Select Committee on Health Written Evidence


Supplementary evidence submitted by Dr Sally Ruane (ISTC 46A)

  I should welcome the opportunity to present further evidence regarding the introduction of ISTCs into the UK health care system within the market context. First, I should like to expand further on the use of research on the US health care market, conducted against a backdrop of debate in Canada regarding the introduction of for-profit hospitals. Second I shall consider the likely impact upon the founding principles of the NHS of ISTCs within the evolving UK health care market.

NORTH AMERICAN RESEARCH

  The literature surrounding comparisons of different types of hospitals is, as noted, mixed. However, this does not mean that all the research conducted is of equally good quality or should be afforded equal weighting. In the hierarchy of evidence, the systematic reviews and meta-analyses of Devereaux and colleagues must surely rank among the best in this field. These studies offer:

    —  systematic review of pre-existing research and meta-analysis of pooled data;

    —  publication in high quality journals following a rigorous peer review process;

    —  a high degree of methodological sophistication and transparency;

    —  findings which suggest applicability across different health care contexts; and

    —  contribution to an active political debate surrounding whether a health-care system (Canadian in Devereaux's case) should open its doors to for-profit hospitals.

  These studies have attracted considerable attention in Canada and have given rise to a debate between authors and critics some of which is in the public domain. This has shed further light on methodological judgements.

  More specifically, the strengths of the Devereaux (2002a) research include the following:

    —  The selection process (in Devereaux et al, 2002a) to determine which pre-existing studies to include in the systematic review and meta-analysis involved the specification of eligibility criteria; an extensive literature search; teams of two independently screening titles and abstracts for relevance; teams of two independently analysing potentially relevant studies "blind" to their findings to avoid bias; implementation of a specified process to resolve any differences between those analysing studies independently although agreement on study inclusion was high; exclusion of studies involving hospitals which had changed profit status; exclusion of studies where further information and/or data were required from the authors and where this was not forthcoming or demonstrated that the study was inappropriate for inclusion.

    —  Adjustment for patients' severity of illness, for patients' socio-economic status, for hospital teaching status and other potential confounding variables; non-adjustment for variables under the control of hospital administrators where these might be influenced by profit status and affect mortality such as staffing levels per bed after severity of illness adjusted for. Most studies used the Health Care Financing Administration database which includes data on all US hospitals which serve Medicare patients and generates risk-adjusted mortality rates. Where studies included unadjusted and adjusted results for disease severity, the analysis consistently led to effect estimates which were more favourable to the private not-for-profit hospitals suggesting they serve a population with greater disease severity. As a result, Devereaux et al judged that any residual confounding would make private not-for-profit institutions look worse—that is, the results of the Devereaux et al study may, if anything, underestimate the potential increase in mortality associated with for-profit hospitals.

    —  In most of the studies, patient care was funded through Medicare; most studies included general acute care, medical and surgical patients; one study examined maternity services.

    —  Alongside the very large scale research (encompassing 38 million patients across 26,000 hospitals) which compared private for-profit and private not-for-profit hospitals (Devereaux et al, 2002a), a separate report analysed four studies including public as well as private hospitals (Devereaux et al, 2002b). Devereaux concluded that the inclusion of public hospitals in the first piece of research would have, if anything, strengthened the findings in relation to the comparatively poor performance of for-profit institutions.

    —  Comparatively low numbers of highly trained staff per risk-adjusted bed, the need for investors to make a rate of return on their investments of 10-15% and the bonus and financial packages to senior staff are posited as possible explanations for the observed differences.

  One study I am aware of on mortality rates in a UK market context was conducted by Propper and colleagues who found a modest but upward effect on mortality rates of competition in the internal market of the 1990s (Propper et al, 2003).

  In relation to payments for care (Devereaux et al, 2004), complexity of comparison is not confined to questions of price fix (which in any case may not remain an unmodified feature of the evolving UK market in health care) but rather a number of factors need to be taken into consideration. In weighing up the contribution to the Committee's deliberations of research based on US studies, the following should be noted:

    —  The data covered and the results persisted over more than a decade and over significant changes in the structure of US health care, including changes in payment systems for Medicare patients.

    —  The five studies showing significantly higher payments for for-profit care had variations in their sources of payments (Medicare, insurance and both).

    —  These observations suggest higher payments for care at private for-profit hospitals are manifest within a variety of health care contexts.

    —  The inclusion of for-profit health care institutions in the UK may over time and depending upon policy development in the UK include the same US hospital chains.

