1. 1 Centre for Market and Public Organisation Health Care Reform: Evidence and Issues Carol Propper Public Service Reform Seminar March 2009

2. 2 Recent NHS reforms

3. 3 Late 1990s and early 2000s: targets Drive to increase quality and efficiency by extensive use of targets Examples –waiting times targets for inpatient care (from an initial 18 months!) –4 hour targets for A and E waits –MRSA and hospital cleanliness –National Service frameworks Coronary Heart Disease National Service Framework - information strategy including information needs of patients, carers and the public; health professionals to deliver care; and clinical governance, performance management, service planning and public health.

4. 4 2004 onwards: Competition Promotion of competition and choice Components –Gradual increase in choice of hospitals by patients –Use of private sector to provide care –PbR tariff mechanism Accompanying changes in roles –PCTs as commissioners of services, SHAs as strategic market managers –The Panel on Cooperation and Competition - The NHSs own version of the CC … will provide independent, expert advice on issues arising from this new competition policy (Bradshaw Sept. 2008)

5. 5 Evidence

6. 6 Targets: the evidence Academic and popular literature stresses negative aspects of targets: meeting the target and missing the point Lots of anecdotal evidence of gaming But … looking at waiting lists, the whole picture and exploiting comparison with Scotland

7. 7 Fig 1: Published and unpublished census data Scotland vs England waiting times

8. 8 Some evidence of managing the lists but no evidence of health effects Similar results for studies of A and E 4 hour waits Why did such targets appear to work? Features of waiting times –High visibility politically –Of concern to clinical staff and patients Targets may act as missions around which employees can focus effort

9. 9 Competition: the evidence Not much sign so far that competition has changed outcomes e.g. Aberdeen report –Fall in LOS, no impact on quality Behaviour has been slow to change in response to PbR –Lack of good costing systems But… –Is there scope for competition? How competitive are markets?

10. 10 Competition: the evidence US Department of Justice guidelines on competition –Market concentration is a function of the number of firms in a market and their respective market shares. –HHI index of market concentration. –Divides market concentration into three regions unconcentrated (HHI below 1000) moderately concentrated (HHI between 1000 and 1800) highly concentrated (HHI above 1800) –In concentrated markets an increase of 100 points may be presumed to create/enhance market power

11. 11 Competition: the evidence How concentrated are English health care markets? Different products –maternity + emergency (people want to be treated close to home) –Hips and knees (waiting times important, lots of providers) –CABG (few providers, people have to travel) Define self contained markets (E-H) and the extent of concentration within these

12. 12 Self contained markets in maternity and emergency

13. 13 Self contained markets in hip and knee and CABG

14. 14 Maternity admissions Emergency admissions Hip and knee replacements CABG procedures Number of providers (with at least 50)15714815930 Herfindahl-Hirschman Index Mean6209651632991490 Median622560681157992 Mean distance travelled by patient 9.814.515.036.6 Mean number of providers used by a PCT19.16.78.42.7

15. 15 Competition: the evidence English health care markets are concentrated Concentration is not a function of lack of number of providers –Less competition in maternity and elective where there are lots of markets and in each a few suppliers are dominant –markets that might be thought to be more competitive because there are more suppliers (hips + knees) are less competitive than CABG Extent of concentration reflects patients willingness to travel, which in turn reflects their need and the existing number of suppliers Implications – mergers could lead to more abuse of market power in maternity (where there are many suppliers) than in CABG (where there are few)

16. 16 The issues

17. 17 Concentration in English health care markets is high –If hospitals seek to merge to avoid competition this will increase concentration in already concentrated markets Lack of competition is not a function of lack of suppliers Patient behaviour will have to change to reduce competition or supply will have to increase considerably –Are patients willing to travel more? –Do the PbR tariffs make this profitable? Lots of issues for the Carter Commission!