carolyn hughs tuohy: a tale of three healthcare reforms

A Tale of Three Healthcare Reforms – and a Short Story: the scale and pace of change in four advanced nations

…….and implications for England in the future

Carolyn Hughes Tuohy

Presentation for the London School of Hygiene and Tropical Medicine and the Nuffield Trust

September 27, 2010

1

System Change: Four Nations

National Example

Pre-Reform Ideal Type(1980s)

Post-Reform Hybrid(2010)

UK(Big-bang)

Beveridge:

Rule-based state hierarchyProfessional influence

Netherlands(Blueprint)

Bismarck

Sickness fundsPrivate insuranceCoordination through intermediary associations

US(Mosaic)

Residual

Employer-based private insurance as normPublic programs for elderly and poor

Canada(Incremental)

Single-payer (SP) + mixed market (MM)

SP for physician & hospital servicesMM for all other services

National Example



UK(Big-bang)

Beveridge:


Internal market (England)

Purchaser-provider splitHierarchical control through monitoring, evaluation


Bismarck


US(Mosaic)

Residual


Canada(Incremental)



National Example



UK(Big-bang)

Beveridge:


Internal market



Bismarck


Managed competition

Universal mandatory insuranceComprehensive regulation of all insurers

US(Mosaic)

Residual


Canada(Incremental)



National Example



UK(Big-bang)

Beveridge:


Internal market



Bismarck


Managed competition


US(Mosaic)

Residual


Dual

Universal mandatory insuranceEmployer-based private insurance as normManaged competition in individual and small-group market

Canada(Incremental)



National Example



UK(Big-bang)

Beveridge:


Internal market



Bismarck


Managed competition


US(Mosaic)

Residual


Dual


Canada(Incremental)




Increased cross-provincial variationSP for physician & hospital services – some changes in organization & remunerationMM for all other services: some changes in eligibility esp. re drugs

Understanding Policy Change: Overview

• Policy cycling is the norm in advanced health care states

• Periodically, but rarely, external forces open a window of opportunity to establish a new framework

• In those windows, different strategies of change are possible - large vs. small scale; rapid vs slow pace – depending on political and institutional conditions

• Britain, the Netherlands and the US provide examples of different strategic decisions and their aftermath

• Canada provides the “short story” – the default case of continuous policy cycling

• Particular attention to be paid to the English case

• Final speculations about Liberating the NHS

Policy Cycling – a Way of Life in Health Care

• A fundamental tension inherent to health care: – how to control the agency relationship between providers and recipients of care.

“It all comes down to what happens in the operating room [office, surgery]”– Essential to achieving all other goals: access, cost, quality

• Policy frameworks vary – in the weights assigned to hierarchy, market and peer control mechanisms of

control – In the balance of power across the state, private finance and providers

• These frameworks establish powerful and self-reinforcing logics – lines of accountability: to whom do decision-makers feel responsible, and for

what – senior civil servants and politicians? managers of large pools of private capital? medical professionals?

– flows of information: filtered up hierarchical channels? generated and disseminated through signals from multiple independent actors? telegraphed through professional networks?

• All of the mechanisms for controlling the agency relationship are flawed:– Hierarchies may distort information through filtering; fail or delay in response to

local conditions

– Markets may lead to inequities, depending on initial endowments

– Both markets and hierarchies require a sophisticated and legitimate purchasing function

– Peer control may reproduce the conflicts of interest that give rise to the need to control the agency relationship in the first place

• Policy-makers therefore cycle through the repertoire established by the prevailing framework

– Cycling reflects political, institutional and fiscal contexts: shifts in ideological complexion of government; ad hoc coalitions; economic climate

– Centralization/decentralization; regulation/competition; collegiality vs autonomy

– Budgetary constraint/largesse

Policy Cycling In Britain 1970s-1980s

• Context: health-care agenda defined not by the growing cost pressures of health as in other nations, but by mounting criticisms of the effects of cost constraint.

• Policy cycles involved re-organization of the NHS hierarchy, and altering the balance of influence between managers and professionals.

• Two cycles of organizational reforms in regional hierarchy: 1974 and 1982– centralized then decentralized the regional hierarchy, altered the boundaries and

functions of regional authorities– These changes reflected the respective ideological tilts of the governments that

instituted them.– Labour (1970s) more favourable to central state action, consolidated and

rationalized the formerly tripartite structure of the NHS – Conservatives (1980s), more favourable to local discretion, abolished one

regional layer and re-organized boundaries to allow for more localized entities.

