It’s clear that NHS England’s plans for ICSs and ever more framework contracts potentially lead to an ever-widening encroachment of private sector providers, contractors and consultancies. But there is a limit to how far they wish to go: all of these private companies know they are dependent upon the NHS and public funds as a ‘cash cow’ to guarantee profitability.
So is it possible that the private sector attempts to establish a British version of an American Accountable Care Organisation (ACO)?
What’s happening in the US?
ACOs in the privately-led US health care “system” are groups of hospitals, physicians, and other providers who agree to take on responsibility for the total costs of care for a defined group of patients for a fixed fee.
Although the original concept goes back to 2005, they were first fully introduced as part of President Obama’s Affordable Care Act as a way of tackling the inefficient fee for service system, and the perverse incentive it gives to private hospitals of providing unnecessary tests and treatment in order to maximise the bills payable by insurers – and profits. The theory is that by guaranteeing a block payment for delivering stipulated outcomes the ACOs are shifting US health providers “from volume to value.” They only apply to elderly patients covered by the federally funded Medicare system, leaving the private sector to decide their own cost and quality programs.
However Physicians for a National Health Program, which has campaigned for many years for a “single payer” system that eliminates the insurance companies and reins in the profits of the hospital corporations, pointed out way back in 2011 that:
“both quality and efficiency have proven to be very difficult to define. …
“According to a RAND study, most patients receive only about half of the care that they should have. The emphasis on reducing the volume of care has been somewhat misguided since there is a greater need to increase the volume, though we need to get the pricing right when we do that. …
“The bottom line? Integrated health systems that are designed for optimal patient service are an admirable goal, but integrated health systems designed predominantly as a business model are not.”
PNHP has devoted remarkably little attention to ACOs since, despite their expansion in the US. The most recent detailed comments go back to 2014, when they flagged up “Misleading reports on ACO savings” which sound grimly familiar in the 2020 NHS. It cites three reports on early ACOs by the Centers for Medicare and Medicaid Services [CMS] and comments:
“Note the pattern: “Costs” are always going down, “quality” is always going up.
“These reports suffer from numerous defects. The worst defects are:
- CMS fails to report how much it costs the ACOs to participate;
- CMS usually fails to give us enough information to determine the relative size of the savings or increased costs; and
- CMS offers only the vaguest descriptions of what the ACOs are doing and yet, on the basis of a few quality measures, reports that quality is improving for all patients assigned to the ACOs.”
Another substantial PNHP 2014 comment argued that “ACOs provoke pointless war between insurers and hospitals,” noting:
“the claim that enormous health “systems,” dressed up as ACOs or anything else, can improve care and lower costs remains unproven.
“… Why don’t ACO proponents state concretely and specifically what they want ACOs to do, and if evidence indicates what they’re proposing is good for patients, then let’s pay clinics and hospitals (not ACOs) to provide those services. When I say ACO proponents should speak “concretely and specifically,” I mean in everyday language, not “coordinated” this and “integrated” that and other fatuous labels invented by the illuminati at 80,000 feet.
“For example, if ACO proponents were to say that what they really want is nurses to visit heart failure patients at home after discharge and to monitor them remotely thereafter, I believe all of us – ACO proponents and skeptics alike – would agree the evidence indicates that is good for patients.
“In that event, we could write a code for those services and order public and private insurers to pay for them. Why funnel un-earmarked “capitation” payments through the headquarters of enormous hospital-clinic chains and hope they’ll use the money to pay nurses to take better care of heart failure patients rather, than, say, more advertising or more mergers?”
It’s clear from these comments that ACOs and the critique of them are firmly rooted in an American context which is very different from England’s NHS.
In theory the 1,011 ACOs covering 33 million people should offer the potential to improve serious illness care in the US.
“People living with serious illness are those with a condition with high risk of mortality or multiple comorbid complex conditions, high health care utilization, and limited function. They require medical and social services delivered across multiple settings. The fact that insufficient numbers of providers are trained in palliative care, hospice, or general geriatrics further complicates care delivery. Notably, fee-for service reimbursement does not incentivize needed infrastructure and services, such as 24/7 access outside of emergency departments (EDs), patient and caregiver education, care coordination, and shared decision making.”
