Item in the new: “The manufacturer of a drug which could extend the lives of thousands of people suffering from a rare form of cancer has agreed to pay for further patient treatment as part of a cost-cutting scheme.”  This arises from a decision of the English agency NICE to recommend limited use of this medicine.

We have a situation where the pharma company is going to provide the medicine for free to a certain group of patients (the details aren’t important for this commentary) at a certain point in their treatment — in this case toward the end of that person’s life.

How are we to make sense of this?

Who benefits?: the patients get the medicine which they would otherwise not get it toward the end of their life; indeed, unless they were able to pay for it themselves, they would be deprived of the medicine. NHS gets a medicine, which it would otherwise not pay for, for free, for a group of patients, one might argue they were abandoning.

Who pays?: the pharma company absorbs the cost of doing this for one final application of the medicine if needed; the public sector does not pay anything.

When some derive benefit for free from the actions of others, we call the former free riders; that makes the NHS a free-rider. Indeed, one might view NICE and other HTA agencies as acting to achieve free-ridership for the public system, by rationing public funding according to the HTA assessments. The pharma companies, wanting their medicines to be used (they might actually also want them to be paid for), give them away for this group of patients for their own reasons.

This small group of patients would undoubtedly suffer, a price NICE deems worth the cost, and the NHS in this case, is willing to be bound by a decision which may actually increase suffering. The pharma company has come to the rescue of these few patients and is now doing what one would think the public system should do, alleviate suffering. Had the pharma company put profits before use (which they appear not to be doing otherwise they would have sought payment) no doubt they would have been criticised for their prices, which of course underpins NICE’s cost-benefit analysis in part.

Did NICE shake down the pharma company?

I have argued elsewhere, that public health systems must be the payer of last resort (the so-called Rule of Rescue), which should challenge NICE’s models that would increase suffering, as that cost is something no state should ignore. The unethical conduct of public bodies here is breathtaking.

With public finances in most countries looking pretty challenged these days, what steps can central jurisdictions take to achieve two key health policy goals:

1. reduce the overall healthcare expenditure by bending the cost curve down,
2. improve productivity, value-for-money, health outcomes.

Few in government have much experience with reducing healthcare expenditures.  And ministers are rightfully fearful of voter wrath, so one must wonder where the political courage will come from in the first place. Perhaps the key thing is denial is not an option, neither is blame-fixing. The first rule, therefore, is to fix the problem, not the blame.  True statesmanship is now needed, more so than party political rhetoric; that is, of course if we are right that things are in a really bad way.

Few, too, in healthcare management have the necessary experience with substantial changes needed in healthcare delivery systems especially where resource constraints will need to similarly deliver productivity gains.  We’ve had tremendous growth in healthcare expenditure matched with uptake of new technologies, complex treatments, and greater clinical specialisation. We can simply do more, and it costs. But along with this rise in capability, there has been much less reform of the way healthcare is done. Clinical workflows continue to be clogged with unneeded activity; we still use expensive hospitals when less expensive polyclinics or primary care settings would do. We fail to exploit the full potential of the other health professions, such as nurses and pharmacists. The second rule, is that you cannot continue to fund an unreforming health system.

Reform must be a constant feature of healthcare, since it is so dynamic as an area of innovation. If we want to bend the cost curve down, we need to persist in reform, indeed, disruptive reform, creative destruction in healthcare service delivery.  It is not about being nasty as a finance minister, it is all about using the money to unleash creativity to the benefit of all.

The challenge is less how to do that though, than wondering why what is there about healthcare today that seems to keep that from happening in the first place. Now that is really something to wonder about.

For all the reform and protestations that the public deserves a health system for the 21st century, the ongoing saga of health reform in Britain continues to amaze.  The Secretary of State for Health for England, Andy Burnham, has decided that NHS providers get to try twice to prove they are worthy of continuing public confidence.  As he has put it, the NHS is the “preferred provider”, apparently for itself.

