Starting a revolution
Paul Robertson: What position we are in now,where do we stand now following the Richards’review?
Doug Wright: I think there is a lot more claritynow where government policy wants to go withthis. We are still awaiting the consultationprocess but the summary seems to be tomake the problem of top-ups go away byaccelerating the funding process, and decisionprocess, through NICE. How effective that hasbeen is debatable.
Paul Robertson: Okay, well how effective has itbeen then?
Katrina Herren: I think it has been very helpfulto the Primary Care Trusts (PCT) and to thehospitals in understanding much more clearlywhat they can and cannot do. There is still alevel of uncertainty as we are waiting for thegovernment’s final response to the Richards’review. We know that there has also been aHouse of Commons Health Committee enquirythink tank — NHS top-upsgoing on and until we get that final response,the absolute decision the government is goingto make and how we develop and apply thatwithin the insurance market will still leavesome uncertainty for us.
Paul Robertson: Can the NHS’s owninfrastructure handle this?
Joe Farrington-Douglas: The membership ofthe NHS Confederation has throughout thisdebate been reflecting the difficulties thatthere are in coming down on one side oranother. So when we asked members whatthey thought of providers as PCTs, theyunderstood that there was a problem there tobe addressed. There still remains seriousconcerns about practicalities, for clinicians interms of commissioning budgets due toimproved access to the drugs side of things,and for providers if the guidance isimplemented in a very stringent way – tryingto separate public and private care. The clarityis welcomed but there are still somereservations.
Paul Robertson: I was asking around, and thebasic view was that now the political will isapparent, the bureaucrats will fall into line. Doyou think that is the case?
Joe Farrington-Douglas: Well it is not just thebureaucrats is it? A lot of this is down to theway that doctors are going to work with thenew regime and the extent to which they willbe willing. I think the debate has been led byLondon where there is a thriving private healthcare market. Outside of London, I think thereare some real problems among consultantswho work in areas where there isn’t anestablished private practice. And in someplaces they feel pressure to create a privatepractice they didn’t have before. And that hasethical issues.
Karol Sikora: The Richards’ review has takenthe heat off the politicians. And this is coupledwith the announcement by Gordon Brown atthe Labour Party Conference last year thatcancer patients will get free prescriptions,which many people interpreted as free highcost drugs, which wasn’t the case. When youare in the clinic, it is complete confusion,different PCTs are interpreting it differently,and different trusts are interpreting itdifferently. The difficulty is the logistics havenot been thought through. The problem ofcourse is the foundation trusts are limited tothe amount of private practice that they cando. The drugs are expensive and that iscounted as revenue. You could end up goingway beyond your 2002 cap very, very quickly.Non-foundation trusts would win out,compared to the foundation trusts, in terms ofbusiness models.
Joe Farrington-Douglas: Do you think that giventhe economic situation, are we going to haveto think in terms of demand for private healthcare in general? The amount that people canafford to pay for it, the value of their homes,the amount of assets they have etc…?
Karol Sikora: I think you are right, it will cometo the value of disposable money thatpredominantly older people have, they will bethe big consumers of top-ups. But the ultimatething, if you go down the route with top-upsand patient fund holding, you end up in 10years time with a very different health caredelivery structure. It is going to be piloted inStockport in the next six months with certaincategories of patients, probably postrehabilitationpatients, stroke and otherneurological disorders. I think it is aninteresting opportunity with insurancebecause suddenly you have an opening wherepeople have got a pot of their own and thenyou can have a top-up pot that you can insurefor, presumably. The difficulty is theadministration of it and again, how the trustsactually handle it.
Paul Robertson: Canvassing opinions in theindustry, someone said the Richards’ reviewwas an elegant escape, it made a lot of drugsthat weren’t funded funded. There is a limitedamount of time that you can do that and alimited number of times that you can do that aswell. Do you think that this is going to come toa head fairly soon?
Elliott Hurst: Well I think it is coming to a headin cancer in particular sooner than in otherareas of health care. We get back to thatdebate of how sustainable our funding anddelivery model of health care is in the UK, anddo we see a role for a mixed model wherethere is a core area that is publicly funded andthen a top-up area that is privately funded insome shape or form. In terms of the customerflow, the patient flows around that, it must bean absolute nightmare to try and think yourway through actually practising in a clinic,trying to deal with that.
