U.K. single-payer reimbursement pushes most hospitals into the red

As the U.S. considers the merits of “Medicare for all,” experience in the U.K. with a single-payer system is worth highlighting.

One problem with single-payer, at least with the U.K. system, is that if regulators decide they are going to drive healthcare providers into deficit, there is little you can do about it. This is in effect what NHS England (the organization that sets reimbursement levels) has done. Under great pressure to maintain overall spending within the total funding allocated by the Treasury, NHS England decided that it made best sense to keep a tight lid on reimbursements to the acute sector.

Increasing hospital deficits have been offset by surpluses at the “commissioning” end of the NHS. The mechanism for doing so is “payment by results” (PbR), which is similar to DRG payments in the U.S. But payments for emergency care (in particular) are kept low. For example, the top rate for a complex emergency department visit is the equivalent of $420 (with no separate charging for physician services). Any increased emergency activity is typically paid at a 20% marginal rate on already low rates.

As a result, the National Health Service in England has gone from 5% of acute providers being in deficit in 2011-12 to around 70% now. The actual position is even worse because many of the 30% that are “officially” in balance are only doing so with the help of non-PbR sources of income such as charitable funds, private patients and additional funding support (which can be shown as income rather than as a loan). You can imagine the negative consequences for quality healthcare delivery and staff morale at hospitals that are permanently in deficit.

Robert Royce, Ph.D. Swansea, Wales