Healthcare and Tourism

Jeremy Hunt's latest campaign is a xenophobic attack on foreigners, but even though the message is simple he has - typically - delivered it incompetently. Hunt claimed in the Press that "health tourism" cost the NHS £200m, but when challenged in the Commons, Hunt admitted that he did not know:

Steve McCabe (Birmingham, Selly Oak) (Lab): If we are to make this work, do not we need a clearer idea about the real cost? Is it the £200 million that the Secretary of State has been quoted as using, the £10 million suggested by the Prime Minister, or the £33 million that the Under-Secretary of State for Health, the hon. Member for Broxtowe (Anna Soubry), has cited in a parliamentary written answer?Mr Hunt: The truth is that we do not know the cost, which is why we are carrying out an independent audit this summer. The £12 million figure is the amount written off by the NHS each year because of unpaid overseas invoices, but many people think that the costs are much greater. We want an answer for the hon. Gentleman and everyone in the House, so we are carrying out that independent audit and we will publish the results later in the autumn.

So the figures given by various government ministers are either £10m, £33m or £200m. Even if the top figure is used, that represents only 0.2% of the NHS annual budget. However, £200m is still a significant amount of money - the income of the soon-to-be dissolved Mid Staffs Foundation Trust (pdf) was £156m in 2011/12.

In the Commons, Hunt said

"On 3 July, my Department and the Home Office launched co-ordinated consultations on a range of proposals on a new charging system for visitors and migrants in which everyone makes a fair contribution to health care. Those include making temporary migrants from outside the European economic area contribute to the cost of their health care, and introducing easier and more practical ways for the NHS to identify and charge those not entitled to free health care."

Hunt intends that illegal migrants and tourists should pay NHS charges, he calls it a "fair contribution" to the NHS. However, this conveniently ignores the fact that the NHS is paid for from general taxation.

It is a common misconception that National Insurance pays for the NHS. It cannot. In 2011 National Insurance contributions (NIC) for the entire UK was £101.6bn, yet the NHS for England alone was allocated £101.5bn, so NIC would not cover the cost of NHS across the entire UK, nor the other reputed responsibilities of the tax: pensions and unemployment benefits. National Insurance is simply a payroll tax that contributes to general taxation (about 22% of all tax revenues).

VAT and excise duty (fuel duty, duty on luxuries, alcohol, tobacco, etc) also contribute to general taxation, and anyone, of any nationality, purchasing goods and services in the UK will be paying these taxes and contributing to the NHS. In 2011, VAT revenue was £98bn (21% of total tax collected), fuel duty was £26.8bn (5.7%), and sin taxes (duty on tobacco and alcohol) were £19.6bn (4%). Foreign visitors, and illegal migrants, will be contributing these taxes and paying for our NHS, a healthcare system that few of them use.

In 2011 29 million foreign tourists visited the UK and according to the Tourism Alliance (pdf) income from tourism is equivalent to 8.9% of GDP, so tourists make a significant contribution to the country's wealth. Furthermore, the Tourism Alliance estimate that tourists paid £18bn of VAT (or about 18% of total VAT).

Compare these two figures: tourists contribute £18bn of VAT but "healthcare tourism" costs the country £200m (or £33m or £10m, take your pick). It looks like we get far more from tourists than "healthcare tourists" get from us. 

The Nasty Party never went away

"There's a lot we need to do in this party of ours. Our base is too narrow and so, occasionally, are our sympathies. You know what some people call us - the Nasty Party." - Theresa May 2002

This statement was part of Theresa May's plea to the Tory Conference in 2002 to restrain their inclinations and make the party electable. Unfortunately for her message, Michael Howard appointed Lynton Crosby (yes, him) as their election coordinator and in the 2005 election campaign the party ran with the slogans: "are you thinking what we're thinking?" and "it's not racist to impose limits on immigration". The Nasty Party had not changed. After their disastrous 2005 election the Tories chose David Cameron as their leader and he spent the five years until the 2010 election trying to convince the electorate that his party was now "modern".

The current campaigns, like the racist van or the #immigrationoffenders tweets of Border Agency officers arresting people they did not like the look of (both from Theresa May's department), shows that when in government the Tories are still the Nasty Party. The Liberal Democrats have shown that they have failed in their sole raison d'etre as part of the Coalition (that is, to withstrain the Tories).