Karol Sikora: The other issue of interest brieflyis that if you read it carefully, it does say thatyou can only top up within the NHS if you haveexhausted NHS routes for getting the drug.The real problem is it can take six months toget the appeal through and patients have notgot that time.
Joe Farrington-Douglas: The consultation isstill ongoing and it has not yet been ironedout, but we are aware that some hospitalshave been writing to their commissioners andsaying that they will be putting everybodywho wants to have these additional drugsthrough the exceptional panel process. Andthat is clearly not a sensible way forward forpeople who aren’t an exception. I think thatthere are concerns about how this mightcreate delays and we need to work out waysof making it work.
Paul Robertson: So that has brought us fullcircle back to whether the bureaucrats willstep into line having seen that there is thepolitical will. The insurance model, how is thatgoing to work with top-ups?
Katrina Herren: I think it can work but it will bea very different model to the existing servicemedical insurance offers in the market now. Inits currently proposed form, top-ups are justgoing to fill the gap between NHS care and selffunding for cancer drugs. But as I think weNHS top-ups — think tank”“The real problem is it can take six months to getthe appeal through, patients have not got thattime Karol Sikoratalked about earlier, we expect both customerinterest and the market to evolve into a widerrange of therapies, not just drugs, and into awider range of conditions. So potentially intoneuro-degenerative disorders such asAlzheimer’s, some of the other life-limitingdiseases such as rheumatology.BUPA’s research has shown 70% of thecustomer base of the UK would be interestedin such an offer. And we also know that thepricing points will be significantly lower thanprivate medical insurance is today. So thatgives a real opportunity to have relevantproducts around health care that will targetaudiences for which private medical insurancehas not been of interest. One of the challengesis going to be the economics of a much lowerprice model, both in terms of how that isdelivered by insurance but also how we workwith the role of the intermediaries in that,where there is sure to be a need still for independentadvice.
Elliott Hurst: Wehaven’t hadcentralGovernmentimpetusthat has allowed the insurance market and theprivate medical insurers to look to plug gapsand develop products that more accurately andeffectively meet the needs of consumers. Wehave now got an opportunity that hasdeveloped from central Government, from theoutcome of the Richards’ report, DoHresponses and where NICE are taking thoseguidelines to potentially put something in place.There is an opportunity here but also athreat to employers that provide medicalbenefits in an increasingly difficult marketplace. There is an opportunity here torefocus, redesign, redeliver what you areactually looking to achieve as an employer, andmaybe lean more heavily on the NHS in thoseareas where you are comfortable that thedelivery and treatment is both timely andappropriate and of suitable quality, but equallystart to plug those gaps where they havestarted to emerge.
Paul Robertson: On that point,do you see the chance thatdoctors are going to besomewhatpoliticised bythis? They are going to have to make choicesbetween insurers and the NHS.
Karol Sikora: It is interesting that none of theRoyal Colleges really made a statement abouttop-ups during the consultation exercise andthe reason for that was that they all foundthat it was about a 50:50 split in favourversus not in favour. This is poor people’sprivate medicine, it is not a gravy train for theHarley Street consultants. And it has notreally been discussed if the doctor will beremunerated, for the top-up. It is very diffi cult,ethically, because now the doctor is in aposition where he could run his own businesssaying if you have this drug, come to my clinic.I think the logic would be for the NHSadministration within hospitals to sort it out.
Paul Robertson: One aspect of top-ups is whena drug is given to a patient, be it NHS or top-upone, the consequences of that drug are fundedby the original funding. Who decides wherethese side effects are coming from?
Karol Sikora: I don’t think that istoo diffi cult because we havegot large experience andwe can actually workout the likelypercentage of sideeffects for acertain drug.We can put apremium onthe costofthe drug to pay for the side effects.
Joe Farrington-Douglas: The draft guidanceuses the term predictable but there isn’t reallya defi nition of predictable. If there is apotential of a side effect, one in ten, one in ahundred, to what extent should that becharged then to the patient? In other areas oflife, people take risks and the NHS insureseffectively against the risk. If you go skiing or ifyou take private medicine elsewhere in theprivate sector, the NHS is there as a backupto do that repair. But the principle that theRichards’ review set out was that this shouldnot have an additional cost on the NHS.If a patient wasn’t receiving the top-uptreatment, they would probably be receivingsome other form of treatment that the NHSdid provide. There are risks of side effectsassociated with those. So you are having tobalance up the potential costs that areincurred from the top-up drug, minus whatcosts might have been incurred from the NHStreatment.
