Health Spend At the Blair Benchmark

The Blair milestone has been reached. In a celebrated TV interview in the autumn of 2000 the then Premier Blair committed the government to raise NHS spending up to internationally comparable levels with our European partners or more widely with the OECD. Now our spending is over the OECD average –9.8 per cent of GDP compared to an average of 9.6 per cent. This is more than among others Finland, Australia and Italy. Spending on health per person is also now slightly above the OECD average at $3847 per person compared to the average of $3233.
For decades the problems of the NHS have been blamed on underfunding. It was said that the NHS may not have been the envy of the world but it was the envy of Finance Ministers. Now there are no more alibis. For the future there seems little chance of any large bail out where funds rise faster than inflation. The OBR Report paints a picture of falling tax revenues and might have said more about the forward commitments on public spending especially for an increased number of retired who expect improved public sector benefits and may not get them The NHS has its own forward commitments for PFI schemes and technical improvements.
The NHS and the private health sector are now much more important for the productivity of the whole economy than they were when the health service accounted for 3 per cent of GDP as was the case in 1950. There is also the potential for further drag on the economy as demand expands. Health services have a hidden economic and human opportunity cost in that they employ a large proportion of the most highly qualified personpower. How can we create conditions which would ensure that these abilities are fully used?
The key lies in a new drive for redesign of services. We have to improve quality and patient access for a level of funding which will be at best static in real terms. Yet we have a high cost, high tech model where spending has been growing by 4.8 per cent p.a. in real terms. Volterra is committed to working with health partners to make a creative and effective response to this rather large and threatening challenge.
There is an emerging model of healthcare which can deliver better services for patients. The model has four stages in prevention, early diagnosis, ambulatory treatment and care programmes. There is clear evidence from Scandinavia and from HMOs in the US that such a model can deliver better health for populations while containing costs.
Premier Blair in fact came to realize that his commitment to Euro level of spending was not enough for a good health service—for this were needed incentives and competition and patient choice. The agenda is still there and now inescapable.

(1)OECD Health at a Glance 2011. Key Findings United Kingdom.

By Nick Bosanquet, Director Volterra Health

Healing the Finances of the NHS

The financial problems of the NHS are extremely serious—but more like anaemia than haemorrhage. It is the financial equivalent of a long-term medical condition.
The NHS Commissioning Board has just appointed Professor Malcolm Grant as chair and must now determine the likely funding, costs and demand over the next five years. Not just the cost commitments that are already there for example from PFI schemes, but also from increasing numbers of medical graduates, and rising energy and food prices.
Trusts' financial problems have probably been under-estimated. The Department of Health names 20 trusts it is concerned about, but 18 others with PFI schemes and at least three in the London area with known financial problems can be added to that list. Most of the 40+ trusts with problems are in or near London.
The NHS has to redesign services while facing deep uncertainty about budgets. By 2013 the 250 new clinical consortia will have allocated budgets but it will be 2014 at the earliest before they can be confident these are realistic.
There is a danger of funding for new programmes being blocked. Managers are preoccupied with short term survival and consultation activities when the service is faced with urgent funding and design problems, with great uncertainty about responsibilities, funding and service development. There are also problems looming regarding quality of care, especially for elderly patients.
PCTs have data on activity and cost which will not exist for new boundaries, and PCT clusters can work as development agencies for the consortia during their brief remaining life. A three way partnership between clinical consortia, PCT clusters and local government, in its new and positive public health role, is needed, with close co-ordination due to the four different funding streams: the clinical consortia, the National Commissioning Board, the health and wellbeing boards, and social care funding.

Local strategy must be defined first. As the old and wise maxim says, strategy has got to come before structure. New services are going to have to be paid for by savings on the old ones, but the incentives to make them would be much greater if people had some idea of what the money would be spent on.
The new consortia must make a start in developing these strategies well before 2013. Service redesign can use the new four-staged model of healthcare - prevention, early diagnosis, ambulatory treatment and care programmes.
Many current services are obsolete, provider dominated and the wrong side of the digital divide. We need a process of change that will take years but has to start with a clear statement from the new commissioners of what they want. They should signal their intent to use patient choice and willing providers as key resources in getting change. International evidence supports a new approach to hospital admissions. From 1999/2000 to 2009/10 hospital admissions rose 38 per cent in England, compared to 1.6 per cent in Sweden. Both nations have ageing populations yet admissions for the over 75s increased 66 per cent in England compared to 0.6 per cent in Sweden. Reduction in growth of admissions is essential to the improvements in quality of hospital care and should be a major priority for the new consortia.
The Nicholson challenge needs to be redefined in terms of 10 a per cent reduction in costs – and not just for hospitals. The immediate goal is for £15-20bn of savings but all of this cannot come from acute hospitals when they account for only 39% of PCT purchasing of services and the rest goes on primary care, community and mental health services.
Some savings need to be re-invested in better care for elderly patients and new drug therapies, where spending has been rising 10% a year. Such cost cutting is important as per patient costs will rise in response to reduced admissions.
Finally a bonfire of controls must be lit. The general aim of moving commissioning closer to patients is a good one but it will be tough to kick the central planning habit. Local commissioners and providers must regain their initiative and flexibility. The NHS has attracted many talented staff in the last ten years. Let's use them to get back to solvency.
by Nick Bosanquet, Director Volterra Health as featured in the Health Service Journal 10/11/2011

Some Comments from the Third European Public Relations and Communications Summit

I recently attended the third European Public Relations and Communications Summit organized by the New York-based company Exl Pharma. This year there was a change in mood and direction compared with the first, the mood was urgent and the direction was towards building new kinds of partnerships with clinicians and patient groups. Corporate communicators are now much more than flag wavers in front of the juggernaut. They are managing a function vital to the survival of the company. Chief Executives know who they are.

So why this transformation? Pharma companies are in the process of changing their business models. The days of blockbusters are over, for them the phase of greater urgency was with the regulator in gaining initial market access. Instead the companies are having to relate much more directly to their funders: the patients. A new kind of pharma care pathway is now on the way to involving diagnostics, targeted personal therapies and outcome measurement. Companies have to take more responsibility for getting therapeutic results. Especially notable were the contributions at the Conference from Fiona Olivier, Strategic Business Communications Director at Abbott. And from James Read, Director of Public Affairs International at Gilead. Abbott are working to develop a new team approach to the culture change. Gilead has shown what can be achieved in getting improved results for patients from the new range of anti-viral therapies. The new model is being supported by key voices in the European Federation of the Pharmaceutical Industries and Associations led by Colin Mackay.

The new model gives the opportunity for a wider range of companies to develop special expertise. It’s more favourable to new entrants than the blockbuster model, those winner take all models that led to increased concentration in the industry. The new model gives smaller and medium sized companies the chance to build a new kind of relationship with patients.

Nick Bosanquet