Those not familiar with the reform of the NHS, and indeed those who are, must be wondering why mediocrity should be rewarded, and in these difficult times, why the taxpayer or the government should countenance circumstances that public public money at risk.

The NHS commissioners (purchasers in real world speak) are the surrogates for consumer choice, as while NHS patients do have some choice, commissioners in the end are deciding in which directions that choice can be exercised.  A bit like Henry Ford’s model T car: you can have it in any colour as long as it is black.

Why should this matter? The Minister has said that the NHS should not be agnostic about who provides healthcare service delivery but instead favour NHS providers.  But as a monopoly supplier of services, the NHS and the English Department of Health must be mindful of abuse of a dominant position and in particular favouring institutions that are in effect emanations of the state, on the one hand, and forcing the public to experience second-rate service on the other.

Favouring a failing provider strikes me as looking a lot like state aid.  It also does not appear to be a service contract either, as the reason for awarding the contract seems to depend on the ownership of the provider (and protecting their status) and not whether they can deliver the service to a quality standard (which is the purpose of the contract).  The clue that this is a policy fudge is that a failing provider gets another chance to be a preferred provider over a potentially more competent and higher quality provider.  Can you legally enter into a contract for a service to a quality standard, knowing in advance that the provider is unlikely to be able to deliver to the terms of the contract?

Hmm. So much for value for money and healthcare fit for the 21st century.  Do I hear the auditors stirring?

The leaked McKinsey report on the NHS, which endeavoured to provide a review of areas where efficiencies can be achieved in the face of declining public finances does not really offer anything we don’t or at least shouldn’t already know.

NOTE: This post does endorse the McKinsey’s report findings — only to express some surprise that it was not more insightful.  Of course, I have only read the leaked documents, and cannot comment more fully, but then if the Department of Health did want a proper (adult) debate, they would put it in the public domain for all to see.  Perhaps McKinsey would, as supposedly insightful strategy consultants, suggest to the Department the value of a wider social debate on the NHS priorities — but this isn’t their style.  The wisdom of crowds, or the madness of experts?

So on with the commentary.

As if at least 20 years of NHS reform meant nothing, OECD countries together are grappling with rising healthcare expenditure coupled with demand that seems insatiable.  The recession and its consequences has for many offered a useful policy window through which to drive changes that under more benign economic circumstances would be untenable.  Health, as always, is the last to face the music.

What actually is the NHS?  In the UK, it is 4 devolved publicly (tax) funded universal health systems (England, Scotland, Wales, Northern Ireland run their own show); McKinsey is writing about the English NHS.  The “NHS” is often described as one of the largest employers in the world, but then healthcare systems are generally large employers, usually about 5% of a country’s workforce, consuming around 9% of GDP.  The whole health industry is usually about 15% of GDP, employing perhaps 7-8% of the workforce.  So they are all big.  What characterises the UK’s fascination with the NHS is the tendency to speak of the NHS as though it were ‘one thing’, whereas it is more likened, perhaps more accurately, to a confederation.  Regretfully, policy makers have failed to really make sense of the role of private and non-profit providers so there is really only weak integration of services across all providers.  This constrains policy and service delivery somewhat in England as there is always the fears of privatisation and so on.  It is worth keeping in mind though that general practitioners are private sub-contractors, while the acute sector is increasingly run by autonomous arm’s length hospital ‘foundations’ (a weak attempt at copying a hospital arrangement from Spain).

So the NHS is an acute service provider, a contractor for primary care from service providers, and a buyer of services from acute providers.  That it is characterised by a purchaser/provider split is helpful in understanding the constraints under which the system works, as the purchasers (primary care trusts) are in the main general practitioners commissioning (English jargon for buying) care from acute providers.  This engenders some confusion in the public domain between who is responsible for the planning and problems that get thrown up.  The McKinsey report can be seen either as a message to acute providers to reduce their overheads, or a message to purchasing organisations to set contracts with tighter cost controls for the value received (i.e. for the care provided at what level of quality to their patients).

