The cost of patient choice

Post edited 19.7.2011

“It’s about knowing how to play the game”

Local commissioning executive

Because of the purchaser-provider split which was introduced to the NHS in the 90s by Kenneth Clark, we (GPs) are purchasers and hospitals are providers and so we pay every time our patients attend hospital. This is what makes the ‘any willing/qualified provider (AWP/AQP) proposed in the government’s health bill possible.

GP commissioning is sold to you the public as a concept whereby GPs design and commission the services you need from hospitals. It is why the government keep saying they are giving GPs control. The pro-market reformers enthuse that you, the patients, will get better quality care and we, the GPs, will save money because the hospitals will have to compete with each other to provide the cheapest, best quality service.

If you think we are going to be endlessly decommissioning and recommissioning services according to cost and quality, you are mistaken. Commissioning is a time-consuming, expensive, complicated business. We have been offered £20 per patient to do the administrative business that our PCT was doing for £60. We do not have the time or the money. You need us in our consulting rooms.

However, you will be pleased to hear that we are commissioning some excellent services from our local hospital including 29 care pathways. But the government say…

“You can choose any hospital in England funded by the NHS (this includes NHS hospitals and some independent hospitals)” NHS Choices website

The problem then is that patients are free to choose services that we have not commissioned. In fact, they are being encouraged to choose services we have not commissioned. Not only are they being encouraged, but the Competition and Cooperation Panel has been set up to make sure we do not collaborate collude with our local hospital where we have commissioned services.

There is a large shiny PFI hospital not so far away that our patients sometimes go, where we have not commissioned services. It is spending large but undisclosed amounts of taxpayers money on marketing. Down the road is our local hospital which is spending a lot less on marketing. The shiny hospital is costing us a lot more money and there is very little we can do about it.

“[I] cannot see gpccs [GP commissioning consortia] shaping markets, they will be buying off the shelf. Patient choice + awp [any willing provider] = no commissioning” Anna Dixon, Director of policy, King’s Fund (via twitter)

In 2008-9 our PCT asked us to look at the bills we were sent by hospitals under PBR (payment by results). A treatment episode is asigned an HRG code which has a tarif/price allocated to it. For example if a patient is seen in hospital with a major upper respiratory tract infection it costs £541(!) If they have ‘complications’ (unspecified) there is a £50 surcharge. 2008-9 must have been a bad year because almost every patient seen in hospital had ‘complications’.

Our practice looked after about 10 ooo patients in 2008-9. In total we were charged £801k by hospitals under PBR. We checked every single bill for that year. To check them you have to read every patient record and hospital discharge summary (if you get one). It takes a long time, up to 20 minutes per patient. We found reasons to challenge £700k worth of bills because of reasons such as not having received a discharge summary, being charged twice for the same episode, being charged for patients that were not registered with us, innapropriate HRG coding, inadequate information, patient not referred by us, etc. Because of the amount of time it took the PCT to look at our figures they only covered the first 2 of 10 pages of challenges we returned to them. For that we were reimbursed £323K that had been erroneously billed to us. The money covered a large part of our £363 PBR overspend, and had they looked at all 10 pages it would have more than covered it. The money reimbursed has to be paid back by the hospitals to the PCT and it is then available for referrals for the next year. It is not a direct loss (or profit) to our practice, but is pooled within the PCT and shared over more than 30 practices. Since we were overcharged at least £323k and there are approx 250k patients in our PCT that amounts to an estimated £8 075 000 overcharged by providers.

Very few practices checked at this level of detail. We were doing it ‘as a favour’ to the PCT to help them examine the scale of the problem. Our administrator who checked the data explained what was involved one month. On April 22nd the hospitals were supposed to have their data uploaded. By April 30th the PCT were supposed to reconcile it and by May 7th we were supposed to prepare our challenges. The data never arrived on time. It would come piece-meal and if you did not check your inbox regularly you would finish your challenges only to find a hundred or more new HRG codes to check. Very late nights were spent investigating.

