THE DOWNWARD SPIRAL IN LOS ANGELES

The loonies in charge of California medical services think that just a new regulation will conjure unavailable doctors and nurses out of thin air

Busy county emergency rooms turned away ambulances 8 percent more often in 2005 than the year before, prompting officials to impose new limits on how long the facilities can remain shut. Some public hospitals closed their emergency rooms to ambulances an average of 20 hours a day while some private hospitals were shuttered for 12 hours or more, according to data from the county Emergency Medical Services Agency. At times, almost all of the emergency rooms in the county were closed to ambulances. Emergency room directors attributed the overload to population growth, a greater number of seriously ill patients, greater use of the facilities for routine care and the permanent closure of nine medical centers and emergency rooms during the past four years.

When emergency rooms force ambulances to divert to other locations, patient care is delayed and paramedics are prevented from responding to other calls. County officials responded to the problem by cutting the amount of time emergency rooms can remain shut. Current policy allows overwhelmed emergency rooms to close for two-hour periods. The new policy would allow diversions for one-hour periods, and require emergency rooms to remain open for at least 15 minutes before returning to diversion status, said Carol Meyer, director of the Emergency Medical Services Agency.

The guidelines will go into effect in a couple of weeks, she said. Some experts in emergency medicine, however, say the changes don't address the reasons for the closures. "It's window-dressing," said Dr. Marc Eckstein, medical director for the Los Angeles Fire Department. "I don't see how that's going to help anything." The county previously cut emergency room closure times from eight hours to four hours in 2001 and from four hours to two hours in 2002.

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SHUFFLING THE DECKCHAIRS ON THE NHS TITANIC

Even The Economist (article below) can suggest only that medical procedures in Britain's NHS be made more efficient. No mention of sacking the huge dead-weight of bureaucrats who are eating up most of the funds available. A British bureaucrat would keep his job through a nuclear winter

The Royal Free in north London and the Princess Alexandra in Harlow, a few miles away from Stansted airport in Essex, are two very different hospitals. One is a teaching hospital with a turnover of 350 million pounds ($615m) a year. The other is a much smaller district hospital with an annual turnover of 120m. But they have a common problem. Each will be in the red in the financial year ending this March. Across the National Health Service, a deficit of around 800m is now expected for 2005-06. This is far worse than the 250m shortfall in 2004-05, which followed a period of small surpluses (see chart). And it also marks a deterioration from the position in December, when a deficit of 620m was forecast for this year.

The inability of the NHS to balance its books despite unprecedented growth in its funding from taxpayers has caused trouble at the top. This week Sir Nigel Crisp, the 54-year-old chief executive of the NHS, said that he would be taking early retirement. Only a few months ago, his stock was so high that he had been in the running for the top job in the civil service. Sir Nigel may be going but the hot political questions remain. Why should there be any deficit at all after seven years in which the NHS budget has doubled? And how are its finances to be put right?

At both the Royal Free and the Princess Alexandra, generous pay awards conceded by the government are contributing to their financial difficulties. John Gilham, chief executive at the Princess Alexandra, says that the funding it received for “agenda for change”, the pay deal for nurses and non-medical staff, has not fully covered the extra cost. This shortfall is contributing about a third of the hospital's £4.8m deficit this year. This fits in with the overall picture in the NHS. According to the King's Fund, a health-policy think-tank, higher pay swallowed 50% of the cash increase for hospitals in 2005-06. The outlook for next year is not much better, with almost 40% of the planned boost to spending set to be absorbed by extra pay. The King's Fund also highlights other pressures on hospital budgets, such as greater spending on new drugs and compensation payments for clinical negligence.

Yet despite these big general cost pressures, the overall deficit is not spread uniformly across the health service. In December, when the deficit was forecast at 620m, a quarter of the 600 NHS organisations ran a gross deficit of 950m, with some offsetting surpluses elsewhere. In January, the government identified 62—the Royal Free and Princess Alexandra were not among them—which accounted for most of the gross deficit. Of these, 18 required urgent intervention, with managerial and financial “turnaround” teams sent in to help them. This suggests that the NHS's financial malaise reflects a set of local difficulties caused by poor managerial performers rather than a more general problem. Understandably, this is an explanation that the government has tended to stress. What has happened, arguably, is that stricter accounting rules have exposed underlying financial problems that should have been tackled long ago.

The main response of hospitals to these financial strains must be to raise efficiency. At the Royal Free, where the deficit was heading for £15m, savings of £10m have been made in this financial year to bring it back to 5m. According to Peter Commins, the trust's finance director, these have been achieved mainly by shortening the time patients stay in hospital and by increasing the rate of day-case surgery. At the Princess Alexandra, annual efficiency savings of 3% have been made in the past three years. Mr Gilham is introducing “lean management”—a technique that is common in industry—into the hospital. The main goal, he says, is to reduce waste by getting things right the first time. That requires standardisation of treatment procedures wherever possible.

The pressure for higher efficiency will increase next month for all hospitals, whether or not they are having to deal with deficits. A new payments system is being introduced to sharpen competition among hospitals. It sets a national tariff for treatments, which means that hospitals are paid according to how busy they are rather than receiving budgets based on previous funding levels. At present, the new system is limited for most hospitals to elective care, such as cataract removals, but in April it will be extended to emergency work and outpatient visits.

Mr Commins says that the payments change will have a big effect, leading hospitals to shed services when they cannot provide them competitively. With so much riding on the new payments system, it was thus a grave embarrassment to the government when the tariff for 2006-07 had to be withdrawn for amendments towards the end of February. That should prove a temporary setback, but it was an unfortunate prelude to what will be a turbulent and crucial financial year.

The NHS is running out of excuses and time. The big boost to spending is due to end in spring 2008, when the NHS will have to adapt to much tighter budgets. Quite simply, the health service has got to work harder for its money. In some places, there will have to be closures of excess capacity. The deficits spell out in red ink the case for reform

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For greatest efficiency, lowest cost and maximum choice, ALL hospitals and health insurance schemes should be privately owned and run -- with government-paid vouchers for the very poor and minimal regulation. Both Australia and Sweden have large private sector health systems with government reimbursement for privately-provided services so can a purely private system with some level of government reimbursement or insurance for the poor be so hard to do?

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