The fee for service system, which ACOs aim to replace, is notorious for under-funding care of patients with serious illness. However a national survey last year found that the position is not much better for ACOs: only a small minority (8-21%) of ACOs have widely implemented serious illness initiatives “such as advance care planning or home-based palliative care.” A subsequent letter to Health Affairs pointed out that even in the relatively generously-funded USA:
“Shared savings from caring for the most ill were viewed as uncertain.
“ …ACOs are not ready to take the risk of needed investments in care innovation for the seriously ill. These challenges are even more ominous when one considers care for serious mental illness, which is the largest and fastest-growing category of health care expenditures in the US.”
With payments tied to quality of care, and ACOs footing the bills themselves for costs of care, they can in principle earn more for delivering care that improves population health, reduces length of stay and unnecessary use of expensive hospitals. ACOs that reduce the total costs of care for their patient populations can share in the savings with the payer, although in some models they may also be liable to pay back losses if their costs exceed their spending benchmarks.
There is always the risk that cutting costs to avoid any losses can lead to new ways of gaming the system, by downgrading the quality of care, employing fewer specialist and qualified staff, excluding treatment, and inappropriately reducing access to hospital care and speeding discharge.
The ACOs have not been especially profitable for the providers that have got involved. The levels of savings even the successful ones have delivered have been limited. In 2017 just over a third of ACOs were able to share in the cash savings they had generated – the remainder breaking even or losing money. By April 2019 there were just 1,000 ACOs covering 32.7m patients – only around 10% of the US population.
And a recent report sums up that by 2019 541 ACOs were delivering total net savings to Medicare of $1.2 billion, of which the top ten ACOs share varied from $19m to $49m, whereas other hospitals were making much more money – by routinely charging private insurers more than double the amount they charge Medicare.
Figures released in October 2020 by the Center for Medicare and Medicaid Innovation show that in their first three years (from 2016) ‘Next Generation ACOs’ achieved a modest total of just $349 million reduction in gross spending, but no decrease in net spending. It’s claimed that “Quality of care remained constant,” but while the NGACOs reduced spending on post-acute care and professional services, there were “no appreciable declines in hospital utilization and spending.”
However a 2-part study of the claimed “savings” just published in Health Affairs questions whether there were any real savings at all. It notes the sudden and massive increase in the level of claimed savings and points out:
“Much of the acceleration in savings is an artefact of selective entry and exit of ACOs based on their established spending levels relative to new spending targets (benchmarks). Starting in 2017, benchmark updates began to disadvantage ACOs with high spending for their region and advantage those with relatively low spending.
“…Providers with spending above the regional average (who face penalties if spending remains unchanged) have disproportionately exited the MSSP, while those with spending below the regional average have disproportionately entered or remained in the program.”
This is counterproductive for Medicare, because:
“If the objective of the MSSP [Medicare Shared Savings Program] is to lower spending, participation by providers with high spending is critical to its success.”
A large number of ACOs have pulled out altogether after failing to secure the savings and surpluses they hoped to achieve:
“only 123 (36 percent) of the 339 ACOs entering the program in 2012-14 are still participating in 2020.”
So did the ACOs and MSSP really save Medicare $1.29 billion in 2019?
“No – not even close. Might the true net savings be close to zero? Quite possibly. Is the MSSP heading in the right direction? No. …”
The whole scenario for ACOs has been shaped by the commercial health market in which the various ACOs seek to make headway. Another Health Affairs article (February 2020) found that even on the most basic level of integrating services it has been hard for ACOs to achieve what was expected of them. There was little work on tackling social determinants of health or linking up with social services, and difficulties in accessing the information they needed: but perhaps the biggest obstacle is the system itself, and the need to make money:
“Innovation was constrained by ACOs’ difficulties in determining how best to approach return on investment, given shorter funding cycles and longer time horizons to see returns on social determinants investments.”
While the savings are questionable, so are the outcomes of ACO programs. A Canadian review of 59 studies of ACOs in April 2020 strikes a more familiar note when it reports that:
“accountable care organisations produced modest cost savings which are largely attributable to savings in outpatient expenses amongst the most medically complex patients and reductions in the delivery of low-value services.
“… General trends and increased adoption of models similar to accountable care organisations outside of the USA suggest that these models outperform traditional fee for service models across the quadruple aim goals, although with mixed evidence about health outcomes.”