Paul Robertson: At some point, you are going tohave to sit with clients and talk about allthis. Do you envision any greatproblems?
Elliott Hurst: We are already inthese conversations. We throwMike Richards’ report andrecommendations into the mixthat we have been having now fortwo or three years with clients.There are all kinds of issues outthere that employers need toconsider, not only the financialsbut the discriminatoryaspect and also thecommunication andexpectation thatemployees look to theiremployer for. One ofthe problems for employers right now, and forthe insurers and administrators, is until wereach the endgame on the Richards’ reviewand how NICE will react to that, we are notnecessarily in a position where we should beguiding employers to take defi nitive views.
Paul Robertson: How does this new top-upconcept play into the cost effectiveness ofprovision versus the obligations to theemployees?
Doug Wright: I think it plays very well. Forexample there is a range of options out therefor cancer: some corporates tend to fund italmost as an open ended cheque book, andsome are very specific about what they dowant to cover. That is exactly how privatemedical insurance and health care for acorporate works at the moment. And I thinktop-ups are just another vehicle to have thatconversation with them.
Paul Robertson: Do you see a dying-off of theidea of PMI offering the same service as theNHS and the two moulding together a littlemore in future?
Doug Wright: There are employers who almostcertainly see PMI as a replacement for theNHS and there are other employers who verymuch purchase it to dovetailwith the existing NHS health care that all of their employees have. And thatworks very differently for those two types ofcorporates. And putting it together andgetting the right solution is actually thechallenge for us as insurers, even gettingthem to express what their need is and whattheir preference is. Top-ups have been a reallyuseful subject to try and draw out some ofthose conversations and some of the thinkingfrom some of our customers already.
Katrina Herren: The purpose of the employeebenefit is to make that employer attractive topotential employees. What is potentiallydifferent now is the concerns and interests of the employed population are quite relevant toan NHS top-up style of insurance product. Weknow that cancer is the number one healthcare issue, even of the youngest and healthiestof our population. Also we know that theconcern that has been in the media that drovethe Richards’ review about this gap is anotherhuge concern that young people are really aware of. Therefore, there is a potential for afairly cost effective insurance option for the Bto-B market and relevant to a much widergroup of the employed population thannecessarily PMI has been traditionally. One ofthe challenges about the B-to-B market in thecurrent recessionary environment is actuallyhow they might bolt that jigsaw of fundstogether in the future when considering thefull spectrum of employee benefits.One of the things that we are veryinterested in is how to make this a seamlesssolution for the patient. And so we think thisisn’t just about a funding and insurance model,this is about delivery and we feel very muchthat the role of the insurer will be to supportthat patient in finding their way through thesystem. So that they are not left to try andnegotiate a private prescription fromsomebody, to find a third party to deliver it ina different environment than the hospital, togo and find another consultant because theirconsultant doesn’t offer the service, whateverit is. And we think that that is going to be oneof the differentiating factors, the ability toprovide that patient focused service from theinsurer as well.
Karol Sikora: I have been a consultant fornearly 25 years, and there is no doubt that thesystem has changed considerably. Patientsnow are taking a much more active interest.This is a source of inequity because it is theintelligent, better educated and thereforericher patients that tend to do this, leaving thepoorer ones further behind not asking theright questions. If employers want to help theirtotal work force what they have to do is put inplace a system that makes it easy, once youhave the problem, to negotiate what is a verycomplex issue.It is very easy to be put off by phoning up aminor functionary, not a senior manager but asecretary who says ‘oh he doesn’t do that, notpossible’. People do get told that when it isperfectly possible. The other problem we havegot is the inequity of geography. It is crazy tohave 152 PCTs that all have different types ofdecision-making systems about theexceptional criteria. So I think the only waythrough is to define rigidly what the core ofthe NHS provides and then it becomes mucheasier for everyone round the table.
