Universality Under Siege

Head Table Guests

Marcia McClung, President, Applause Communications and a Director, The Empire Club of Canada; Marilou McPhedran, Lawyer, Health Consultant; Rev. Prue Chambers, Rector, St. Nicholas, Birchcliff; Peter White, Chairman, Unimedia Inc.; Catherine Charlton, Principal, Charlton Management, Member of the Board, the Ontario College of Physiotherapists and a Past President, The Empire Club of Canada; Bill McLeod, President and CEO, Women's College Hospital; Jennifer Kruk, OAC student, Rosedale Heights Secondary School; Catherine Callaghan, Health Editor, Chatelaine; William Wilkerson, President and CEO, Liberty Health; and Nancy Gelber, President, Lionel Gelber Foundation.

Introduction by Julie Hannaford

Yesterday, The Empire Club was addressed by Sir Richard Sykes, the Deputy Chairman of Glaxo Wellcome plc. Sir Richard spoke about the advances in pharmaceutical science. In doing so, he addressed the way in which the dramatic developments and changes in the pharmaceutical industry have created in part the sea change in how we look at health care. Essentially, because medical science has delivered breakthroughs in almost every field of health, causing those diseases and syndromes which we once viewed as unsolvable to be viewed as solvable, the frontiers of possibility have been pushed back. As a result, we both expect and demand that our health-care system deliver fast if not immediate solutions to our health-related problems.

But, as Sir Richard made clear, the delivery of highly advanced genetic engineering and the delivery of modified and highly effective pharmaceutical treatments requires money and investment by way of research and development. Our medical knowledge and pharmaceutical horizons have been advanced and expanded because of the capital markets underpinning them.

The second pillar of the health-care structure also involves money, but in a different way. Universality requires the delivery of health-care services and products to all Canadians as a matter of right, and governments increasingly have less money. Hence the pressure to maximise efficiency in the delivery of health care, and to deliver pharmaceutical products at a reduced price. As Sir Richard so eloquently put the proposition, however, the pressure for universality and economic deliveries of health care threatens to undermine the research and development that created our demand for excellence in health care. If we focus on the economies of delivering health care and pharmaceutical treatments at the most efficient cost to taxpayers and if we focus on that exclusively, we are at risk of becoming a third-world nation.

Dr. Wedderburn's address to The Empire Club of Canada today, therefore, is particularly timely" for she has agreed to address The Empire Club on the issue of Universality Under Siege. Dr. Wedderburn is the 1996 Visiting Scholar in a programme funded by The Lionel Gelber Foundation.

The programme is administered by the Canadian Institute of International Affairs in association with the Centre for International Relations and the University of Toronto. The base of the programme is developed by an advisory group, consisting of Haroun Saddiqui of the Toronto Star; Professor Janice Stein of the Political Science Department of the University of Toronto; Dr. Sylvia Ostry, Chair of the Centre for International Relations; Bill Boyle, Director of Harbourfront; Alan Sullivan of the CIIA; and Nancy Gelber, President of The Lionel Gelber Foundation.

The goal of the Lionel Gelber Fellow/Visiting Scholar Programme is to involve all citizens in a public policy issue which is international in character. This year, the issue is "the devolution of medicare." The topic could not be more topical or timely.

The Empire Club of Canada is fortunate to be addressed on the issue of universality by Dr. Wedderburn. If I summarised Dr. Wedderburn's curriculum vitae for you, I would violate the rule of brevity associated with introductions of speakers. While a brief tour of Dr. Wedderburn's background and career in the field hardly does our speaker justice, you will be interested to know some of the highlights of learning and distinction that Dr. Wedderburn brings to her address on this important topic today.

Dorothy Wedderburn graduated in economics from Cambridge University in 1946 and for the next 15 years was employed as a researcher in the Department of Applied Economics, Cambridge, specialising in aspects of social policy particularly the social and economic problems of aging. In 1965 she moved to join the teaching staff of the Imperial College of Science and Technology, London University, the foremost specialist institution in Britain for teaching and research in science and engineering. Her specific brief was to broaden undergraduates' engineering education, and she eventually established the Department of Social and Economic Studies of which she became the first head in 1978, having been appointed to a Chair in Industrial Sociology in 1977. Her research interests had expanded to include problems of organisation and industrial relations. Over this period she was much involved in public appointments, as a member of the Royal Commission on the Distribution of Income and Wealth (1974-78); of the Council of the Government Advisory Conciliation and Arbitration Service (1976-82).