Worse, a 2019 review of ACOs reveals that the risk adjustment “may lead ACOs to drop high risk beneficiaries”. This is one of the known distortions of the private insurance market, which always favours uncomplicated, low-risk customers who are least likely to make a claim: while this might be annoying in relation to car and pet insurance, it can be disastrous in a health care system.
As a universal system covering the whole population, the NHS from 1948 broke completely from the previous health insurance system. Nye Bevan stressed that it was a National Health Service not national health insurance. Any evidence that ICSs, or components of ICSs are seeking to exclude high risk and patients and those requiring frequent medical intervention would be powerful ammunition for campaigning and prove that alien elements of American, insurance based health care have been imported into the NHS.
With tens of millions of people entitled to NHS care who would be prime targets to be dropped by a switch to any form of insurance based system, it’s clear there would be a political price to pay for any government that tries to import this aspect of ACOs and US health care to England.
So can we expect ICSs to be the British equivalent of ACOs?
We can easily see some similarities with England in the ways the ACOs are looking to rein in spending. NHS England has for some time been pushing CCGs to make savings by drawing up lists of excluded treatments and developing systems designed to keep patients out of hospital and reduce length of stay, while trusts have been encouraged to find ways to reduce costs by downbanding staff and diluting skill mix.
While ICSs may be a vehicle to pursue these policies, coupled with trendy data-driven “population health management” initiatives, these types of spending cuts, “reconfiguration” of services and so-called “cost improvement programmes” are not exclusive to, or dependent upon ICSs or ACOs – they have been an increasing factor in the NHS for many years.
And while it has been possible to campaign strongly over the exclusion of some treatments by CCGs or trusts, it’s not always easy to counter all of the ways in which spending reductions are being proposed. Decisions must be based on the health needs of the patient rather than seeking cash savings, but we are not in favour of spending more than necessary and useful.
Whether or not it is connected with an ICS, neither campaigners, nor clinicians nor patients are opposed to measures that improve care (and save money) – by developing alternative services to hospitalisation. We are not in favour of more patients than necessary being admitted to hospital, or staying there longer than necessary, and we know that there are treatments and services in physical and mental health that can be equally well – or better – delivered to patients by nurses or other professionals rather than doctors.
So while it is right to expose the limitations and flaws in data-driven projects like “Getting it Right First Time” and The Model Hospital, no campaigner wants to argue in favour of getting treatment wrong, or reject any comparisons that might enable services to be delivered more safely and efficiently. We can express concerns at the growing number of procedures included on the list of “Procedures of Limited Clinical Value” but no campaigner wants to demand the continuation of techniques and treatments proven to be useless or harmful.
In other words, campaigning on these issues needs to be carefully done with close attention to the actual facts and the specific proposals in each area, and simply arguing that changes should be opposed because they arise in ICSs can land us in difficult situations. We always oppose arbitrary cutbacks and service changes which seek to balance the books at the expense of poorer patient care or reduced access to services: but that does not mean we can oppose each and every proposal that emanates from an ICS.
Bite sized chunks
If the ACO analogy does not fit, could there be another scenario in which the ICS prove a stepping stone to privatisation?
While the whole of England’s NHS is generally understood to be too big and complex for any corporation to try to take over, once it has been carved up into 42 local ICSs, might these be seen as affordable bite-sized chunks, prompting interest from larger US or other health corporations? Might these commercial interests, in partnership with powerful local foundation trusts, seek to take over control of one or more ICSs, and effectively run them as private franchises?
In theory it is possible, given that the legislation and regulations do not forbid NHS statutory bodies from sub-contracting work and forming partnerships with the private sector.
However, there are a number of practical business reasons why it is most unlikely.
- The first is that the NHS is drastically under-funded – and even more drastically under-funded by comparison with US levels of funding. The possibility of generating sufficient profit from any takeover to justify the huge risk involved is minimal. In the US even the least-profitable ACOs have levels of per-capita funding 2-3 times higher than the NHS.
- The second is that the private sector around the world is risk-averse – it is especially wary of involvement in the highest-risk sectors: emergencies, maternity, complex and chronic cases, which are the staple fare of the NHS in any area. They are most keen to focus on low-risk elective surgery, which is a relatively small share of the total NHS workload. In Britain the network of private hospitals – averaging just 43 beds, with only a few larger hospitals with 100-plus – has geared up precisely to cater for this: it trains no staff, it employs few doctors other than on a sessional basis, it has no emergency provision and little or no ICU. Private insurers in Britain operate on the same narrow focus. Why would the private sector now want to take on the huge, unknown gamble of taking over responsibility for healthcare in a whole geographical area of the NHS?
