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Equity and PFI Strategies in the NHS

Info: 3342 words (13 pages) Nursing Essay
Published: 11th Feb 2020

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A) Equity

NHS hospitals acquire some finance from the private sector and many patients use private health insurance to gain access to treatment; a two tier health care system is emerging (Browne, 2002).

From the time the NHS began there has been concern about inequalities in health care. The Black report (1980) looked further at this and the Department of health report “Saving lives” (1999) rates the importance of equity highly. Equity can conflict with efficiency (Wagstaff, 1991). Sassi (2001) explains that mechanisms of achieving equity are unclear especially when there is the conflict with efficiency. Sassi (2001a) found that for cervical cancer screening, renal transplantation, and neonatal screening for sickle cell disease there was no consistency between NHS policies and equitable principles. Social class has an influence on the incidence and the survivability of many malignancies (Brown, 1997) but despite this fact in the cervical screening program the women most at risk were the least likely to get screened (National Audit Office, 1998). The monetary incentives to achieve screening targets by general practitioners did not address this problem.

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There are also “morally related” benefits such as respect for the individual and respect for autonomy that need to be considered. Although “there should be equal access to health care within the NHS based on equal need” (Davey, 1993) the advent of prescription charges and the extent of the exclusions of dental treatment and of optician services from the NHS (New, 1996) and particularly the exclusion of the bulk of infertility treatment negates this principle. Whilst the prescription charges and optical and dental charges do not, in general, mean that the patient’s need is not met (since the inherent means testing excludes those who are likely to be able to pay themselves) the fertility treatment issue is quite different.

Whilst allocation by index of social deprivation or by ethnicity may be a requirement this may conflict with allocation by clinical need. The important question is whether there is equal treatment for equal need. Since those who are poorer in financial terms have the greatest health care needs in addressing the question it becomes apparent that those individuals who are poorer should have an appropriate resource allocation for health care. The system of resource allocation is slightly “pro poor” (Propper, 2001). The lowest 25% of the population economically do get 25% of the funding (the financial groups were standardised for equality of health care need). Equity in resource allocation does not however mean equity in terms of health actually achieved. The question is whether there is effectiveness of this allocation. Inequalities in health persist across social boundaries (Acheson report, 1988). Propper (2001) analysed “equal treatment for equal need” according to whether those of equal clinical need but of differing financial means actually had equal treatment. The issue to address is whether there is equal access to healthcare, so this goes a step forward from just equal funding. Interestingly Propper (2001) finds little effect by age. The higher health care expenditure with increased age was generally in the last few months of life regardless of age.

There is not currently a fair distribution of health care provision across multi ethnic groups (Erens, 2001). Whether affirmative action policies would assist in a more equitable distribution awaits further evaluation (Sassi, 2004). The Department of Health’s “Tackling health inequalities” (2003) places much emphasis on targeting racial groups for enhanced care. Health care targeting of ethnic minority groups with greater health care needs has begun to show some evidence of improved outcome (Arblaster, 1996).

Health authority funding has tended to be overly weighted according to age distribution (Judge, 1994). Judge (1994) calls for a “unified weighted capitation system”. Coordination is a problem. Budgetary allocation may be partly determined on the previous year’s spending. Mechanisms of altering care according to need have often not assessed how this might be achieved (Majeed, 1994).

Those individuals with the greatest health care needs include young children, the elderly, people living in areas of social deprivation and people from ethnic minority groups (Majeed, 1994). However it is these groups of the greatest need who have general practitioners with the greatest primary care work load (Balarajan, 1992). People from ethnic minorities and those living in areas of social deprivation have the lowest uptakes of immunisation (Baker, 11991).

There is a fundamental need still for the equal need – equal access equation and despite the difficulties of trying to achieve a balance (which may be viewed over pessimistically, Doyal, 1997) it remains a worthwhile objective.


Acheson Report. Independent inquiry into inequalities in health report. 1998 Department of Health London: The stationary office.