Now we find that the Tories have a two pronged xenophobic attack on people who do not look English: NHS charges. The first is from May's department in the form of the new Immigration Bill. The Ministerial Statement (pdf) starts with this:

The forthcoming Immigration Bill will make it more difficult for illegal migrants to live in the UK unlawfully and ensure that legal migrants make a fair contribution to our key public services

Any law that says its purpose is to make it difficult for someone "to live in the UK" is worrying. Note that the purpose is not to deter people from coming to this country, it is to make difficult the lives of those here illegally. Even those migrants here legally will be treated differently to the rest of the population because they will be required to make a "fair contribution" which means NHS charges. When it comes to healthcare this means charging such people if they use the NHS, and denying care if they are not willing to pay. Two people, same needs, one gets the treatment the other doesn't: this is not the NHS.

The other attack is from Jeremy Hunt, who is coordinating the dog-whistle campaign. Hunt, however, is typically incompetent in delivering the message. Is it charges for non-British to visit GPs? Is it charges for EU citizens resident in the UK? Is it a one-off charge for non-EU visitors applying for a work or study visa? It appears to be all of these things, or perhaps none of them. Hunt does not know, but what we do know is: the Nasty Party has returned and is getting nastier.

Parsa Solution to A&E Bailouts

After Ali Parsa successfully duped the public over his claim to save £1.6m on procuring paper (which could only happen if Hinchingbrooke got all of its paper for free for 10 years) Jeremy Hunt is now trying the same thing with his announcement of an "extra" half a billion for struggling A&E departments.

The problem is that this is not an extra half a billion, indeed, it is unclear whether this money exists at all. HSJ reporter, David Williams attempted to get the Department of Health to explain where this money would come from (see 2.09 on the HSJ Live Blog):

A DH spokeswoman told me the cash is 'coming from DH underspends and efficiencies'. The department doesn't have a breakdown of exactly what these efficiencies are, or how much any given saving scheme is expected to generate, although she did say: 'We have quite a big drive to reduce administration spending'.

Note that this is from the department underspends, not NHS underspends:

The spokeswoman confirmed that the money would come from within the DH's departmental expenditure limit - so isn't new money going into the department from the Treasury. She also said it wasn't going to come out of the NHS commissioning budget, so taking the department at its word, this wouldn't be a reallocation of funds already being spent on NHS care to the most under pressure areas. The savings necessary to pay for the bailout haven't been made yet - they are being made in 2013-14. And if all that sounds a bit vague, remember they're planning to find the same amount again in 2014-15.

The spokeswoman confirmed to David Williams that this was not new money, the Treasury that has already pocketed billions from NHS underspends in the last few years is not going to give any of that money back. She also confirmed that the money would not come out of the commissioning budget - that is, the money that goes to CCGs and NHS England to commissioning services. So this is not a raid on CCG budgets like Osborne did a couple of months ago with his surprise announcement of funding for integration. Instead, this £250m a year for two years will come from the Department of Health's own allocation - the money it is given to run the department and few other public bodies:

So where's this money going to be made available from? According to DH's business plan for this year, its total budget is £110bn, but £94.2bn of that goes straight out again to NHS England, to be spent on commissioning NHS services. Most of the rest goes to other organisations such as Public Health England, Health Education England, and local councils. Just £3.9bn is identified as 'DH programme and admin expenditure'. Of this, 'admin funding' accounts for just £230.8m - meaning that even if the DH stopped administrating altogether, it couldn't save enough money to pay for the A&E bailout. 'Programme funding' comes to £3.5bn, of which £381m is capital. Programme funding pays for the chief medical officer's work, the external relations directorate, and the following acronyms: PHD; ERD; SCLGP; GOA; and SFNHS.

The list of initialisations at the end of this are a bit obscure, however, the DH Corporate Plan gives a clue to the work of these divisions and projects in the department. ERD is involved in improving care, delivering the Secretary of State's Care Priority and delivering the government's response on the Mid Staffs inquiry. GOA is associated with NHS estates and facilities. PHD is concerned with screening, long term conditions and the public health strategies to reduce smoking, alcohol consumption and obesity. SCLGP is associated with development of the "No Health Without Mental Health" strategy; improving the quality of life of people with dementia and improve health outcomes for children and young people. SFNHS is associated with cutting costs through strategic financial planning.

