Introduction
The UK healthcare needs changes and improvements to meet changing demands and requirements of modern society. Today, competition in the internal healthcare market is introduced by separating those who purchase or commission health care from those who provide it. Government interventions would help the healthcare system to overcome the economic crisis and improve its technical efficiency and new methods applied to the diverse healthcare field. In England and Wales, the national institutions are primarily responsible for commissioning health care. Momentum is achieved in the market by enabling fund-holders to compete on quality by using their funds in the ways they consider most appropriate in the interests of their patients.
Government Interventions
The necessity of government interventions in the healthcare system is justified by a unified approach to all healthcare institutions and medical establishments and the introduction of high standards and high ethical principles for all units. Hospitals are obliged to attract custom by providing a high-quality, low-cost service to patients. Contracts between commissioners and providers are negotiated at a local level and, subject to national policy constraints, the assessment of health needs will be dominated by local influences.
This incentive to attract more patients has no doubt enabled some hospitals to do more work than others. It has not, however, entirely resolved the problem of the efficiency trap. One would expect the major part of a hospital’s revenue to arise from block contracts, in which a lump sum payment is agreed by a purchaser for a category of work. In this case, even the most efficient hospitals with the greatest income will face the prospect of exhausting their revenue before the end of the financial year because the money available to purchasers remains limited (Brekke et al 2006).
The need to introduce government regulations is justified by the fact that many medical institutions have not introduced dramatic changes to their patterns of purchasing from hospitals. To some extent, decisions are influenced by the pressures exerted by established customs, but this should not conceal the fact that decisions are, nonetheless, being made to preserve the status quo. Patients, however, may hold that the same hospital in the highest regard. To them, its closure might be considered a disaster.
A ‘pure market’ cannot take into account how and when the adjustments should occur (Mooney et al 2002). For this reason, the effects of the market in healthcare should be regulated to preserve continuity and standards and to implement a strategy. Additional funding is needed to plan the adjustments which market forces introduce. To maintain consistency and reliability, funds must always be reserved to allow services to be phased in or out over a reasonable time. Healthcare markets are driven by consumers, but the use of patients and doctors as ‘consumers’ presents problems. One of the most serious difficulties concerns the quantity of information needed in an effective marketplace (Culyer et al 2000).
Payment system
The best approach to a payment system is contracting. The most serious difficulties, therefore, concern
- inadequate information,
- healthcare strategy in the internal market, and
- the danger of a ‘two-tier health service.
Clinicians are not routinely monitored for the purposes of comparison, nor is information available to patients as to the hospitals with the least attractive records of surgical success. Thus, both patients and doctors are often wholly ignorant of the relative. There has been some interest in making patients more critical of the standards achieved, and consequently more selective in their choice of doctor, by giving them more information about the outcome of treatments in a hospital.
“While there is no profit in the UK case, and hospitals are not allowed to make savings or carry forward deficits, surpluses can be used for within-year expenditure and deficits were seen as evidence of failure on the part of hospital management” (Propper et al 2004, p. 145). As between hospitals, the allowance would have to be built into the system for the different degrees of mortality and morbidity between, say, the region of retired patients on the South coast and the industrialized conurbations of the Midlands and North East. Similarly, as between doctors, case-mixes will vary. A larger percentage of one surgeon’s patients may have died following surgery, but that is not necessarily due to incompetence.
It may be that this doctor accepts the most difficult cases because he or she is the best in that field, or that more of those patients are elderly. Most of the differences in outcomes are accounted for by differences in ‘inputs’, i.e. the conditions of the patients admitted for treatment. To make matters more complicated it is difficult to measure the extent to which a modern health service can be responsible for improved levels of health. Proxy measures of quality have been used but none are free from ambiguity, and the evidence which they present is equivocal.
For instance, some indices show how our standards of health have increased. Infant mortality has declined steadily and morbidity and mortality statistics demonstrate that we are in general living longer and healthier lives than ever before. But the extent to which these improvements may be attributed to the health service is difficult to assess because other factors have significant effects (Martin and Smith 2003). A separate difficulty concerns the extent to which a health market is consistent with the development of a clear strategy in the healthcare system. With the introduction of new regulations fund-holders, however, decision-making power has shifted towards local hospitals (Dafny, 2005).
In the new environment, purchasing power will be increased and refined if the hospital system is given its own health service resources to manage because they, rather than a remote health authority, are able to make the arrangements with hospitals that best suit the practice and its patients. This has been made possible by the introduction of fund-holding. Fund-holding practices are allotted funds annually, as determined by the current norms.
