Perverse Incentives
48. It is argued by some that allowing NHS consultants
to conduct private practice creates a system in which there are
in-built perverse incentives for those consultants to allow their
NHS waiting times to increase, in order to stimulate demand for
their more lucrative private practice. Professor Donald Light
told us that "I have come to conclude that consultants' contracts
constitute one of several government policies that maximise waiting
times and maximise the number of patients going private".[75]
In a recent article he went further and argued that elements of
the consultants' contracts were "a blatant conflict of interest,
an invitation for mischief". He identified a number of factors
which created this situation, including:
- the maximum part-time contract, which "is
a government issued commercial licence....to build highly profitable
businesses on the foundation of their NHS practices";
- the "minimal obligations that the government
sets so that full time consultants have plenty of free time to
build up private practices";
- the "control by consultants of the waiting
lists and over how long different kinds of patients will wait....
Some routine practices in the NHS help to drive patients into
[the private sector] such as notifying NHS patients when they
have been given an appointment in ways that minimise the chances
they can actually show up; scheduling theatre sessions to end
an hour early;....These officially permitted practices mean less
work at full pay and more patients ready to queue jump and pay
large private fees."[76]
49. The ability of consultants to determine waiting
lists and the length of time that patients have to wait leads
Professor Light to recommend that "all referrals from GPs
and consultants be run by an independent Waiting List and Booking
Office that would manage the logistics of assigning and allocating
patients among consultants in a geographical area".[77]
The Minister appeared to approve of such a scheme and told us
that ".... there are a number of trusts up and down the country
which in key specialties have actually agreed to move away from
consultant specific waiting lists and from consultant specific
referrals and that has often developed, not exclusively, where
people have developed booked admissions programmes.....I think
that is a very good practice. There are some sensitive issues
because if you have a team of surgeons with greater and greater
specialism it will not always be appropriate to refer, as it were,
to the general body or to the person with the shortest waiting
list. That is an issue for GPs who are doing referrals as well
as consultants. I saw a system in Lewisham the other day, for
example, the direct booking system, which will enable GPs either
to refer to any named consultant or to the consultant group as
a whole. I think in broad terms we would encourage those types
of development...".[78]
50. We support the suggestion that an independent
waiting list and booking office be used as a way of reducing the
'perverse incentives' which exist in the system and we welcome
the Minister's enthusiasm for this proposal. We recommend that
an evaluation be carried out of such an office in order properly
to assess the benefits and disadvantages it might bring.
51. Although the independent booking office is a
welcome initiative, it is unlikely to deal with the problem in
its entirety. The general question of the influence of private
practice on NHS waiting lists would remain. Professor John Yates's
evidence stated that contractual arrangements "place consultants
in the invidious position where there is a conflict of interest.
Such conflicts of interest are actively avoided in both commerce
and the public sector. No electricity company official would expect
to retain his employment if he offered to replace electricity
meters in the evening, as a private arrangement, for an additional
cash payment, in the event of the company being unable to change
the meter as quickly as the customer would like. As one consultant
neurosurgeon said in response to the patient asking whether his
BUPA insurance would speed up treatment, 'Would the patient be
so casual in offering a bribe if he was speaking to a police officer
instead of an NHS consultant?'"[79]
52. Professor Yates pointed to long waiting times
- which he admitted were caused by a range of factors, including
some outside consultants' control - as offering, through their
decision making process, a "potential conflict of interest"
to consultants. He made the general point that "one consistent
feature about waiting times.... is that those patients who are
prepared to pay are treated much more quickly than those who wait
their turn in the NHS". He gave a number of examples:
- In 1994 outpatient waiting times and private
sector rooms times in the NHS for orthopaedics and ophthalmology
averaged 25 weeks and 19 weeks respectively; in the private sector
they average two weeks;
- between 1989-90 and 1994-95 median waiting times
for NHS patients for inpatient and day case admission rose from
32 to 42 days; for private patients it fell from 11 to 9 days.[80]
53. Other witnesses had concerns regarding perverse
incentives. The Consumers' Association told us that they were
concerned about "whether there is a perverse incentive to
sustain and create lengthy NHS waiting lists. It seems to make
sense to me that if I was going to profit from private practice
it is in my interests that waiting lists are long. It just does
not seem to make sense and it is not suitable for a modern NHS
to have such a contract".[81]
54. The Department's evidence acknowledged the suggestion
of a conflict of interest, but stated that "there is no hard
evidence that establishes beyond doubt the existence, extent or
impact of these claims". It went on: "There is a correlation
between those specialties with the longest waiting lists and those
specialties where private practice earnings make up a substantial
part of a consultant's income. However, this does not of itself
demonstrate that the current consultant contract causes these
long waiting lists".[82]
55. The BMA denied that their members were driven
by perverse incentives, or that private practice influenced NHS
waiting lists. Their representative told us that "I do not
defend the waiting times on the National Health Service. However,
I do not believe that has got anything to do with the current
consultants' contract".[83]
The BMA also asserted that "the causal link between waiting
lists and private practice has not been held up by evidence".[84]
The BMA also made the case that, as long as they met their NHS
obligations, what consultants did in their own time should be
for them to decide: "You could argue that if that consultant
did not do private practice but was out with his family on Saturday,
exactly the same would happen. Patients would still be kept waiting
because he was not working. What we have to do is to make sure
that the National Health Service gets full value from consultants".[85]
56. While causation and proof are hard to establish
beyond doubt in this matter, a number of facts are not disputed.