• Another pattern of cycling re organization at the centre: the degree of autonomy of NHS headquarters within the Department of Health.

– Conservatives (1980s and 1990s): NHS given progressively greater institutional autonomy, epitomized by physical move to Leeds (Jarman and Greer 2010).

– Labour after 1997: new cycle: re-integration of functions, epitomized by combining the roles of the NHS Chief Executive and departmental Permanent Secretary

– 2006: roles were split apart again and a debate about greater NHS independence was rekindled

Policy cycling in the Netherlands, 1970s-1980s

• Context: ongoing tension between solidarity and subsidiarity in Dutch political culture; fiscal pressures of health cost increases

• Dutch healthcare policy has sought to balance strong roles for intermediary associations, notably insurers, vs. the state as regulator and subsidizer of the system.

• In 1970s -1980s, solidarity was threatened as private insurers abandoned voluntary community-rating under pressure of cost increases

• Produced cycles of price and supply constraint; increased/decreased state weight within corporatist structures; stop-gap measures e.g. high-risk pool

Policy cycling in the US, 1970s-2000s

• Context: “veto-ridden” institutional structure and highly adversarial politics; persistent strain of distrust of government, especially federal

• 1970s-1980s: Cycles of regulation/deregulation: HMOs, PSROs/PROs, HSAs

• 1980s-1990s: Cycles of tightening and relaxing constraints on payments to providers under Medicare

• 1990s-2000s: incremental increases/decreases in eligibility for coverage: welfare reform; SCHIP; Medicare prescription drug coverage

• State-level experimentation and variety, largely in insurance regulation and Medicaid

• Reactive to developments in private market and practicalities of ad hoc coalition-building, largely within budgetary process

Policy cycling in Canada, 1970s-2000s

• Context: federal system with strong provinces; single-payer system for physician and hospital services; tight accommodation between medical profession and state at provincial level

• 1970s-1990s: progressive reduction of federal transfers to provinces– Provincial cycles of horizontal reorganization in hospital sector: numerous

changes in numbers/boundaries of regional bodies; election/appointment of directors

– Real reduction (~8%) in per capita public spending on health 1992-1996

– Budget caps and supply constraints

• 2000s: progressive increases in federal transfers to provinces– Continuing reorganization in hospital sector

– Increases in physician pay, both FFS pot and targeted at new forms of organization and remuneration

Windows of Opportunity for Major Change: Introducing New Principles and Logics

• Embedded investments in existing system (acquisition of resources, establishment of information channels) make it extremely unlikely that change will be generated from within the health care system

• Change requires intersection of two factors in the broader political system– Mobilizing of authority

• Depends on political institutions: more difficult (but not impossible) as veto points increase – e.g. congressional systems, federalism

– Political will to address health care as central to broader agenda• Depends on political and partisan climate

• Strategic options:– Scale of change: extent of change in institutional mix or structural balance or

both– Pace of change: simultaneous vs gradual

• Major change means large scale or rapid pace or both

• Three cases of major change (GBR, NLD, USA) and one default case (CAN)

BIG-BANG

MOSAICINCREMENTAL

BLUEPRINT

S C

A L

E

P A C EGradual Simultaneous

Larg

eSm

all

•large-scale change in a single comprehensive sweep.

•new institutions supplant previous institutions

•typical where actors have consolidated authority but face competitive pressure – e.g. Westminster system with competitive parties

•consensus on an overall framework within which each element is to be enacted over time

•new institutions supplant previous institutions

•typical where at least some parties can reasonably expect to be in a position of influence over time – e.g. systems with established traditions of coalition government

•multiple simultaneous adjustments to existing institutional arrangements

•new institutions may co-exist with established; may or may not introduce new organizing principles

•typical where one party is well-enough positioned to build a minimum winning coalition within a relatively brief window of time - e.g. supermajorities in veto- ridden systems

•gradual piecemeal adjustments to existing institutional arrangements

•new institutions may co-exist with established

•default category: where neither condition for major change is met – i.e. “ordinary” times in all systems and typical in veto-ridden systems