What they discovered was shocking. One patient with a minor head injury needed glue to his scalp but the A&E department had run out so the sent him to another hospital for glueing and we were charged several hundred pounds for each A&E attendence. A psychiatric inpatient attended A&E every day during his admission, but never got past the reception but we were charged £50 every time. A woman who was pregnant was admitted with pneumonia and then delivered her baby, but stayed in becasue of her pneumonia and we were charged a maternity rate (approx double a medical rate), total cost approx £30k. Patients who missed a follow up appointment were discharged and asked to see us for a new referral which costs double a follow up appointment. The major errors were for episodes for which we were charged twice, one of which cost £150k.

This was a trial. It is no longer happening because there are not enough people, time or money to keep checking at this level of detail. At present data is aggregated to give average costs or selected areas are examined, for example frequently attending patients, or antenatal care.

In the first 6 months of this year we have discovered:

A patient referred to our commissioned antenatal service is seen 8 times, but a patient seen at the shiny PFI hospital is seen 14 times. A patient seen for their first antenatal appointment at the shiny hospital had 5 separate health professional interactions for blood and urine tests,blood pressure etc. each of which was coded and we were billed.

The average number of outpatient follow-ups at the shiny PFI hospital is 4.12 compared to 2.8 at the hospital down the road. Even if the tariff was the same, a hospital can increase its profits by calling patients back more often.

The tariff for the same ENT outpatient appointment at the shiny hospital is higher, £200 vs £170 for the hospital down the road. This is supposed to cover the costs of all the polishing needed in a central london location. We pay the difference.

The re-referrals. A patient referred to a commissioned gastrointestinal service with bleeding from the bowel would be properly investigated and managed by the commissioned service. If one of our patients chooses to go to the shiny hospital they need one referral to the gastroenterologists for the stomach another referral to the surgeons for the colon.

Another way the shiny hospital makes money is by telling my patients that I need to refer them to a different specialist at their hospital. Then I have to say, “look I know Professor Spratt said you need to see his delightful colleague, Mr Nibbs, but I really don’t think it’s necessary” And the patient replies, “that’s just because you’re trying to save money” …

Shiny hospitals hang on to their patients with an iron grip. Most notoriously the London Integrated Hospital. Unsurprisingly for a homeopathic hospital, the patients do not get better, so they are never discharged and we pay for their supportive counselling, which is, for many vulnerable patients, very helpful, but it is very expensive form of counselling.

If we object to the bills the shiny hospital are sending us we can ‘challenge and reaon’. Sometimes an agreement is reached, but sometimes arbitration is threatened. This is far too expensive and so the threat effectively results in us coughing up. Providers like the shiny hospital have the cards in one hand, our balls in another and enormous PFI debts hanging over them. No wonder they’re squeezing.

This overtreatment by healthcare providers is a consequence of ‘perverse incentives’. As George Bernard Shaw said 100years ago,

That any sane nation, having observed that you could provide for the supply of bread by giving bakers a pecuniary interest in baking for you, should go on to give a surgeon a pecuniary interest in cutting off your leg is enough to make one despair of political humanity.

It is one of he reasons why market-based, competitive healthcare is so expensive, as US surgeon Atul Gawande showed by comparing different systems of health care delivery in the US.

Our patients are not just normal folk who are mesmerised by i-gadgets and racked up to the eyeballs on credit spent on toys they do not need or play with any more. No, they are far more likely to be undereducated and over anxious, ideal fodder for unscrupulous marketing departments of shiny hospitals. These dupesters are spending money that ought to be spent explaining how your chemotherapy works, what physiotherapy can achieve, or the risks vs benefits of knee surgery hypnotising our patients with their beautiful reflective buildings and augmented nurses. This stuff gets to people when they are making a choice. In fact it matters more than very difficult to analyse outcome data, which is much less easy to polish on photoshop. It matters less than locality or convenience for most of our patients for now, but it is very early days in the world of heavily marketed shiny i-hospitals.

It might be going too far to say the cost of patient choice is gaming. There is as much erroneous coding as deliberate over treatment. The only way to prevent this is to have armies of detective administrators meticulously examining every bill for every patient. One reason this can never work is because healthcare is not a commodity and to treat it like one is to commit a ‘category error’. Coding episodes of care is to be forever hammering square pegs into round holes. You cannot have healthcare markets without market bureaucracy.  This is why administration costs in the US are at least twice what they are in the UK and why, according to Ruth Thorlby of the Nuffield Trust, the single biggest reason health care commissioners in California went bust. Because of the internal market administration in the NHS has risen by so much in recent years and transaction and administration costs account for about £10bn a year. The latest changes to NHS bureaucracy completely dwarf what we had before. This is the very opposite of what the government promised, but even that pales before what we will need if the health bill goes ahead.

