Editor's blog 26th March 2009: Simon Stevens on US-UK lessons, Kings Fund

Kings Fund seminar: Obama’s healthcare challenge - what can the UK and the US learn from each other?

Introducing the debate and speakers Simon Stevens and Chris Ham, Kings Fund chief executive Niall Dixon noted the appropriate venue name – the Burdett Room, named for the reformer who introduced benchmarking of hospital performance in the 19th century.

Simon Stevens, UnitedHealth
Why should the UK care about US healthcare system when there’s so much wrong and needing to change? Because:
1. of natural curiosity over the Obama phenomenon and how it will do with health reform
2. though the US and UK have very different systems, two of their three main problems are similar – efficiency and quality (though US has extreme problems over access and coverage)
3. the US acts as a natural laboratory as there is no single overarching system, but a big variations of organisational and payment systems (Medicare and Medicaid; employer-  / individual-based insurance). There is much diversity from whose successes and failures we can learn
4. topically, sorting out  the US economy medium term is of national and even global importance. Healthcare affects US economy, so we have financial vested interests

Why should the US care about the NHS? Both countries swap stereotypes about the other’s health system. We see 15% of their population uncovered by health insurance; their stereotype of us is about long waits for routine surgeries, underfunding and scarce lifesaving cancer drugs.

But the NHS has faced a number of issues over the past decade (many quite successfully) that US policymakers are now addressing.

Where is US reform at present? Though Obama enjoyed a big majority in the electoral college, with 53% of the electoral vote, his Democrats need majorities in Congress to pass legislation. He got more Democrats last November, up to 59% and 58 senators (possibly rising to 59 with Al Franken's ongoing vote recount). Under normal Senate rules, 60 are needed tyo pass legislation. Without 60, policy can’t be brought ot a vote on the floor. Even if Franken wins, Obama remains two short of this number.

There are significant differences within both Republican and Democrat parties about health reform; between house and senate; between the  various committees - all of which must act in concert or reform will fail. The 1993 Clinton reforms were screwed up by various committees’ disagreements (finance, budget, health education, ways and means, energy) – all committees have their own chairs, views, and though they have said they will be working more closely together, tensions are already plain.

Also, if to reforms are be durable, needs to be bipartisan as unless Obama gets some buy-in for the opposition, stuff gets reversed. So he needs to try to attract Republican support to Democrat proposals.

There is an alternative mechanism to pass legislation if it’s not possible in Congress, via the Budget Reconciliation Process, run by the Senate budget committee. This can only address the spending bit, as Senate only needs 51 votes, and legislation passed that way ‘sunsets’ after 10 years and you have to do whole thing again.

This is before the we come to the myriad stakeholders (professional groups, hospitals, insurers, trial lawyers), for whom if you’re trying to slow healthcare spending growth, well, one man’s spending is another’s income. All suggest that they are wiling to move a bit to see progress, but the rubber has not yet hit the road.

One Obama response has been to outsource much of the detail of reform to Congress, which has shown that he is not going to go to the wire for many specific details on which he campaigned. If proposals emerge that are generally consistent with what he wants, he’s said he will be flexible – he’s learnt lessons from the Clinton reform efforts of the early 90s. Hilary Clinton took a ‘telephone book’ of proposals to Congress, which chose to turn it down.

He will also attempt to use his grassroots engagement mechanisms. He has 10 million email addresses of those expressing interest in his campaign, and he has not stopped mailing on election day. Obama will use that database to mobilise public support for his budget proposals and healthcare reform. Mass mobilisation is very much part of the process.

The way the healthcare reform issue has been framed has been principally around cost-containment, not desire to improve quality or even (mostly) to cover the uninsured. Several reasons for this – the fact that the US system is very expensive, and as costs rise, it’s harder for employees and families to afford cover.

Also, the administration is very aware of polling data, showing voters’ principal reported concern about healthcare is cost over quality or accessibility. In the UK, NHS tends to report good personal experience. Going back to US surveys from last October (2008), on the top priority for health reform, 50% of surveyed voters said making it more affordable; 25% said covering the uninsured; and 11% said to improve quality.

Asked if they’d be willing to pay more tax to improve coverage, 49% said they would be. However, back in 1993, 66% said they would be for the Clinton reforms. This is feeding into a political backlash against health spending that is not offset against savings from future spending growth – there’s a real need to show a 'glide path' back to fiscal stability.