The politicians are indeed running around in a bit of a frenzy because the NHS is seen as a sacrosanct public sector organisation, and that cutting the budget would be equivalent to committing treason.  Of course, this adds to the problem and increases the denial.  This strengthens the hands of those who oppose reforming healthcare, and makes the case for increasing efficiency and productivity, and in general ensuring that the public receives good value for the tax money spent on healthcare more difficult.

Yes, healthcare is a hands-on activity, and yes we need hospitals (at least for now).  But it is hubris to suggest that the acute hospitals are as productive and efficient as they could be, or that the distribution of clinical work across the health professions is a well done as it might be.  Hospitals by and large still draw on industrial age models of organisation — they are little different from commercial conglomerates.  Efficiencies in McKinsey’s report comes from things such as:

• vertical integration (hospitals into community care, for instance)
• integrated care pathways (something healthcare has been up to for at least 20 years)
• reduction of waste and duplication (no surprise there)
• role clarification of clinical work (yes, professional cartels called Royal Colleges)
• elimination of clinically ineffective or doubtful work (the tough call but is a natural consequence of evidence-based medicine).

Criticisms of the report are right to the extent that McKinsey has done what they are generally good at: stating the obvious.  Any of these items should be on any hospital CEO’s to-do list, and subject of Board level discussions.  Unfortunately, where McKinsey is less good is in looking at the NHS and assessing the underlying logic and meaning of its organisational structure, its clinical care paradigm, and how it can evolve, as a dynamic entity, into a better care system (they would surely argue that that wasn’t their brief, but good consultants work with, not just for, their clients).

But salaries and infrastructure (buildings) are the costs to look at: perhaps 80% of a hospital’s budget.  Choices here require a different logic, and include:

• using e-health, telehealth technologies to replace both staff and infrastructure (home telecare monitoring, for instance)
• use of supportive clinical decision-support technologies (from robotic vision systems to work with radiologists to scan mammograms, thus doubling the number of radiologists, to artificial intelligence systems to data-mine health records to identify patients are risk of A/E readmission to a COPD exacerbation)
• using medicines to replace hospital stays, surgical interventions
• using best-imaging-technology first to diagnose (the best technology to diagnose a problem is not generally used in initial diagnosis, an x-ray might be used, then CT, then MRI.  Just use the best first.)
• and so on.

These all address the possibility of labour (clinical work) substitution, (which might improve the quality of the jobs clinical and support staff actually do), greater patient empowerment (as they take greater control of their healthcare, direct resources to achieve their own healthcare goals), and a real use, slowly being addressed by the Connecting for Health initiative, for information for clinical and patient decision-making.  This emerging information value-chain will produce improved measurement of clinical outcomes, and thus inform better in-hospital decision-making and resource allocation.

Of course this ignores the actual physical unbundling of hospitals themselves.  The organisational logic that requires the aggregation of clinical skills in the modern hospital is dated under many service scenarios.

So where are we?  We are at the point of knowing that much can be done to improve the patient’s experience of healthcare, by driving out dated clinical and organisational practices, adopting new practices and technologies, procedures and methods.  It should not be inconceivable for any healthcare system to achieve 20% savings.  Fear of alienating clinicians is less the issue than engaging them in service improvement, to which they should be committed.  This will in the end ensure the high-touch requirements of healthcare where it is needed, without protecting sacred cows and vested interest groups.  In the end, it will come down to political will, managerial commitment, and clinical professionalism to ensure, in a publicly funded healthcare system, that the public gets what it thinks it is already paying for.  Otherwise, resistance looks a lot like protectionism.