If the over charges for 250k patients for our PCT are approximately £8 million per year and we assume an English NHS population of 52 million, this is approximately £1.6bn in excess charges every year. If there are insufficient resources to examine all this, as there would seem to be, you can see why the private sector providers are so keen on NHS reform.

The NHS reforms will divert money away from where it is needed and will render the NHS unsustainable in a very short time.

I believe that this might very well be the government’s intention.

Further reading:

Time to abolish payment by results? Prof Alan Maynard (Health Economist) Health Policy Insight

Clinical activity in the English and Scottish NHS before and after devolution. NHSCA “In summary, increases in English inpatient and day case hospitalisation rates were 26 times those in Scotland between 1998-99 and 2009-10. Increases in new outpatient referrals were 13 times greater in England than in Scotland over this period and increases in A&E attendance rates were almost four times greater.”

Doctors paid for cardiac investigations order more: NY Times

Up-Coding a hazard as pressure for payment by results grows. e-health insider (excellent comment

15 responses to “The cost of patient choice

  1. too_simplistic

    I’m curious to know why some doctors seem to assume that all of their patients are thick and are only able to make choices based on shiny marketing campaigns?

    Believe it or not, many patients are able to tell when they go to x,y,z hospital (commissioned by their GP) that they are getting a poor service and that x,y,z consultant (commissioned by their GP) is incompetent. In which case why shouldn’t patients have the choice to go to another hospital and find a better consultant than the one commissioned by their GP (who is presumably also trying to maximize profits by commissioning the cheaper service)?

    Spend some time on patient forums and you will soon see that when patients use word of mouth to recommend consultants, they typically don’t talk about the ‘shiny hospital’ or the ‘well-tended’ gardens or the attractive looking staff. What they tend to concentrate on is outcomes and treatment effectiveness ie. did the hospital/consultant do right by them? Are they seeing improvements in their health etc.? They may also talk about waiting times, organizational issues (eg. does the hospital keep losing their blood samples), communication skills of staff etc. but the ‘shininess’ of a hospital doesn’t even come into it. When patients are ill and need help, fancy hospital decor is the last thing on their minds.

    To say that patients primarily make healthcare decisions based on the influence of fancy marketing is akin to saying that GPs are primarily influenced in their commissioning decisions by the quality of friendship they have with their specialist buddies at the local golf club. Of course the reality is far more complicated.

    • Thanks for taking the time to comment. I’m sorry if I gave the impression that all patients were the same. They are, like all people infinitely varied, though people who are vulnerable physically and mentally use health services disproportionately.
      I’d be interested in what proportion of patients use on line fora to research hospitals. Certainly I’m aware of more patients bringing in tabloid clippings and adverts than stories from patient fora, though I do have a handful who I know are very active. Many of my paitents cannot read or write, many do not use the internet and a large proportion do not speak english. Marketing is very powerful, the phamaceutical industry spends more on marketing than on research. Fortunately many people like yourself are thoughful and sceptical enough to work things out for yourself. Nevertheless there is plenty of evidence that doctors are undly influenced by marketing and corrupted by financial ties to commercial providers and pharmaceutical companies. I’ve written about that in several of my blog-posts.
      My point was about the behaviour of hospitals (providers) and the risks to the financial sustainablity of the NHS. It was not meant in any way to denigrate patients.

  2. It used to be said – and no doubt still is true – that patients judge hospitals by their car parks. Many are notoriously far too small so that patients must turn up long in advance to be sure of finding a space in time for their appointment. If the introduction of competition goads hospitals into doing something to solve this problem, patients will consider it a success, even if funds are diverted away from making them better to pay for the extra asphalt.

    • Will they make the connection between the number of follow-up appointments and the new car-park, or will they make the connection between better parking and no elderly or paedicatric care, which cannot be run profitably? That’s the problem we face, the costs of competitive healthcare are too easily hidden.

