Business of Health Care - National Health Services in the UK - Essay Example

? Business of Health Care Business of Health Care Introduction Providing quality health care to the citizens at a reasonable cost can be considered as one major concern of many governments of the world. It is the responsibility of the state to provide care and treatments to the patients on time which is also the main purpose of health care. However, the changing trends in the past few decades have turned health care organizations in to business organizations. The National Health Services (NHS) in UK is one of such organizations, which is publicly funded, yet functions as a business organization. The aim of the present study is to prove that NHS is a business organization which has implemented business principles in order to function effectively. The study begins with a discussion on how health care overall in a business and how NHS in UK is also functioning like a business organization. The business strategies being implemented in the organization to improve its performance and efficiency at a low cost are also explained. The trends in global health care are also explained and measures taken by NHS to keep up with the changes are also discussed. The conclusion of the study is presented in the end. Health care as a Business Health care is a USD 6 trillion dollar industry as is very much treated like a business in the global environment. Just like any other business, the health care industry provides provide returns on investments, creates jobs, provides insurance, and is often funded by the government (Ralston, 2007). Moreover, the services it provides are necessary for survival of a society, thus it must be maintained as a business to ensure the future and present smooth running of the industry. In order to maintain health care as a business, the health care triangle must be maintained, which includes the “access, cost, and quality” of the services being provided to the consumers (Gandhi, 2012). Since health care is treated like a business, the individuals to whom it provides services are treated not as patients but consumers whose needs must be satisfied. Keeping this view of health care as a business in mind, the concept of Accountable Care Organizations (ACO) was introduced by Dr. Elliot Fisher in 2006 (Fisher, 2010). According to this model, an ACO is a “local health care organization and a related set of providers (at a minimum, primary care physicians, specialists, and hospitals) that can be held accountable for the standards of care delivered to a defined population” (Devers and Berenson, 2009, p. 1). This modal has become a major part of the US health care system since its implementation under the Patient Protection and Affordability Care Act (Gandhi, 2012). The private health care firms operate more like business organizations than the public health care organizations as they provide quick quality care to the patients. Many patients whose treatments are delayed or denied often seek treatment from the private firms that charge their patients the desired price for their services. The private health care industries in the United Kingdom have been a victim of criticism in recently because of their inability to provide precise information of quality and price of their services (Ruddick, 2011).The business for the private health care firms is generated mainly through health care insurance and network agreements while some patients may also choose to pay themselves for the services (Ruddick, 2011). National Health Service as a Business The National Health Services (NHS) represents the three of the four health care systems in the United Kingdom which is publicly funded through general taxation instead of health insurance. NHS is subjected to a number of health care services that are provided free of cost at the time of use. The NHS provides jobs to over 1.2 million people and allows patients with serious conditions, as indicated by the General Physician, a direct access to specialist treatment (Popper, Sutton, Whitnall, and Windmeiier, 2007). The NHS is a 14 billion euro business and is the 4th largest employer in the world. The UK government spends 118 billion euro annually for the funding of NHS. Though many business principles have been employed in the NHS to improve the quality of services provided to the patients, it has come under much criticism due to its inefficiency in providing timely care to the patients. The main complaint against the NHS by the public is the long wait which the patients have to bear with as they have to first get in contact with their General Physician, then if their condition is severe, they have to wait to get an appointment with the specialist, and if recommended by the specialist, they again have to wait to receive proper treatment in hospital. This can be very troublesome for the patients who actually have a severe condition as waiting for long periods of time can be fatal for them. NHS had become a business a long time back when the concept of Managers was first introduced in the institute in 1983. The NHS was facing many problems in relation with the union workers in the institute. The main cause of the industrial chaos remained the pay but the union also had