Reports have it that wards at Good Hope are being closed and treatments for certain conditions being transferred to Heartlands. Whilst this may well cause concern and inconvenience to many, it is only to be expected bearing in mind the way the NHS has operated in the past (and in many ways continues to do so) and the changes being forced upon it by the nature of the British economy.
First of all, the economy, which ultimately pays for medical care either by taxation of incomes, spending and company profits (all the result of economic activity) or out of individual’s pockets, those pockets being filled by economic activity. The first problem with using a term like “the economy” is just what that means. In this case (paying for health care) it’s the wealth produced by the economy, known as Gross Domestic Product (GDP). Now, strictly speaking, we should be looking at Gross National Product (GNP) since this is GDP plus overseas income, since this is the total potential wealth that can be tapped for health care. However, the UK does not have large individual remittances (Britons working overseas who send money home to their families) although British companies do have large overseas earnings.
However, against these additions need to be subtracted monies sent back by foreign workers to their families and, because of the large foreign investments in the UK, monies sent home by foreign companies. This does result in a small surplus of GNP over GDP but, from figures from the Office of National Statistics (ONS) ( http://www.statistics.gov.uk/downloads/theme_economy/ESA95_GDP_to_GNP.pdf ), this resulted in a boost of less than 1%. So, let’s stick with GDP.
So, conceptually, how is GDP measured? Whilst GDP is expressed in money terms (dollars, pounds, euros, etc) it actually aims to measure the volumes of goods and services being bought, sold or made and to each of those items it fixes a monetary value. Of course, in order to do this those measuring economic statistics (in the case of the UK, the ONS) do not measure every single item, instead these recognised mathematical techniques for sampling. In addition, to simply things, they simply measure volumes not prices. In order to put a price on something they set a value once every so many years, this then means that GDP is not being influenced by inflation.
So this means that official GDP figures for one year can be compared with another to see whether the economy is growing (good) or shrinking (bad). However, it is also useful to compare one economy with another. This, of course, leads to measurement problems.
Since the French economy and the German one is measured in Euros, how can this be compared to the British measured in pounds? The simplest way would be to use the prevailing exchange rate. Using this technique you will often hear politicians or lobbyists after money (much the same thing really) say that the UK economy is the fourth biggest in the world and is therefore rich. And they are wrong.
The real purpose of money is to as a means of exchange, in other words what can you buy with it. For example, when I left university in 1973 the going rate for a degree other than a first was £1,500 the average now (2008) is £24,000. However, I could buy a gallon of petrol for 33p.at the time. So (roughly) graduate wages have risen 16 fold whilst petrol has risen 14 fold. Combined with the increased quality of cars we can say that the purchasing power of graduates has increased between 1973 and 2008 (at least when it comes to buying cars).
So take make any international comparisons you would need to use purchasing power parity comparisons. That is to compare the wealth of different nations not by using exchange rates but by allowing for what can be bought with that money in that country.
Furthermore, when dealing with money being spent on services paid for out of taxation, it’s the purchasing power parity per person (PPP) that matters. The more people the more doctors, teachers, policemen, etc. On this measure, the UK is not 4th but 15th, as of August 2007 http://www.economist.com/displaystory.cfm?story_id=8846663
This makes the UK on a par with Hong Kong, a little richer than Australia, France and Germany, but poorer than Luxembourg, the US, Holland, Canada and Belgium (amongst others). Frequently comparisons are made between the NHS and the U.S. regarding health care for the poorest but health care for those with insurance is very good and the U.S. spends a great deal on the military. There is, however, a fly in the GDP ointment.
The biggest contributor to GDP, after government spending, is consumer spending. That could be ok if it was a sign of Britons buying goods made in Britain. It would be a sign of British management making things people want, nothing wrong with that. But the UK runs a trade deficit bigger (as a measure of GDP) than the US. So the British are buying foreign goods not UK ones. Where do they get their money from? Well, of course, a lot of it is borrowed. So not only can’t that continue for too long but what looks like success (a growing economy) is really problems stacking up.