In 1981, she accepted the appointment as Principal of Bedford College, University of London, thus becoming the first woman head of a university in the U.K.

When she retired in 1990 her involvement with health-care matters became her major commitment. She was appointed to a Department of Health Committee on Medical Work Force Planning; she became a non-executive member of a Health Authority and a consultant to a Regional Health Authority on organisational and management problems of the National Health Service. All of these are continuing activities.

For 15 years she has been the President of the Fawcett Society, the oldest organisation in the U.K. campaigning for equality between the sexes. She is presently Senior Research Fellow in The Management School, Imperial College of Science, Technology and Medicine and has been awarded honorary doctorates from the Universities of Warwick, Loughborough, Brunel, City and Cambridge.

Please join me today in welcoming our guest, Dr. Dorothy Wedderburn, to The Empire Club of Canada.

Dorothy Wedderburn

Well it's a great honour for me to be here and I take this opportunity of expressing my gratitude to the Gelber Foundation for financing and arranging my visit and also to the Centre for International Relations which has been responsible for planning the programme and seeing me through it--literally seeing me through it. I'm very grateful to all of you for this.

Although I was vaguely aware that Canadians were very proud of their national health service before I came here, I think the notion of pride has been brought home to me much more sharply, although in this very conflictual context where you are having to discuss whether there should not be major changes in it. I think you have a great deal of admiration, very close to that which Britain feels about its NHS, for the health-care system that you introduced here. I think the British view was well expressed by Barbara Castle, minister of health in the late 70s, when she said: "Intrinsically, the NHS is a church. It is the nearest thing to the embodiment of the Good Samaritan that we have in any aspect of our public policy."

For 40 years the principles on which the original National Health Service was founded in 1945 under the leadership of an Aneurin Bevan, then minister of health, rested on four major tenets: that it should be a comprehensive service; that it should be universally available; that there should be equality of access; and that it should be free at the point of use. And in Aneurin Bevan's terms, it should also be the very best that could be provided. Those tenets have remained remarkably resilient over time. Even when other aspects of the welfare state, which the National Health Service was an intrinsic part of in 1945, were modified or even whittled away, those principles I've just enunciated of the NHS survived. It appeared even to survive the introduction of Mrs. Thatcher as prime minister and the changes which she introduced in 1990 because the introduction to those changes still contained the declaration that the principles that have guided the NHS for the last 40 years will continue to guide it into the 21st century. The NHS is and will continue to be open to all, regardless of income and financed mainly out of taxation.

I would like to explore with you today whether that is a true statement and to address three issues. First I would like to assess the strengths and weaknesses of the NHS until 1990, the year of the big changes introduced by a conservative government and by Mrs. Thatcher; second, to look at the philosophy which underlies the changes which were introduced and what the expectations were from those changes of 1990; and third, to assess the consequences of these changes and where we might be going and from that maybe we can decide if there are any lessons for Canada.

The strengths of the NHS seemed to me to be five in principle. It was genuinely comprehensive. The rejection of a notion of insurance, whether it was public or private insurance, meant that there was no exclusion of any member of the population on the basis of non-payment of contribution. Indeed within a few months of vesting day, after the passage of the act, 97 per cent of the population had registered with the general practitioner of their choice.

Secondly, it was and has remained administratively extremely simple right up until 1990. You had your health service number which admitted you to the services of the general practitioner of your choice, but that health service number then travelled with you if you had to move to other parts of the health-care system. It was relatively simple to change GPs subject to certain safeguards against frivolous use but the administration and the costs of administration remained extremely low.