Strategies of Change – Four Domains

UK1991-2010

BIG-BANG

MOSAICINCREMENTAL

BLUEPRINT

UK1989-91

SCA

LE

PACEGradual Simultaneous

Large

Small

Netherlands1987-2006

UK1991-2010

BIG-BANG

MOSAICINCREMENTAL

BLUEPRINT

UK1989-91

SCA

LE


Large

Small


UK1991-2010 US

2009-10

US1994-2008

US1993-94(failed)

BIG-BANG

MOSAICINCREMENTAL

BLUEPRINT

UK1989-91

SCA

LE


Large

Small


Canada1987-2010

UK1991-2010 US

2009-10

US1994-2004

US1993-94(failed)

BIG-BANG

MOSAICINCREMENTAL

BLUEPRINT

UK1989-91

SCA

LE


Large

Small

Strategy Type National Example Political Conditions

Big Bang UK (1990)

US (1993-94)

Blueprint Netherlands (1987- 2006)

Mosaic US (2009-10)

Incremental Canada (1987-2010)

Political Conditions: Four Domains


Big Bang UK (1990) Unitary parliamentary government structure

Majority government in third successive mandate

US (1993-94)


Mosaic US (2009-10)






US (1993-94) Bicameral congressional government structure

Presidency and both Houses of Congress controlled by same party by narrow margins


Mosaic US (2009-10)









Unitary parliamentary government structure

Coalition government

Mosaic US (2009-10)











Mosaic US (2009-10) Bicameral congressional government structure

Presidency and both Houses of Congress controlled by same party by clear margins – supermajority in Senate











Mosaic US (2009-10) Bicameral congressional government structure

Presidency and both Houses of Congress controlled by same party by clear margins – supermajority in Senate

Incremental Canada (1987-2010) Federal parliamentary government structure – poor climate of federal-provincial relations through 1990s

Majority governments at national and provincial levels until 2006; minority government at federal level and briefly in Quebec thereafter


BIG-BANG

MOSAICINCREMENTAL

BLUEPRINT

S C

A L

E

P A C EGradual Simultaneous

Larg

eSm

all

•Conditions for successful use are especially rare

•Each step in enactment process needs to be as balanced as overall framework

•Complexity makes gaining popular support and overcoming implementation vetoes particularly difficult

•Stickiness in response to changing circumstances

Strategic Vulnerabilities

National Example


Entrepreneurial Allies in Implementation

UK(Big-bang)

Internal market



Managed competition


US(Mosaic)

Dual


Canada(Incremental)



Implementation: the Role of Strategic Allies

National Example



UK(Big-bang)

Internal market


GP fundholders; executives of hospital trusts; purchasing experts


Managed competition


US(Mosaic)

Dual


Canada(Incremental)




National Example



UK(Big-bang)

Internal market




Managed competition


Executives in sickness funds and provider organizations

US(Mosaic)

Dual


Canada(Incremental)




National Example



UK(Big-bang)

Internal market




Managed competition



US(Mosaic)

Dual


Management of exchanges ???Participants in pilot projects ????Meso-level and arm’s-length organizations ????

Canada(Incremental)




National Example



UK(Big-bang)

Internal market




Managed competition



US(Mosaic)

Dual


Management of exchanges ???Participants in pilot projects ????Meso-level organizations ????

Canada(Incremental)



•Strategic alliances constrained by bilateral monopoly, consolidated under retrenchment


Health Policy in England: the story of the 2000s

The Legacy of the Internal Market

• Internal market reforms were rare example of a major shift in mix of control mechanisms– from hierarchy and professional networks to contractual arrangements

among independent entities– Implied significant change in types and flows of information

• Little change in balance of power across state, private finance and providers, but shifts within these categories

• Reforms had a lasting impact on the system, but not before being absorbed and mediated by the logic of the existing system.

• Relationships were re-styled as “contractual,” rather than “command-and- control,” but established networks persisted, due to:– Information costs– Local health care political economies

The Legacy of the Internal Market (cont’d)

• Professional networks were reshaped with:– Emergence of GP fund-holding

– Exercise of increased decision-making latitude by some hospital trusts

• i.e. certain key strategic actors saw the reforms as to their advantage and began to drive them forward in particular ways

• Neither of these developments involved much “competition”

Blair Cycle 1, 1997-2000: “Third Way”

• Ambiguity and increasing central direction

• Elements of future directions signaled in December 1997 White Paper:– PCT commissioning: cash-limited budgets, including prescribing

– National standards, not variation driven by competition in local markets: NICE, CHI