Inevitably, fund-holding gives the hospital system a much more explicit role in the management of hospital system resources. For the moment, no precise formula exists by which the allotment can be made and the process allows for reference to past referral patterns, mortality and morbidity statistics, and a good deal of hard bargaining. Practices must satisfy many conditions to become eligible to apply for fund-holding status and their funds are closely regulated by current standards.
The healthcare contracts are intended to enable the parties to agree on matters of quality, quantity, and cost. Common to ordinary business contracts between commercial parties. Parties may have to make compromises between competing objectives. Perhaps the quantity of a particular service ought to be reduced to expand facilities elsewhere, or prices ought to be reduced to attract more custom. Similarly, there is the need to balance administrative and transaction costs (the costs of setting up, operating, and monitoring the service) with the money devoted to the services themselves (Laing, 2003).
However, the matter ‘should not be approached as a legalistic or adversarial exercise but as an opportunity to discuss and agree how improvements to patient care can be secured and over what time’ Clearly, the healthcare contracts will force the parties to be explicit about the services which they wish to provide and, by implication, those which they do not. In this respect, they make more visible than ever before the decisions made about which patients should be treated when the demand for health care exceeds the resources available (Dafny, 2005).
These are agreements in which hospital units undertake to provide an unlimited or a maximum, number of facilities, over a specified period of time. Under these personal arrangements, the healthcare may commit resources to a hospital provider irrespective of the actual usage of the facilities, and will consequently have difficulty in being precise for quality. These set out agreements for the provision of a particular service or services for a specific price.
The emphasis is on output, in that the parties agree to a specific requirement for an exact price. ‘The various advantages to both contracting parties–the opportunity for the healthcare to link payment with activity; and for units to match funding to workload and deploy their resources more flexibly–suggest that cost and volume contracts are likely to be widely used as negotiating skills improve and more detailed information becomes available.’
To date, these arrangements have had little or no impact on overall strategy in the health service. Interest has been shown, however, in schemes in which the capital cost and use of expensive equipment could be shared, joint ventures could be undertaken to pay for new hospital developments, and screening services could be purchased from independent laboratories. Clearly, agreements of this nature could introduce an entirely new form of relationship between the NHS and the private sector. One reason to encourage this collaboration is ‘because it relieves pressure on the NHS (Laing, 2003).
Competition
Enhancing competition in the healthcare field can lead to improved quality and lower prices for patients. Strategic decisions must now be made at a local level. Of course, this is the idea of the market and may bring advantages for doctors and patients, but it is not clear how the planning and objectives of the Secretary of State, or the overall stability of hospitals, are promoted by such a system.
Obviously, the Secretary of State will continue to be responsible for the promotion of healthcare and may not simply abandon her duty to buyers and sellers in the internal market. As she has said with respect to health service resources: ‘the first step in a strategic approach must be the establishment of clear priorities so that action and resources can be directed to best effect. A crucial aspect of ‘policy’ is the need for a reasonably consistent long-term strategy (Dranove et al 2003).
There was no procedure for prioritizing calls, indeed the nature of the information taken over the telephone did not enable priorities to be determined. Ambulances were often despatched to calls that could not be described as emergency cases at the expense of those in genuine need of emergency care. Standards of call-taking were poor so that the information supplied to those responsible for allocating and despatching ambulances was inadequate.
Amongst those working in the emergency room, no single person was responsible for linking the several 999 calls made in this case. The report made a number of recommendations for improving the management and organization of the service. Obviously, in all these cases improved levels of care could be provided if additional resources were made available. Responsible medical experts will often be prepared to say that the level of services provided by a unit was unacceptable. However, in the current and foreseeable circumstances, more has to be achieved with relatively fewer resources (Strong and Robinson 2005).
Every action in negligence requires the plaintiff to show: that the defendant owed the plaintiff a duty of care, that the defendant failed to achieve a standard of care demanded by law, and that it was this failure that caused the plaintiff’s injuries. An award of damages depends on proof of fault; it has nothing at all to do with the mere fact that the plaintiff has suffered terrible injury and grief. Unless each one of these elements is satisfied the plaintiff will fail to recover compensation. Under these principles, many who suffer the most tragic and catastrophic damage are left to cope alone with the contributions made by the social security system.
The duty is imposed because the healthcare or hospital doctor is able to foresee that carelessness on their part could cause damage to the patient and that they ought therefore to take reasonable care (The Economic Journal 2008). In the majority of cases, therefore, the difficulty faced by the patient who issues proceedings in negligence is not to establish the existence of a duty of care, but rather to prove that, in treating the patient, the doctor failed to achieve a satisfactory standard of care the doctor failed to tell the patient about the risks or side-effects associated with the treatment, made a wrong diagnosis or prognosis, or that the treatment caused more harm than good because it was not performed carefully (Robinson and Le Grand 2005).