Thirdly, the basic organisation up to 1990 with a division between the primary care system--the general practitioner--and the secondary care system provided by hospitals with specialists was a very conducive one to being economical with the use of medical care because the general practitioners acted as gatekeepers to the expensive secondary care services. The main opposition to Bevan's proposals in 1945 had come from GPs who feared becoming state-employees and they succeeded in negotiation to retain their status as independent contractors. They are independent, self-employed people, but contracted to the NHS if they choose to do so and most of them have chosen to do so. They are limited in where they practice to some extent to avoid over-doctoring in particularly over-populated areas and they lost their right to buy and sell practices. Their income comes from a basic principle of capitation. I register with a GP who then gets an annual sum of money for looking after me. I may not go anyway near that general practitioner for three or four years but that sum of money will form part of her income all through that period. So there's a control on the amount of expenditure on the primary care service and the GPs act as gatekeepers to hospital care because the patient cannot refer themselves to consultants except through their GP and except of course in cases of accident and emergency. Thus a third strength of the NHS is the containment of direct patient-generated demand through this two-stage system.

The next important point is finance from direct taxation and that sum is negotiated by the Chancellor of the Exchequer who is obviously always trying to restrict the sum of money available for health and the minister of health, who is always arguing for more. But there is a tight control centre. From that the budget is devolved down to local level.

As for private care, which I know is a matter of great concern and interest to you today, there has been a private care system ever since 1945. Consultants employed full-time in NHS hospitals are allowed to do private practice up to 10 per cent of their gross salary. They can, however, opt to go for a part-time contract and forgo this restriction for a reduction in their NHS income and then the amount of private practice which they can do is unrestricted. There's no doubt at all that over time the consultants have made use of this in some specialties more than others and in some geographical areas more than others because it is easier to do it in central London where there's a lot of demand for private care. It does seem that the possibility of doing some private work restricted in this sort of way has provided a useful safety valve against pressures from doctors to increase their incomes more than would otherwise be possible through their health-service activities.

None of these strengths have been undermined by the recent changes but what do I see as the weaknesses of the Bevan system?

Administrative costs were low but the size of the activity was enormous. You had the whole planning, execution and delivery of care undertaken under a single umbrella of the National Health Service which at that time was said to be the largest employer in the world. You can see the enormous complications that this raised and which introduced all sorts of inefficiencies and bureaucracies into the system and made it very unresponsive to changes which were occurring in the type of patient to be treated and in the expectations of the users of the service.

Secondly a weakness was the dominance of medical professionals in terms of deciding what was needed and how medical care was to be provided. Perfectly legitimate questions about quality or efficiency were rarely addressed in open discussion.

Thirdly one of the important changes over this whole period was that the patients themselves or the consumers, as I perhaps have to call them now, began to find a voice and have ideas about accountability and the need to pay more attention to the participation of the patient in the process of the delivery of medical care. Strangely enough, for a labour government-designed service there was no provision in 1945 for local representation or any kind of elected representation and that had to wait until 1975, but it still did not address the kinds of issues of participation which I just touched on. Whether you wish to call it a weakness of the pre-1990 health service or whether the health service itself was a victim of changes in society, industrial relations became a major problem. The doctors had always been extremely well organised, militant and vociferous, but nurses became more militant and with the upsurge in white collar unionisation from the 60s onwards, all groups in the work force became forces to be reckoned with. At the same time as government employees they were also the first targets of a successive wave of incomes policies attempting to constrain and restrain the wage increases and so their salaries were held back. This led to many confrontations and strikes which increased in intensity and which indeed formed the backdrop to Mrs. Thatcher's approach to the health service.

Finally there was growing criticism of the medical care itself for the long waits for treatment in certain areas.

To summarise up to 1979 1 think that the founding principles were adhered to but there were some major problems emerging and I think there was no doubt at all that something would have happened. Indeed the Labour Government had set up a royal commission just before they left office. That would have led to some changes but not I think to the actual changes which did occur. I come now to the Thatcher reforms.

Most people expected a frontal assault upon the NHS with the return of Mrs. Thatcher for she was well known for her ideological commitment to private enterprise, to competition and indeed to her lack of trust in professions of all kinds. Doctors were only one of the number of groups of professionals who in one way or another found their rather comfortable positions attacked in her proposals.