The first is the correlation noted in the Department's evidence
between those specialties with the longest NHS waiting lists,
and those which produce the most lucrative earnings for consultants
in the private sector. The second is the findings of the Audit
Commission in 1995 that "the 25% of consultants who do the
most private work carry out less NHS work than their colleagues".[86]
It has been put to us that some consultants are driven by perverse
incentives into maintaining long NHS waiting lists in order to
stimulate lucrative private practice. This, however, has not been
proven to us. What is indisputable is that NHS patients wait longer
than private patients, and that private earnings are highest in
those specialties where NHS waiting times are longest. We recommend
that the Department examine ways in which the suspicion of perverse
incentives can be removed from the system.
Equity
57. As we noted above, NHS patients wait longer to
be treated than those patients who can afford to be seen privately.
Professor John Yates gave us a telling example of this, based
on a real case:
"In one outpatient clinic
this month a patient called Keith discovered that he required
heart surgery. The surgeon explained that ideally the operation
should be performed soon, but as his condition was not urgent
he would have to wait about nine months. For a payment of £10,000
the same surgeon would operate on him within two weeks in the
same NHS hospital or in a private hospital.... The health care
system in this country will consistently allow other patients
to be treated before Keith. They will be operated on by NHS surgeons,
both in NHS hospitals and private hospitals, even though their
need is not greater. In the NHS hospital that Keith is waiting
to enter, one cardiac patient in every 20 is a private patient.
This means that Keith will probably be overtaken by 45 private
patients in nine months in that hospital.... Their earlier access
to care will simply be based on their ability to pay..... The
extent to which the consultants' contractual conditions contribute
to this inequity is uncertain. It is fairly clear that long waiting
times are not solely caused by this issue..... [However,] queue
jumping is only really possible where payment is made to surgeons."[87]
58. Whatever improvements are made to consultants'
contractual obligations to the NHS, and whatever steps are taken
to reduce perverse incentives, the inequity of a system which
allows patients of equal clinical need to queue jump ahead of
others simply because of their ability to pay, seems to us to
be indefensible. We sought to establish whether research had been
conducted into the treatment given to patients of equal clinical
need, between patients on the NHS and patients paying for private
treatment, in terms of waiting times, quality of treatment, and
outcomes. We were told that such research had not been conducted.[88]
However, we were told by the Consumers' Association that a survey
of NHS Chief Executives had established that 40% of them felt
that consultants' private practice had a negative impact on waiting
lists for operations; 37% thought it had a negative impact on
waiting lists for out-patient clinics; and that 36% thought it
had a negative impact on the supervision of junior staff.[89]
It was put to us that a significant number of Chief Executives
are concerned about the adverse impact consultants' private practice
has on NHS patients. In order to get a better picture of what
is happening in practice, we recommend that research be conducted
into the comparative treatment of patients with similar clinical
needs on the NHS, and of those who receive private treatment,
in terms of waiting times, quality of treatment, and outcomes
of treatment.
59. The inequity inherent in the system of NHS consultants
having private practices led us to question witnesses as to the
desirability and feasibility of separating the system, so that
consultants worked either in the NHS or in private practice, but
not both. The BMA told us that there would be a danger of losing
consultants currently working in both sectors entirely to the
private sector, particularly in certain specialties where there
were already shortages.[90]
The Minister noted that there would be practical problems in 'buying
out' consultants' right to work in the private sector, in that
consultants in those specialties for which there was little private
demand would be likely to accept such an offer, but that it might
not be taken up by those consultants in specialties where there
was high demand for private work.[91]
60. The separation of NHS and private practice would
have a number of significant knock-on effects. Put simply, some
consultants would be likely to leave NHS work entirely, and a
valuable resource would be lost. Other consultants might decide
that it would be in their interests to work solely in the NHS.
The consequent effects on the NHS and on health care generally
would be complex and depend on many factors. This short inquiry
would not have been the appropriate forum in which to examine
those consequences in detail. However, we believe it is indefensible
that patients with similar clinical needs receive significantly
different treatment purely because of their ability to pay. Therefore
we believe that the Government should make it a long-term objective
that consultants in the NHS do not undertake private practice.
We recommend that the Department commission research into what
the effects of any such separation would be, and into ways in
which incentives could be implemented and afforded which would
help to keep the best consultants within the NHS. The NHS was
founded on the principle of equity: it should put that principle
into practice.
69 Ev., p. 43, para. 6.1. Back
70
Q 173. Back
71
Q 7. Back
72
An Inquiry into Quality and Practice Within the National Health
Service Arising from the Actions of Rodney Ledward, 2000,
p. 268. Back
73
Ibid p. 388. Back
74
Q 170. Back
75
Appendix 8. Back
76
Donald Light, "The Two Tier System Behind Waiting Lists",
British Medical Journal, 2000:320, p. 1349. Back
77
Appendix 8. Back
78
QQ 293-294. Back
79
Ev., p. 9, para. 10. Back
80
Ev., p. 10, paras. 16-17. Back
81
Q 7. Back
82
Ev., p. 32, paras. 22-23. Back
83
Q 161. Back
84
Q 219. Back
85
Q 164. Back
86
Audit Commission (1995), The Doctor's Tale, p. 44. Back
87
Ev., p. 8, paras. 2-4. Back
88
QQ 71-74. Back
89
Ev., p. 5. Back
90
Q 262. Back
91
Q 300. Back
