Myths About the US Healthcare Model Risk the Survival of the NHS
Dr Salinder Supri and Prof Karen Malone | 7 February 2012 from Pulse
The coalition government claims that its reforms of the NHS will put patients at the heart of healthcare but contrary to its stated aims however, the government is driven by the desire, not to improve healthcare, but to open the door to new healthcare providers, invariably from the private sector, marking the beginnings of the privatisation of the NHS.
There is therefore a huge chasm between the government’s rhetoric of improving healthcare and what it is doing in reality. The reforms are driven by an ideology that seeks to introduce features of the US market-based system of healthcare, with which, as Baroness Williams has said, the reformers are ‘bewitched’.
US healthcare is far from the epitome of excellence that it is popularly portrayed as being. It is in fact grossly complex, highly bureaucratic, rampantly inefficient, and extortionately expensive. Even worse, it is focused on profits rather than patients, and is brutal and unforgiving, failing millions of Americans precisely when they are at their most vulnerable. These ideologically-driven reforms are therefore misguided at best, and sheer folly at worst. Not only will they bring no benefits to UK patients, they pose a real danger for the future integrity of the NHS. In this paper, we challenge seven of the myths about market-based healthcare on which the government’s reforms are based.
The Myth of Patient Choice
A fundamental tenet of the reforms is that patients will have greater choice and control over all aspects of their treatment. In theory, patients will act in tandem with their GP to choose which treatments and drugs are best for them, irrespective of whether provided by the public or private sector. Furthermore, it is argued that, with a market-orientated system of healthcare, patients will be given access to a much wider choice of treatment and drug options, and will not encounter any “rationing” of their healthcare.
However, contrary to government rhetoric, market-based reform of healthcare will not lead to unrestricted choice of treatments and drugs, because under such a system, treatment and drug decisions are led by financial considerations, rather than medical need, or the wishes of patients.
To get a better understanding of what this reform will mean for British patients, we simply have to look across to the US, where patients face a multitude of restrictions on what treatments and drugs they can receive. Americans not only face limits on their choice of treatments and drugs, but also on the number of days they can spend in hospital, their choice of health provider, and even the specific doctors they can see. Even the medical decisions of their doctors are disregarded since, as the US Secretary of Health and Human Services acknowledges, suggestions that they make for their patients are routinely over-ruled.
The Myth of Superior Treatment
By opening up the healthcare market to any new provider willing to supply services, the government’s reforms aim to give patients access to more treatments than currently available. The reformers believe that the larger number of providers that the market-based system permits will allow for more treatment options than already available to patients.
Opening up the UK healthcare market to new entrants, particularly from the private sector, brings inherent danger. In particular, it will lead to patients being exposed to excessive and unnecessary medical treatment. This is because under the government’s new “fee for service” arrangements, healthcare providers will be paid a fee for each service they supply to the new Clinical Commissioning Groups (CCGs). As the income and profits of these providers will be directly related to the amount of treatment or medical services provided to patients, there will be a tendency on the part of some, to supply more services and treatments than may be medically necessary. This carries significant risks for patients, who will not only be routinely exposed to invasive and unnecessary procedures, including potentially dangerous tests and operations, but will lead to a huge waste of money and resources on unwarranted diagnostic testing and hospital admissions. Thus, a wider availability of treatment does not equate with wider patient choice per se. More treatment does not equal better treatment.
This is precisely the case in the US, where many patients are routinely subjected to a battery of excessive or unnecessary tests and medical interventions. For example, when working in the US, one of the authors, who after contracting a minor infection behind a finger nail, was on the receiving end of hours of testing, including ECG scans, blood tests, and x-rays of the hand, neck and spine. To the uninitiated, such extensive testing might give the impression that the US has a more rigorous and higher quality system of healthcare than does the UK. However, these numerous diagnostic tests and clinical procedures were medically unwarranted and – with each and every intervention being itemised and billed – were undertaken solely to increase the profits of the healthcare providers involved. Such over-treatment is widespread in the US, and is a consequence of the American “fee for service” model of healthcare, which we are introducing into the UK.
The Myth of Medical Research and Innovation
By ‘freeing up’ the NHS to competition from new providers, reformers hope to stimulate medical advances, believing that a market-driven system of healthcare will result in greater research and innovation, and bring about more and better treatments.
The US, with its market-based system of healthcare, is often hailed as being at the forefront of developments in medicine, giving Americans access to the latest and best drugs and treatments. To understand the power of this belief, we only need think of the heart-rending media stories featuring UK patients who feel they have no option but to fly to the US to undergo last-ditch treatment for rare and life-threatening conditions.