From 1979 onwards there was much discussion in the inner circles of the Thatcher government about ways of moving towards a privatised system. Insurance was considered but the NHS has always been an extremely popular service and both political parties up until 1979 did not dare touch it. Even after 1979 Mrs. Thatcher found difficulty in touching it and when she did publish the proposals, actually drafted by Kenneth Clark, then Secretary of State for Health, there was not only a great deal of public outcry but response from the profession was enormously strong. There was very violent opposition from consultants in particular in some of the London hospitals but also from other groups in the employment of the NHS.

The basic principles have been modified not in essence but at the margins and we have been in a situation of continuous development and turmoil. Essentially it was a rather simple approach avoiding the issue of whether to privatise or not--trying to introduce an internal market which would produce competition but without introducing the notion of private ownership. There was a split between the functions of providers, the hospitals, community trusts, and the purchasers. Health authorities were set up with the budget devolved to them from the centre to purchase care on behalf of their population--population somewhere between 350,000 and 400,000-so that the health authority's job was in fact to decide what the health needs of their local populations were and to acquire those health services that they judged to be needed from the trusts. The hospitals became independent trusts who were there to supply the health care. Slotted into all this was still the primary care system with GPs providing as before but subject to much closer cooperation with the health authorities about the kinds of care they were providing. There was also the introduction of the concept of the fund holder. The health authority, if a general practitioner so decided, could hand over to that general practitioner a budget with which the general practitioner directly purchased health care for the people on his list. We now have 400 trusts, we have 80 or so health authorities, and as far as fund holding is concerned some 50 per cent of the population is now covered by fund holding.

One aspect of those reforms in 1990 which was not organisational but was very important indeed was the injection into the health service of a rather large increase in the budget for the next two years. This was an attempt I think to sweeten and to reduce the opposition to it. So can we evaluate these changes, this very radical attempt to introduce a market publicly funded into a public provision of health care?

I must say that it's extremely difficult to evaluate because there's been a great deal of developmental differentials, different kinds of approaches to the problem because so many of these units are quite small and they're encouraged to experiment. It's hard to get an overall picture of what is happening because there have been constant changes since 1990, not as I say in the basic idea but in the way in which it has been implemented. The government claims an increase in hospital treatments, some 4.3 per cent with an average over the previous 10 years of only 3.3 per cent but this is a very difficult figure to interpret. We do not know whether the base was accurate and there's some anecdotal evidence that the treatment has not improved. On the other hand, these famous waiting lists have undoubtedly been reduced because this was a major target presented to all the trusts by the central NHS executive. The target has been reduced from 18 months to a year for any kind of operation and most are dealt with much more speedily than that and any accident or emergency is dealt with immediately. There have been some unintended consequences of this drive to reduce waiting times. The GPs feel a loss of freedom as gatekeepers because they're now not free to refer their cases to any hospital of their choice as they were in the old system. They have now to refer them to a hospital with which their local health authority has a contract. I think the plus side is that there has been a much greater willingness to innovate among those GPs and trusts. There has been a very big increase in day surgery which you may say would have taken place anyway but it's been encouraged and a number of very innovative services like one-stop diagnostic centres for investigating suspected breast cancer and so on have developed and are providing a great deal of satisfaction to the patients.

It seems to me that the effects of competition are more doubtful and less rosy. It's true that they have not been very wide-spread. There's been no big bang, as it were, with health authorities shifting their contracts from one provider to another. There have been some shifts that are noticeable, shifts from outer London buyers from inner London suppliers because prices are cheaper in outer London. There have been some shifts of contract from non-specialist providers to specialist providers and even some headline-hitting initiatives like buying cataract operations from France because the waiting time involved in such operations in some parts of Britain were so long. But if any hospital or trust has come anywhere near closing the government has showed a loss of nerve and bailed it out. The pattern of relationships between purchasers and providers, as I have observed it from my seat on the health authority, is one which more nearly mirrors a relationship of co-operation rather than one of competition. The moderation of competition in its crudest forms seems to me to lend support to those who argue that the simplistic model of competition is not appropriate for health care and that collaborative transactions between purchasers and providers and between doctors and patients are the kinds of relationships which can be built up over time and which provide the best result. There are indeed two areas of health care where the market has proved noticeably unsuccessful and yet they are major consumers of resources of health care and that's the care of the aged and of the mentally ill, together accounting for over half of total NHS expenditure. In our discussions about health care I think we sometimes forget that these are two of the areas which are most important and which are growing. In my health authority we now spend a quarter of our total budget on mental illness, being a central London authority with a growing demand.