The UK is again in the midst of a crisis of purpose as it seeks to understand how to balance the monopoly (under) supply of health care that characterises the NHS, and enabling individuals to purchase (mainly) medicines that are deemed too expensive.  Apart from the argument made in an earlier posting that the NHS cannot get off the hook of paying for high cost healthcare, rationalising the current mix of co-payments can only be good.  The effect of enabling top-ups (as if that is really what they are, of course), or more accurately co-payments, would actually harness a variety of features that currently elude UK health policy makers.

Enabling wider use of copayments (also apart from the literature which would say they increase social injustice and are an example of a policy zombie), would turn the UK NHS into the French health system — and given the evidence from France, that might not actually be a bad thing.

Such a change would have the effect of clarifying the current dispensing fees for medicines, bundling them with the cost of medicines deemed by NICE to be excessively costly, and enabling payment by individuals through suitably prepared supplementary health insurance — which reversing the senseless actions of the Labour government in 1997 could be made tax deductible.  It would also enable a simplification of the current gap between NHS and private dentistry (by blending entitlements) and enable easier utilisation of the wider healthcare infrastructure of public and private (sorry, not very politically correct here, independent) provision.  Further bundling with individual social care budgets would open the way toward consumer-led purchasing of healthcare, something of considerable interest to people with long-term conditions who no doubt dislike others telling them how to lead their lives.

All this would provide the needed disruptive influence to drive provider reform and improve quality and system responsiveness much faster than would otherwise be the case if the PCTs, ICOs and whatever next crops up, were to try to achieve the same goals through institutional planning processes (not an easy thing to do with complex adaptive systems that in effect ignore the impact of patients in the system).

No need to create a market, no need to fuss about social justice, individuals would be given responsibility for their care and that is a just thing to do. The NHS in its current form  effectively insulates individuals from the consequences of their own poor health and lifestyle choices which only exacerbates injustice to the extent that it undermines individual autonomy.

Rather than co-payments having the economic effect that various folk have written about, policy makers would have instead a mechanism by which public health goals could be pursued, through a partnership between the state/NHS and the individual, rather than a partnership between the state/NHS and PCTs/itself, with the patient as an interested, but disenfranchised bystander.

NICE’s position on the rule of rescue is incompatible with the purpose of the NHS as a state mandated healthcare system which must at least be the option of last resort for people where social values and preference would provide healthcare — despite NICE’s analysis.  Government cannot let HTA bodies such as NICE ignore the rule of rescue.  NICE argues that it adequately takes account of this — but there is a discontinuity in the applicable decision logic below and above NICE’s QALY threshold.  NICE in effect is applying below the line logic to above the line issues.  The issue of compliance and indeed civil disobedience may be applicable as doctors are prohibited from violating their professional codes of conduct, or acquiescing in acts or procedures that would cause them to violate their ethical code.  A doctor strictly speaking cannot not aid a person caught by the NICE threshold cutoff, where they are able.  The state is obligated to interevene and pay for expensive care as it is not an act of supererogation, but it is the State’s duty. Therefore, the State must act in cases above the line out of duty –  aiding people who might cost a lot by HTA QALY benchmarks but if the state doesn’t act, and who will?  This is especially troublesome in the UK where the NHS is presented as the health provider of last resort — not something NICE has clearly thought through.  Will the politicians allow NICE to wag, so to speak, the objectives of universal healthcare?

As other countries adopt NICE-like thinking, how will they come to understand the role of the state?

The most advanced development of the purchasing function is with the English NHS. Other countries, such as the Netherlands are leaders in using competition to improve purchaser performance.

The priority for the English NHS has been to ensure the effectiveness of purchasing (or commissioning as it is called), as poor purchasing is seen as the weak link for ensuring good service delivery. For Ontario, this means that LHINs will need to be robust organisations with the necessary capabilities to undertake the necessary work to deliver integrated health services.