So Congress and Obama accept that extending coverage to the uninsured must be offset against savings in future growth of spending.

What has been done? Stimulus legislation put $87 billion more for Medicaid for the poorer, more funding for children's health insurance, and for people laid off to carry on their employer-based health insurance. $1 billion is made available for ‘comparative effectiveness research’ and $19 billion on health IT.

What next? One interesting thing is that  offset of future savings in growth vs. present spending. There’s an independent arbiter of the Congressional Budget Office, scoring each individual proposal. Obama’s initial budget proposal identified $634 billion in savings (about half coming from tax, more marginal on better off; other half from changing the way hospitals get paid, with more bundling in of care, not less and ensuring private plans delivering Medicare would get paid via competitive bid to be purchaser of seniors in Medicare).

Lots of the most controversial items i.e. a new public plan in US health system were not put in to what’s going into Congress. One controversial idea that was a plank of Obama’s election campaign would have meant a 19% pay cut for doctors and 29% for hospitals, but that did not make it in. Nor did proposals to limit direct-to-consumer (DTC) pharma advertising.

Lessons for the US from the NHS?
NICE has now produced 10 years of comparative effectiveness studies. NICE is well-known in US and comapartive effectiveness is a polarising policy: some see it as interesting and important and some are very concerned about applying full cost-effectiveness measures. NICE’s development, approach to independent scientific objectivity and efforts to transparency are all good things, but I think it’s pretty unlikely a NICE-type body per se will come to the USA.

A few lessons from NHS Connecting For Health spring to mind: the fastest-implemented software was the one reconciling GP payment with the Quality and Outcomes Framework (QOF), so linking payment reforms to systems for clinical practice seems to work. Secondly, you need to deliver clinical benefits, not administrative ones. CFH’s early projects were all about back-office matters, which risked or caused loss of clinical interest. Thirdly, you need to put as much emphasis on the I as on the T of IT. How is the information useful to improve system performance? Fourthly, be realistic about timescales. The US is saying that the $19 billion will be spent by 2014, a year before the date now set for CFH 2015 …

The US interest in payment reform seems to be moving away from pay per unit of HRG or tariff care and towards integration of funding for a pathway, which creates a potential equivalent opportunity as we had in 2002 when the GP contract renegotiation offered the possibility of something-for-something deal (history will judge how the UK has done …) more to different system to incentivise care delivery. A ‘Doc Fix’ is embedded in the US budget, reversing the campaign suggestion that  doctors' pay was to go down 20%. This offers billions over the next decade: for a total of $400 billion, you should be able to have a meaningful conversation …

And what is of interest to us from the US? Firstly, integrated care: in the NHS, we need to learn if integration just means hospital mergers, we should worry about what this means to pricing. US evidence as hospitals merged in the 1990s found that in 88% of urban geographies, mergers increased inpatient prices by between 5% and over 40%. Set of US data.

Second, there are lessons around how to engage doctors and GPs in self-referral and in ownership of own systems. In fact, there are legal prohibitions in the US on doctors owning medical facilities, as it’s been found to adversely affect referral. Radiology has seen a big growth of US imaging spend as GPs, orthopods and others can bill at higher rates when referring people to equipment they own. How can we maximise the opportunities of GP PBC while being sensible to the dispensing practices phenomenon, writ large?

Third, it will be tempting to the DH to use tariff to extract savings from the NHS as the financial position means lower rates of funding growth. There are interesting US lessons about what behaviour that drives, especially as when commissioners squeeze tariff prices, volumes should increase, as hospitals do more operations in response to guarantee their income.

US evidence suggests that saving £1 million in pricing costs £300,000 in extra volume. Process and not just technical efficiency, is important.

The final point is that there is very good evidence that where payment systems combine tariff with negotiated prices, the squeeze gets felt in the negotiated bit. £15 billion of NHS spending is still on negotiated prices. The NHS and purchasers should attend to cost-shifting, which is thought to represent about $88 billion in the US between the two.

Just as the US seeks big efficiencies over 5-10 years, the NHS will be under significant funding pressure from 2011-12, and the hunt will be on for efficiencies. An intelligent process may avoid crude return to pay freezes and pay review and lead to intelligent conversations about the process of clinical care. The US system has more spending to go at, and thus more defenders of the status quo, but it also has an independent process to address whether it will deliver savings.