Britain’s National Health Service (NHS) has been scarred by systemic failures in healthcare provision. To meet current aspirations it needs to transform its culture from that of an early 20th-century manufacturer into that of a 21st-century technology company.
The NHS at the crossroads
Britain’s National Health Service recently celebrated its 70th birthday. It is a monolithic nationwide healthcare provider like no other. NHS England is managed ultimately by the Department of Health and scrutinised by the Westminster Parliament: in the other nations of the UK, the devolved governments supervise the management of the NHS, though there is broad congruence in policy and management. It employs more people and spends more money than any other government department or agency. It is quite simply a gigantic enterprise.
|Nation||Number of Employees||Budget, 2017-18/ per inhabitant[i]|
|NHS (England)||1,400,000||£122.0 billion – £2,200|
|NHS Scotland||160,000||£13.2 billion – £2,500|
|NHS Wales||72,000||£7.3 billion – £2,300|
|Health & Social Care Northern Ireland (HSC)||56,604[ii]||£5 billion (2016-17) – £2,700|
Most British people are quietly proud that they live in a country where, if they get sick, they can get access to comprehensive medical care and treatment without opening their wallets or getting out their credit cards. The NHS is free at the point of demand. It is almost entirely (98.8 percent) funded through taxation. (Supposedly through National Insurance Contributions (NICs) – though, in practice, these all end up in the same pot as income tax and other taxes.) In contrast, most of Britain’s peers have systems of compulsory medical insurance whereby citizens pay into an insurance scheme of one kind or another and are then reimbursed for the cost of their treatment.
It seems that the British are so attached to this model that it has become politically impossible to reform it. Any proposals to privatise aspects of the NHS’s services or to bring in external healthcare providers are greeted with widespread public outrage. Therefore, even pro-market Tory governments have chosen to leave the NHS funding model well alone. The only question for central and the devolved governments is: how much of the national cake to allocate to the NHS. With an ageing population and rising healthcare expectations, what they allocate will never be enough.
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In terms of outcomes – the success of the system measured by survival rates and other metrics – the NHS performs reasonably as compared with other developed countries overall, but it lags well behind some of our European neighbours and the USA in cancer care and certain other pathologies. Furthermore, the NHS has been dogged by repeated instances of systemic failure (see below). Most fundamentally, it is clear that demand for the NHS services is growing faster than the economy as whole, leading to an inevitable funding crisis sooner or later.
Recent research by four think tanks suggested that Britain was the worst placed out of 18 western countries at preventing avoidable deaths[iii]. The UK also fared worse than average in the treatment of the 12 most common causes of death, including deaths within 30 days of having a heart attack and within five years of being diagnosed with the five most common forms of cancer (breast, rectal, colon, pancreatic and lung cancer).
Even infant mortality is higher in the UK than amongst our peers. Seven in 1,000 new-borns died within one week in the UK in 2016 as compared with an average of 5.5 across the comparator countries. The report also showed that the NHS has fewer doctors, nurses, hospital beds, CT and MRI scanners than other countries.
Now that Artificial Intelligence (AI) in healthcare is very much on the agenda, decisions taken now about the structure and operation of the NHS will have long-term consequences. Last week Professor Ian Cumming, Chief Executive of Health Education England, said that the NHS will need about 50 percent more staff within a decade – that’s another 600,000 people – if it does not embrace AI[iv]. AI systems can already be used to analyse X-rays, MRI and CAT scans. Very soon, these systems will attain better levels of accuracy in diagnosis than radiologists.
Staffing is a critical issue for the HNS right now. Figures released on Tuesday (11 September) show that vacancies have risen further – the NHS is 3,000 nurses short this week. And the number of hospital doctors opting for early retirement has doubled in the past decade, many due to ill health (stress?).
In April, the Prime Minister pledged to spend an additional £16.4 billion on the NHS over the next five years. This will probably be partly funded by increases in taxation; although the £2 billion surplus reported by the Treasury in July (thanks to larger than expected tax receipts) augurs well for those who think it can be financed without tax increases. The UK budget deficit for the first four months of this fiscal year was £12.8 billion – that’s 40 percent less than at the same point last year.