  3. I recently went to a big new shiny hospital for High risk consultant led ante-natal care. I had my previous ante-natal care a big shiny hospital’s shabby Victorian predecessor. The consultants were the same in both places but big shiny was infinitely better not because it was shiny but because it had been designed for modern ante-natal care with the assistance of the women who use it. No longer were we climbing up and down endless stairs and round mysterious corners visiting different bits for bloods, scans and appts but everything was on one floor. The pre and post natal wards were much improved too. Shiny in this case was worth it.

    • Thanks for taking the time to comment. I have worked in crumbling hospitals that should have (and eventually were) closed because they were innapropriate for the standards of care patients rightly expect. My concern (and the point of the article) is that in reality choice is far more nuanced that either a matter or shininess, quality or cost, and that the government are so enthusiastic about the potential benefits, they appear to be blind to the risks. What is very interesting is that shortly after writing this piece, we looked at our antenatal referrals and 98/100 chose to go to our local hospital and only 2 went to the shiny hospital. My wife had care from the local hospital midwives and our baby was born at home 8 weeks ago. I also worry that with pressure to make childbirth as ‘efficient’ as possible, a home birth, supervised by 2 midwives will no longer be possible.

  4. I too have lost many hours of my life to the checking and challenging of HRG data and costs; however I would observe in response to your article that in the current system, few hospitals make a profit; in fact many make significant and recurring losses.

    Although we can see that there are theoretical incentives for hospitals to over-charge the commissioner through artificially manipulating the data, the sophistication to do so (both in terms of staff and IT) seems to be lacking. However until the data is challenged in the detail you describe, neither is there any incentive to improve data quality. Whilst HRG data is simply viewed as a mechanism for enabling the payments to be made, and the cash to flow through the system, such errors can be expected to continue.

    Regardless of the means by which finances are transferred within the *internal* market, hospital providers are spending all of the money that they receive from commissioners on paying their staff, procuring equipment and consumables and administering quality and performance management processes. We can argue that such expenditure is inefficient, but it is happening, so your extrapolated potential cash saving is highly unlikely to be realised. The coding systems will simply evolve to enable continued cash transfers.

    The real risk, of course, arises when the provider is no longer part of the NHS’s internal market and does have both the incentive and ability to make a profit (or “surplus”) from its commissioners – that will be private sector, third sector and local government providers then!

    • Your last point is paramount, thank you.
      I do not mean to demonise hospitals. What I want to emphasise is that we cannot afford to treat healthcare as a commodity and patients as consumers becasue markets require market administration to make them work safely. This accounts for up to 35% of healthcare costs in the US. In a cash limited system like the NHS this will leave pitifully little for patient care.

  5. I think part of the problem is the numbers – patient numbers. Despite the growth of the population and the increase in housing surrounding hospitals (surgeries etc.) there has not been an identical growth in the number of services available. There is a cascade effect caused by the amount of time available to deal with each person, which creates many of the problems with the current system.
    I agree that the answer is not to be found in privatisation and that there can be no real patient choice in the NHS: these options are just papering over the cracks. If healthcare were taken more seriously and seen as one of the most important services by the wider public, perhaps real reforms would take place. As it is, there is not enough pressure exerted by the public as healthcare is only though about when you are unwell, which generally means that you are too unwell to speak-up.
    This country is facing a huge problem that is not going to go away with short-term fixes. Governments have spent all the cash that should have been used to grow and improve the NHS, so now we are facing a crisis on a large scale. I recently wrote a bit about a similar situation with health & social care at
    It seems to me that in the last decade all medical services were forced to take on large numbers of manegerial, admin and non-medical staff, all of whom take money from patient care. It really comes to something when you have to decide between giving a person the treatment that they need or hitting some sort of target. Is anyone more deserving than anyone else?
    If I were to guess at a way to begin sorting things out, I would say to simplify the system and make people more aware of just how important healthcare actually is.