I worry because it seems to me that the present structure of the NHS has not delivered great advantages in economy and use of resources. It has admittedly opened up some possibilities of innovation but it also opens the way to a steady but slow process of privatisation and some cynics would say that that was precisely the intention. It was politically far too sensitive to confront the NHS as the water supply or the electricity supply were confronted when they were privatised. It was far too politically sensitive to do that so you create a situation where it becomes easier to interrelate the existing relatively small private sector with the public sector. Last week it was announced that one of our major teaching hospitals, the Royal Free in London, had got a contract with a private health provider to develop a specialist oncology ward with eight rooms for intensive treatment. The details of the arrangement are basically the input of capital from the private health provider but the concept obviously is that special terms will be given to their patients when they need treatment. These sorts of developments are clearly, in my view, laying the possibility of increasing the potential for the development of a two-tier system and by two-tier I mean a first-class system and a second-class system--a first-class system for those who can pay and a second-class system for those who have to rely on the public system. What does the Labour Party propose to do? It is very unclear at the present moment. The Labour Party is reluctant to open its mouth to say anything that might be taken to mean that they might raise more in taxation and spend more publicly. But ignoring that, what they propose to do is not to undo the whole of this system of an internal market but to try to modify it in such ways that it will be protected against further incursion from the private sector but at the same time retain some of the benefits which I talked about earlier.

Well are there lessons for Canada? The role of our primary-care system as gatekeeper and the capitation method of payment of GPs has much to commend it in terms of enabling control over the total spent on health care. It can of course be modified if you are asking your general practitioners to do additional jobs. It can be modified to encompass those but it does mean that there's no incentive for a general practitioner to undertake unnecessary treatments.

Secondly, the simplicity of the administrative system of registration with a GP has much to commend it and what we are seeing now in the new system is a big increase in administrative costs as more and more people are required to handle contracting not just among the GP fund holders but also among the trusts. So in terms of the administrative efficiency I think we are losing that and any change in the system has to have an eye to the administrative costs of change.

Thirdly, I would say that the attempt to introduce a market and to use competition as a means of increasing efficiency is not only not successful but has also had certain undesirable consequences because emphasis is put on balancing the books and meeting the bottom line when it should primarily be concerned with the quality of health care. The displacement of attention from quality which is not always easily measurable to the things that can be measured seems to me to be totally undesirable in a health-care system.

Canada and Britain I think share problems if we wish to retain a universal system of health care. In your case there is pressure from the U.S.A. where there is a model of a basically private health-care system, with the pressure to increase salaries for your physicians and the attractions of serving in a situation where incomes are not limited. However you always have to remember the number of people in the U.S.A. who simply have no access to their health-care system with 40 million people excluded from the insurance system.

In our case, we have the possibility of the growth in importance of the private health-care system. I think the lessons for us both are that there is a lot more than the bottom line to health care and that there is a big contribution from a national publicly financed health-care system towards the general well-being of society. Aneurin Bevan talked about society becoming more serene and spiritually healthier if it knows its citizens have at the back of their consciousness the knowledge that not only they themselves but all their fellows have access to the best that medical care can provide. I find that a very important thought in a society in Britain and I suspect in Canada too where inequalities of other kinds are increasing greatly and contributing to a quality of life in our society which is increasingly torn by conflicts of all kinds. I think we sometimes forget that universal health care can contribute to a sense of unity in a society such as we have in Britain and in Canada. Thank you.

The appreciation of the meeting was expressed by Catherine Charlton, Principal, Charlton Management, Member of the Board, the Ontario College of Physiotherapists and a Past President, The Empire Club of Canada.