The case against the NHS
Doctors in nearly all countries swear the Hippocratic Oath on graduation, promising to do no intentional harm to their patients. Yet in June we learnt that 456 patients at Gosport War Memorial Hospital (Portsmouth, Hampshire) had their lives cut short as a result of being given powerful painkillers with no medical justification[v]. An independent inquiry chaired by the Right Reverend James Jones (a former Bishop of Liverpool) determined that Dr Jane Barton – a clinical assistant at the hospital between 1988 and 2000 – was responsible for “an institutionalised regime of prescribing and administering dangerous doses of medication showing disregard for human life”. The findings were described by the then Health Secretary, Jeremy Hunt, as truly shocking.
What is even more shocking is that there have been countless examples of medics who turned into murderers – and they almost always get away with it for much longer than one might think possible. Some are never caught, such as Dr John Bodkin Adams (1899-1983), who is suspected of killing off about 160 of his patients between 1946 and 1956. 132 of them left him money in their wills! More recently, a nurse, Beverley Allitt, murdered three babies in Lincolnshire in 1963. But the most notorious medical serial killer was Howard Shipman, who was found guilty of killing 15 patients in his charge in 2000. An inquiry subsequently estimated he had killed over 250 people over three decades, mostly elderly women. Another nurse, Barbara Salisbury, used Shipman’s preferred method – the pain killer diamorphine, sometimes known as medical heroine – to kill two elderly patients at Leighton Hospital (Crewe) in 2004.
At Gosport it transpired that there had been nurses who tried to alert senior management – who did not want to know. Relatives of patients who complained were dismissed as troublemakers. It took 27 years from the first concerns being raised to the truth being published. It was a similar story at the Mid Staffordshire NHS Foundation Trust five years ago. At Stafford Hospital, between 400 and 1,200 patients died as a result of poor care over the 50 months between January 2005 and March 2009. This scandal came to light thanks to the work of Sir Brian Jarman of Imperial College, London. He spotted that mortality rates at Stafford hospital were a statistical outlier – but initially his findings were dismissed as a result of a deeply-embedded desire not to know.
In late August it was revealed that dozens of babies may have been killed or seriously injured by a “toxic” NHS maternity unit which was allegedly obsessed with natural births. The Shrewsbury and Telford NHS Trust was subjected to a review led by Donna Ockenden, a senior midwife. The extent of malpractice there between 1998 and 2017 is even more scandalous than that of Morecombe Bay Hospital, which experienced the avoidable deaths of 11 babies and one mother.
Dame Sally Davies, Chief Medical Officer for England, told MPs on 04 September that the NHS is hiding the scale of drug-resistant super-bugs because hospitals refuse to admit when patients die from them. Many relatives will never know that their loved-one died from MRSA. (I suspect my mother did just after her release from hospital – but she would probably have died anyway in her 89thyear.)
Earlier this week an inquest reported that a vulnerable 85-year-old patient died in Lewes Hospital, East Sussex because she drank cleaning fluid that was left by her bed in a bedside water jug. No explanation has been provided by the hospital. The Brighton coroner warned that this “could happen again”. If this had happened on an airline or in a hotel there would have been a case for corporate manslaughter. The NHS enjoyed immunity from prosecution until 1991, since when, technically, it can be sued. But, in practice it has proven extremely difficult to charge doctors with manslaughter[vi].
The real problem
The issue is that the NHS is a highly centralised state-sector bureaucracy. It has proven extremely difficult to reform it. Arguably, the most promising initiative was launched under Labour Prime Minister Tony Blair by Alan Milburn (Health Secretary October 1999 to June 2003). Some of my readers might remember the heady days of early Blair before the man dragged this nation into a hideous war it did not want and did not need to fight.
The idea was to invite private clinics to offer services inside the NHS. The Blairites argued that the poor should have the same choices as the rich – who have access to private healthcare. This was hugely unpopular on the Labour benches and on the part of the clinical establishment. The Milburn reforms were slowly eroded away over time.
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No Tory government has had the courage to repeat this experiment. Jeremy Hunt (Health Secretary September 2012 to July 2018 – the longest-serving Health Secretary since Aneurin Bevan, who lasted from July 1945 to January 1951) was a dedicated Health Secretary who became the patient’s champion – but he was a very safe pair of hands who eschewed any radical initiatives.
The new generation of private hospital management companies – amongst which Circle Health Ltd. once looked so promising – has failed to materialise. Circle once attracted the attention of legendary fund manager Crispin Odey – but its management of Hinchingbrooke Hospital ended in recrimination. (Though Circle now runs a number of shiny new private hospitals like the one in Bath.) Reportedly, even Simon Stevens, the CEO of the NHS, is no longer keen on the reforms he helped design when he was an adviser to Mr Blair.
