U.K. NHS more efficient than Kaiser(HMO)

Dr Alison Talbot Smith, Dr Shamini Gnani, Prof Allyson M Pollock, Sir Denis Pereira GrayBritish Journal of General Practice 01 June 2004

A key document in UK government policy making for the NHS has been evaluated by Dr Alison Talbot Smith and her co-authors Dr Shamini Gnani and Prof Allyson Pollock of UCL’s School of Public Policy, and Sir Denis Pereira Gray in the British Journal of General Practice published on 01 June 2004. The original paper purports to show that Kaiser Permanente (a US HMO or health maintenance organisation) “achieved better performance at roughly the same costs as the NHS”.

An evaluation will show that the paper has four major areas of error. Crucially like was not being compared with like. Kaiser covers around eight million people in the US, mainly the working well. In contrast the NHS provides universal coverage to around 60 million citizens including the unemployed, the poor, and older people. Richard Feachem et al, the authors of the original paper, were not able to adjust for the differences in the populations, thereby negating comparisons of bed use and costs.

Similarly Feachem et al also used an unorthodox approach to adjusting for level of service when calculating costs. They did not include the additional charges that Kaiser members incur, currently £28 for each primary care consultation, £56 to attend an accident & emergency centre, and £285 for childbirth, and they omitted the 12% of Kaiser members who take out supplementary cover for services which are not included as part of the plan (‘coinsurance’).

They also wrongly applied a double currency conversion which added no less than 40% to their calculation of the NHS’s costs. They converted pounds into dollars at the general exchange rate, and then took this dollar rate and multiplied it again by the special rate that applies to the health sector. As the chief economist for the Department of Health pointed out, “it is simply wrong to adjust for health care prices over and above adjusting for general differences in prices”. In spite of systematically inflating NHS costs and deflating Kaiser’s, the NHS still comes out ahead. Undoing it puts NHS costs at $1,102 per capita compared to Kaiser’s $1,951.

Prof Allyson Pollock and Sir Denis Pereira Gray said today:
“When the Lancet published a paper on MMR, which threatened to undermine public health programmes, the DH and other major medical journals lost no time in entering into the scientific debate. Now we have a paper being widely adopted by policy makers, the claims of which concerning Kaiser are not supported by the evidence.”

James Lancaster
Public Health Policy Unit 
School of Public Policy  
UCL  
29-30 Tavistock Square
London WC1H 9QU     
t:  44 (0)20 7679 4985 (UCL: 24985)
f:  44 (0)20 7916 8536
email: j.lancaster@ucl.ac.uk

http://www.ucl.ac.uk/spp/about/health_policy/index.php