Strategic commission involves the following for LHINs:

• Planning healthcare

• Determining local health priorities within the provincial health strategy

• Assessing and identifying local needs based on patterns of service that respond to the population’s needs

• Establishing local capacity plans that extend into the future (and achieve the integration objectives)

• Purchasing healthcare

• Deciding which services are provided by which providers, taking into account current balance of service delivery (and risks in areas of strategic low priority) and future capacity requirements

• Developing the right SAA arrangements that achieve integration (taking account of service utilisation, risk, quality)

• Appropriately overseeing the resulting arrangements within a collaborative governance arrangement

• Monitoring and performance managing healthcare services

• Are the agreed services being provided to the volume that has been identified for the population’s needs?

• Assessing provider clinical performance using quality assurance through external auditing and accrediting bodies that a service meets external standards, and SAA-specific quality standards that the LHIN may seek.

• Is a high-quality, integrated patient experience being provided?

Effective purchasing focuses on delivering health outcomes to national targets, with the ability to establish novel provider arrangements as they see fit, and which provide at least equivalent clinical benefit (that ensures that changes are not just for change sake but are value-adding). This addresses an element of strategic purchasing about how to encourage novel forms of provision, and move beyond legacy providers.

Various challenges for strategic purchasing by LHINs include:

• The ability of a LHIN to measure health needs and inequalities and model appropriate service provision, in the present and for the future.

• The ability of a LHIN to collaborate with other LHINs and multiple providers particularly around specialist service areas.

• The ability to achieve integration strategies with non-LHIN-funded providers.

• Determining the appropriateness of cross-LHIN-boundary patient flows that may not be compatible with LHIN-based integration strategies.

• How can LHINs achieve integration solutions that reduce inappropriate use of secondary care, by

• shifting resources toward primary care,

• enabling service redesign by providers

• working with non-secondary-care/community providers.

This presents a developmental challenge for LHINs for a number of reasons:

• There is a very small number of people on LHIN boards who have direct experience of the purchasing function, and who have not developed their perspective on health system performance from other than a provider experience. This means that considerable efforts will be needed to ensure that LHIN board members learn the appropriate strategic approaches to service redesign, transformation and integration from a non-provider perspective.

• Proposal: a board-level development plan is needed to ensure that LHIN board members are able to embrace the appropriate health system reform models compatible with a purchasing function.

• Differences between LHINs and providers are real in terms of them having different roles within the Ontario system; explicit recognition of this is necessary.

• Proposal: individual chairs and chief executives of LHINs may find it useful to engage in a learning-set development process with chief executives and chairs of providers to explore their different roles.

• LHINs need to engage with like-minded organisations with purchasing experience

• Proposal: a series of workshops for LHINs with people with direct and practical experience of the problems and challenges of purchasing.

References

Commissioning in the NHS: challenges and opportunities, NERA Economic Consulting, London, June 2005.

NHS Alliance, The Future Shape of Primary Care and General Practice – who will be the providers of the future, and how will they be organised? November 2004). Dr Mike Tremblay led the development of this paper for the NHS Alliance.

Mike Tremblay, Tremblay Consulting

Role	Description
Planning
Short term demand forecasting	Use of actuarial techniques to forecast demand, even in short term Modelling techniques
Long term demand forecasting and capacity planning	Strategic perspective on future activity levels taking account of epidemiological models and service design assumptions
Market management	Taking account of longer-term capacity requirements, relationship between purchasing decisions affecting one provider may impact on others
Financial, risk management	Risk pooling of high-cost low demand care where population is small or insuring against unavoidable overspending in high priority (necessary) areas of service delivery
Purchasing
Procurement	Contract negotiation, based on agreed activity from planning process with providers
Supply chain management	Pro-active approach to ensuring the best pattern of service delivery, rather than functioning as a ‘flow-through’ funding body
Patient relationship management	Ensuring the administrative control of the patient’s journey through the healthcare system, to achieve service integration from the patient’s perspective
Monitoring
Contract management	Reviewing service quality and service provision; payment
Information	Standardised and timely information to monitor financial performance of the local system
Benchmarking	Using comparative information on providers to permit service improvement through peer-learning

How can I be sure the medicine I take is genuine?  In some countries, there is an almost even chance that it is counterfeit; not just a cheap substitute, but a real fake,  ineffective,  probably harmful, and maybe fatal.  Some counterfeit medicines were found in Hamilton, Ontario, earlier this year and the pharmacist has now been charged by the RCMP.