While these media stories lead some to believe that US healthcare outperforms the UK, they obscure important facts. These stories omit to tell us that many patients fly to the US to undertake treatments that are often experimental, untested, or unproven. We are also seldom told if these treatments are ever successful, nor that these trips are often hyped-up media events, undertaken primarily to showcase the US hospitals involved. In yet another serious omission, such headline-grabbing stories wrongly give the impression that these pioneering treatments are routinely available to all Americans. The reality is that, due to their very high cost and extremely uncertain outcome, these treatments are the preserve of the few, very rich Americans in the privileged position of being able to pay for them.
Similarly, the idea that the US leads the world in medical research and innovation is illusory. While in absolute terms, the US spends considerably more money on medical research than other countries, comparatively little of this expenditure is of benefit to patients. A closer examination of the Research and Development (R&D) activities of the US pharmaceutical companies clearly illustrates this point. It reveals that the focus of their R&D is not on developing new medicines, but on circumventing the intellectual rights of competitors, by formulating alternatives to, or copies of, existing drugs to which rivals hold the patents.
US pharmaceutical companies also spend larger amounts of money on marketing activities than on medical innovation, with more dollars devoted to advertising and promoting existing drugs than developing new ones. What is worse, of the new drugs that are developed, many are of little or no benefit to patients, with one authoritative study recently reporting that as many as 90 per cent of all new drugs either had serious side effects, or did not work at all. In contrast, more substantive medical research and innovation takes place in Europe, where there is a greater emphasis on undertaking research that benefits patients rather than simply maximising profits: to take one example, of the top 20 cancer drugs in the world, 19 are the result of UK-funded research.
The Myth of Improving Cancer Outcomes
Opening up the NHS to market competition will, according to reformers, engender significant improvements in UK cancer treatments and outcomes, bringing them in line with other countries, and in particular the US, which is believed by many to have the highest survival rates in the world.
However, the government’s assertion that the UK needs to move to market-based healthcare in order to improve cancer survival rates is highly questionable. This is because for most cancers, survival rates in Canada, Japan, Australia and Cuba are comparable to, or higher than those of the market-based American healthcare system. Second, for many cancers, the UK already takes the lead. For example, Glasgow is the world leader in the treatment of stomach cancer, making advances in outcomes as dramatic as those seen with the introduction of chemotherapy in the 1980s.
Yet another reason why we need exercise scepticism of reformers who believe that the US market-based system produces better cancer outcomes, is that many of the ‘life-extending’ treatments that nominally push up US survival statistics prolong life only for a few extra months. What is worse, these additional few months are exacted at terrible cost, since many of these last-ditch treatments have appalling side effects, as well as being exorbitantly expensive. For example, an investigation by the US Food and Drug Administration into new cancer therapies discovered that Yervoy, a treatment for late-stage melanoma, cost each patient around $120,000 (£77,000), and only managed to prolong their life for three-and-a-half months. Even the Chief Medical Officer of the American Cancer Society concedes, “we are not buying a lot of life prolongation with these drugs.”
Moreover, US cancer survival statistics also fail to reveal that outcomes vary dramatically by ethnicity, income, and level of health insurance cover. The sad reality is that all too many American patients are simply unable to afford the latest cancer treatments, and therefore cannot benefit from them. This is especially true for those who cannot pay for admission to a specialist centre, and for ethnic minorities such as blacks and hispanics, all of whose chances of survival are significantly lower than portrayed by headline survival rates.
The Myth of Streamlining
By dismantling many existing NHS organisational structures, government reformers hope to tackle the bureaucracy and inefficiency that are touted to be rife. They contend that the proposed changes will simplify the architecture of the NHS, cut out duplication, and produce efficiency gains.
However, it is nonsensical to claim that market-based reform of the NHS will streamline and simplify the healthcare system, sweeping away bureaucracy. On the contrary, the introduction of decentralised purchasing by hundreds of GP consortia from potentially thousands of new providers – together with the advent of individual patient billing – will result in a much more complex and fragmented system. These new arrangements will necessitate a much larger bureaucracy to manage all the extra administration and paperwork that will be generated by the more complicated and fractured new structure.
We only need look at US healthcare to see how a market-based system, with its plethora of private healthcare providers, leads to a mushrooming of bureaucracy. For example, Johns Hopkins Hospital in Baltimore has to deal with a staggering 700 different providers, each with their own stipulations regarding services rendered, payments, documentation and paperwork.
The massive administrative bureaucracy needed to manage the large numbers of providers involved in its market-based system of healthcare means that administrative costs by themselves account for around 50% of total US healthcare spending. This is a staggering amount, especially when compared with other advanced nations, including the UK, who only spend around 10% of their healthcare budget on administration.
The Myth of Cost-Efficiency
The government contends that opening up the healthcare market to new providers from the private sector will result in increased competition that will drive down prices, and produce a more cost-efficient healthcare system.