Arblaster L Lambert M Entwistle V et al 1996 A systematic review of the effectiveness of health service interventions aimed at reducing inequalities in health. J Health Serv Res Policy 1: 93-103.

Baker D Klein R 1991 Explaining outputs of primary health care: population and practice factors. BMJ303:225-9.

Balarajan R Yuen P Machin D 1992 Deprivation and general practitioner workload. BMJ 304:529-34.

The Black report 1980 Department of Health and Social Services. Inequalities in health: the Black report. London: DHSS

Brown J Harding S Bethune A et al 1997 Incidence of Health of the Nation cancers by social class. Population Trends 90: 40-47

Browne A and Young M 2002 A sick NHS: the diagnosis. The observer Special Reports Sunday April 7, 2002

Davey B, Popay, J. Dilemmas in health care. Buckingham: Open University Press, 1993:27-42.

Doyle L 1997 Rationing within the NHS should be explicit: the care for BMJ 314:1114-1118

Erens B Primatesta P Prior G 2001 Health survey for England 1999: the health of minority ethnic groups. London: Stationery Office.

Judge K Mays N1994 Equity in the NHS Allocating resources for health and social care in England BMJ 308:1363-6

Majeed FA N Chaturvedi N R Reading R 1994 Equity in the NHS Monitoring and promoting equity in primary and secondary care BMJ 308:1426-29

National Audit Office 1998 The performance of the NHS cervical screening programme in England. London: Stationery Office.

New B 1996 The rationing agenda in the NHS BMJ 312:1593-1601

Propper C 2001 Expenditure on Health Care in the UK:

A review of the issues. CMPO Working Paper Series No. 01/030

Available on http://www.bris.ac.uk/cmpo/workingpapers/wp30.pdf

Accessed 1 May 2006.

Sassi F Archard L Le Grand J 2001aEquity and the economic evaluation of health care. Health Technol Assess 5(3).

Sassi F Carrier J Weinberg J 2004 Affirmative action: the lessons for health care BMJ328:1213-1214

Saving lives: our healthier nation 1999 Department of Health. London: Stationery Office

Tackling health inequalities. A programme for action. 2003 Department of Health. London: DoH, 2003.

Wagstaff A 1991 QALYs and the equity-efficiency trade-off. J Health Econ 10: 21-41

B) Private Finance Initiative (PFI)

PFI is a partnership between the NHS and a private company. It is increasingly used to purchase a new hospital building. Instead of a capital payment being made revenue payments are made over a number of years.

Advantages of PFI

Many hospital buildings are extremely old and are clearly no longer suitable for their purpose. The buildings hamper the introduction of new technologies and new ways of working. Costs of new buildings are prohibitively high. The PFI arrangement enables a new building to go ahead where otherwise the opportunity to rebuild would not have arisen at all. PFI certainly overcomes the difficulties that would ensue from a rise in taxes to achieve new hospital builds which would be very unpopular with the public and would be difficult to provide equitably. The PFI does achieve a building with the minimal of public spending at least in the short term. The view of Government is that PFI allows money to be spent on equipment rather than buildings (Ferriman, 1999).

There is an argument that PFI is only a procurement issue and other procurement processes are not without problems (McGinty, 2000). The blame laid on PFI may have occurred with alternative means of funding the building of a new hospital.

Under the PFI scheme there is a clear incentive, once agreement has been reached, to commence and complete the building work. The private company has a financial interest to see completion to a satisfactory standard. The advantage here for the healthcare provider is that the scheme will complete quickly. There is an ongoing interest in the building by the building and finance companies and this may work to the benefit of the health care provider.

Disadvantages of PFI

The cost may increase once the building work has begun and this may lead to cost containment negotiations resulting in a decreased number of beds or result in other cutting of health care services. Smith (1999) finds where there is PFI there is an increase in the number of private beds to help to finance the project. This may arise as a choice to increase the revenue from private work as opposed to cutting the number of beds in the new build.

The PFI scheme does not really take into consideration the fact that an increasing amount of health care previously provided in hospitals is now done in the community and investment is now in “services not beds” (McCloskey, 2000).

