Fig. 31.1
Schematic of the structure of the NHS, prior to the introduction of the internal market
Things began to change more drastically in the 1980s. Outsourcing was introduced for non-clinical services such as catering and cleaning, and the internal market, discussed above, was introduced in an attempt to create competition and improve efficiency. Then in the 1990s and 2000s Primary Care Groups and then Trusts were introduced, changing the funding of services significantly. Primary Care Trusts (PCTs) were run by groups of GPs. Their role was to allocate funding to NHS service providers, such as secondary care in hospitals, GP practices themselves, and community care services (Fig. 31.2). PCTs were responsible for allocating around 80 % of the NHS budget.
Fig. 31.2
Schematic of showing NHS organsiation following restructuring and introduction of the internal market
A further change in the structure and funding of the NHS came into practice in 2013. Most significantly, PCTs were replaced with Clinical Commissioning Groups (CCGs). CCGs perform a similar function to PCTs in commissioning community and secondary care services, and currently have control over around two thirds of the NHS budget. NHS England was created to commission primary care services and some specialised hospital services.
CCGs are essentially committees that include nurses, hospital doctors and members of the public in addition to GPs. All general practices now belong to CCGs. The groups ‘commission’ services for their patients on behalf of the NHS often from NHS hospitals. However, charities and private companies can also be contracted by CCGs to provide these services as long as they conform to minimum quality and safety standards. For example, a CCG could commission a private company to provide MRI scanning for NHS patients, if they felt it would provide better quality or more efficient care (Fig. 31.2).
Although the most recent health service reforms may significantly affect how healthcare is funded and delivered, when seen in context, they are arguably a continuation of the outsourcing of services and introduction of an internal market that began in the 1980s. This trend has not been affected by changes in government, ministers and civil servants.
Healthcare Economics
Healthcare economics began to emerge as a distinct branch of economics in the early 1960s. This included the study of the healthcare market in general, but also the evaluation of which interventions provided the best value for money for specific illnesses. The latter became known as economic cost-effectiveness analysis [4].
NICE places considerable emphasis on measures of relative cost-effectiveness when evaluating new health technologies. The introduction of this analysis in standard NHS practice has been controversial [2]. Some critics argue that the process of technology evaluation by NICE is too slow. Other critics argue that the analysis of what is in the best interest of the country does not necessarily reflect the best interest of individual patients. It is also argued that NICE has been ineffective in improving the efficacy and equity of resource allocation, and that the speed at which healthcare spending is increasing remains unchanged. Nevertheless, as there is currently no alternative methodology to consider the cost and effectiveness of medical interventions simultaneously, it is likely that cost-effectiveness analysis and NICE appraisals will remain. Therefore, in the following section we will discuss some key concepts and terms related to cost-effectiveness that may be encountered in the literature.
Perspective
When only costs and benefits relevant to a particular organisation or group are considered the analysis is said to have been performed from the perspective of that particular organisation or group. The perspective adopted for cost-effectiveness analysis significantly affects estimates of the costs and benefits associated with an intervention. For example, if we consider the total cost of a hernia repair to a third-party payer, such as the government, we must include the cost of pre-operative care, the cost of the procedure itself, the cost of outpatient follow up, the costs incurred in primary healthcare, and the potential costs of treating recurrence of the hernia or complications of the procedure. If we consider the cost incurred by the patient for the same procedure, all of the previous costs would be irrelevant and we would only need to consider the cost of travel expenses and loss of earnings. A societal perspective is when all costs and consequences to all stakeholders within the borders of a country are considered. In the United Kingdom, NICE recommends an NHS (third-party payer) perspective. Ultimately, whatever perspective is adopted it must be explicitly stated, as interpretation of cost-effectiveness data is impossible when the perspective is unclear [7].
Measures of Effect
Cost-effectiveness analyses can be classified according to how outcomes (or effects) of the interventions are measured. In cost-minimisation analysis, it is assumed that alternative interventions are equally effective. Interventions are compared simply on the basis of cost. As we can rarely be sure that two interventions are equally effective on every occasion in all patients, cost-minimisation analysis is not appropriate in most cases.
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