Backgrounder: The UK health care system

Prepared for EvidenceNetwork.ca by Lee Tunstall

Backgrounder-The-UK-Health-Care-System

Overview

The UK health care system is now really comprised of four separate health care systems: National Health Service (England), Health, Social Services and Public Safety in Northern Ireland, NHS Scotland and NHS Wales. The national system was first established in 1946 under the National Health Service Act and in 1947 in Scotland under the National Health Service (Scotland) Act, but launched to the public on July 5, 1948. The national system was devolved into four separate systems in the late 1990s during the wider devolution process. The UK government sets the overall budget available to the NHS in England, while it provides block grants to the other three countries, under which their legislatures determine how much of that block grant to spend on health care.

In 2014, a Commonwealth Fund report ranked the UK NHS system as the best overall health care system compared to 10 other developed countries. The UK system is a mainly publicly-funded system where individuals who wish to do so for elective treatment also have access to certain private health service providers. All systems provide preventive medicine, primary care and hospital services to all those “ordinarily resident.” This includes primary care, in-patient care, outpatient care, mental health services, ophthalmology, and dentistry. Users must pay a user fee or part of the following services: dental, optometry, and prescriptions (only in England and only 15% of the prescriptions dispensed.)

The social care system is different in each country, and is designed to support children or adults in need or at risk, or adults with needs arising from illness, disability, old age or poverty through social services programs, similar to Canada’s social programs. It is integrated with the health care system in Northern Ireland but is delivered by local government social services in the other three countries.

NHS Wales

NHS Wales was partially devolved in 1969, when powers over the NHS in Wales were given for the Secretary of State for Wales. It was further devolved in 1999 when powers were transferred to the Welsh Government, under the Welsh Minister for Health and Social Services. In 2009, NHS Wales underwent a change in structure, whereby there are currently seven Local Health Boards (LHBs) in Wales which deliver NHS services on a geographic basis, as well as three national trusts, which operate services such as cancer care or ambulance service.

NHS Scotland

Universal health care coverage came into effect in Scotland in in 1947 under the National Health Service (Scotland) Act and was revised in 1972 and 1978. Previous to this, half of Scotland was provided state-funded health coverage by the Highlands and Islands Medical Service, which had been established in 1913. Today, NHS Scotland is comprised of 14 regional NHS Boards, seven Special NHS Boards and one public health body.

Health, Social Services and Public Safety in Northern Ireland

The Health, Social Services and Public Safety department is responsible for both health care and social care, which differentiates it from the other three national systems which are responsible for only health care. The department is organized under a Permanent Secretary, with five business groups, five medical professional groups and one agency. There are also five regional trusts which are responsible for their own budgets and the management of front-line staff, health and social care services.

National Health Service (England)

England’s National Health Service was until 2013 accountable to the UK Parliament, through the Secretary of State for Health and the Department of Health.

In 2012, the UK’s Coalition government introduced substantial reforms to the NHS in England. The Health and Social Care Act introduced a new clinically led “commissioning” model. Although it was also designed to bring more patient involvement and local clinical knowledge to the NHS, the reality is that there is no more patient involvement than previously and there is possibly less local clinical representation than before. The Act has an explicit goal to create a competitive market in health care where there once had been an integrated public service, which has been extremely controversial.

A new organization, known as NHS England, is now responsible for day-to-day operations. It is responsible for overseeing the 211 Clinical Commissioning Groups (CCGs), as well as commissioning specialist services and the national contracts for general practice, dentists, etc. CCGs currently control approximately half of the NHS’ total budget in 2013-2014. These CCGs receive funding from NHS England and can purchase health care services from within the NHS or from independent sources, such as for-profit businesses or non-profit organizations, that are known as providers. CCGs are made up of GP practices in their geographic area, but are governed by a board that is designed to be clinically led, but also to include two lay members. They are responsible for purchasing the following services:

  • Urgent and emergency care (for example, A&E);
  • Elective hospital care (for example, outpatient services and elective surgery);
  • Community health services (services that go beyond the GP level);
  • Maternity and newborn; and
  • Mental health and learning disabilities.

Primary health care is commissioned directly by NHS England, as is some specialized secondary care, health care for military personnel and their families, individuals in prison and victims of sexual assault. Public health care is now handled by a new organization, Public Health England, with local public health switched from the NHS to the responsibility of local health authorities.

Two-thirds of English GPs still operate as private contractors, but there is a move towards GP networks with practices working together to provide different types of services. There is also a strong increase in salaried GPs (800% since 2004), with 180 practices operated by private companies.  Almost all secondary care specialists are employed by hospitals and are commissioned by the CCGs. In theory, patients are to have choices about which hospital to go to and which specialist to see, but this has not been fully implemented to date.

TUNSTALL_The UK Health Care System

  Organization of England’s Health Care System 

Trusts and Foundation Trusts

NHS trusts are organizational entities that serve a geographical area (usually anchored by a hospital service area) or a specialized service, such as ambulance or mental health. Since the 2012 Health and Social Care Act, trusts have been mandated to transform into foundation trusts, which are more independent and allow for more locally-based decision-making. This has not been universally successful, as by December 2013, 147 trusts had transitioned to foundation trust status, while 98 remained as NHS trusts. In a controversial move, the 2012 Act also abolished the private patient income cap for foundation trusts and allowed them to raise up to 50% of their revenue from private work. Many worry that this will lead to private patients being prioritized over NHS patients.