- The third reason is because US corporations have made no attempt at any such buy-in or takeover of better-funded health care systems more similar to their own in other advanced countries (Germany, France, Netherlands, Switzerland): why would they want to take an even bigger risk by trying to muscle in on a health care system where they know in advance that everyone will be against them?
- The fourth reason is that the only corporations big enough to even consider this as a possibility are in the US: but while hospital chain HCI has dabbled in the British private care market, American insurers have been conspicuous by their absence. The amounts of money they are used to collecting in premium payments are much higher than the equivalent funding of NHS patients. The American companies that have begun to appear are concentrated in the HSSF – where there is the prospect of rich pickings from infrastructure and ‘back office’ IT and data contracts funded by the NHS, with minimal risk.
- Fifth, the private sector in Britain has for some time made clear that it is happy to coexist with the NHS, which takes the biggest risks and treats the costliest patients, trains all of the professional staff and gives them core employment, provides emergency and ICU back-up to small private hospitals – and helps prop up otherwise unprofitable private hospitals by paying for NHS patients to use spare bed capacity. The new £10 billion framework contract with private hospitals over the next 4 years is a massive win-win for the private sector. The private hospital sector is well aware that it would not exist in Britain without the hidden subsidies and patronage of the public sector and government. Why would anyone want to risk all that?
American-style insurance system?
Some have argued even more abstractly that the takeover of ICSs in this way could lead to yet another huge step – the introduction of US-style health insurance.
In this analysis the NHS would effectively hand over whole ICSs to US insurance corporations such as UnitedHealth, wiping out the NHS itself and its values, landing each individual with a bill to pay, and leaving tens of millions excluded because they could not afford the premiums, or because of pre-existing conditions. This is what is implied by the notion of the government putting the NHS “up for sale” to the Americans, and the implied end-point of “Americanisation” of the NHS.
Such a step would amount to effectively reversing Nye Bevan’s great modernisation that scrapped the previous “mixed economy” of health care in 1948 and established the NHS.
As a political step it would be unprecedented on a world scale: no country that has established any form of collective insurance or provision of health care has completely reversed it: even Pinochet’s Chile – which massively privatised state assets and murdered trade unionists and socialists from 1973 – did not abolish or “sell off” the public health care system – although the regime hugely skewed resources in favour of the private insurance sector.
Any such idea also hugely exaggerates the relative importance of even the whole of England’s NHS as a £130+ billion market compared to the $3.6 trillion (£2.7 trillion) US health care spend (American health spending averages £8,461 per person in 2018, compared with £2,256 NHS spend per head in England).
It also completely ignores the huge political implications of such a step for any government daft enough to attempt it. The most recent Tory Manifesto, scarcely the work of the most progressive wing of the party, states:
“The NHS represents the best of this country. … It is precious to all of us – especially because it is free at the point of use and there for you on the basis of need, not your ability to pay.
“We as Conservatives believe passionately in the NHS. Because we believe that everyone deserves the chance to live free of sickness and disease – and to know that if they do fall ill, our brilliant NHS staff will be there for them.
“We are proud that since its foundation, it is the Conservative Party that has acted as the steward and guardian of the NHS and its principles for 44 of its 71 years.”
We know as campaigners that this is an empty statement – but it’s a necessary empty statement for a Conservative Party wanting the votes of its own mainly elderly members and a voting public who are overwhelmingly supportive of the NHS – and its principle of tax-funded services that share the risk of ill-health amongst the widest possible population.
Any move to invite or allow US insurers to raise their heads in England’s NHS would be political suicide: but as argued above there is equally little prospect of profit to attract the insurers across the Atlantic and take on unprecedented and unknown levels of risk.
Conclusion
Although NHS England’s plans for ICSs and ever more framework contracts potentially lead to an ever-widening encroachment of private sector providers, contractors and consultancies, there is a limit to how far they wish to go. ACOs and the critique of them are firmly rooted in an American context which is very different from England’s NHS. There are some similarities with England in the ways the ACOs are looking to rein in spending. While ICSs may be a vehicle to pursue a similar objective, policies to achieve spending cuts are not exclusive to, or dependent upon ICSs or ACOs – they have been an increasing factor in the NHS for many years.