However, these assertions are disingenuous. Opening up the NHS to competition from new providers will not cut costs. This is because under the reforms, price regulation only applies to publicly funded services, and will do nothing to regulate or hem in the prices charged by private providers. Moreover, there is no evidence that competition automatically drives down the cost of healthcare, or leads to better value for money.
To see what outcome competition in the UK healthcare market is likely to produce, we only have to look at what the effects of competition have been in the US. In fact, competition has not reduced the costs of US healthcare. Its market-based system of healthcare has led, not to lower, but to much higher prices, and American patients consequently pay significantly more for treatments that are available at much lower cost in other countries. The prices that US patients pay are quite simply shocking: to take just one example, in 2010, patients at the Bayonne Medical Center in New Jersey were charged an average of $28,000 (£18,000) for each day they spent in hospital.
Rampant pricing also extends to the cost of drugs, which are far higher in the US than anywhere else in the world. Under their market-based system of healthcare, Americans pay double the price than do Europeans for the same drugs. Since US pharmaceutical companies are able to charge such inflated prices for their drugs, this has allowed American drug giants to make profits that are the highest in the world, and typically four times than that of the average Fortune 500 company.
Due to such exorbitant pricing, the US market-based healthcare system has the dubious honour of being the most expensive in the world. America spends around $2.5 trillion each year on healthcare, representing approximately 18% of its Gross Domestic Product (GDP) – that is, nearly one-fifth of the country’s resources. In contrast, the UK has the most cost-efficient healthcare system in the world: we spend only around nine percent of our GDP on healthcare, and yet, according to the American-based Commonwealth Fund, we get more value per pound spent than all other countries, including Germany, Canada, and Australia.
The Myth that Market-Based Healthcare is Best
The government insists that extending competition by greatly enlarging the role of the private sector is key to improving the performance of the NHS, and driving up healthcare outcomes. This stance is simply a reflection of an unsubstantiated ideological belief in market solutions, especially when all the evidence consistently shows that market-based healthcare – as exemplified by the US – results in some of the worst outcomes in the world.
International comparisons of healthcare quality consistently paint a damning picture of the US market-based healthcare system. The Commonwealth Fund ranked the US last on almost every dimension of healthcare quality, well behind the UK, Canada, New Zealand, Australia, Germany and the Netherlands. Similarly, the World Health Organisation rated the US as 37th in the world, while another study of health outcomes placed it 28th out of 30 countries, with an abysmal performance that cannot even compare with that of Poland, the Czech Republic, or Slovakia.
Focusing on specific health indicators provides an even starker picture of just how poorly the American healthcare system performs. In terms of life expectancy, the US lags 50th in the world. This is far worse than the UK, and lower than the average for the European Union and even some developing countries. In terms of infant mortality, the US languishes 43rd in the world, with an infant death rate double that of many European countries, and nearly a third higher than in the UK. In terms of child mortality its performance is no better, with the US trailing miserably behind 43 other countries, including Estonia and Slovenia. In terms of women’s health, US performance also leaves much to be desired, with a recent Save the Children report finding that America has the highest maternal death rate of any industrialised nation, and more than double that of the UK.
Due to its market-based healthcare system, twice as many Americans die before the age of 60 as compared with Europeans; an American child is more than twice as likely to die before reaching the age of five, than a child in Cyprus, Iceland, Finland, or even Slovenia; an American woman is more than seven times as likely as one in Ireland to die from pregnancy-related causes, and her maternal death risk is 15 times higher than for a mother in Greece.
As if these statistics were not sobering enough, the US healthcare system leads to the ruin of countless numbers of Americans. Some 79 million Americans have difficulty paying their medical bills, and many find themselves going into debt and being forced into medical bankruptcy. This fate befalls 2.2 million Americans each year, leaving them unable to afford even the basic necessities of food, heat or rent, let alone healthcare.
Where then does this leave us when considering the current proposals for reform of the NHS? The answer is clear. Although the NHS has its shortcomings, what is needed is a carefully considered approach, in which we look at new and alternative approaches to the healthcare challenges ahead. While there is certainly room for improvement in medical outcomes, and we can learn from the rest of the world, the coalition government’s insistence on signing us up to an American-style system of healthcare is not the solution, and is grossly misguided to say the least. Such simplistic and ideologically-driven reform will cause irreparable damage to the NHS that, despite some shortcomings, is the envy of the world.
Dr Salinder Supri and Professor Karen Malone have previously published ‘Developing Leadership in Medicine: The Importance of “Institutional Awareness”‘ in Healthcare Reform Magazine, and ‘On the Critical List: The US Institution of Medicine’ in the American Journal of Medicine. Professor Malone has recently returned from the US, where she was Professor and Director of Education at the University of Medicine and Dentistry of New Jersey, the largest medical university in the US, and Dr Supri was Director of Änderung Consulting, New York.