A view, though not universal, (Smith, 1999) is that with PFI the planning is done in the private sector and is therefore not so readily visible.

There is increasing evidence that PFI is costing more than the costs of using public money (Pollock, 1997). “Private capital is always more expensive than public capital” (Smith, 1999). The cost through PFI of construction plus financing costs is 18-60% higher than the building costs (Gaffney, 1999). This is a worrying aspect. It is likely the deficit will be met by cutting costs in the service (Gaffney, 1999).

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Gaffney (1999) argues comparisons prior to approval of PFI schemes use comparisons with public sector building that involve “discounting” of costs and adjustments to reflect “risk transfer” in its appraisal methodology which biases towards approval of PFI. The discounted cash flow analysis makes the PFI look better value than it actually is. Such discounting is appropriate for the private sector where it is useful to maximise profits. Its value in health care where there is not the aim to profit is therefore suspect.

The level of concern about PFI has reached the level where the British Medical Association opposes the scheme and wishes the public to be informed of the anticipated long term repercussions and that there be an audit of present such schemes (Beecham, 2002).

There is some evidence that PFI is now becoming less popular with private companies (O’Dowd, 2005). There is a concern that some feel that purely because the private sector is involved the procedure must be wrong. It is not the partnership with the private sector that is wrong but the lack of a credible system of achieving an appropriate balance between the financial rewards to the investor and the value for money of the health care provider. If the scales tip the way many fear they will there will be a very serious financial drain on the health service. The Government has now become concerned about the cost implications of PFI and is presently delaying further PFI plans whilst investigating the issue further (O’Dowd, 2006).


Beecham L 2002 PFI schemes should be vigorously opposed BMJ 325:66

Ferriman A 1999 Dobson defends use of the PFI for hospital building BMJ 319:275

Gaffney D, Pollock AM, Price D et al 1999PFI in the NHS---is there an economic case? BMJ 319:116-9

McCloskey B Deakin M 2000 Series did not address real planning issues BMJ 320:250

McGinty F 2000 Partnership between private and NHS is not necessarily wrong BMJ 320:250

O’Dowd A 2005 Private sector is losing interest in PFI projects BMJ331:1042

O’Dowd A 2006 Three hospital PFI schemes are delayed while government looks at their cost BMJ332:196

Pollock AM Dunnigan M Gaffney D et al 1997 on behalf of the NHS Consultants’ Association, Radical Statistics Health Group, and the NHS Support Federation. What happens when the private sector plans hospital services for the NHS: three case studies under the private finance initiative. BMJ 1997; 314: 1266-1271

Smith R 1999 PFI: perfidious financial idiocy BMJ ;319:2-3

C) Managing Scarce Resources Clear mismatch been healthcare resources and needs leads to rationing but the actual mechanism of this is unclear. There are important differences between rationing and priority setting/resource allocation (New, 1996). The former denies a service to individuals whereas the latter concerns value judgments in providing services to groups. Rationing only concerns those treatments which are of proven benefit and is not concerned with evaluation of treatment effectiveness (Nice, 1996).

There is healthcare rationing within the NHS today and this is not clear or widely acknowledged and therefore is implicit (Coast, 1997). As a result where treatment is denied to individuals the public do not realize this is due to rationing but on the occasions it finds out there is generally public dissatisfaction, sometimes culminating in litigation as with child B (Price, 1996).

Arguments against rationing being explicit include the difficultly of creating such a scheme since there are no ethical rules by which to do it Klein, 1993). “There is no such thing as a correct set of priorities, or even a correct way of setting priorities” (House of Commons Health Committee, 1995). Even if it could be done some consider it is unlikely to work not least because those disadvantaged may bring about dispute and disruption leading to a return to an implicit system (Mechanic, 1995). Coast (1997) sees the disutility (dissatisfaction with the poorer clinical outcome where treatment is denied) of explicit rationing as a distinct problem. With explicit rationing the public would be colluding with decision making and would feel responsibility and disutility where treatment is denied. Coast (1997) argues that in an implicit system the doctors will tend to medicalise the decisions not to treat. When there has been explicit rationing there is no evidence of improved decision making but reluctance to determine which treatments should be denied (Cohen, 1994; Donaldson, 1994).