objections against the way the system was being run (Rivett, 1998). Consequently, Roy Griffiths was hired by the then Permanent Secretary, Sir Kenneth Stowe, to write a review. In his report Griffiths concluded that the institute was in dire need of a strong managerial board which must have authority to manage and restructure the system as needed (Rivett, 1998). It was then that the first managers of NHS were hired and the system officially became a business organization. The NHS has been through many internal and external significant innovation in a close duration of time due to the change in economics of the health care industry as a whole (Brown, 1994).The external changes in the environment include the pressure to reduce cost and capitalize on efficiency of the staff. Moreover, The increasing competition due to rise in the number of private health care firms has also increased the pressure on NHS to improve its performance. Another criticism faced by the NHS is its leadership style and the inefficiency of the NHS managerial staff has been pointed out in a recent enquiry conducted by the King’s Fund’s Commission (Practice Business, 2011). Especially since the NHS is under a lot of financial pressure, the need to improve the management of the system has become a priority. The internal changes in the NHS include the shift from a “fragment disease-focused” approach to a “community-focused system” where priority is given to the preclusion of the infective disease and endorsement of the health and primary care (Gilmartin and Freeman, 2002). The NHS funding has drastically increased from 41 billion euro in 1999 to 118 billion euro in 2011 (Westwood and Silvester, 2007). The main purpose of increasing the funding was to improve the performance of the system. Though the increase in budget for NHS did reduce the waiting time for patients to a certain extent, they delay in treatment of patients is still a problem in the NHS. Lean Six Sigma and NHS Lean Six Sigma is a managerial tool used to improve the overall organizational performance at minimum cost. The lean approach suggests elimination of waste from the value stream while the Six Sigma tool is used to identify and minimize the discrepancies in the value stream (NHS Institute for Innovation and Improvement, 2012). In the December of 2005, Lean Six Sigma approach was introduced to the NHS to improve the performance of the institute which has had a significant impact on the waiting time of the patients (NHS Institute for Innovation and Improvement, 2012). Before the implementation of Lean Six Sigma, the staff and the leaders at the NHS did not have complete information about the patients and there was no flow of information in the system i.e. the staff were unaware about the patient’s referrals, reports, coding information, etc (Westwood and Silvester, 2007). The main problem with the institution was that the staff focused increasing the departmental budget and activity without taking into consideration the structure and the problems within the system (Westwood and Silvester, 2007). The first solution to every problem was to install expensive equipment to help reduce the time taken to complete a given task. Before employing the Lean Six Sigma, the NHS first monitored the regular daily operations and the execution of unit and then recommended a few managerial and organizational changes to improve the performance of the institute. Since then the performance of NHS has significantly improve, for instance, the use of radiology has been employed to decrease the number of waiting patients and time for which they have to wait (NHS Institute for Innovation and Improvement, 2012). The NHS was able to reduce the MRI and CT waiting time from 17 and 27 weeks to 10 weeks in just a period of five months (NHS Institute for Innovation and Improvement, 2012). The overall waiting time was reduced to 97% in the early six months of execution of Lean Six Sigma which allowed NHS to save up to 100,000 dollars annually (NHS Institute for Innovation and Improvement, 2012). NHS and Open Market The main purpose of brining in managers in the NHS was to formulate the health care structure extra professional and businesslike as the managers were expected to improve performance, reduce cost, improve customer care and satisfaction, control the staff, generate new and effective ideas to run the organization, etc. However, the cost of the organization kept on increasing which encouraged NHS to expose the health care system to internal market competition (McPherson, 2012), as it was believed that it would help in improving the performance. This idea of internal market competition did not work as different parts of the same organization were competing with themselves and at the same time required to co-operate and co-ordinate with each other (McPherson, 2012). Thus, the NHS was made open to the external market competition with the intentions of increasing the efficiency and performance of the organization. It is expected that the new structure of NHS and the increasing competition will lead to an improvement in the performance of NHS. This will sure have a plenty of impact on the way things are run in the NHS. The major advantage of doing this is that the NHS will