Paul Robertson: Well it is interesting that theNHS has just brought in a constitution but hasyet to define what you get from the NHS.
Joe Farrington-Douglas: The best way toapproach it is to create a positive list or, asNICE does, have a negative list of what theNHS doesn’t provide on cost effectivenessgrounds. I would counter the argument thatthe NHS hasn’t done anything to address thisproblem, although it probably did sweep itunder the carpet before the introduction ofNICE. One of the things that this review hashighlighted is that there is inconsistency, Ithink Karol is right, there is no single systemacross the board. You would expect there to be some variation across the country in howmany decisions are approved and how manyare not approved, but I think having someshared understanding of the way that PCTsmake those exceptional decisions would makesense. That is something that is beingaddressed as part of the review.
Doug Wright: I think Katrina has alreadymentioned that this is more complex than justthinking of it as a funding solution or a marketopportunity. It is about putting the rightservice together and developing some way ofworking with the individuals as a partnershipthat helps them choose the right health carefor them. Now that is a very grand ambitionbut it is absolutely what we are going to needto make this work. We are seeing differentsystems develop across the UK, within thedifferent countries of the UK, and marryingthat up with the different PCTs and healthboards, we are always going to see some levelof inconsistency. But I think there is a strongrole here for insurers to actually put togetherservices that help people navigate their waythrough that in a better way.
Elliott Hurst: Karol mentioned that thepatients he will work with in practice will bethose that come with the more intelligent,more perceptive and more relevant questionsabout understanding where their treatment isgoing. We have got a whole culture shiftaround private health care and public healthcare in the UK. It says we must providestructures and processes that allow patientswho want to engage more in understandingthe appropriateness, the quality, the cost andthe timing of care, to actually take forwardthose discussions. All of this sits around agreater use of consumerism.A medium term structure for that is thatyou then start to look potentially at fundingmechanisms that more effectively reflectconsumerism. But I think we are some wayaway from employers looking towards that.Let’s not forget that in a recessionaryenvironment employers now have the absoluteupper hand in benefit provision to theiremployees. So I would contend that if you wantto make notable, significant, potentially radicalchanges to your employer medical plan, now isthe time to do it. Unfortunately some of thequestion marks that sit around Richards aremaybe delaying some of those more radicalsolutions being delivered on the table byproviders and insurers.
Paul Robertson: Do you envision this wholeseries of changes that we are starting to seeas invigorating the market, your market?
Elliott Hurst: Yes, I think it is very welcome,whether what is coming out of Richards issustainable or not, the bottom line is it isopening up the debate making it far moreintelligent, far more open and far moreexplicit. Employers are under pressure, notonly from the recessionary environment andfrom headcount issues and so on, equally theywant to maintain a benefit that is valued,useful, accessible and delivers whenemployees actually need it. You wantyour medical benefits programme todeliver something, particularly if theNHS is not potentially able to do that.The disability market hasrather dragged forwardchanges around stateincapacity benefits, welfare and format and so on, changingcultures there. We are starting here at leastto open up the first elements of a debatewhich says ‘Mr Employer, or Mr Individual onthe High Street, what do you actually wantyour private medical insurance and benefit tolook like?
Joe Farrington-Douglas: There is a top-upinsurance product on the market but it hasn’texactly taken off as a product because themarket for actually topping up is so small.Look at the odds. If you happen to reach theage where you get a certain type of cancerthat the NHS happens not to provide and youhappen to be a suitable patient for thatproduct, you are almost better off buying alottery ticket. Perhaps it is more suitable forthe self-paid market rather than for aninsurance tool.
Paul Robertson: But surely the point is that thisis the opening of a door. You will see the samewith dementia for example, that as we all getolder, Alzheimer’s drugs become moreexpensive.
Joe Farrington-Douglas: I think that isdebatable, I think that has always been said,ever since the start of the NHS, that theywon’t be able to keep up with the demand, withwhat patients expect and with medicaltechnology’s advances. And that actually whatthe NHS provides is an expanding list, it is nota set basket that, having defined every newproduct, can be provided by the insurancemarket. It provides an expanding and changingbasket of goods and I don’t think that privateinsurance is the most efficient way of fundingthose high cost treatments as well.
