Paying for private healthcare

The NHS white paper repeats often that patients will be given the choice of "any willing provider", but I have not been able to find anywhere that says how these providers will be paid.

One of the aspects that is internationally acknowledged about the NHS is that it is extremely cost-effective. If you want a cheap, high quality system then the NHS has always been regarded as the best system. So how will private providers provide treatments as cheaply as the NHS?

The Coalition Agreement says:

"We will give every patient the power to choose any healthcare provider that meets NHS standards, within NHS prices."

The important point outlined here is that these private providers will only be paid at NHS rates. These rates are going to get tighter. The new national tariff (the rate for each procedure) will be the rate of the most efficient NHS provider rather than the average that is paid at the moment. Private healthcare cannot meet this rate. I have to point out that this phrase is from the Coalition Agreement, and the white paper does not repeat this phrase. Since the white paper has already broken one statement in the Coalition Agreement - by abolishing PCTs rather than making them elected - we must regard the statements in the agreement as being optional, but for the time being let us assume that the government will stick to this pledge.

I have blogged elsewhere that I think that the effect of paying at the rate of the most efficient NHS provider will be to close NHS hospitals since the government has said that they will not bail out hospitals. These new national tariffs will be extremely low rates.

The downside of the cost effectiveness of the NHS has always been long waiting lists: non urgent cases have always been subject to waiting times. The white paper says nothing about waiting lists and since Andrew Lansley says that the 18 week Referral to Treatment (RTT) target will no longer be used for performance rating hospitals, he is giving an indication that he expects waiting lists to rise. For your reference the median RTT waiting times in May 2010 was 8.4 weeks for admitted patients and 4.3 weeks for non-admitted patients. We will never see waiting lists as low as this again. While it is expensive to cut waiting lists, allowing waiting times to rise does not necessarily cut the cost of the treatment in the long term. So it is not likely that private healthcare can reduce their costs to NHS rates simply by increasing waiting lists.

The NHS white paper gives no clues about how private healthcare can provide treatment at the lowest NHS rates.

Then I discovered this transcript of the Health Select Committee on the 20 July 2010. The interesting point is this:

"Dorrell says govt is looking at future co-payment model, have to look at funds and also at achievable levels of private funding compatible with principles of equity."

There are three ways that co-pay could be used:

1. You could be asked to pay a token contribution for appointments, say £10 to see your GP. The idea is that there is a financial incentive not to miss an appointment. There will be the usual safeguards for those on low incomes and children.
2. You will be asked to make a contribution towards treatment. This is just an extension of the concept of prescription charges to treatment. There will be the usual safeguards for those on low incomes and children.
3.  Private providers will be allowed to charge co-pay.

Think about it. You will be allowed to use any willing provider at the NHS rate but if the provider charges more than the NHS rate then you will top-up the fee with co-pay. Over time, NHS providers will become "social enterprises", that is, private companies, and will be allowed to charge their own co-pay. This will mean that the national tariff will not be the rate of the cheapest NHS provider, but merely the contribution to your treatment that the tax-payer is willing to pay.

This will be the end of the principle of "free at the point of delivery".