It is unclear whether it is possible for the DH to save 8% on the chief medical officer's work and the projects mentioned in the last paragraph, which leads to the sentence about admin funding:

Of this, 'admin funding' accounts for just £230.8m - meaning that even if the DH stopped administrating altogether, it couldn't save enough money to pay for the A&E bailout.

This is the Parsa solution. Whereas Parsa pledged to save £1.6m by getting all Hinchingbrooke's paper products for free, Jeremy Hunt will save £250m by not paying anyone in the Department of Health!

Out to the community

We hear constantly that moving care out of hospitals and "into the community" will save money, be best for patients and is generally is such a brilliant idea that it is clearly an indication of how rubbish the NHS is that it hasn't already been done. Politicians behave as if it is such a "nobrainer" that anyone questioning their brilliant idea must be doing so out of "vested interests".

The problem is that the people promoting this policy never back up their policy with evidence. We have no proof that moving care into the community is any cheaper than if the care is delivered in a hospital. If the treatment involves an expensive resource (a costly piece of equipment, or an expert clinician) it makes sense that the patients go to the centralised resource, rather than replicating this resource.

Indeed, there are some suggestions that hospitals are cheaper. In 2008 McKinsey (PDF) produced a report outlining the excessive costs in US healthcare.

[outpatient care] accounts for more than 40 percent of overall health care spending and 68 percent of spending above expected. This category expanded at 7.5 percent per annum from 2003 to 2006 - a faster pace of growth than observed in any other cost category - to add more than $166 billion in costs during this period. ... Same-day hospital care is the fastest growing of all outpatient cost categories at 9.3 percent per year.

The significant size and growth in spending on same-day hospital care is attributable to a number of factors. First, the United States delivers a higher percentage of care on an outpatient basis than on an inpatient basis, compared with most other countries. For example, nearly 90 percent of hernia surgeries in the United States are performed on an outpatient basis, verses about 40 percent in the United Kingdom.

What this says is that a large proportion of US health care is delivered "in the community" and it is carried out in a costly way. McKinsey acknowledge that the care would be delivered cheaper if it were delivered in a hospital. Indeed, they say that the care delivered in the community costs 68% more than if it had been delivered in a hospital, costing the US an extra $166bn over four years. In a rare admission, McKinsey gives the NHS as an example for the US to follow.

A few years ago I had some basal cell carcinomas on my back - a minor type of skin cancer which can cause ulcers that do not heal. The dermatologist told me that a common cause was sunburn before the age of ten; which brought back fond memories of hot 70s summers, holidays on the beach and my back peeling from sunburn. The treatment is photo-dynamic therapy (PDT) where a magic cream is put on the skin cancer. This cream makes the cancer cells more sensitive to infra-red light and is only half of the treatment; the other half is the patient spending time under an infra-red light while the cancer cells are (I guess the only appropriate word here is), cooked. The cream that attached to cancer cells also fluoresces under UV lamp, so it gives a good indication of the amount of cancerous skin cells there are. PDT is a very common treatment, NHS data show that in 2011-12 there were 387,000 separate episodes, at an average cost of £84 per episode.

I was referred to a hospital clinic to have PDT. On the day, there were 4 other people waiting for the treatment and luckily I was first in the queue. The nurse explained the procedure: the cream would be applied and then to allow the cancer cells to be sensitised I would return the next day and then have the infra-red treatment. Then the nurse took the tube of cream out of a cupboard. It was tiny. The nurse explained that the tube of cream cost £250 and would treat 5 people. She also explained that once opened, the cream had to be used immediately. This was the reason for the 4 other people outside: they would each have a fifth of the tube.

This is a treatment that could be carried out "in the community". The equipment was fairly basic: an infra-red lamp for the treatment, a UV lamp to "see" the cancer cells. The treatment was also straightforward and didn't need a consultant: it was delivered by a nurse. All of this meant that very little investment was needed, so it could be delivered in a GP surgery, or a converted storage room at Boots. The major problem is the cost of the tiny tube of cream. The hospital where I was treated covers a population of 300,000 so it was possible to get together 5 people who would be able to put aside the same two consecutive mornings. The NHS targets for treatment for cancer (treatment must be within 31 days of consultant deciding treatment is needed, and within 62 days of first being referred by a GP) complicate this further, because you have to have a large enough population to be able to find 5 people who have been referred for this treatment within a few days of each other.