adopt a more patient-centered approach where the satisfaction of the patient with the services provided will be a priority. Secondly, since the customers will have more choice to select a service provider, the service providers will make efforts to provide quality services at minimum cost. However, the idea is completely new and untested and can backfire. There remains a slight chance that the instead of improving the quality of services, the condition of the institution worsens with more patient picking private health care services over NHS. Another disadvantage of external market competition is that if the idea fails, the government will have no obligation to help the NHS recover from the loss and failure which can have a drastic effect on the overall health care system of the U.K. Business Trends in Health Care It is obvious that the health care diligence is indeed a business industry as suggested by the structure and function of most of the health care organizations, including NHS. Similarly, these organizations have adopted certain principles of business to ensure the smooth functioning of the business. The structure of the health care industry has been quite different from the rest since there has always been a limited number of health care institutions and specialists in a given locality. There was no competition in the industry and people had no choice but to visit the few specialists present in their localities. However, with the increase in the health care institutions and specialists, the competition in the industry has also started to get tough. The organizations are now focusing on business terms such as “customer satisfaction” and “guarantees”, which were formerly not given attention by the health care professionals. The health care organizations in UK have no choice but to compete with each other as the financial pressure keeps on increasing and they must perform well to gain more funds. Moreover, the expectations of the customers have also increased due to the presence of different health care providers and they are bound to compare the services of one with those of others (Jones, 2002). Moreover, the health care organizations are expected to provide quick and quality services at a minimum cost. Due to this situation, number of changes has been made in the trends of national and international health care system which include (Harvard Business Review, 2012): Need for Innovation and Increase in Demand – Due to increase in the problems related to health care, the demand for better and faster services is increasing with no rise in the funds or budget. This requires that the managers of the health care systems innovate new ways which will help in the smooth sailing of the industry. Aging Population – The life expectancy of an average U.S citizen will rise from 76.6 years in 2000 to 83.9 years in 2050 (Harvard Business Review, 2012). This means that there will be an increase in the number of aging patients with severe diseases that require expensive treatment. This will require the health care organizations to analyze the position and appear up with the cost-benefit solutions to deal with the problem efficiently. Increase in Cost – Due to the technological advances and increase in the overall population, the cost of medicine is likely to get high in the coming years. This could be a big problem for many health care organizations with they fail to do a proper planning. Increase in Non-MD Caregivers – Due to an increase in health care demand, cost, protocol standardization and a decrease in more of the leading health care physicians and specialists, the trend of non MD’s providing care to patients is on the rise which can have a significant impact on the overall structure of the health care industry. Consecutively to maintain all these trends, it is required that the health care managers adopt proper business trends and implement business strategies to stay in the competing market. NHS has also created a Standard of Business Conduct for its staff and it is required that all the employees of the organizations follow this code of conduct which covers everything from action for managers to private practice (NHS, 2010). The two main reasons for implementing business principles are: 1. Reduce Cost 2. Improve Quality The NHS has actually been able to reduce cost of the organization by implementing certain business strategies. (NHS Institute for Innovation and Improvement, 2012). The implementation of business strategies has not only helped the organization in saving up to 100,000 dollar but also helped in reducing the waiting time of the patients by 97% (NHS Institute for Innovation and Improvement, 2012). It is clear that the implementation of business strategies in the NHS further help in reducing the cost of the organization but does it also improve the quality of services? In an effort to improve the quality of the health care services provided by NHS, the organization signed a 10 year contract with Atos Health care, a French Multinational IT firm, to manage the GP surgery practices of NHS (McNicoll and Campbell, 2011). The firm entered the contract with great promises of significant improvement in services but failed to deliver. The contract was terminated only after