Funding

As a publicly-funded system, health care costs are included in taxation received from the four countries. NHS England is funded directly from the UK Treasury, while the three other countries fund health care out of the block grants they receive from the UK Treasury.

NHS England funds the CCGs on a weighted capitation basis, which means they are funded on the basis of the lists of the GPs in the CCG, weighted by the lists’ age profile, the health of the population and where the CCG is located. There are warnings that this new system will result in fragmented data and therefore reduce the ability to provide accurate population data sets used to assist policymakers in health care planning and needs assessments.  Providers are then funded by one of two main methods: a block contract or a Payment by Results (PbR) system. The providers reimbursed by the PbR system receive funding at a fixed national rate for the services they provide, while block contracts are not subject to these restrictions. Approximately 30 per cent of providers receive funding under the PbR system, while the majority of others still operate under block contracts. A new system is being developed based on quality of care and health outcomes achieved.

Private Health Care System

There is a smaller, parallel private health care system in place in England. Over half of consultants (secondary care specialists) work in both the public and private systems, but the private system focuses on uncomplicated elective treatments and does not provide any emergency care. Of the minority of  individuals who access this system, most carry voluntary private insurance. In 2012, 10.9 per cent of the population was covered by private insurance, with four private insurers providing coverage for the majority of these individuals. Eighty per cent of those are covered by corporate workplace plans. There are almost 550 private hospitals operating in the UK which average just 50 beds each and between 500 and 600 private clinics. Many private health care services are elective services, although some do use private insurance to speed access to services and consultations that would otherwise have longer wait lists in the public system.

Social Care

Northern Ireland has an integrated system whereby social care is part of Health, Social Services and Public Safety. Social care in the other three countries is provided through local councils. Scotland offers free personal care for seniors, the costs of which have doubled over seven years, from £219 million to £450 million.

In England, social care is delivered by local councils and is a separate, though related system. As it is almost always underfunded, this impacts the health care system by stressing hospitals as those needing sub-acute care may not be able to find a place in the social care system and remain in hospital. It is means — and needs — tested, so that an individual’s financial situation (including assets) and health condition are considered before they receive publicly-financed care. There are both public and private providers in the social care system, and more than half of services are delivered by private providers and paid for privately. There is some discussion to integrate both the social care and health care systems, so that both can be commissioned by the same entity, and budgets can be contained.

In 2014, the Coalition government passed the Care Act, which introduced personal budgets, whereby individuals have more control over choosing their own personal care services. This has also been a controversial reform, as research has indicated it could cost the system more with worse patient outcomes, although many patients found the personal control to be positive.  It also introduced a national threshold for minimum availability for care, which replaced the previous local system of varied thresholds. It has also increased the means testing level, so that more people will be able to access state-funded care. Even if individuals pay for their own care, there is now a proposal to set a maximum of £72,000 per year to save people from catastrophic care costs, after which point state funding will commence.

Costs

Health care costs have steadily risen in all four UK countries over the last decade. In 2012-13, England and Wales spent approximately £1,900 per capita, while Scotland and Northern Ireland spent approximately 10 per cent higher, or £2,100. These costs range from 92 percent (Northern Ireland) to 115 per cent (England) higher than costs in 2000-01. The most recent World Bank statistics in 2012 report that the UK spends 9.2 per cent of its GDP on health care costs, compared to 10.9 per cent in Canada. Nearly half of the NHS England budget (48 per cent) goes towards acute and emergency care, while general practice community care, mental health, and prescriptions cost the system about 10 per cent each of the total budget. The percentage of funding dedicated to GP care has been falling in recent years, as has mental health care funding.

How well is the system performing?

As mentioned, the UK health care system was rated first out of 11 countries in overall performance in 2014 by the Commonwealth Fund. The report, based on 2012-13 figures, did include mention that that the UK system still had challenges regarding timeliness of care and in particular, healthy lives, which included healthy life expectancy and infant mortality as two of the indicators. The Nuffield Trust has also published a study on a comparison of the health care systems in the four countries that make up the UK. This was made more challenging because not all data were comparable. The report showed the English health care system has historically performed better than the other three countries’ systems, although, this has changed in recent years as the other countries’ performance has improved. This is interesting given that health care policy in the four countries has diverged over that time.

Safeguards and Evaluation

As part of the NHS England system, there are numerous organizations that are designed to evaluate performance and ensure compliance. The Care Quality Commission inspects hospitals, care homes, dental and general practices and other care services as per the basic standards of safety and quality. It monitors, inspects and regulates care and health services to ensure they meet basic standards of quality and safety, and publishes performance ratings.

Monitor is the sector regulator for the NHS in England, tasked with ensuring both competition and regulation in the health care system.  As part of its mandate, it is responsible to ensure that foundation trusts are properly governed and that they are acting in the best interests of patients. It maintains a publicly-available directory of foundation trusts and their ratings to help achieve this. Monitor also ensures services are maintained if a provider fails.