Counterfeit medicines are a global problem, with trade estimated to exceed US $36 billion a year.  The World Health Organization estimates 8-10% of all drugs supplied globally are counterfeit.  The European Union estimates counterfeit drugs cost their health systems €1.5 billion annually.

Counterfeits are a clear and present danger to human health.  Africa is threatened by counterfeit AIDS drugs, while in Haiti, Nigeria, and Bangladesh almost 500 mainly children were killed from fake paracetamol syrup.  Perhaps 192,000 people were killed in 2001 in China from counterfeit medicines.  Counterfeits circulate in the European Union, with two recent cases in the UK alone.  And Canada.

Fake medicines are hazardous, with documented toxicity, instability and ineffectiveness but few people are experts in pill authentication (even pharmacists get fooled).  Counterfeit drugs are easier to make — in portable cement mixers – and fake than money.  But there is little patients can do but rely on assurances by others that drugs are genuine.  That may not be good enough.

Our health and medicines regulators believe there isn’t a problem because there are few cases.  But recent research in Europe counters this regulatory denial with evidence that regulators have little hard evidence on the scale of counterfeiting.  Problems with medicines are rarely associated with the drug being fake.

Counterfeit medicines don’t just show up in the local pharmacy, they are infiltrated into the supply and distribution of legitimate medicines by rogue, criminal organizations and individuals, who specifically target the weaknesses in this system.  But counterfeiting is seen as a patent issue not the criminal act it is.

Once a medicine has been factory sealed by the pharmaceutical manufacturer, there is no assurance that it will reach the patient unopened; a pharmacist and doctor can open it.  However, there are companies with the licensed authority to repackage factory-sealed medicines with new labels in new languages.  Unscrupulous distributors can conceal the illegal substitution of counterfeits within our apparently highly regulated system.  Canada, a net importer of medicines, is vulnerable from this as it imports medicines from countries that are known sources of counterfeit medicines.

While US/Canada medicines trade has focused on internet pharmacies, the real problem the internet is also a counterfeit drug delivery system and a real problem by the US, which views Canada’s system as easily compromised by counterfeiters.

Therefore, we need to ensure that any tampering with a product’s factory packaging is clearly evident to others.  Using ‘drug provenance’ would show who has handled, opened or repackaged a product; another way is to use advanced ‘track-and-trace’ technologies such as radio-frequency tags (RFIDs) to track shipments of medicines and determine if they have been tampered with.  However, there are stricter controls in place to deal with the movement of cattle than medicines.

Nevertheless, things are slowly improving, with the US FDA promoting the use of RFIDs by 2007, and efforts to improve data collection on counterfeiting.  But there is little public awareness of this global threat, as regulators focus on the operation of pharmacies rather than the origin and safety of the medicines themselves.  Legal sanctions are often weak, or inappropriate, considering the grave health risk counterfeit medicines represent.

The way forward will require ‘counterfeit proofing’ the supply and distribution of medicines.  The criminal law needs rethinking to link human health and counterfeit medicines.  Good data is needed to inform our actions and understanding to ensure appropriate regulation.  Finally, the problem must be viewed as a global one and Canada could show international leadership in proposing solutions in an area were there is common cause amongst regulators, health professionals, pharmaceutical companies, and healthcare organizations.

The health system works on the basis of trust, and patients must trust that the pills in that little bottle are what they are supposed to be.  But while the vast majority of drugs are perfectly legitimate, a more comprehensive solution to the problem of counterfeits is needed.