Learning from Health Care Reform Abroad - More Lessons from the British National Health Service

Unlike in the U.S., where it’s exceedingly difficult to pass health care legislation, sweeping health care reforms are commonplace in Britain. Because of their parliamentary, winner-takes-all political system, when each new government arrives in power, they almost always introduce broad changes to the National Health Service. The latest coalition government has not been an exception to this trend.

On May 11, David Cameron became prime minister of Britain. Nearly two months later, Andrew Lansley, his newly appointed health secretary, released proposals for sweeping changes to the NHS. The policy-package outlined by Mr. Lansley expands a number of the market-based reforms introduced five years before by Tony Blair, but they also radically change the way money flows around the NHS and give substantially more power to local doctors to run the health system.

While this constant policy flux in the NHS causes consternations for British doctors, it presents real learning opportunities for policymakers located in the U.S. who often don’t have local evidence to draw upon. These changes in Britain present American policymakers with an opportunity to examine what has worked abroad and think about what lessons this presents for the reforms being introduced at home.

As I’ve written before, the NHS plays an odd role in the American health care debate. The NHS has long been derided for being the poster child of “socialized” medicine; it was featured in ads lobbying against health care reform. Don Berwick, the recently appointed administrator of the Centers for Medicare and Medicaid Services, was heavily criticized for comments he made praising the NHS. As a result, the challenge for the U.S. is to be able to look past the hyperbole about the NHS and examine what the evidence in England suggests for health care reform in the U.S.

In the last ten years, the NHS has undergone significant reforms. Initially, the government turned towards very rigid performance management from the center. The central government set performance targets and rewarded hospitals for meeting them and fired the staff at hospitals who didn’t. Evidence on this period showed that the performance management did improve performance, but that it collapsed employee satisfaction, led to gaming of statistics, and thwarted innovation.

Later, the Blair government turned towards increasing patient choice and hospital competition within a well-regulated market. This market has vivid parallels with the market for Medicare patients in the U.S. Evidence on these market-based reforms indicates that they have improved hospital management, increased efficiency, and ultimately lowered hospital mortality. The evidence emerging is that hospital competition is effective, as long as hospitals are competing on quality, not prices.

In many ways, the current reforms being proposed in England are an extension of the recent patient choice and competition reforms. They encourage patient choice, they place a premium on providing patients with extensive information on providers’ clinical quality, and they encourage hospital competition. However, there are other elements of the reforms that are significantly more radical.

The reforms place an extraordinary amount of power into the hands of England’s family doctors—general practitioners. Most of the layers of bureaucracy in the NHS will be cut and GPs will be tasked with negotiating with hospitals, organizing local services, and purchasing care from hospitals on behalf of their patients. The local doctors will be given a budget for each patient and given clear financial incentives to treat that patient for as little money as possible. In an effort to keep patient satisfaction high, patients will be able to select which family doctor purchases care on their behalf and will regularly have the opportunity to switch doctors if they’re displeased.

Ultimately, this means that nearly $125 billion of the English NHS’s $160 billion annual budget will rest in the hands of local doctors. This has raised all sorts of questions, in particularl whether or not the GPs are up to this mammoth task they’re being asked to carry out. Proponents of the recent reforms argue that they increase local-decision-making and create sharp incentives for local GPs to provide services out of the hospital and promote wellness care, not sickness care. Critics of the reforms argue that they will decrease patient satisfaction and that GPs are simply ill equipped to manage such significant sums of money.

The uncertainty in Britain is a boon for analysts in the U.S. The key is thinking about which aspects of the British policy experiment in years ahead will provide useful evidence for the U.S. and what questions we need to investigate.  Here are three, which I believe we should focus on:

  • - First, were consumers (patients) in Britain reactive to new information on their health care provider’s quality?
  • - Second, were British family doctors up to the task of managing care for their patients and playing a larger role dictating the financial flows around the NHS?
  • - Third, did creating financial incentives for doctors to promote wellness and avoid hospital admissions improve patient welfare?

Nobody is suggesting remodeling the U.S. health system to mirror what is done in other countries. No matter how good those other systems are, that kind of strategy is bound to fail because each country’s health system is a complicated combination of history, values, and political dynamics. Nevertheless, learning from other countries is vital. For the U.S. health system to succeed, policymakers increasingly need to look abroad for evidence on what is working and what is not and take that evidence and filter it back into the policymaking process at home. Too often, policymakers in the U.S. are devoid of evidence. International experience does not provide all the answers, but it will provide some clues about how to deal with some of the difficult issues we’re dealing with as we continue to rollout the recently introduced Patient Protection and Affordable Care Act.


Special Contributor Zack Cooper is a research officer with the London School of Economics. His monthly column for the Health Policy Forum considers health policy from the international perspective. “Special Contributors” are regular contributors to the Health Policy Forum who pose their own opinions and policy positions in the realm of health care and health policy. As a leading nonprofit health care research and consulting institute dedicated to improving human health, Altarum encourages open discussion and debate about the many challenges in health care today. All postings to the Health Policy Forum (whether from employees or those outside the Institute) represent the views of the individual authors and/or organizations and do not necessarily represent the position, interests, strategy, or opinions of Altarum Institute. Altarum is a nonprofit, nonpartisan organization. No posting should be considered an endorsement by Altarum of individual candidates, political parties, opinions, or policy positions.

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