Healthwatch England and its local members are designed to provide consumer oversight to the NHS England system and act as a champion for consumers while integrating local knowledge of issues to form national trends in consumer concerns. It was established under the 2012 Health and Social Care Act, replacing Local Involvement Networks, which in turn replaced the Community Health Councils in 2003. These Councils had statutory power and rights that Healthwatch does not have. There are concerns that Healthwatch suffers from a low profile and that it is poorly integrated into the health care system.

The National Institute for Health and Clinical Excellence (NICE) develops quality standards for the most common conditions that occur in primary, secondary and social care. It has developed national strategies for numerous conditions, including cancer, trauma and stroke. A website within NICE, known as NHS Evidence, provides open access to current clinical guidelines.

Emerging Issues with NHS England

The NHS reforms in England have been met with opinions ranging from scepticism to disdain to outright opposition by many, including GPs. There has even been a new political party, the National Health Action party, formed in response to these reforms. The Labour party has promised to repeal the privatization laws and restore the “right” values to the NHS. The main criticisms are that the reforms have led to greater privatization, commercialization and fragmentation of the health care system. As competitive tendering increases, there is worry that private, for-profit firms will in the near future provide the majority of NHS services instead of NHS providers and that costs will increase while quality will decrease. This will fragment the system and leave NHS providers with the more expensive and riskier services. It will also leave patients, especially those with more than one medical condition, facing a confusing array of separate providers and not one integrated system. A 2015 King’s Fund report found that the reforms have been complex, confusing, damaging and distracting to core services and planning for emerging challenges, especially the challenge of a rapidly aging population. It has also led to an exodus of NHS leadership that has worsened these results. However, it also found that privatization has not permeated the system at the accelerated rate it was first thought, although this finding has been disputed. There are also researchers who argue that because barriers to making profits exist, privatization in the NHS may be slowed.

Experts available for interview

Stephen Peckham, BSc, MA(Econ), HMFPH
London School of Hygiene and Tropical Medicine & University of Kent UK Healthcare System
Health Policy Analysis, Organization and Service Delivery, Primary Care, and Public Health
011-44-1227-827645 | 011-44-7910-583447 (c) | S.Peckham@kent.ac.uk

Anne Snowdon, BScN, MSc, PhD (Canadian Based)
Academic Chair, International Centre for Health Innovation
Ivey School of Business, Western University UK Healthcare System & Canadian Healthcare System
1-519-661-2111 ext. 82022 | asnowdon@ivey.uwo.ca

Our commentaries on the UK Health System

Learning from European and U.S. health care

Our backgrounders on the UK Health System

Backgrounder: The Dutch health care system

Our videos on the UK Health System

How Britain reduced wait times for health services and what Canada can learn from their example, with John Lister (3.8 min)
Why public sector provision is an effective way to deliver healthcare: Learning from the UK model, with John Lister (3.2 min)

The failure of private-public-partnerships in healthcare in the UK, with John Lister (4.1 min)
What Canada can learn from Britain’s National Health Service, with Dr. John Lister (18.3 min)

What we’ve learned: working with journalists across Europe on health reporting. A webinar with Dr. John Lister (53.4 min) 

Further reading

The Four UK Health Care Systems:

A more in-depth reading list from May 2014 regarding the devolution of the NHS into four separate countries can be found here: Reading List – The devolved National Health Service – the NHS in England, Northern Ireland, Scotland and Wales.

For a 2013 comparison of the four UK health care systems from the King’s Fund, see: The four UK health systems: Learning from each other.

For reviews and descriptions of the UK-England system, see the UK-England page of the European Observatory on Health Systems and Policies.

NHS England:

For an up-to date critique of the recent NHS reforms, see NHS for Sale: Myths, Lies and Deception.

Although the private health care system is small, the Competition and Markets Authority conducted a market investigation into it in 2014: Private healthcare market investigation.

To view the original legislation, see: The Health and Social Care Act 2012. There is also a series of fact sheets available on various aspects of the Act.

To view the original legislation, see: The Care Act 2014. There is also a series of fact sheets available on various aspects of the Act.

For a good, brief overview of the 2012 organizational reforms, see this pamphlet published by NHS England: Understanding the New NHS.

The Nuffield Trust has conducted projects on the NHS reforms: Nuffield Trust NHS Reform.

The King’s Fund undertook a commission in 2013 to research whether health and social care should remain separate systems: A New Settlement for Health and Social Care: Interim Report (includes more history on changes to social and health care since 1948); A New Settlement for Health and Social Care: Final Report.

For more evidence-based research of the Health and Social Care Act 2012, see:

For a critique of the English private health care system, see The Centre for Health and the Public Interest’s 2014 report, Patient Safety in Private Hospitals: The Known and Unknown Risks.

For evidence-based research into the new commissioning system, see the Policy Research Unit in Commissioning and the Healthcare System (a collaboration between London School of Hygiene and Tropical Medicine, the University of Manchester and the Centre for Health Services Studies at the University of Kent).

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