  6. Your assertion that “Gaming” has become part of NHS culture is absolutely correct. Unfortunately the “Managers” and many of us who are or have been working in healthcare seem to be in some sort of state of denial. MPs expenses are in the same category. What the polititicians try to do is to find a larger sticking plaster to apply to the festering wound instead of examining the root cause for the failure of the wound to heal. But that is because they to a man have little or no clinical experience, and when pushed rely on a backroom full of “doctors” with the gift of the gab rather than the gift of healing.
    These “medical notaries” should be tried by a people’s court for treason!
    Chance would be a fine thing.
    There is another aspect of this equation and that is the FT Hospital.
    Whilst many doctors see Foundation Trust Hospitals as part of the same evil motivation to privatise the NHS, these FT Hospitals do at least have one potential advantage over other hospitals. That is their requirement to have a Board of Governors. The Governors’ committment to the local population who elected them is paramount and their service is free. Their weakness lies in the fact that very few are medically qualified and by the time the rest have got to grips with what is going on, it is time to hold new elections. I am sure that this was the cynical intention of the politicians who formulated this bit of legislation.
    We should now use the Governor principle to the advantage of patients AND the professional standing of doctors, by getting involved.
    With this system working properly the NHS could relieve itself of its massive bureaucratic burden and spend those savings on real patient care.
    I could continue ad nauseam but readers should examine the masses of data out in the media and our website:
    Grist to the mill. Persevere and we will succeed.

    • I am not a doctor, but I am a governor, so I have the expertise to comment.

      You need to know what governors’ responsibilities are now, and what they will be in the future. Within the constraints of the word count I have at the False Economy blog, I have outlined the important ones here:

      In effect the statutory duties are to appoint the auditors and appoint the non-executive directors (and chair). In addition they have to approve the trust strategy and approve the appointment of the chief executive. Oh, and governors have to attend the quarterly council of governors meetings (at least the AGM).

      Can you now tell me the “strengths” here?

      In the future these responsibilities will hardly change, but (as I point out on that blog) there will no longer be Monitor (with their trained accountants poring over trust accounts) to find the hide to find information that will indicate that the trust is heading for failure. The untrained, unpaid governors will have to do that.

      “That is their requirement to have a Board of Governors. The Governors’ committment to the local population who elected them is paramount and their service is free.”

      Yes. let me ask you a question. A hospital trust like, say, Imperial has a turnover of £800m. Would you say that someone who is elected (and hence no requirement to have any qualification whatsoever other than the ability to be elected) and who is unpaid, and consequently only spends four hours every three months, is a good way to safeguard the strategy or finances of a hospital? It scares me that my trust has a turnover of £160m, catchment population of 270k and I have to make decisions about the trust strategy? How can I, or my fellow amateurs, be trusted to make any important decisions? This is why the Financial Times quoted a civil servant at the Department of Health saying:

      “governors vary ‘from those with extensive business backgrounds to people with tea cosies on their heads’.”

      I am a tea cosy wearer, as are most of my fellow governors. (Why does anyone stand to be a governor? Successful business people are surely far too interested in spending their time making their millions.)

      “Their weakness lies in the fact that very few are medically qualified”

      Not a weakness at all. Are you seriously suggesting that a governor should tell the medical director of a trust that they are doing things wrong? Governors do not have access to the hospital. Governors cannot comment on implementation details, they are more concerned with keeping the trust to account (admittedly, toothlessly) and it does not take a clinician to read mortality or MRSA figures.

      “and by the time the rest have got to grips with what is going on, it is time to hold new elections. I am sure that this was the cynical intention of the politicians who formulated this bit of legislation.”

      … or indeed, by the time those with medical training have come to realise that their main role is to make sure that the FT breaks even every year and forget about medicine and concentrate upon finance. (Seriously, governors DO NOT have a say on clinical matters.)

      “We should now use the Governor principle to the advantage of patients AND the professional standing of doctors, by getting involved.”

      I agree, but only during the election. Make the election an issue. Make sure that local press see that there are people standing who are devoted to the Bevanite NHS principles and get the businessmen (some of them medically trained, of course) who believe in marketising the service to justify their position. This will get the NHS debated and get the press to publish and examine the trust’s strategy.

      Once the Bevanite governors are elected, they will be able to do sod all to change the policies of the trust, but at least the publicity of the election will make the trust realise the strength of local opinions and that may well influence them.