This in marked contrast to France and Germany where savings ratio of the order of 15% are the norm (as in many other countries that use the Euro - Eurozone countries).
By contrast, in 2006 the UK savings ratio was around 5% with consumer debt in 2007 actually being larger than GDP. Consumer debt in Eurozone countries is considerably lower than in the UK.
UK debt and savings ratios are comparable with the US, in fact in 2007 US savings ratios actually went negative, past savings being eaten into. However, there is a huge difference between the two. First of all, the US makes the currency in which oil and other raw materials are priced - the dollar. Whereas other countries have to make things oil producers want the US can simply print currency, a great advantage. Secondly, because it is a huge economy (many times bigger than the UK) many countries - particularly Asian ones - simply hand back the dollars they have received for goods by buying US government bonds.
In addition, the other big contributor to GDP is the government. This is true in all developed countries, so on the face of it, nothing out of the ordinary. However, this spending is based on taxes raised by economic activity. If that activity isn’t as strong as it seems then the tax base isn’t a strong as it seems. The growth of the last 16 years has relied substantially upon cheap goods and services from Asia keeping prices down and, as a result, keeping interest rates down so making borrowing (relatively) cheap.
The nature of government spending causes problems, one of which lies at the heart of Good Hope’s problems. Government spending, per se, isn’t that much out of line with the rest of Europe and it spends on much the same things, as the UK population has expectations much like other Europeans (health, for example). So it is only natural that spending on the NHS is beginning to follow what happens in Europe. The payment by results system is very like the French tariff de convention where every procedure is priced and French patients can chose their service provider, providing they are enrolled in the system. The individual picks up the bill and is re-imbursed 70% of the price for the procedure by the government with the rest being picked up, normally, by the individual’s insurance policy. Although, with computerisation, increasingly the 70% is collected by the provider directly from the government.
The big difference with the NHS, other than the French system being insurance based, is that the state is not the sole provider of medical care. It is only very recently that NHS patients have had a choice of provider whereas in France there has always been a private/public mix of providers. The other big difference is how money is shared out in the NHS. According to the British Medical Journal (BMJ) reports, in 2005-6 half of the increased NHS spending went on wages. This fits in with the history of the NHS. Aneurin Bevan, the founder of the NHS, famously remarked that to get the agreement of doctors in 1948 he had to ˜stuff their mouths with gold”. This must account for the fact that drugs available in Europe are not on the NHS, as I constantly tell my son, you can spend a pound only once.
Because of the way money is shared out between staff and patients the NHS causes itself a problem - expectations. Despite having a 25% pay increase over the preceding 3 years, in 2007 the BMA complained when the government decided on a modest pay rise for doctors. Those expectations are focused and made more effective by the fact that workers in the NHS have unions (the BMA, RCN, Unison) whilst patients are individuals on their own with no power whatsoever. Guess who is going to win?
This means NHS management have to learn to be basic managers. They have to learn how to balance costs (mostly wages) against income from medical procedures. But with wages centrally negotiated by powerful unions it;s an impossible task.
If that’s not bad enough, the other main contributor to the economy (along with retail and government spending) is the financial sector - and that is well truly in the toilet. So the expectations of NHS workers are in direct conflict with the ability of the economy to fund the NHS and the expectations of patients.
This bears all the hall-marks of the (now defunct) British motor car industry. Management too weak to manage a truculent work-force who have little or no concern for their customers. Unfortunately (for patents) whereas buyers of British motorcars could turn Japanese the opportunities for British patients to get value for their taxes is far more limited. The EU directive that would require the NHS to fund patients who sought health care in Europe, and thereby provide much need competition, is being opposed vigorously by the British government. The government insists that the NHS should decide what treatments it will fund. That is, to maintain the way in which tax payers’ money is shared between NHS workers and patients. Anyone like to guess where their priorities will lie? Anyone ever think that the NHS will ever provide world-class health care? I don’t.
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