Anecdotally moreover, there is abundant evidence that the NHS is wasteful. One family with a severely disabled daughter recently contacted the Sunday Telegraph to share how difficult it was to return a wheelchair that their daughter no longer used. While everybody has a horror story about how the NHS wastes money, we should not exaggerate this. According to the Nuffield Trust report (cited above) the NHS seems to be relatively efficient, with low administrative costs and high use (84 percent) of cheaper generic medicines.
Paul Johnson of the Institute of Fiscal Studies (IFS) summed up the NHS nicely:
The truth about the NHS is that by international standards it is a perfectly ordinary healthcare system, providing average levels of care for middling levels of cost. Access is good and people are protected from high costs, but its performance in treating people with cancer is poor, and international comparisons suggest that too many people in the UK die when good medical care would have saved their lives.
It is as if the British people have collectively decided that a mediocre healthcare system is a price worth paying for the convenience of its being free at the point of demand. Everyone knows that the NHS is dysfunctional – but few people want to change it because it is free.
It’s all in the genes – or is it?
Professor Cumming and others have emphasised the need for the NHS of the future to prevent disease as well as to cure. The cost of sequencing a human genome has fallen dramatically in recent years. In future it is quite realistic that all citizens would have their genome scanned, ideally at an early age, and that the results could be analysed so as to alert citizens of any diseases to which they may be pre-disposed. There will of course be issues around data security.
Obviously, our health is somewhat determined by the luck of the genes but most health issues are related to lifestyle factors – which are controllable.
Currently, about ten percent of the total NHS budget is spent on treating diabetes – 90 percent of which is Type 2 diabetes. Type 2 diabetes is largely (though not always) preventable as it is correlated to obesity – something in which the British excel! Public Health England (PHE) reckons that up to 20,000 people are dying from heart problems every year as a result of excess alcohol, “couch potato” lifestyles and poor diets. Professor Jamie Waterall, national lead for cardiovascular disease at PHE says: “By making important lifestyle changes you can reduce your risk of cardiovascular disease before it is too late”.
Deputy Leader of the Labour Party, Tom Watson MP, has been doing the rounds of the TV studios this week, reporting how he beat Type 2 diabetes by losing six stones (38 kilos) in weight.
As an economist it seems to me that the NHS model invites the possibility of moral hazard. If I know that I will be rushed to hospital as soon as I have a heart attack and will get the best treatment gratis, then what is to persuade me to stop eating deep-fried chip butties, smoking a pack of fags every day and drinking high strength cider by the litre while I watch daytime TV on the couch? But of course, that thought is unacceptable. If we went down that path we would end up charging fat people more than thin people for their care. This would, of course, be discriminatory.
In the past it has been suggested that smokers should pay higher levels of NICs to reflect their greater likelihood of using the NHS. They will of course tell you, if you ask them, that they have already paid up many times over for their additional healthcare in excise duty. (A packet of 20 cigarettes in the UK retails for about £7.20 today – of which over £6 is tax.) Ditto, wine drinkers (guilty, M’Lud – though we are a robust lot) will tell you that they have more than paid for our health care over many decades thanks to the Treasury’s penchant for taxing sin.
The NHS accused of “scaremongering” and bad science
In late August Public Health England (PHE) launched a campaign urging people over 30 to take an online Heart Age Test, warning that four out of five people have a heart age higher than their actual age. Almost immediately leading experts described this caper as “ridiculous” and “evidence-free nonsense”.
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This silly test calculates an individual’s heart age using inputs: age, height, weight, health conditions and the family history of cardiovascular disease. It then intuits cholesterol and blood pressure using national averages. It does not enquire about exercise levels. Dr Ben Goldacre, author of Bad Science, tweeted: “This is ridiculous”. Later, he wrote that this test could result in tens of thousands of perfectly healthy people in their 30s booking totally unnecessary GP consultations at considerable expense to the NHS.
Another highly questionable metric used across the UK is the Body Mass Index (BMI). This is calculated as the ratio of your height and weight. If you have a BMI of over 30 you are officially obese. But the metric does not take into account your level of body-fat relative to lean muscle tissue, let alone your fitness. So athletes and bodybuilders who may have comparatively low levels of body-fat and lots of muscle are all “obese” and need to diet. Quite frankly, this kind of thing is an insult to our intelligence.