    —  Although the tariff is currently fixed in the UK, the development of a market dynamic is likely to lead to pressure for future policy changes or modifications to which I return below.

  More specifically:

    —  Again, a detailed process was employed by the research team to identify and select high quality pre-existing studies which met the inclusion criteria involving eligibility decisions and data abstraction in duplicate.

    —  Canadian hospitals are publicly funded and the researchers thus focused upon the policy question: how much will government pay for care delivered by private for-profit versus private not-for-profit providers?

    —  Studies were considered methodologically strong where they adjusted for patient source of payment (as well as patient age, sex, ethnicity, income education, primary diagnosis (case mix), co-morbid conditions, severity of illness, the concentration of hospitals in a region and hospital teaching status).

    —  Various hypotheses to explain variability in the direction and magnitude of effect across studies were specified in advance. These included whether patient source of payment was public or mixed (as well as whether payments for care were per discharge or per day; whether payments for care were related to hospital stay or included a period of time after hospital discharge; whether hospitals evaluated were specialty or general; whether the patient population was adult or paediatric; and whether the analysis was adjusted for potential confounders or not).

    —  The eight publications of observational studies included over 350,000 patients and assessed a median of 324 hospitals per study. Five studies showed significantly higher levels of payment for care at private for-profit hospitals; 1 showed significantly lower levels of payment for care at for-profit hospitals. The primary meta-analysis demonstrated that private for-profit hospitals are associated with higher payments for care; only one of the pre-specified hypotheses helped explain the large heterogeneity across study results (general vs specialty). The studies with the most extensive adjustment for potential confounders reported statistically higher payments for care at private for-profit hospitals. Pooled estimates from both the 3 studies evaluating specialty hospitals and the five studies evaluating general hospitals showed higher payments of care for the private for-profit hospitals.

    —  Ten publications excluded from the analysis either because no measure of variance was supplied or because public and private not-for-profit had been grouped also all showed higher payments or charges for care at for-profit hospitals, statistically significant in six out of the 10.

    —  Given the significant variability in direction and magnitude of effect among studies, the authors conclude that whilst the inference that for-profit hospitals result in higher payments for care is secure, the magnitude of the effect may differ according to circumstances.

    —  The authors believe that the results may underestimate the association between private for-profit hospitals and higher payments for care since, because studies in the systematic review adjusted for case mix, increase in payments resulting from inappropriate upcoding of patient diagnosis to enhance reimbursement is not captured; and because issues of fraud are not addressed (performance of unnecessary surgeries, billing for services not provided, inappropriate detainment of psychiatric patients for billing purposes). (The multimillion-dollar fraud lawsuits in the US have been overwhelmingly against private for-profit hospitals.)

  Vaillancourt Rosenau and Linder's (2003) research is methodologically simpler and arguably less sophisticated than that of Devereaux and colleagues. It does, however, provide the first systematic review of data-based, peer reviewed assessments of the relative performance of for-profit and not-for-profit providers in the United States. The 149 articles which met the inclusion criteria reported 179 performance assessments of four common performance criteria: access, cost/efficiency, quality and amount of charity care. The full universe of eligible studies (since 1980) was included in the systematic review and these were given equal weighting; the synthesis focused upon statements of findings. The authors assume that technical flaws and consequent errors in the studies are randomly distributed.

    —  56 of the 149 studies considered cost, only 13 of which reported for-profit providers as superior.

    —  69 studies sought to compare quality of care on at least one measure and 41 found not-for-profit providers as superior with a further 20 finding no difference.

    —  30 compared on access and 20 found not-for-profit providers superior.

    —  Out of 24 assessments of charity care performance, 16 found not-for-profits as superior.

ISTCS: THE MARKET AND NHS FOUNDING PRINCIPLES

  Although ISTC policy must be examined in terms of its technical details, it cannot be reduced to these and any overall assessment within the political process must adopt a broader view, encompassing the political, moral and value basis of the policy. This means that ISTCs must be clearly understood and evaluated in the context of the government policy of moving UK health care away from the NHS as traditionally understood towards a system of health care based on a competitive, partly commercialised market.

  The reason ISTCs pose a threat to the rather frayed founding principles of the NHS lies in the dynamic they help create, particularly within the market context, and there are two key aspects to this on which I wish to comment.