Arguments in favour of explicit (openly acknowledged) rationing, a view favoured by healthcare policy makers, include; openness and honesty, possibly leading to a more equitable, efficient service, in which the public can influence the rationing process democratically. Doyal (1979) favours explicit rationing and promotes “evaluat[ion of] the justice or the efficiency of the rationing process,” and considers the inability to face this is in contrast with the moral foundation of the NHS.

Doyal (1979) favours rationing according to need (degree of disability) not by disease popularity, or social worth. Incorporation of uniform clinical guidelines might facilitate the process.

Points to consider in a rationing process include (New, 1996);

  • Which services are to be rationed
  • What are the objectives of the rationing process
  • What are the ethically acceptable criteria for rationing
  • Who should do the rationing

The Rationing Agenda Group’s function is to increase debate on rationing. This body believes rationing and public involvement in the process are essential (New, 1996). There are various methods of rationing, one includes a cost effective analysis, another involves capacity to benefit (New, 1996). Different approaches are used for different needs for instance infertility treatment may be denied entirely.

In any explicit rationing process objectives need clarification and here the objectives might include (New,1996) maximising quality adjusted life years or minimising health inequalities by group or area of residence, The decision making process at national level will include formulae for allocation by geographical area and also work in response to national agendas such as Health of the Nation. At local level there will be health care commissioning incorporating decisions about which health care services to purchase for a community. The processes will be subject to pressure from groups such as; pressure groups, complaint mechanisms and statutory bodies such as community health councils and review by the national Audit Office (New, 1996).

Even when a rationing criteria is agreed upon the situation remains complex. Rationing by age may be morally wrong and some would advocate its illegality (Rivin, 1999). Age is a major factor in the rationing of renal transplantation (Lewis, 1989) despite the fact that age does not have a good relationship with prognosis (Wolfe, 1999). Sassi (2001) explains the lack of equity principles in the way such decisions are made in the NHS.

O’Boyle (2001) auditing rationing secondary care for excision of skin lesions and found poor patient and general practitioner satisfaction with the process and a high rate of re-referrals.

The debate as to the degree of openness of the rationing process continues. The problems of rationing are inherent in the process and openness of the process exposes yet more difficult decision making.

References Coast J 1997 Rationing within the NHS should be explicit; the case against BMJ 314:1118-1122 Cohen D 1994 Marginal analysis in practice: an alternative to needs assessment for contracting health care. BMJ 309:781-4.

Donaldson C 1994 Commentary: possible road to efficiency in the health service. BMJ 309:784-5.

Doyal L 1997 Rationing within the NHS should be explicit: the case for BMJ 1114-1118

House of Commons Health Committee 1995 Priority setting in the NHS: purchasing. London: HMSO 57. Klein R 1993 Dimensions of rationing: who should do what? BMJ 307:309-11.

Lewis PA Charny M 1989 Which of two individuals do you treat when only their ages are different and you can’t treat both? J Med Ethics 1989; 15: 29-32.

Mechanic D 1995 Dilemmas in rationing health care services: the case for implicit rationing. BMJ 310:1655-9.

New B 1996 The rationing agenda in the NHS BMJ 312:1593-1601

O’Boyle Cole R P C 2001 Rationing in the NHS : An audit of outcome and acceptance of restriction criteria for minor operations BMJ323:428-429

Price D 1996 Lessons for health care rationing from the case of child B BMJ 312:167-9.

Rivlin M 1999 Should age based rationing of health care be illegal? BMJ319:1379

Sassi F Le Grand J Archard L 2001 Equity versus efficiency: a dilemma for the NHS BMJ323:762-763

Wolfe R Ashby V Milford E et al 1999 Comparison of mortality in all patients on dialysis, patients on dialysis awaiting transplantation, and recipients of a first cadaveric transplant. N Engl J Med 341: 1725-1730


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