Earlier this year, the British government hired management-consulting firm McKinsey & Co. to suggest ways the country's National Health Service (NHS) might save money in the face of rising health-care costs. But when a portion of McKinsey's confidential work calling for a 10% cut in the NHS workforce was leaked to the British press last week, politicians rushed to the airwaves to reject the report they themselves had commissioned. "That's not what we are about," Minister of Health Mike O'Brien told the BBC. "In core frontline services, we need more staff rather than fewer."
As debate rages in the U.S. over greater federal involvement in health care, Britain's socialized health-care system has come under scrutiny. The McKinsey report, and its fallout, highlights some of the pros and cons of such a system. On the one hand, McKinsey's analysts laid bare the scores of redundancies and inefficiencies within a bloated national health-care structure that employs some 1.5 million people in England. According to the Health Service Journal, which obtained a copy of the confidential report, McKinsey believes the NHS could afford to eliminate 137,000 clinical and administrative posts by 2014 and save $32 billion in the process.
But the rejection of the suggested job cuts by British politicians displays how a socialized medicine system can be shielded from market forces and that provision of care need not be sacrificed for a healthier bottom line. In the past, politicians have readily implemented efficiency measures that benefit patients reducing the length of stay in hospitals, for example, and introducing automated drug distribution while refusing to push through those that may curtail care. There will be many aspects of McKinsey's confidential report not pertaining to job cuts that the NHS will most likely adopt, says John Appleby, chief economist of the King's Fund, a British health-care think tank.
According to Appleby, the fact that the NHS lacks any profit motive can be both a blessing and a curse. "One of the problems of a national health service is that there are not the usual incentives for it to be efficient or to find more productive ways of operating," he says. "But at the same time, politicians are not forced into taking a narrow view of what's efficient. In this instance, they can reject threats to staffing levels of doctors, nurses and administrators while accepting other elements of the report."
For the past several years, Britain's Department of Health has spent about $200 million a year on hiring international management-consultant firms, hoping to find ways to counter rising health-care costs associated with an aging population, expensive new medical treatments and rising patient expectations. The result is often a clash of cultures. A former analyst at A.T. Kearney, who spoke to TIME on condition of anonymity because of a nondisclosure clause in his contract, recounted the reaction of senior British health officials when he suggested that they adjust for increases in pharmaceutical costs by upping the fee patients pay for prescription drugs by the equivalent of $1.60. Most British citizens currently pay around $12 for prescriptions.
"They looked at me as if I had suggested saving money by killing all the sick babies in British hospitals," said the former analyst. "It simply was not politically acceptable to even mention increasing prescription charges. I was shocked. It takes a degree in Britishness to understand how touchy people are about the NHS."
McKinsey's report, which was completed as part of nearly $15 million worth of work for the Department of Health this year, also called for a recruitment freeze within the next two years and for a drop in medical-school admissions, according to the Health Service Journal. It said savings of up to $5 billion a year could be made by improving staff productivity, while more than $3 billion could be saved on external contracts with waste-disposal companies, food suppliers and other contractors.
But with a general election looming next spring, there may be little chance that even softer cost-control measures such as those will be implemented, according to Appleby, who says the NHS is one of Britain's sacred cows. "Politicians know the NHS is incredibly popular, so they wouldn't dare propose cuts this close to an election, even though debt will eventually force the government to either raise taxes or cut public services or both," he says. The incumbent Labour Party has already been projecting itself as the party that saved the NHS from years of neglect under Margaret Thatcher's Conservatives. But David Cameron, leader of the Conservative Party, has pledged to "ring-fence" NHS funding and make cuts elsewhere.
Even if such promises are upheld, experts say, the NHS faces a funding crisis in the coming years. One recent report by the NHS Confederation, an independent membership body for the organizations that make up the NHS, found that even if the NHS's budget were increased 5% each year until 2011, rising costs would lead to a real-terms reduction in funding of some $15 billion over that period. "More with less" may be the management consultant's old adage, but with health-care systems around the globe under strain, citizens and politicians alike may have to adjust their expectations of what constitutes affordable health care. As Niall Dickson, chief executive of the King's Fund, recently told the BBC, "Doing less with less seems a more realistic scenario."