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What mechanisms can be used to bridge the affordability gap?

Report of a seminar organised by BUPA and held at the British Medical Association on 10 October 2000
As part of the process of gathering evidence for the review of healthcare funding a seminar was held on 10 October 2000 to debate the use of alternative funding mechanisms within UK healthcare.

Representatives of a range of organisations, including private sector healthcare providers, professional bodies and government policy advisors attended.

The seminar was chaired by Dr Andrew Vallance-Owen, Group Medical Director of BUPA, and presentations were given by Graeme Leach of the Institute of Directors, Philip Collins of the Social Market Foundation, Richard Darch of First Consulting Group and Ron Zimmern of the Public Health Genetics Unit.

The first presentation focused on the Institute of Directors’ recent report, ‘Healthcare in the UK: the need for reform’. (The report can be accessed via the website www.iod.co.uk). A major theme of the discussion throughout the day was whether a greater take up of private insurance, for example through tax incentives, should be encouraged. Key points were:

• subsidising those who could afford to take out private insurance was inequitable and not the best way of using public funds;

• if some groups in society could buy their way out of the NHS, there would be a loss of social cohesion;

• the ‘deadweight’ costs of providing tax rebates for those who already had private insurance were seen as a serious disadvantage;

• however, it could be argued that these would be outweighed in the long term by the productivity and efficiency gains of increasing private sector involvement;

• an expansion in the private sector was anticipated regardless of the government’s position, perhaps through greater use of corporate schemes and self care rather than individual insurance;

• restricting costs within the state sector would reduce the quality of outcomes, and therefore lead to a two-tier system;

• the marginal costs of an individual operation were low, and performing it outside the NHS would save very little public money;

• a more effective approach might be for the government to negotiate with the private sector to provide a service in bulk;

• competition in provision could be encouraged without changing the funding system, and could improve the efficiency of the system;

• this might evolve into a model in which the NHS remains the most popular ‘brand’ but operates as a commissioner and operator of services provided through competitive tender rather than as a provider;

• competition was only truly effective if it was brought down to the level of the patient or consumer;

• competition could be effective if it were based on the principle of mutuality – however, the traditional mutual institutions had been weakened and dispersed, and reviving the principle would be politically difficult;

• competition relied upon consumers being informed and the GP’s role as an independent adviser should therefore be preserved;

• however, consultation on the National Plan had showed that many people would prefer the traditional patient role to that of ‘informed consumer’.

• the current procurement process was expensive and inefficient, although improvements were anticipated;

• the pattern of investment showed marked geographical variations, which reflected the success of individual trusts in developing schemes rather than planned priorities;

• schemes in London benefited disproportionately from high land values which did not apply elsewhere;

• schemes were planned with little reference to developments in clinical practice and contractual arrangements, or to national and regional planning priorities;

• many schemes had been planned on a mistaken assumption that fewer hospital beds would be needed in the future;

• the scope for increasing the proportion of PFI schemes was limited, and public investment in facilities was also essential;

• a 30-year contract was too inflexible, given the speed of changes in clinical practice;

• the general conclusion was that public-private partnerships in future should focus on the delivery of services rather than premises.