  7. Richard Blogger, I admire your balls – not literally! I wholeheartedly agree with your comments on the current status of FT Hospital Governors. They are little more than eunuchs in the Sultan’s harem. On the other hand there is no point in thinking that lobbing Molotov Cocktails over the perimeter fence will achieve anything. You need to get in there and fight the beast from the inside. Currently Governors have weapons no sharper than wobbly dicks. We have to change that. It is up to us.
    Our Governors are organising themselves outside the nominal 4 hours per quarter. I am an eternal optimist and can see a way forward. But we do need more medically qualified doctors as Governors because those of us who have worked in the hospital service at the sharp end for almost 50 years know which stuff Management is serving up to us is bullshit and what is not, and when in doubt where to look for the truth.
    There are such things as dynamite suppositories. Beware the manager who thinks his a*** is protected.

  8. Really enjoyed the debate on the blog, very interesting.

    As a hospital Dr I can understand the concern from GPs who feel they lose control of their budget(s) as soon as a patient is admitted. But I think that it is easy to claim over investigation after the event, with benefit of hindsight when you can say ‘of course that investigation would be negative! Why did they do that? I don’t want to pay for it’.

    The fact is by the very definition hospital inpatients are sicker, older and often more complicated than the average GP attendee, with lots of differential diagnoses that need to be excluded in order to provide prompt treatment and quick discharge. For that ‘£560’ you get a hospital bed, a TEAM of Drs/nurses/physios and clinical support and all your blood tests/ imaging thrown in. If you consider that then I think It looks like good value?? I suppose compared to a prescription for amoxicillin and a repeat GP appointment it’s expensive.

    I have never seen and hope I will never see over investigation for the sake of hospital income….. Infact I see the opposite with our trust embracing integrated care and reducing follow ups and working to prevent admissions.

    Remember clinical coders are non clinical and probably also don’t have the time to trawl and decipher our scrawl so I would imagine chargeable items will also be missed as well as errors made in mischarging.

    Re your point on shiny new hospitals at my last trust we had a meeting to discuss our customer feedback. It was noted one of our ‘competitors’ jumped up the satisfaction scores by a significant margin by simply moving into ‘shiny’ premises. But that is understandable when they look cleaner and brighter and are custom built with a modern NHS in mind. The truth is poor clinical care can occur in a ‘shiny new’ or ‘dull old’ hospital and your patients will soon learn which one to avoid!

  9. I had all but forgotten this blog sequence when I found myself revisiting it out of curiousity. The last blogger, from the hospital side of healthcare, assumes that there is a real choice of hospital out in the sticks. For the practical reason of distance that “choice” is illusory.
    When I enthusiastically blogged in August 2011 I was still optimistic that Governors could steer the Board of Directors away from making crass decisions which lacked clinical relevance.
    I was totally deluded. What is more – the hospital’s own elected Governors lacked the willpower to cry foul (for fear of losing their jobs or perks).
    The end result of this debacle was that I was dismissed “by my fellow Governors”.
    That process, embedded in the Governors’ Code of Governance, was orchestrated by the Chairman (actually a woman) who employed tactics which puts the email hacking scandal of our national papers into the shade. She effectively persuaded the Governors that I had breached the Code of Governance by cutting and pasting phrases (from personal emails) which inferred that I was not supporting the Trust’s objectives.
    At first she denied any knowledge of how the “information” had come to her attention, but later admitted that it had come from a fellow Governor, whom she then protected with a guarantee of anonymity, and then encouraged him to keep feeding back info until she felt she had enough to kill me off.
    The disciplinary process which followed was a disgrace to our national concept of fair play.
    I reported this farce to Monitor.
    After several months I received Monitor’s response.
    “The Trust had acted within the constraints of the current legislation”.

    Clearly the Foundation Trust Hospital has carte blanche. What we really need is a change in the legislation. i.e. MPs putting their heads above the parapet.
    I contacted three of our local MPs, but none of them have even bothered to reply.
    Democracy ???

    Read more on the NHSCA website.

  10. “The shiny hospital is costing us a lot more money and there is very little we can do about it.”
    Could somebody not ‘whistle blow’ the actual figures into the public forum? This sneaking privatisation is partly made possible due to no-one actually knowing the cost of this so-called ‘choice’. Or knowing and hiding it.

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