UK’s healthcare system is undergoing a massive change through continuous reform of its structure, processes and how it relates to other sectors of the economy. Ever since the victory of first conservative government in 2010 (through a liberal democratic coalition), there has been a very ambitious program to reorganize the structure of NHS England while improving the quality of social care and unlocking funding in that process. A lot has been written on this matter and we decided to compile it in a simple way in this blog post.
The Health and Social Care Act 2012, in which the National Health Service (NHS) system is reorganized, is the most important healthcare reform currently being implemented by the government. The Health and Social Care Act 2012 is a reform that creates an independent NHS Board, promotes patient choice and reduces NHS administration costs. The act has a big impact on how the health and social care services are funded, commissioned and administered. This was done by changing the structure of National Health Service, accountabilities, funding arrangements and working relationships. By making these changes, government wants to improve the quality of social care.
The 4 key changes of the Health and Social Care Act 2012 that were implemented on 1 April 2013 are as follows:
1. Giving real budgets (£60 billion) to Clinical Commissioning Groups (CCGs) such as General Practitioner (GP) and other professionals to buy care on behalf of their local communities
Implication: The Clinical Commissioning Groups which include GPs, dentists, pharmacists and other secondary care services who provide services such as those provided by hospitals are given a bigger budget to provide more specific services needed in the local area. The local authorities are responsible for public health and social care. Once the local authorities analyze that for example smoking, obesity or another health issue arises in their local area, the CCGs now have the budget to buy specific vaccinations or medicines to tackle these health issues. This improves the responsiveness of the health care givers on the local problems and needs.
2. Shifting responsibilities such as budgeting from the Department of Health to a new, politically independent NHS Commissioning Board (now renamed NHS England)
Implication: The responsibilities were shifted from the Secretary of State for Health to a new independent NHS England. These responsibilities include budgeting, overseeing the delivery of the NHS services, improving the quality of treatment and care, and making decisions about services based on the needs of the communities through local health care professionals. NHS England shares the legal duty with the Secretary of State for Health to promote a comprehensive health service, and is accountable to the Secretary of State and the public for how well it performs. NHS England now represents the NHS and encourages the public to take part in the NHS. Shifting the responsibilities to NHS England gave the professionals more space and power to listen and connect with the patients. This makes sure that the NHS is able to respond quickly and operate efficiently.
3. Creation of health economic regulator, Monitor, with a mandate to guard against anti-competitive practices
Implication: The Monitor is implemented as the sector regulator. The Monitors’ main task is to remove the barriers and enable integrated care provisions. By making the health sector a competitive market, GPs and other health practices will be more focused on the quality they offer to patients. Patients are not obligated to stay with a local care giver but can choose from all the care givers accepted by the NHS. This rule results in a more competitive, better priced and improved quality of the health service market.
4. Moving all NHS trusts to foundation trust (FT) status in April 2014 as part of an existing FT or another organizational form.
Implication: In April 2014, the status of NHS trusts was changed to Foundation trust (FT) The NHS trusts strengthened their board governance, financial status and ensured a framework to secure delivery of quality services in order to become FT. To maintain the FT status, the trust needs to financially stable and deliver good quality services.
The new act changed the way patients experience the health and social care in the UK. Patients are able to register with a General Practitioner (GP) of their choice, and are not obligated to register with a local GP anymore. Additionally, the GPs are also able to provide services that are based on local needs and priorities such as vaccinations and necessary treatments against e.g. obesity. This is the result of the budget transfer to Clinical Commissioning Groups (CCG).
However, the reforms have bad consequences for the poor because the privatization of the healthcare made treatments more expensive. While making the health and social care market competitive, some NHS services opened up for private providers such as UnitedHealth Group. The government believes private companies will improve standards by competition and choice. But for now, marketization of the NHS, which means that it is now driven by competition and profit, has only led to more costs in the short-term.
Some private companies cut in staff benefits and use risky financial techniques to protect their profits. Private sector companies increase the prices of the services they provide and goods they sell to NHS to make a bigger profit. The public spending on Healthcare has been actually increasing in the last few years, which is opposite of what was expected by implementing The Health and Social Care Act 2012. The public spending on health care was £116.9 billion in 2010 and £129.5 in 2014, one year after the Act was implemented.
The reason for the high spending in health care is because of the lack of staff members in hospitals. Hospitals’ trusts (NHS hospitals and non-NHS hospitals) paid a very high amount to hire a nurse to work a shift of 12h (£2,200 for one shift). They also pay a very high salary to agency and bank nurses. They cost more than the hospitals’ permanent staff members and they also tend to offer lower quality to the patients because they are just a temporary workforce. The cost of the agency staff was £3.3 billion in 2014-2015. The UK hospitals desperately need new permanent staff to cut down in agency staffing costs. In 2014, 30,000 people in the UK, who wanted to train as nurses, were turned down by Health Education England, because not enough positions were funded. NHS England, body responsible for the budget, did not fund enough spaces in Health Education England to train people.
In the next 5 years, UK wants to focus more on reforming the Social Care. On February 2013, the government announced new measures it might take in April 2017. It wants to have an exact plan by 2017 to minimize the costs of social care, increase productivity of existing social care and explore options for redirecting elements of the health and welfare budget into social care. This reform will be made to ensure that elderly and people with disabilities will be able to receive the care they need without facing very high expenses. The government decided to take this measure as a result of concerns about the implications of the aging population and its affordability of a long-term health care.
Outlook and Implications
The healthcare reforms, which cost the government at least £1.1 billion, led to the closure of 170 organizations within NHS and creation of more than 240 new bodies after the healthcare reforms were implemented. It is too early to say whether the reforms will end up making NHS more cost-efficient in the long-term, but one thing is for sure that the delivery of services and the way NHS operates with other stakeholders such as the pharmaceutical industry will definitely go through a change.
United Kingdom is one of the most lucrative and early launch markets for the pharmaceutical industry and any changes in the NHS’s structure and processes will have repercussions for other markets as well. Now with the tide of many emerging market companies trying to commercialize assets into western markets such as UK, it is important to take into account the ongoing changes due to reforms.