Focus on short term is ruining health service

Opinion: We are educating medical personnel to a high standard but for export

Wed, Feb 5, 2014, 00:01

The Government’s spin is that the Irish acute healthcare system is “challenged”. The consensus across the medical and nursing professions is it is unravelling – and that the Government knows this to be the case.

The atmosphere in some key specialities, like A&E, is one of real pressure; in the Health Service Executive, it’s one of frenetic firefighting and the feeling is it is no longer possible to hold the line. The system is at a point where imbalances in both public (including voluntary) hospitals and the private-health-insurance-funded independent sector are undermining service provision.

The mauling that the public acute system has experienced under the troika is reflected in the 2014 service plan. Policies have reduced medical and nursing staffing to levels that compromise patient care and increase risk, right across the system. At the same time, consultants have been muzzled by the Government. The HSE has been constrained to mute its criticisms of what the Government has termed funding “challenges”. The leaders of our largest hospitals have been more explicit.

Government policies on funding and on medical manpower are one-dimensional, disingenuous and fixated on the short term. Funding policies which inevitably generate overspends do not make sense, except as political theatre. There is a resistance to new thinking, a notable example being the unwillingness to engage with consultant James Sheehan’s proposals for a new national children’s hospital.

Medical manpower policies that set terms and conditions for staff that are so counterproductive as to impel those who are mobile to leave the country represent an enormous waste of resources for the acute system. We are educating medical and nursing professionals to the highest standards, but “for export only”. These same medical manpower policies deter consultants who are working abroad, and whose medical skills are urgently needed here, from even applying for posts in Ireland – as the HSE has been forced to acknowledge only this week.

The consequences of such short-term thinking, and the longer-term costs of rebuilding services and staffing levels, greatly outweigh any savings

Affordability crisis
The dysfunctionality is at least as great within the private health insurance market, where the State also exercises great influence. The reasons for the affordability crisis in Ireland’s private health insurance system stem from this: there has never been a properly functioning market in Ireland along the lines envisaged by the EU’s third non-life directive, which was emphatically pro-consumer.

What there is instead is the legacy of an essentially protectionist mindset; one that long operated a two-tier regulatory system which discriminated, in such areas as solvency capital and supervision, against new entrants to the market. The European Court of Justice ruling of September 2011 which instructed the State to capitalise the VHI on the same basis as any commercial institution – and quickly – remains stymied. That, in itself, is extraordinary.

Dropping private health insurance cover is a decision not taken lightly. But well over 200,000 customers have defected in the last few years, burdened by escalating premiums that have more than doubled in real terms. The rate of defection is greatest among young people. Colm McCarthy has pointed out that, in 2008, for every customer over 60 there were 2.21 in the 18-39 age cohort. That has fallen to 1.54. This will destabilise the market.

The dysfunctionality evident in the public system is also clear in the anomalies in the private health insurance market. Not least is the fact that a key element driving up the cost of private health insurance and contributing to defection rates is the Government itself, through the huge increase in recent years in the health insurance levy and the negative impact that has on customers of smaller insurers.

The charging of private patients for public beds will extract €115-130 million from consumers. The State has long managed to pull off the trick of increasing the costs of a private room in a public hospital in the budget – and disclaiming responsibility when insurers announce premium increases the following January – as if the two were entirely separate.

In last October’s budget, tax relief on so-called “gold-plated” policies was reduced. This impacted across 90 per cent of customers, pushing premiums up still further for families. It also impacted on a public system already under pressure. The change is likely to contribute to widespread downgrading of plans and push even more consumers into public-only plans and then out of the “market”.

These three factors amount to an estimated transfer of well over €300 million from private health insurance consumers to the State. These developments have put additional pressures on sustaining capacity and jobs in independent hospitals while transferring even more pressure to the public system.

Consumer damaged
State policy towards the Irish private health insurance market should be about what is best for the consumer. Instead, private health insurance is treated as a “cash cow” to bring in money to shore up a systemically underfunded public system.

Frenetic efforts a year or so ago to get insurers to make advance payments to the State to meet fiscal “targets” show just how detached the policy mindset is from a longer-term view on market-building.

A first step would be for the Government to acknowledge that austerity has a lasting negative effect on health status and on future health expenditures. The oldest principle of management is to take care of your customers ( your patients) and nurture the trust of those who serve your customer – and the “system” will take care of itself. A policy mindset that still emulates the short-termism of the troika is going in entirely the opposite direction .

Ray Kinsella lectures in economics and is editor of Acute Healthcare in Transition in Ireland

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