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

National Pre-Reform Ideal Type Post-Reform Hybrid
Example (1980s) (2010)
UK Beveridge:
(Big-bang)
Rule-based state hierarchy
Professional influence

Netherlands Bismarck
(Blueprint)
Sickness funds
Private insurance
Coordination through
intermediary associations
US Residual
(Mosaic)
Employer-based private
insurance as norm
Public programs for elderly
and poor
Canada Single-payer (SP) + mixed
(Incremental) market (MM)

SP for physician & hospital
services
MM for all other services

Example (1980s) (2010)
UK Beveridge: Internal market (England)
(Big-bang)
Rule-based state hierarchy Purchaser-provider split
Professional influence Hierarchical control through monitoring, evaluation

Netherlands Bismarck
(Blueprint)
Sickness funds
Private insurance
US Residual
(Mosaic)
insurance as norm
and poor

services

Example (1980s) (2010)
UK Beveridge: Internal market
(Big-bang)

Netherlands Bismarck Managed competition
(Blueprint)
Sickness funds Universal mandatory insurance
Private insurance Comprehensive regulation of all insurers
US Residual
(Mosaic)
insurance as norm
and poor

services

Example (1980s) (2010)
(Big-bang)

(Blueprint)
US Residual Dual
(Mosaic)
Employer-based private Universal mandatory insurance
insurance as norm Employer-based private insurance as norm
Public programs for elderly Managed competition in individual and small-group
and poor market

services

Example (1980s) (2010)
(Big-bang)

(Blueprint)
US Residual Dual
(Mosaic)
Employer-based private Universal mandatory insurance
insurance as norm Employer-based private insurance as norm
Public programs for elderly Managed competition in individual and small-group
and poor market
Canada Single-payer (SP) + mixed Single-payer (SP) + mixed market (MM)
Increased cross-provincial variation
SP for physician & hospital SP for physician & hospital services – some changes
services in organization & remuneration
MM for all other services MM 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)

Strategies of Change – Four Domains
BLUEPRINT BIG-BANG
•consensus on an overall framework within •large-scale change in a single
which each element is to be enacted over comprehensive sweep.

Large
time
•new institutions supplant previous
•new institutions supplant previous institutions
institutions
•typical where actors have consolidated
•typical where at least some parties can authority but face competitive pressure – e.g.

SCALE
reasonably expect to be in a position of Westminster system with competitive parties
influence over time – e.g. systems with
established traditions of coalition government

Gradual PACE Simultaneous

•multiple simultaneous adjustments to existing
•gradual piecemeal adjustments to existing institutional arrangements
institutional arrangements
•new institutions may co-exist with established; may
•new institutions may co-exist with established or may not introduce new organizing principles
•default category: where neither condition for •typical where one party is well-enough positioned to
major change is met – i.e. “ordinary” times in all build a minimum winning coalition within a relatively
systems and typical in veto-ridden systems brief window of time - e.g. supermajorities in veto-
Small

ridden systems

INCREMENTAL MOSAIC

Large

BLUEPRINT BIG-BANG

UK
1989-91

SCALE
PACE Simultaneous
Gradual

UK
1991-2010

INCREMENTAL MOSAIC

Small

Large

BLUEPRINT BIG-BANG

UK
1989-91

Netherlands
1987-2006

SCALE
PACE Simultaneous
Gradual

UK
1991-2010

INCREMENTAL MOSAIC

Small

Large

BLUEPRINT BIG-BANG

UK
1989-91

Netherlands
1987-2006

SCALE
US
1993-94
(failed)

PACE Simultaneous
Gradual

UK
1991-2010
US
2009-10
US
1994-2008

INCREMENTAL MOSAIC

Small

Large

BLUEPRINT BIG-BANG

UK
1989-91

Netherlands
1987-2006

SCALE
US
1993-94
(failed)

PACE Simultaneous
Gradual

UK
1991-2010
US
2009-10
US
1994-2004

Canada
1987-2010

INCREMENTAL MOSAIC

Small

Political Conditions: Four Domains

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)



Big Bang UK (1990) Unitary parliamentary government structure

Majority government in third successive mandate
US (1993-94)

2006)

Mosaic US (2009-10)





US (1993-94) Bicameral congressional government structure

Presidency and both Houses of Congress controlled by same
party by narrow margins
2006)

Mosaic US (2009-10)






Blueprint Netherlands (1987- Unitary parliamentary government structure
2006)
Coalition government
Mosaic US (2009-10)






2006)
Mosaic US (2009-10) Bicameral congressional government structure

party by clear margins – supermajority in Senate





2006)
Mosaic US (2009-10) Bicameral congressional government structure

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

Strategic Vulnerabilities

BLUEPRINT BIG-BANG

Large
•Each step in enactment process needs to •Conditions for successful use are especially
be as balanced as overall framework rare

SCALE
Gradual PACE Simultaneous

•Stickiness in response to changing •Complexity makes gaining popular support and
circumstances overcoming implementation vetoes particularly
difficult
Small

INCREMENTAL MOSAIC

Implementation: the Role of Strategic Allies
National Post-Reform Hybrid Entrepreneurial Allies in
Example (2010) Implementation
UK Internal market
(Big-bang)
Purchaser-provider split
Hierarchical control through monitoring, evaluation

Netherlands Managed competition
(Blueprint)
Universal mandatory insurance
Comprehensive regulation of all insurers

US Dual
(Mosaic)
Employer-based private insurance as norm
Managed competition in individual and small-group
market
Canada Single-payer (SP) + mixed market (MM)
(Incremental)
SP for physician & hospital services – some changes
in organization & remuneration
MM for all other services: some changes in eligibility
esp. re drugs

UK Internal market
(Big-bang) GP fundholders; executives
Purchaser-provider split of hospital trusts; purchasing
Hierarchical control through monitoring, evaluation experts

(Blueprint)

US Dual
(Mosaic)
market
(Incremental)
esp. re drugs

UK Internal market

(Blueprint) Executives in sickness funds
Universal mandatory insurance and provider organizations

US Dual
(Mosaic)
market
(Incremental)
esp. re drugs

UK Internal market


US Dual Management of exchanges
(Mosaic) ???
Universal mandatory insurance Participants in pilot projects
Employer-based private insurance as norm ????
Managed competition in individual and small-group Meso-level and arm’s-length
market organizations ????
(Incremental)
esp. re drugs

UK Internal market


US Dual Management of exchanges
(Mosaic) ???
Universal mandatory insurance Participants in pilot projects
Employer-based private insurance as norm ????
Managed competition in individual and small-group Meso-level organizations
market ????
(Incremental) •Strategic alliances
Increased cross-provincial variation constrained by bilateral
SP for physician & hospital services – some changes monopoly, consolidated under
in organization & remuneration retrenchment
esp. re drugs

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

• NICE clinical guidelines • Increased remuneration

• Reorganization of graduate • Sir Ara Darzi report: clinician-led,
education clinician endorsed (but BMA
skeptical)
• Increased lay control of GMC

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

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