other reasonable observer. The access to specialist
care and the waiting time are two clear disadvantages that need
addressing. The finding in this paper that the age adjusted rate of use of
acute hospital services in California was one third of the use in the NHS,
if confirmed, would be worthy of investigation for causes and remedies
with great benefits to the NHS.
The NHS is not perfect; however, let us not allow the NHS to be
written off financially on the basis of flawed calculations.
I would be interested to hear the views of others on the realistic,
rather than any academic, value of the adjustment referred to.
Magdi M Kirollos
FRCS (Urol),
Urology Department, Torbay Hospital, Torquay
(1) Feachem RGA, Sekhri NK, White KLGetting more for their dollar: a
comparison of the NHS with California’s Kaiser Permanente. BMJ 2002;
324:135-141.
Rapid Response:
Kaiser California, is it better value for money than the NHS, or, is it creative accountancy?
To the editor,
Feachem et al (1) attempt to answer the question of whether, or not,
the NHS provides good value for money, in comparison to a system mainly
based in California.
Since the answer could have wide reaching implications, particularly
in the current political climate of looking for alternatives based on
other countries experience, this paper deserves the strictest of scrutiny.
The authors admit to the great difficulties encountered in making the
comparison between the two systems, but they give the impression that the
comparison, after the adjustments they made, is fair.
However, it seems to me that one of the adjustments they made, namely that
for ‘medical cost environment or purchasing power parity (PPP)’ was one
adjustment too far.
As shown in table (1), the authors reached an estimation of the
annual per capita health expenditure of £876($1402) and $1951, for the NHS
and the Kaiser California systems respectively. They then made the
mentioned adjustment to reverse the balance between the two systems to
$2130 versus $1951. The authors then made a justified adjustment for the
more elderly population looked after by the NHS, thus reaching a final
estimation of per capita expenditure of $1764 and $1951for the two
respective systems.
This adjustment for PPP is justified in the paper on the basis that
it “corrects for the underlying price difference in medical inputs- that
is, if the NHS operated in California or if Kaiser operated in Kent”. This
adjustment is ludicrous as it corrects for the difference in the cost
factor that the paper is supposed to measure. In other words, it assumes
an increase in the cost of the healthcare system in the UK to parallel
that in California, for example by increasing the salaries of G.Ps by 43%,
hospital specialists by 115% (we wish!) and an increase in the price of
pharmaceuticals by 20-60%. None of this, particularly the salaries
increase, is even remotely possible in practice.
If this adjustment for ‘medical cost environment’ is omitted, as it
should, to make the comparison meaningful and realistic, then the final
comparison between the per capita expenditure in the two systems should be
$1161 and $1951, for the NHS and Kaiser California respectively. This is
hugely different from the authors’ conclusion that claims a parity of cost
between the two systems.
As a worker in the NHS for over 20 years, I am aware of its
deficiencies like any other reasonable observer. The access to specialist
care and the waiting time are two clear disadvantages that need
addressing. The finding in this paper that the age adjusted rate of use of
acute hospital services in California was one third of the use in the NHS,
if confirmed, would be worthy of investigation for causes and remedies
with great benefits to the NHS.
The NHS is not perfect; however, let us not allow the NHS to be
written off financially on the basis of flawed calculations.
I would be interested to hear the views of others on the realistic,
rather than any academic, value of the adjustment referred to.
Magdi M Kirollos
FRCS (Urol),
Urology Department, Torbay Hospital, Torquay
(1) Feachem RGA, Sekhri NK, White KLGetting more for their dollar: a
comparison of the NHS with California’s Kaiser Permanente. BMJ 2002;
324:135-141.
I declare that I have no competing interest.
Competing interests: No competing interests