If there are 387,000 treatments of PDT in England every year, then this means for a population of 300,000 there would be about 230 treatments, say, one PDT clinic treating 5 people once a week. A GP practice, on average, covers a population of around 7,000. Using the same figures, such a practice would expect 5 people a year to need PDT. Clearly one clinic a year would not meet the cancer targets, and if each patient were treated individually then that would mean each treatment would cost at least the cost of one tube of cream (£250). This is why PDT is not given "in the community": the cost would be too high.

Treatment "in the community" where the treatment is closer to the patient's home may well be better for the patient in some cases. But in today's NHS - like it or not - cost of care is the most important priority. Until care "in the community" delivers treatment at a lower cost than in a hospital, it will never happen. So remember this the next time a politician whines on about moving care out of hospitals.

Parsa's Paper Deceit

As part of the government’s reform of the NHS, the Secretary of State, Jeremy Hunt, announced that the NHS will go "paperless" by 2018 and save up to £4.4 billion. However, one NHS trust appears to have taken this decision months before. Hinchingbrooke NHS Trust claimed that it could save £1.6m through better paper procurement.

For a few days in August last year, Ali Parsa, then the chief executive of Circle Holdings, was everywhere in the media promoting his company and their recently acquired contract to run Hinchingbrooke NHS Trust. However, the situation was not as rosy as Parsa was making it out to be. Circle Holdings had recently contacted its shareholders asking for an additional £46m of capital or else it said "the Group would not be able to trade as a going concern which would be likely to result in the insolvency of all or part of the Group". Further, the finance report of the first quarter of Hinchingbrooke under the management of Circle showed that the trust was still in deficit and Circle's attempts to change the situation was behind plan by £652,000. (Since then, the financial situation at Hinchingbrooke has got worse. The finance report of last quarter of the financial year the trust said that it lost £3.5m over the year and Circle had to cover this debt with its own money. The financial situation of the trust has got so bad that in July 2013 the trust said it would need a working capital loan from the government to carry out necessary refurbishment.)

With Circle bankrupt and Hinchingbrooke showing signs of losing money, Circle desperately needed some good PR in August 2012 and Parsa launched a charm offensive that the media gladly lapped up. On the BBC Today programme on the first of August Parsa claimed that Circle "have looked at procurement and we can save £1.6m by just buying our paper better" (although the BBC's typically sloppy NHS journalism reports this quote on its website as if Hinchingbrooke had actually saved £1.6m, Parsa’s comment was aspiration, not actual). Considering the trust has a total annual income of £107m, a figure of almost two million pounds is a large amount to spend on paper, let alone to "save" on procurement. I have used a Freedom of Information request to obtain the actual figures of how much the trust spends on paper products. In 2011/12 the trust spent £148,000 on paper products and £115,000 of this was on office supplies like appointment letters.

Category of paper product	2008/09	2009/10	2010/11	2011/12	2012/13
Clinical Forms via managed print service	52,195.00	53,838.00	74,617.93	77,535.82	59,005.77
Office paper products	28,986.66	36,565.52	39,975.84	37,270.18	20,757.35
Clinical paper products	22,061.89	30,692.62	31,558.00	30,228.70	8,576.14
Patient paper products	2,520.00	3,049.22	3,544.98	3,234.01	1,915.05
Total	£105,763.55	£124,145.36	£149,696.75	£148,268.71	£90,254.31

Clearly the figures do not add up. For Hinchingbrooke to save £1.6m the trust would have to procure all of its paper products for free for ten years. That includes clinical paper in treatment rooms and toilet paper, as well as office paper. Even if Hinchingbrooke went paperless in the sense that Hunt is suggesting, and stopped using paper for appointments and GP letters, it would take the trust 14 years to "save" £1.6m, which is four years longer than Circle's contract to run the trust.

Parsa is no longer the chief executive of Circle Holdings, having resigned so that he can spend more time with his fantasy figures. Hunt, however, is still the Secretary of State, and has equally fantastic ideas about the savings possible by going paperless, and a £4.4 billion is even less believable than Parsa’s £1.6m.