  ISTCs contribute to a differentiation of health care experience. In itself, this differentiation does not necessarily imply inequality. However, within a competitive market context, differentiation is likely to be characterised by inequality. This is because of the instability and disequilibrium created by a market which results in inequalities among providing units and potential destabilisation of some NHS hospitals (this relates to the question about destabilisation posed by the Committee Chairman at the second hearing). Where NHS hospitals lose their income—either because patients choose to go elsewhere or because their income has, as a matter of policy, been diverted to the establishment and maintenance of the for-profit providers—the scope and quality of the health care they offer is compromised. This is particularly so where they are left with responsibility for more disproportionately complex and costly cases.

  One of the less often quoted founding principles of the NHS is that patients should be able to access equally good care wherever they obtain it. This is one aspect of the principle of equity which underpins the concept of the NHS (Whitehead, 1994). Whilst difficult to achieve in practice, this principle poses a test and reference point by which to evaluate policy initiatives. The more health care becomes differentiated, the greater the danger that patient experiences will become systematically unequal. The current focus upon inequalities in health care around ISTC policy centres, on the one hand, upon whether procedures carried out in ISTCs are of equally good quality (compared with those in the NHS) given existing recruitment practices and modes of service delivery (eg Wallace, 2006) and, on the other, upon whether the quality of care across NHS hospitals is becoming unequal as a result of the destabilising dynamic of the market with the resulting loss of income, training opportunities, surgical skills etc. in hospitals affected by ISTCs on their patch. Evidence to date is limited but concerns expressed so far include the viability of eye and endoscopy services, with implications for holistic and comprehensive care; compromises to the quality of care where the management of follow-up and complications is thwarted by fragmentation and poor communication and where MRI scans have been poorly and remotely conducted (eg SCR, 2006; RCO, 2006). The ability of these affected NHS units in the future to offer good quality health care will be influenced by the outcomes of the currently evolving policy on purchasing training from ISTCs and the impact of this and other loss of investment in NHS services and capacity because resources have instead been spent on temporary private contracts. At present, we do not know whether patients accessing different providing units differ in terms of class, sex, ethnicity and age.

  This is not to say that planned systems automatically guarantee equally good care wherever it is accessed but rather that markets automatically tend towards difference and inequality; moreover, costly regulation and incentives may be insufficient to redress this.

  There is another dynamic, however, which poses a threat to the founding principles of the NHS, and this is a political one. The introduction of for-profit companies into the routine workings of the NHS allows the representatives of those companies a seat at the policy making table. We are already seeing calls for the ISTCs to be more integrated and for the private companies to become involved in workforce planning as an example. For-profit companies will have a role in shaping health policy and it is reasonable to suppose that they will do this in a way which advances their interests. In practical terms, this will involve seeking to secure higher rates of profit through an increased share of the market and/or through increased prices. The tendency of for-profit providers to accrue ever greater shares of public expenditure, to foster dependency upon their services and to resist effective regulation has been well documented in relation (for example) to PFI and long-term care for older people (Pollock, 2004).

  At the same time, the dynamic of the market itself could exert an upward pressure on costs, as Nigel Edwards (2005) has pointed out. This arises from such factors as the administration of a competitive market (contracting, billing, strengthened governance arrangements for increasingly independent providers; trying to hold back supplier-induced demand, via structures of demand management, treatment pre-authorisation and service use reviews, as providers try to secure a higher share of health care expenditure); provider behaviour such as differentiating market "products" through advertising and information given to patients; and wastage arising from duplication and redundant facilities (as Kevan Jones MP reported to the House of Commons in October relation to MRI scanners, for instance). The steps taken to try to control the undesirable consequences of the workings of a market (including fragmentation) are costly and may not succeed. The implementation of financial incentives is problematic, particularly in the profoundly moral context of health care (eg Marshall and Harrison, 2005) and the current political and economic climate is moving away from regulation, not towards it as the prolonged political battle to remove health care from the EU draft Directive on Services in the Internal Market illustrated.

  This combination of rising costs—costs which, it should be noted, are not directly spent on health care and arguably contribute little to improved health outcomes—and effective political lobbying and policy influence exercised by the for-profit companies will, it is not unreasonable to anticipate, lead to political pressure to introduce additional charges, such as through top-up fees for above basic service or co-payments. This should not be regarded as fanciful or scaremongering. For instance, the prospect has already been discussed within the pages of the BMJ (Donaldson and Ruta, 2005); proposals surrounding more privatised modes of health care funding have been developed by right of centre think-tanks (eg Booth, 2002); and a voucher scheme formed part of Conservative Party health policy at the 2005 General Election.