Then there are the recommended daily or weekly levels of consumption of a particular comestible (usually a pleasurable one). The recommendations keep on changing (which begs the question whether the people who set them have a clue what they are doing) but I believe that currently men are warned against drinking more than 21 “units” of alcohol a week. (They could have expressed this straightforwardly in terms of millilitres of alcohol – but “experts” always have to invent new quantifiers in order to make their artifice sound more solemn.)
This 21-units-a-week level is prescribed regardless of a man’s size or physiology. Obviously, some people respond differently to alcohol than others. There are people who cannot metabolise alcohol at all – and they should definitely avoid it altogether. Others seem to keep rather well on more than the recommended dose. This kind of thing is at best crude and, at worst, bad science.
So why is Nanny so addicted to this stuff? Should she not direct more of her energy towards reducing mortality rates in hospitals?
There is, however, some cause for hope – and that is the intelligent application of technology.
The new Health Secretary, Matt Hancock MP, appointed by Mrs May in July when Mr Hunt was translated to the Foreign Office, has made a very auspicious start. In a series of interviews he has emphasised the potential to harness technology to improve the NHS. He has stated I want the NHS to become the most advanced healthcare system in the world.
By the end of this year, people in the UK will not have to visit a doctor to get a repeat prescription for medication. GPs are already able to send prescriptions electronically to a pharmacy nominated by the patient. Medication can be prescribed for up to a year using one electronic signature. So much less time is wasted for both patients and doctors.
By scrapping notoriously illegible doctors’ prescriptions, the NHS hopes to save up to £300 million a year by 2021. In some parts of England it is also now possible to book GP appointments online. Not before time.
In an article for the Daily Telegraph on 06 September Mr Hancock offered some detail on how he wants to use technology to raise the NHS’s game. He wants to make fixing the NHS’s stuttering IT systems his priority. He is appalled that hospital doctors cannot access patients’ GP records – as I have been for some years. In some cases different computers in the same hospital cannot even talk to one another. He cites the case of 13-year old Tamara Mills who had a fatal asthma attack in 2013. She was seen by medical professionals 47 times in different departments across the NHS – none of whom communicate with one another.
A world in which a hospital can’t pull up a patient’s GP records to see the reason for stopping and starting medications is downright dangerous…And don’t get me started on the fact that the NHS remains one of the biggest buyers of fax machines on the planet…It’s time to bring the health and care system into the 21stcentury.
The Health Secretary announced a £200 million fund for NHS trusts to help with a systems transformation. Yesterday (13 September) he called on the NHS to allow every patient to be able to contact their GP on Skype via their PC or smartphone.
A change in culture is required
Part of the problem of the NHS – I’m on dangerous ground here, because many interested parties will take offense – is the prevailing culture within it. This culture obtains from senior management through all levels of clinicians, nursing staff and paramedics to ancillary staff. Collectively, this culture has proven extremely resistant to change of almost any kind. Doctors always know best – and anyone who questions a doctor is, of course, a charlatan.
The NHS is run as if it were an early 20th-century manufacturing company (you can have any colour so long as it’s black) when it should be thinking and acting like a 21st-century technology company. What that means is that the raw material of medicine is no longer human flesh; rather it is the data around how that human flesh performs. In the future, diagnostics will be facilitated by wearable devices; and all treatments will be personalised according to the individual’s genome.
Opportunities in focus
In the October edition of the Master Investor magazine I’ll be taking a more detailed look at The Medical Technology Revolution. We are poised on the threshold of a golden age of medical advances and it is vital that the state healthcare apparatus – the NHS in Britain’s case – is match-fit to translate those advances into better health outcomes for the people at large. I’ll drill down to reveal some of the key investible players who are making this revolution possible.
The question is firstly whether the politicians will have the boldness to seize the opportunities – and secondly whether the medical establishment will have the flexibility and open-mindedness to embrace them.
I’m reasonably optimistic about the first; though sadly sceptical about the second. But eventually, with the immense help of technology, we shall all have access to robot doctors, either as chatbots or as chips implanted in our necks – whether the medical profession likes it or not.
[iii]How good is the NHS? Published by the Nuffield Trust, The Health Foundation, the Institute of Fiscal Studies and the King’s Fund. Download at:
[iv]Use AI in NHS, or find 600,000 more staff, by Laura Donnelly, Sunday Telegraph, 09 September 2018, page 1.