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What if cashback was offered to encourage patients to self-pay privately rather than use the NHS?

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I entered this essay into the King’s fund essay competition. It didn’t win but I have been told that the competition was stiff and English was never my strong point so not at all surprised. In particular when up against this fabulous entry from the runner up “What if the NHS changed its approach to risk” I am far from upset at losing but thought some may be interested in what I submitted.

Runner up: What if the NHS changed its approach to risk?

The NHS is widely recognised as being the most efficient healthcare system yet seems perpetually short of cash. It stumbles from crisis to crisis as the population increases and ages and demand overwhelms it. There is cross party consensus that all UK residents should be able to access NHS health care according to need, generally free of charge and such care should be comprehensive.  Any solution should abide by these principles. Many have been proposed but all have floundered.

Tax rises may seem obvious and although when asked most people are happy to support an increase in tax to pay for the NHS it’s a different matter when it comes to the ballot box.

Charges have been proposed but these will bring in few funds or will disadvantage the poorest who need healthcare the most and may be put off seeking help when they need it.

Replacing the tax funded NHS with an insurance based system again disadvantages those least able to pay and is ridiculously inefficient.

Perhaps better to reduce the services that are provided or reduce the numbers of people using the service.

Much can be done to limit treatments and interventions to those of proven value. A comprehensive service does not need to include useless interventions and hopefully NICE will continue to assess and restrict access to them.

This will help but much more benefit can come from using the same overall pot of money to help fewer people. After all one of the major reasons why the NHS is short of funds is the increase in the numbers of patients using its services.

Cracking down on healthcare tourists may appeal to some but in reality will save little.

What many claim is deliberate government policy now would be to starve the NHS of funds so people are forced to pay privately but would any mainstream politician seriously propose or sanction that?

We could incentivise private medical insurance (PMI) by offering tax relief on premiums. That was tried by Thatcher but abandoned by the next Labour government, one objection being that if too many have health insurance they stop relying on the NHS and an important voice fighting for it is lost.

A fourth novel suggestion is to offer cashback to any patient who pays directly for their own care rather than use the NHS. It would only apply to treatments that the CCG would pay for anyway. Some PMI policies already offer cash back schemes to encourage use of the NHS instead of private so why not try the reverse?

As fewer people have PMI more are choosing to self pay for private care. This is the only growth area of private medicine, is still a small portion of total health expenditure but if the costs were reduced it could dramatically expand.

The cashback could be a proportion of either the tariff price or the marginal costs of providing the service by existing local NHS providers.  Basing it on the latter would avoid allegations that diverting funds away from NHS providers would destabilise their services.

The cash amount to be paid back could easily and rapidly be changed as, unlike tax, the rate could be set by local CCGs and would not require parliamentary approval. Clever mathematical modelling and experience with past patients could be used to adjust the rate to maximise financial benefits to the NHS.

The rate could vary dramatically from one part of the country to another depending on quality of and access to existing NHS services, the wealth of the local population and so on.

People love a bargain. They are more likely to see cash back as a positive incentive than say tax reductions on PMI and therefore such a system is likely to have more impact on reducing demand for NHS services whilst only marginally reducing the commissioners’ funds.

The private healthcare market in the UK is small. Competition is generally lacking which leads to excessive prices. Growth in the market driven by a cashback system would encourage more providers and thus more competition.

The PMI companies have proven ineffective at driving down prices as evidenced by the fact that, perversely given their buying power, prices charged by hospitals to insurance companies tend to be higher than prices charged to self pay patients. People paying out of their own pockets are more likely to shop around for the best service and price. The information about private providers being publicised by PHIN will hopefully make such choices easier and better.

High volume specialised units concentrating on just one disorder or one treatment will flourish and it is these which can really make an impact on both reducing costs and improving outcomes.

Private hospitals are often criticised for being too general and small with limited facilities often relying on the NHS to back them up.  Increasing use of private hospitals could improve their facilities to match NHS hospitals and reduce this reliance.

A criticism of tax relief on PMI is that it just gives a tax cut to some who don’t need it but does little to increase uptake. As the self pay market is at present small a cashback system would only benefit a few people who at present pay this way but has greater potential to grow. Its benefits would not apply to those with PMI most of which is paid by companies.

Although many older people are well off PMI in this age group is very expensive so they may well be unwilling to buy PMI but may pay for a one off operation. Relatives too are more likely to pay for granny to have a hip replacement than to pay for her to have PMI.

A cashback system would not reduce the voice of users of the NHS as expansion of PMI may do as people using the system would still know they had to rely on the NHS for some if not most of their healthcare needs.

Unlike charging for services eg £10 to see a GP a cashback system would do nothing to discourage people from seeking care when needed.

So the suggestion is attractive but what are the negatives?

Any mention of private provision will bring screams of protest about inequality of access. Most people though are unconcerned with what others get but are anxious to ensure that a good NHS service is available for them when they need it.

Objections are also likely to be made concerning training of healthcare staff particularly within the NHS where most training currently is undertaken. There is absolutely no reason why training of staff, doctors, nurses and allied professionals, should not be shared across both the NHS and the private sector. If the private sector expanded it would become both necessary and practical for it to play a proportionate part in the training of all healthcare workers.

On balance cashback promises to reduce NHS demand with minimal risk. As it is totally voluntary it could easily be piloted before being rolled out nationally if benefits were proven.

Dr West, Feb 2017

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