The current cases which do not concern the exercise of professional medical judgment are assessed according to the objective standards of the ‘man on the street’. The issue of whether an employer is responsible for exposing an employee to an unsafe system of work, or the driver of a car for injuries caused to a pedestrian, can be considered by the judge who applies common sense to the question of the standard of care which ought to have been achieved.
Cases concerning professionals cannot always be judged in this way. The considerations which ought to have been borne in mind, or the exploratory tests which should have been conducted by a doctor during diagnosis, or the measures which ought to have been taken to deal with it, are matters requiring professional judgment (The Economic Journal 2008). Thus, in assessing the standard of care owed to patients, medical negligence has been generous to doctors, and to a slightly lesser extent to professionals generally. Inevitably, the distinction between matters within and without the court’s competence is a matter of degree and depends on the sympathies of the court and the circumstances of the case.
However, it becomes increasingly difficult for the court to impose its own common sense on the dispute when medical experts are available to both parties. To what extent does the court retain discretion in these circumstances to declare that medical opinion is unreasonable? Outside the field of medical practice, the courts have shown a willingness to question for themselves the reasons on which skilled and professional people have adopted a particular practice.
Given that penicillin presented no serious danger and was readily available to the doctor, he ought to have administered it to his patient. Thus, despite the support of his colleagues, the defendant was held liable for his failure. The logic of the duty requires the court to examine the substance and rationale of the decision, not merely the fact that others can be found to support it. Sometimes the court will find it impossible to criticize the clinical practice, particularly if it involves technical considerations beyond its competence (Propper et al 2004).
Policy conclusion
Policy conclusion will involve such issues as a possibility to allocate money to
- health authorities and
- fund-holders to enable them to purchase (or commission) health care from hospitals on behalf of patients.
On the other hand, different arguments could arise if the state is to change the basis on which funds were distributed during the financial year in a way that prejudiced the efficient management of the health service. In this unlikely event, an action for judicial review could be considered on the ground that the State was estopped from going back on his word, or that the health authority had a legitimate expectation that funds would be forthcoming (Propper et al 2004).
Waiting times
Waiting times in the system are said to be increased and refined if healthcare is given their own health service resources to manage because they, rather than a remote health authority, are able to make the arrangements with hospitals that best suit the practice and its patients. This has been made possible by the introduction of fund-holding. Fund-holding practices are allotted funds annually, as determined by the current rules.
Inevitably, fund-holding gives healthcare institutions a much more explicit role in the management of healthcare resources. For the moment, no precise formula exists by which the allotment can be made and the process allows for reference to past referral patterns, mortality and morbidity statistics, and a good deal of hard bargaining (Ham, 2004). “Assuming a positive discount rate, the shorter the waiting time the more likely the plaintiff is to reject the defendant’s offer and go to court. As waiting times lengthen, judges might respond by working harder and/or more judges could be appointed and courts built to deal with cases” (Martin and Smith 2003, p. 160).
Healthcare practices must satisfy a number of conditions in order to become eligible to apply for fund-holding status, and their funds are closely regulated by current laws and regulations. The new system of contract funding in the NHS requires hospitals to earn their revenue by selling goods and services to purchasers of health care by entering ‘NHS contracts’: ‘the phrase ” the healthcare contract” means an agreement under which one health service body (“the acquirer”) arranges for the provision to it by another health service body (“the provider”) of goods and services which it reasonably requires for the purposes of its functions. the healthcare contracts are intended to enable the parties to agree on matters of quality, quantity, and cost.
They introduce pressures common to ordinary business contracts between commercial parties. Parties may have to make compromises between competing objectives. Perhaps the quantity of a particular service ought to be reduced to expand facilities elsewhere, or prices ought to be reduced to attract more custom. Similarly, there is the need to balance administrative and transaction costs (the costs of setting up, operating, and monitoring the service) with the money devoted to the services themselves.
Conclusion
In sum, the modern healthcare system requires new and innovative approaches to its improvements and development. A new system of payment for patients treated in the hospital may be distinguished by the medical unit in which treatment is given. New price structure and introduction of waiting lists make the emphasis on output, of that the parties agree to a specific requirement for an exact price. Individually agreed contracts may be used most frequently by fund-holding.
Because they inevitably carry larger financial costs they will be less commonly used, though they will often be the basis on which extra-contractual referrals are priced, in which potential buyers are referred to hospitals with which the medical unit has no existing healthcare contract. In general, healthcare products and services may be reluctant to enter the cost per case contracts on a day-by-day basis, for the alarm of losing control over their resources. The alternative is to use the state interventions as a means of negotiating entire episodes of care, with the emphasis on the provider to assess the standard cost of each case or treatment, allowing for occasional complications, or to refine cost and volume contracts after a specified threshold targets have been achieved.
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