Britain's National Health Service Needs Intensive Care

Red ink, cutbacks, and long waiting lists are fueling a fierce political debate

The warning is dire: If Britain's National Health Service (NHS) doesn't receive an immediate cash injection of some $300 million from the government, hospitals may be forced to turn away patients except for emergencies, says the British Medical Assn. (BMA), which represents two-thirds of the nation's doctors. Inside the health service, the message is just as grim. "We're living beyond our means this year, doing work we can't afford to do," says Alan Langlands, chief executive of the NHS. "We're under tremendous pressure."

It's not the first time. Britain's National Health Service has been in trouble on and off since the 1980s, when then-Prime Minister Margaret Thatcher launched reforms aimed at boosting efficiency in the huge health bureaucracy. But now the NHS is running into a new financial wall. With demand for emergency services up 13% this year and administrative bills soaring, costs are fast outpacing the government's $70 billion NHS budget. More than half the country's 117 health authorities expect to overshoot their budgets this year, forcing hospitals to cut services, postpone equipment purchases, and delay surgeries.

FEWER TOOLS. To make matters worse, some doctors say Britain is falling behind in medical technology. For example, magnetic resonance imaging scanners, which cost $1.7 million each, are still rarities at most NHS hospitals. "We have coped remarkably well with chronic underfunding," says Dr. Sandy Macara, the BMA's chairman. "But there simply aren't any more efficiency savings to be made."

With a general election just months away, the NHS crisis is becoming a hot political issue. The opposition Labor Party is trying to cash in by blaming the Tories for pumping up the NHS bureaucracy at the expense of patient care. In a Nov. 20 debate in Parliament, Labor deputies accused the Tories of adding 20,000 managers and cutting 50,000 nurses from NHS payrolls since 1991. While Labor hasn't promised a big NHS funding hike, it says it will scrap some reforms aimed at injecting competition into the service.

The Conservative government can't afford an NHS crisis on the eve of the election. That's why the Tories are likely to do everything they can to avert a breakdown of the NHS this winter. Some observers say the government may allow health authorities to postpone paying some bills until next fiscal year, when the government could boost the NHS budget to ease the strain. The NHS's 1996 budget was just 1% higher than the previous year's, compared with average 3% annual budget increases for the 17 years before that.

Finding emergency financing would solve only part of the NHS's problems. A bigger fight is focusing on how much more of the service should be privatized. In 1993, the government launched its "private finance initiative," allowing private companies to bid for the right to build and operate public hospitals. So far, few deals have been struck, though Marriott International Inc. and Hewlett-Packard Co. have shown interest. But the respected medical journal The Lancet opposes "back door privatization" because it could lead to the deterioration of patient care.

"POT OF GOLD." As the politicians argue, there's no shortage of NHS horror stories. Patients are shifted from hospital to hospital because of a lack of beds. Waiting lists for elective treatments are rising again, after plummeting from 176,000 to 3,700 since 1990. The government was able to slash lists by allowing hospitals to award bonuses to top-performing surgeons, sometimes doubling their NHS salaries. "Working through a big waiting list could mean a pot of gold," says Dr. Matthew Porteous, an orthopedic surgeon at London's King's College Hospital. His unit will operate on a third more patients this year than in 1993. But its waiting list has soared to 18 months, up from a year in early 1996. "The money is running out," says Porteous.

Likewise, the funding squeeze has stepped up the "rationing" of care. For instance, most health-care authorities refuse to pay for in-vitro fertilization. And doctors usually won't recommend costly services such as hip replacements for people over 75. That explains why 14% of the households in Britain have bought private insurance as an alternative to the NHS. "Britain is like a developing country," argues Klaus-Dirk Henke, chairman of the Advisory Council for Health Care Reform in Germany. "In Germany, we do not need waiting lists or rationing."

As the winter flu season sets in and campaigning gets under way, debate over the NHS is certain to intensify. While Labor keeps up the pressure, the Tories may shelve plans to further privatize the service, removing a big target for critics. One thing is sure: No one will argue for scrapping the nearly 50-year-old NHS, which still excels at basic services such as childbirth and emergencies.

But the NHS is as close to the financial breaking point as it has ever been. The next government--whether Labor or Tory--must hike the budget substantially or push through big cutbacks. Either way, it's likely to be bitter medicine.

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