Elliott Hurst: Joe mentions the number onestandalone product out there, presumably theWPA product? It has now been taken off as astandalone product. So I think in fairness toWPA, and I salute them for it, they said theywere flying a kite in the face of theDepartment of Health to actually say ‘come onthen, we are ready to have this debate, we areleading the market here.’ You look at some ofthe metrics and elements of the programmethat they were selling and some of thenumbers in there wouldn’t have taken you toofar on some of the high cost drugs that areout there.
Joe Farrington-Douglas: I think they are stilloffering that product as part of a package. Butnobody is going to claim on it for 50 years orso. It is not until you have got cancer and youhave been told that actually the NHS won’tcover it, won’t provide this drug, that yousuddenly realise that you have a problem. Theremay be something in this though; that peoplesay ‘well actually I wouldn’t mind paying a coupleof quid a month to not have that worry that atsome point in the future this will happen’.
Katrina Herren: As I said earlier, 70% of theUK population think this is a real concern, andin audiences that don’t normally think abouthealth care in the same way as the olderperson or the person who has already gotcancer do. I think we have got a slightlydifferent view at BUPA about the funding gap.We believe the NHS is going to need to doquite a few things if it is going to besustainable over the next 10, 20 years. Andthat includes things like NHS productivitygains. But looking at alternative ways offunding, all our work around this has shownthat that is the way the market is going to go.Over the last 50 years an increasingly largeamount of our tax revenue has been spent onhealth care. If we model that forward, that isgoing to become increasingly bigger.
Joe Farrington-Douglas: All the time I haveworked in health policy, it has been as theeconomy expands the demand for health careis expanding faster. But as the economyshrinks…?
Paul Robertson: Well one thing I am getting out of this is that this situation is pretty fluid at themoment. How far down the road are we forexample as an insurer, towards the time weget some solidity into what is happening?
Doug Wright: We are all sitting round thistable and we are fairly well informed and Idon’t think any of us could say with anycertainty what the NHS does and doesn’tcover. When you have got that coreuncertainty, it is actually very difficult to givethe clarity that we want to give to everyone.
Paul Robertson: If there is one aspect that youare most concerned aboutwithin this debate,what would it be?
Karol Sikora: I think it is people’s understanding.Patients and carers can’t understand why itisn’t a bottomless pit. They have got atremendous, almost religious, faith in the NHS.Even if they have top-up insurance, it is notgoing to be a bottomless pit. It will be verydifficult for the mathematicians who calculatepremiums to work out what is going to happenin innovation over the next five years, far less20 years. That is going to be a huge creation ofeven greater misunderstanding. And that isgoing to have to be managed because people dothink that if they have got some policy that theycan have anything. The public alwaysunderestimate the cost of medical care,because they have never seen the bills.
Katrina Herren: I think the biggest area of uncertainty is how the patient/customer worksthrough the system. And until we get thatclarity, developing the solution that is morethan funding but which considers how thepatient will route through this system is goingto be very difficult.
Elliott Hurst: I guess from an adviser toemployers’ perspective, we have a coreuncertainty around what the final Departmentof Health, NHS response will be here. Thebottom line is employers cannot necessarilydemonstrate too easily a return oninvestment on their employee health careprogramme as things stand. That is why thequestion will be asked, more and more so,over a period of time.I cannot foresee many employers wantingto sustain a relatively open-ended bottomlesspit kind of cancer drug benefit, if the NHS isactually going to fund many of these drugs inthe medium term.
Joe Farrington-Douglas: I think a year ago wewere saying that if the Department of Health had a review of this and worked out what theNHS isn’t going to provide, then that wouldprovide clarity to the insurance industry aboutwhat it can provide. As we are movingtowards getting that clarity on the policyposition, the political position, all the rest ofthe furniture is moving around.There is so much lack of clarity anduncertainty in the rest of the health economyabout what is going to happen to demand,what is going to happen to those internationalcomparisons, what is going to happen to theprovider markets? I think the whole wide rangeof new debates are being opened up. So I thinkwe are going to have to carry on debating this.
Doug Wright: There are clearly all the practicalimplementation issues that we have talkedabout. For me, my biggest concern around allof this is that given that there are so manyother financial issues around at the moment,that this may well be an opportunity for it tobe on the political back burner again if wedon’t really get the debate continuing in theright way.