– Clinical governance

– Patient voice through surveys

• Spending increased by ~4% annually, with focus on reducing obvious failures to deliver:

– Waiting times

– Mortality from cancer, heart & stroke

Blair Cycle 2, 2000-2002: Spending, centralization, targets

• Increased expenditure: Blair commitment to European Union average, 2001 Budget, Wanless reports

• Star-rating system under CHI

• Re-design of services under Modernization Agency

• Patient voice through forums in each Trust

• i.e. recovery of hierarchy, but (in theory) not central prescription of rules of behaviour

– Rather, focus on ends, leaving means to discretion of local agents– Trusts “compete” only with themselves – reward/punishment is related to

performance against targets, not performance against competitors

– In practice, much detailed central guidance

Blair-Brown Cycle 3, 2002-2010: Return to markets and competition

• Delivering the NHS Plan:– Devolution within a strategic framework– Strategic Health Authorities replace HAs and NHS regional offices– Foundation Trusts (FTs) – NHS providers with greater independence under

Independent regulator: Monitor– Independent Sector Treatment Centres (ISTCs) – Primary Care Trusts – strategic purchasers

• Later: practice-based commissioning

• The “Consumerist Wish:” patient choice through payment-by-results:– Patient is offered choice at point of referral– Money follows patient – fixed tariff: therefore non-price competition on quality and access (vs internal

market)

• Self-report and publicity vs targets– “Annual Health Check” replaces star-rating in 2005/2006

Ongoing centralization/decentralization tension

• Proliferation and reorganization of central bodies, e.g:– CHI Healthcare Commission Care Quality Commission

– Modernization Agency NHS Institute for Innovation and Improvement

– NICE, Monitor

– Various patient involvement mechanisms

• Reorganization of regional structures, e.g:– 2006: PCTs reduced from 303 152

Ambivalence re Clinician Involvement

• Abolition of “fund-holding”

• NICE clinical guidelines

• Reorganization of graduate education

• Increased lay control of GMC

• PCGs PCTs PCTs+PBC: continuing thread of GP centrality

• Increased remuneration

• Sir Ara Darzi report: clinician-led, clinician endorsed (but BMA skeptical)

“Liberating the NHS”

How to read?

• “bold new vision?” “One of the biggest shake-ups in [NHS] history?”

• Or Cycle 4 of internal market framework?

• Historic election opened window of opportunity:– unique (in peacetime) period of coalition government in the UK. – aftermath of a synchronous global recession opened up agenda

• Neither a big-bang nor a blueprint strategy was likely: – coalition governments do not lend themselves to big-bang strategies,

require multiple compromises– blueprint approach was not feasible in a precarious coalition

• But a mosaic strategy of multiple novel adjustments and additions might have been expected– need to find support not only from both parties but across the left, right

and centre components of each party– need for rapid action: one-term commitment

• In fact, however, the proposed reforms are best understood as a fourth cycle of the internal market reforms, with a renewed emphasis on – clinical discretion and provider networks in the field– increased NHS independence at the centre.

Liberating the NHS as Cycle 4

• fundamental logic of the purchaser-provider split was entirely consistent with the broad agenda of “deconcentration” around which the Conservatives and Liberal Democrats, could coalesce.

– “state-funded but self-run ‘foundation’ hospitals and ‘academy’ schools appeal to an ancient Tory reverence for the local, the small and the independent” (The Economist 2010:20).

– The decentralization motif also appealed to the Liberal Democrat leadership, representing the “centre-right, small-state liberalism [that] for much of the history of the Liberal Party, and then the Liberal Democrats, … has been able to coexist happily with centre-left social liberalism” (Grayson in New Statesman 2010).

• All that was needed was to– redress the tilt toward the centre through monitoring and performance

measurement under Labour (even in its most decentralist phases) – accelerate the emphasis on “choice” of the last cycle of Labour policy– resurrect and expand the role of GPs as key purchasers.

How will these changes now be absorbed by the logic of the established framework?

• This will depend very much on the entrepreneurial allies of reform that emerge

– Among GPs?– Among “experts” in purchasing/commissioning?– Among managements of Foundation Trusts?– Within central agencies?

carolyn hughs tuohy: a tale of three healthcare reforms

Health & Medicine

mixedincremental market

normpublic programs

physician hospital sp

physician hospitalservicesmm

physician hospital services

mixedsinglepayer sp

internal marketbigbangrule

policy change