three years as the firm did not have previous experiences or running such a department. This was a big failure on part of NHS as in the beginning of the contract many promises were made. It is argued that the NHS is not a business but a public service organization and its focus should be on providing quality health care to the citizens not on making profit (McPherson, 2012). The purpose of developing NHS was to provide quality health care to people free of cost at the time of use and would be paid for by general taxation. On the other hand, it is criticized for taking up most of the funds without any significant improvements in the services. Moreover, the attitude of the NHS staff has attracted much criticism as they assume that the increasing costs of the organization will somehow be met by the government as they make no efforts to reduce cost and instead keep on increasing the installment of new expensive equipment and staff (Corrigan, 2011). However, the importance of the institution cannot be ignored along with the fact that the increase in the number of patients each year does require more resources. But the cost can be controlled if proper business principles are employed. It must also be understood that adopting business principles in NHS is crucial for the survival of NHS the same as it will not merely help out the organization to save the taxpayer money but also allow it to function efficiently as an organization. Conclusion The review of the literature provided above shows the businesslike nature of the health care organizations including NHS. Even though NHS in UK is a publicly funded, non-profit organization, it is being run on strict business principles that focus on reducing cost and increasing productivity. The structure and function of NHS in UK is similar to any other business organization with managers and code of business conduct. Moreover, the organization has also entered the external market for competition which further puts in the category of a business organization. Health care has similar goals, strategies, and challenges to face as any other business organization. Its main purpose is to provide quality care at minimum cost. NHS has managers who aim at drawing business strategies that are to be implemented in the organization in order to achieve the goals, it works toward reducing cost, and it is competing with other health care organizations to stay in the market. All these qualities of NHS in UK prove that it is indeed a publicly funded business organization that seeks to satisfy the needs of its consumers. List of References Brown, M. 1994. Commentary: The Economic Era: Now for real change. Health Care Management Review, 194 , 73-81. Devers, K., and Berenson, R. 2009. Can Accountable Care Organizations Improve the Value of Health Care by Solving the Cost and Quality Quandaries? Robert Wood Johnson Foundation. Fisher, E. 2010. Accountable Care Organization. Brookings: The Dartmouth Institute for Health Policy and Clinical Practice. Gilmartin, M. J., and Freeman, R. E. 2002. Business ethics and health care: A stakeholder perspective. Health Care Management Review, 272 , 52. Harvard Business Review. 2012. Megatrends in Global Health Care. Retrieved May 7, 2012, from Harvard Business Review: http://hbr.org/web/extras/insight-center/health-care/globaltrends/4-slide Jones, K. 2002. Helping the Health profession Help Others. Knoxville: The University of Tennessee. NHS Institute for Innovation and Improvement. 2012. Lean Six Sigma. Retrieved May 7, 2012, from NHS Institute for Innovation and Improvement: http://www.institute.nhs.uk/quality_and_value/lean_thinking/lean_six_sigma.html NHS. 2010. Standard for Business COnduct for NHS staff. NHS Dumfries and Galloway. Popper, C., Sutton, M., Whitnall, C., and Windmeiier, F. 2007. Did ‘targets and terror’ Reduce Waiting Times in England for Hospital Care? Bristol: Bristol Institute of Public Affairs. Rivett, G. 1998. From Cradle to Grave - the first 60 years of the NHS. King's Fund. Westwood, N., and Silvester, K. 2007. Eliminate NHS losses by adding Lean and some Six Sigma. Operations Management, 5 , 26-30. Ralston, R. E. 2007, April 16. Health Care Is a Business—or Should Be. [Online] Available from Americans for Free Choice in Medicine: Accessed on May 7, 2012. McNicoll, A., and Campbell, D. 2011, April 12. Atos Healthcare pulls out of NHS contract. Retrieved May 7, 2012, from Guardian: http://www.guardian.co.uk/society/2011/apr/12/nhs-privatisation-future-policy Practice Business. 2011, April 18. Good management difference between NHS success and failure. Available from Practice Business: [Accessed on May 7, 2012] Corrigan, P. 2011, September. Business as usual in the NHS? Not anymore.. [Online] Available from Public Service: [Accessed on May 7, 2012] Ruddick, G. 2011, December 9. Private healthcare industry faces inquiry. Available from The Telegraph: [Accessed on May 7, 2012] McPherson, B. 2012, February. The NHS is not a business and should not run like one. [Online] Available from Public Service: [Accessed on May 7, 2012] Gandhi, V. 2012, March 23. The Future of Healthcare: The Basics of Accountable Care Organizations. [Oneline] Avialable from The Business of Healthcare: [Accessed on May 7, 2012] Read More