September 19, 2011


It's already happened (James Meek, 9/22/11, London Review of Books)

They still do hips at Wrightington, and knees, and elbows, and shoulders. They deal with joint problems that are too tricky for general hospitals. There's a sort of blazer and brogues testosterone in the corridors, where the surgeons have a habit of cuffing one another's faces affectionately. At the end of a hallway lined with untidy stacks of case notes in wrinkled cardboard folders Martyn Porter, a senior surgeon and the hospital's clinical chairman, waited in his office to be called to the operating theatre. He fixed me with an intense, tired, humorous gaze. 'The problem with politicians is they can't be honest,' he said. 'If they said, "We're going to privatise the NHS," they'd be kicked out the next day.'

The Conservative Party's 2010 manifesto promised: 'We are stopping the top-down reconfigurations of NHS services, imposed from Whitehall.' Two months later, the new health secretary, the Conservative Andrew Lansley, announced his plans for a top-down reconfiguration of England's NHS services, imposed from Whitehall.

The patient whom Porter was about to operate on was a 60-year-old woman from the Wirral with a complex prosthesis in one leg, running from her knee to her hip. She'd had a fracture and Porter had had a special device made at a workshop in another part of the NHS, the Royal National Orthopaedic Hospital in Stanmore in Middlesex. The idea was for the device to slide over the femoral spur of the knee joint, essentially replacing her whole leg down to the ankle. 'The case we're doing this morning, we're going to make a loss of about £5000. The private sector wouldn't do it,' he said. 'How do we deal with that? Some procedures the ebitda is about 8 per cent. If you make an ebitda of 12 per cent you're making a real profit.' You expect medical jargon from surgeons, but I was surprised to hear the word 'ebitda' from Porter. It's an accountancy term meaning 'earnings before interest, taxation, depreciation and amortisation'.

'Last year we did about 1400 hip replacements,' he said. 'The worrying thing for us is we lost a million pounds doing that. What we worked out is that our length of stay' - the time patients spend in hospital after an operation - 'was six days. If we can get it down to five days we break even and if it's four, we make a million pound profit.'

I felt as if I'd somehow jumped forwards in time. Lansley has not yet, supposedly, shaken up the NHS. He'd barely been in power a year when I talked to Porter. But here was a leading surgeon in an NHS hospital, about to perform a challenging operation on an NHS patient, telling me exactly how much money the hospital was going to lose by operating on her, and chatting easily about profit and loss, as if he'd been living in Lansleyworld for years. Had the NHS been privatised one day while I was sleeping? [...]

At the moment, hospitals aren't allowed to compete with each other on price, and are rewarded with extra money from the commissioners if they do a particularly good job. Procedures are categorised as 'healthcare resource groups', each with a code and a price. Any hospital anywhere in England, NHS or private, that carried out procedure HA11C on an NHS patient last year - treatment of a routine hip fracture - got a base payment of £8928 from the outfit that commissioned it, and £9373 if it followed 'best practice'. A maternity unit clocks £1324 for a regular birth, NZ01B; putting in an artificial heart, EA43Z, earns £33,531. But this isn't the amount they actually get. The sum is adjusted according to a local 'market forces factor', which takes account of the variation in cost of labour and assets between different areas. The codes and prices are worked out, in turn, according to the actions taken and materials used by typical hospitals. The set tariff for treating a stroke might be calculated from the price of nine days being nursed in a ward at £170 a day, a couple of X-rays at £20 each, ten pathology tests at £6 each and six sessions of therapy for £235 - a total of £1865. If the hospital can treat the patient for £1600, it keeps the difference. The incentive to send the patient home as soon as possible is high.

Under the new system, state money will 'follow the patient' wherever the patient chooses to take it, even when that is outside the NHS. Patients with chronic conditions like diabetes will increasingly be given, not treatment, but money to spend on treatment. All NHS hospitals will be obliged to become 'foundation trusts', turning them into semi-commercial operations, able to borrow money, set up joint ventures with private companies, merge with other hospitals - and go broke. The contracts they make with GP groups will be legally binding. They will find themselves competing not only with other NHS hospitals and private hospitals but potentially with the GP groups themselves, which may set up local clinics to provide diagnostic tests or minor surgery.

Posted by at September 19, 2011 7:01 AM

blog comments powered by Disqus