Mark Newbold

Future of our hospitals: more lessons from the US?

I’ve been lucky enough recently to learn more about health trends in the US. It isn’t a system most of us would wish to emulate, given that it consumes twice as much of the national resource as the NHS while leaving over 20% of the population with access to emergency care only.

Nevertheless, many of the challenges faced by their hospitals and health systems are comparable with those faced by the NHS. And there has been a steady shift in the nature of services.

Mergers and acquisitions are more numerous than ever, creating large groups and chains of hospitals. These are facilitating both greater market share and cost reductions from greater scale. Interestingly, back office savings are small (around 1-2.5%) while service rationalisation gains are much greater (some 10-16%).

While health spending has grown at five times the rate of the US economy since 1980, the spend on hospital care has fallen from 43% to 33%. Physician services have remained constant though, at 21%. And cost and quality are not well aligned, so that greater cost does not equate to better outcomes.

The larger health systems seem to be getting stronger, as margins have climbed in recent years following a steady fall in the nineties. Revenue from out-patient services has been rising, from just over 20% in 1990 to around 40% now, with in-patient income showing a corresponding drop.

The aging population is a factor, but the greatest cost pressure is the growing burden of chronic disease.

Rising health costs for employers are now driving increasing investment in ‘wellness’. As a consequence, accountable care systems, which are integrated and able to focus on overall population health, are gaining ground over the previous ‘production models’ of provision. Co-production of services with patients is increasing too (some systems offer access to health records through a phone ‘app’, with reminders and prompts also coming via mobile technology).

What of the future? Perhaps fewer, larger healthcare systems, concentrating as much on maintaining good health and provision of out of hospital care, as well as on the still necessary in-patient services? Specialist services consolidated to create excellence, procedures carried out in high volume ‘hubs’, and greater use of non-doctor professionals and increasing standardisation of care protocols?

Here in the UK, as we contemplate similar trends and cost pressures, and fret over the future of our hospital sector, it is easy to spot similarities. We talk a lot about integration, but seem unable to bring it about. I think the following need changing, for urgent care at least:

1. Tariff and Payment by Results for hospitals

2. The ‘purchaser provider split’

3. Separate targets and regulation for hospitals

4. Fragmented primary care provision

5. Reactive and unfocused community care

6. Too many small hospitals and unsustainable specialist services

They are all blocking progress.

It is surely time to trial a different approach? A budget built up on a ‘year of care’ tariff; standards and targets measuring whole system performance in terms of maintaining well-being; leaders willing to collaborate and being allowed, and incentivised, to do so; and greater patient involvement in designing a new system that facilitates self-care, access to records, and 24/7 access to advice and support.

Sure, it would require people to work differently, including doctors. But hospital specialists would be using their skills, and those of their teams, to better manage chronic illness and improve the quality of life of sufferers by actively working to improve wellness. That has to be rewarding and worthwhile, and a fitting utilisation of hard won skills and expertise?

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6 Responses to “Future of our hospitals: more lessons from the US?”

  1. Bob Bury says:

    Interesting Mark, and a nice contrast to a content-free paean to the US health care system elsewhere on this site.

    As a radiologist, I’m particularly interested in the development of markets and the necessary tariffs to enable so-called ‘service’ departments to market themselves both inside Trusts, to other clinical directorates, and externally (particularly important for large tertiary services like Leeds, where I work). The big problem with many of the radiology tariffs so far devised is that they result in us not even covering the cost of consumables for some of the more complex procedures we perform.

    It’s very difficult to rationalize services and increase efficiency when we have no access to high quality data concerning the real costs of what we do. Once we have that we can get serious about service level agreements and external marketing, and this in turn gives us a handle on demand management, something which is essential if we are to use capital-intensive service like radiology in a rational manner. Robust data are also required if we are to tackle the current rush to the private sector on a level playing field, and resist the type of fallacious arguments that made PFI look like a good deal.

    Interesting times, as they say.

  2. Malcolm Morrison says:

    Very interesting and ‘positive’ (for a change!) – both article and Bob’s remarks.

    Two questions:
    1. This appears to realte to ‘elective’ care. How do emergencies come into the ‘equation’ of ‘costings’?
    2. How does this relate to the training of professionals (doctors, nurse, physios etc.)? Is training and post-graduate education taken into consideration when ‘costing’ is done?

  3. cd says:

    mark puts it candidly as the second point in his list but this is the most important point of them all – by far. the 2 pillars of health care need to be clearly separated. one is the provision of healthcare, this is what doctors and nurses do and one look at private vs public hospitals shows that the private sector is far better than the public sector at this. the other is the provision of access and once again, one look at the US of A, where profit making insurance companies have created an impenetrable maze of health plans shows the public sector should be in charge of this. ONE national health insurance that provides universal access (by reimbusring the cost) to everything listed in the little book “evidence based medicine” and private medical facilities that compete for the patients. the “provider – purchaser split” is the all important point!

  4. Mark Newbold says:

    Thanks all – this is a complex and fascinating area isn’t it?

    Bob – I agree re marketing radiology externally. If I were running a large service I would be seriously considering this. I am less sure about internal charging (which we have in my Trust), because I’m not convinced it alters behaviour? It is time consuming to administer and works well for radiology when the ‘tariff’ is set high enough, but not if it isn’t. And it is a circular flow of money within the organisation, so only benefit is if it drives down overall costs

    Malcolm – I am generally positive (though often frustrated and disappointed), I would struggle to do my job if not! The 6 proposals I made relate particularly to urgent care, which i strongly believe needs to be a collaborative effort across health and (ideally) social care. Arguably, elective care can be provided and funded differently, depending on one’s political standpoint.

    cd – I am afraid I have come to the view that the purchaser provider split is not really proving beneficial. It remains policy but I struggle to see what we have gained from it in the NHS. In the US I think the insurers have ‘controlled’ the system better than our commissioners have, but even so the best systems are when the insurer and provider are one and the same (Kaiser, Geisenger). This is because they are, in effect, integrated systems which allow proper management of patients with chronic illness, and proper incentives to provide early, proactive care that reduces expensive hospital care.

    Thanks for your interest

  5. cd says:

    “managed care” as practiced by kaisers has the drawback of removing the choice of doctor by the patients and its this point the insurance lobby uses to keep the current system in the US going. a basic, national (state run) health insurance that guarantees universal access to proven, evidence based care of the no-frills variety, possibly using drg’s to reimburse private providers competing for patients … i am convinced that this would deliver the best overall result …

  6. Malcolm Morrison says:

    There is always some degree of a ‘social’ aspect to health care; so ‘treatment’ (or some might like to use the term ‘management’) of the patient should be a co-operative venture between ‘medicine’ and social care.

    The major problem, faced by the whole Western world, is that we (the medical profession’) have now become so ‘clever’ that we can ‘offer’ so many effective (but often costly) treatments for so many ‘conditions’ (some of which some might argue are not ‘illnesses’) that the ‘demand’ is almost limitless. Thus, those who have to pay for the care – the Govt. (NHS) in the UK and insurers in the USA (and in private in the UK) – now need to ‘control’ the demand and ‘limit’ the supply.

    Is it not time that we had a proper and sensible debate (devoid of party political ‘point-scoring’) about what what the NHS SHOULD provide – and what it should NOT?

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