NCPA - National Center for Policy Analysis


January 13, 2006

Britain's National Health Service (NHS) could be considered a template for the difficulties in Canada's Medicare system, says Peter Holle, president of the Frontier Centre for Public Policy.

As in Canada, increased waiting times, the pouring of resources into bureaucratic structures without a corresponding expansion of services, and a built-in conflict of interest because providers and funders wear the same hat, have soured the system's noble intentions, says Holle.

The most important difference, however, lies in the fact that both the Conservative and Labor governments in Britain have attempted to remedy failures in the system by creating internal markets. In 1991, three fundamental changes occurred within the NHS -- the creation of trusts, fund-holding practices and a purchaser-provider split.

As a result:

  • Hospitals are becoming self-governing businesses with significant financial freedom to contract services from outside the system.
  • Within limits, doctors can negotiate for patient services with non-government facilities.
  • Providers no longer receive block funding but are paid for services rendered in a competitive market.
  • By 1995, no patients were waiting longer than 12 months and dozens of trusts and hundreds of fund-hold practices were created.

But political divisions quickly arose over the issue of equality, says Holle:

  • Access to treatment and the willingness of local authorities to fund procedures varied widely from area to area.
  • More importantly, the purchaser-provider split was diluted in the law itself and in implementation.
  • Public sector financing rules made purchasers responsible for the financial health of providers and prices had to be set equal to cost.

Nevertheless, the system has worked and British reforms should, at least, give Canadian politicians a measure of direction; if Canadians want to reduce waiting lists, they need to split the purchaser from the provider, says Holle.

Source: Peter Holle, "Changing the Culture in Britain's National Health Service," Fraser Forum, October 2005.


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