  The encouragement to relate to the NHS and other public services as consumers rather than citizens is likely to undermine the sense among the public that health care should be considered in terms of equity and need rather than want and personal satisfaction. Further, whilst the necessary funds for this more expensive market system could be raised through curbing tax avoidance schemes, only limited action so far has been taken (Tax Justice Network, 2006) and raising taxes on the very well off does not appear to be on the political agenda at all. The conditions would then be created in which the principle of health care free at the point of delivery—the NHS founding principle which is often cited by ministers—is seriously undermined. Whatever the undertakings given by the current government, there will be pressure on future political leaders to respond to this, with potentially very unequal outcomes for health care users. Thus, this other pillar of the NHS principle of equity is also ruinously weakened.

  ISTCs have been located geographically not merely or even principally, so far as we can tell, on the basis of additional capacity needs but rather to kick-start the new market in health care. Markets are typically not appropriate for securing policy goals such as equity. The growing role and influence of commercial interests in the NHS has moved the institution in a particular direction over the past decade or two; the "direction of travel" intended by government is increasingly clearly articulated. The Committee's assessment of ISTCs must have regard to this growing contradiction between a market embracing commercial providers and the principle of equity institutionalised by the NHS for, as Bevan put it, the serenity of our society.

REFERENCES

  I.  P Booth (2002) Getting your Health back: Rebate Financing for Medical Care. London: Adam Smith Institute.

  II.  PJ Devereaux, PTL Choi, C Lacchetti, B Weaver, HJ Schunemann, T Haines, JN Lavis, BJB Grant, DRS Hasla million, M Bhandari, T Sullivan, DJ Cook, SD Walter, M Meade, H Khan, N Bhatnagar, GH Guyatt (2002a) "A systematic review and meta-analysis of studies comparing mortality rates of private for-profit and private not-for-profit hospitals", in Canadian Medical Association Journal, 28 May, 166(11): 1399-406.

  III.  PJ Devereaux, HJ Schunemann, N Ravindran, M Bhandari, AX Garg, PTL Choi et al (2002b) "Comparison of mortality between private for-profit and private not-for-profit hemodialysis centers: a systematic review and meta-analysis", in Journal of the American Medical Association, 288(19): 2449-57.

  IV.  PJ Devereaux, D Heels-Ansdell, C Lacchetti, T Haines, KEA Burns, DJ Cook, N Ravindran, SD Walter, H McDonald, SB Stone, R Patel, M Bhandari, HJ Schunemann, PTL Choi, AM Bayoumi, JN Lavis, T Sullivan, G Stoddart, GH Guyatt (2004) "Payments for care at private for-profit hospitals and private not-for-profit hospitals: a systematic review and meta-analysis", in Canadian Medical Association Journal, 8 June, 170(12): 1817-24.

  V.  C Donaldson and D Ruta (2005) "Should the NHS follow the American way?", in British Medical Journal, 331: 1328-30.

  VI.  N Edwards (2005) "Using markets to reform health care", in British Medical Journal, 17 December, 331:1464-1466.

  VII.  M Marshall and S Harrison (2005) "It's about more than money: financial incentives and internal motivation", in Quality and Safety in Health Care, 14: 4-5.

  VIII.  A Pollock (2004) NHS plc, London: Verso.

  IX.  C Propper, S Burgess, K Green (2004) "Does competition between hospitals improve the quality of care? Hospital death rates and the NHS internal market", in Journal of Public Economics, 88: 1247-72.

  X.  Royal College of Ophthalmologists (2006) "Written evidence" Health Committee: Independent Sector Treatment Centres, Fourth Report 2005-06 Vol II, London: The Stationary Office.

  XI.  Society and College of Radiographers(2006) "Written evidence" Health Committee: Independent Sector Treatment Centres, Fourth Report 2005-06 Vol II, London: The Stationary Office.

  XII.  RCO (2006) Evidence to the Health Committee.

  XIII.  Tax Justice Network (2006) Brown misses "last chance" to deliver on tax avoidance promises, Tax Justice Network: budget 2006 Press Release, March 22.

  XIV.  P Vaillancourt Rosenau and SH Linder (2003) "Two decades of research comparing for-profit and nonprofit health provider performance in the United States", in Social Science Quarterly, 84(2): 219-241.

  XV.  A Wallace (2006) Independent sector treatment centres: how the NHS is left to pick up the pieces, in British Medical Journal, 332: 614.

  XVI.  M Whitehead (1994) "Who cares about equity in the NHS?", in British Medical Journal, 308: 1284-7.

Dr Sally Ruane

Health Policy Research Unit

De Montfort University, Leicester

March 2006





 
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