Cost Cutting and Rationing in the NHS has Patients being Treated in Corridors where they Wait for a Bed

Posted by PITHOCRATES - May 12th, 2012

Week in Review

Yet another example of the cost pressures on a national health care system.  And the ill affect those cost pressures have on their patients (see Patients ‘treated in corridors’, claims Royal College of Nursing by Nick Triggle posted 5/12/2012 on BBC News Health).

Patients are being left stranded on trolleys for hours and forced to have treatment in corridors due in part to the loss of hospital beds, nurses say…

The RCN said that was putting patients at risk by potentially leaving them without access to essential equipment such as oxygen supplies and heart monitoring equipment as well as compromising their privacy and dignity.

Other problems highlighted included ambulances being forced to queue outside A&E units and patients being put in unsuitable wards.

The RCN said the crisis was being caused by a combination of staff shortages, the long-standing drive to reduce the number of beds in hospitals and the rise in A&E admissions…

Mike Farrar, chief executive of the NHS Confederation, which represents hospitals, said the problems identified should not be happening.

But he added hospitals were facing a struggle because of “growing financial pressure and significant structural upheaval”.

In other words the cost of Britain’s national health care is growing so great that they are cutting costs and rationing care.  To treat as many people as possible with their limited resources.  Which can be expected in a country with an aging population that is living longer. 

It took the National Health Service (NHS) awhile to get here.  Obamacare is starting with these dire statistics.  So there will even be more cost cutting and rationing under Obamacare.  Which will try to treat far more people with their limited resources.  Which begs the question whose bright idea was Obamacare?  And couldn’t they see the problems the NHS has been having these past few decades?


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Waiting Times in the UK’s National Health Service Grow Longer, some even Waiting a Year or More for Treatment

Posted by PITHOCRATES - April 22nd, 2012

Week in Review

The advocates of national health care said that it will give all people quality health care.  While cutting costs, too.  Which was the claims made during the Obamacare debates.  Opponents said it was impossible to increase the number of people getting quality health while cutting costs at the same time.  For any national health care system would require massive new taxes and the rationing of services.  To make those limited resources spread over the greater number of people in the system.  Increasing wait times for medical treatment to unacceptable levels.  Like they are struggling with now in the UK.  As wait times have increased for the second year in a row in the National Health Service (NHS) (see David Cameron faces pressure as NHS waiting times grow by Denis Campbell posted 4/18/2012 on The Guardian).

Patients are enduring increasingly long delays before having some of the most common forms of surgery, according to official data that casts serious doubt on David Cameron’s pledge to keep NHS waiting times low.

New research by the Patients Association also shows that fewer patients are undergoing planned operations such as joint replacements, cataract removal and hernia repairs, as the NHS tries to make £20bn of efficiency savings at a time when demand for healthcare is growing.

A report from the association, based on information supplied by 93 of England’s 170 acute hospital trusts, found that waiting times for a range of elective operations rose between 2010 and 2011

The average wait before having a new knee fitted rose from 88.9 days to 99.2 days, while patients needing hernia surgery typically waited 78.3 days in 2011 compared with 70.4 the year before. The delay before the removal of gallstones increased over the same period, by 7.4 days, as did the delay before having a new hip (6.3 days longer), hysterectomy (three days) and cataract removed (2.2 days).

Smaller numbers of patients also had surgery for all these procedures over the same period, according to responses from hospitals to freedom of information requests submitted by the association. Trusts that supplied figures jointly performed a total of 18,268 fewer operations for these conditions in 2011 than in 2010, with those blighted by worsening vision, especially older people, most affected.

There is only one reason for these increases.  Their limited resources can’t treat the same amount of people as last year so they increased waiting times.  That is, they rationed these services more.  Now funding could have remained the same and the number of patients rose.  Or they cut funding while the number of patients remained the same.  Or more likely it was both.  More patients and less funding.  Because of an aging population.  And rising budget deficits (the NHS accounts for a very large part of Britain’s budget deficit).  Which is exactly what will happen under Obamacare.  Only on a greater scale.

But the health department said data from every hospital trust showed waiting times were low and stable and more patients were being treated, including for conditions in the report. The document was based on “partial” data and did not reflect the situation across England, it added.

Health secretary Andrew Lansley said: “There are fewer patients than ever waiting a long time for treatment in the NHS. The number of people waiting over a year for treatment has reduced by two-thirds since we came into office and the average time patients have to wait for treatment is at the same level as two years ago.”

Okay, so the data may be a bit skewed.  For the people waiting longer than a year for treatment has fallen by two-thirds.  Which means that one third of that group is still waiting over a year for treatment.  So that’s something to look forward to with Obamacare.  A new metric to enter our lives to remind us how good Obamacare is.  People waiting a year or more for treatment is down.  Yeah.  But the US is far more populated than the UK.  So Obamacare will treat far more patients than the NHS.  So it’s not likely that we’ll be hearing that metric reported as going down.  So we’ll probably hear something more along the lines like “though the number of people waiting over a year for treatment has increased the rate of that increase is smaller than the previous year.  Just another fact to tell you that Obamacare is taking care of you.”

Let’s face it, based on the sheer size of the US and the amount of time the British have been practicing national health care Obamacare will never be as good as the NHS.  For the size of Obamacare will make the NHS look like a walk-in clinic.  Because all the numbers are working against it.  An aging population that is living longer.  And declining birth rate that creates fewer people entering the workforce than leaving it.  You put these together and it can only mean one thing.  Massive new taxes and the rationing of services.  And all on a far greater scale than in the NHS. 

The only thing Obamacare will do is make the NHS look better.  Even with wait times of over a year.


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LESSONS LEARNED #20: “It is never a consumer that complains about ‘predatory’ pricing.” -Old Pithy

Posted by PITHOCRATES - July 1st, 2010

ECONOMIES OF SCALE and vertical integration can do two things very well.  Make industrialists rich.  And make the things they sell cheap. 

The more you make, the less each thing you make costs.  Businesses have fixed costs.  Big one time investments in plant and equipment.  Businesses have to recover these costs.  Each thing they sell has a portion of these fixed costs added to its price.  The more they sell, the less they need to add to each unit sold.  This is economies of scale.  Think of bulk goods.  Warehouse clubs.  Places where you can buy large quantities of things at lower unit prices.  You may buy an ‘economy pack’ of 3 bottles of shampoo shrink-wrapped together.  The purchase price of a 3-pack will be greater than the price of a single bottle of shampoo at your convenient corner drug store.  But the unit cost of each of the bottles in the 3-pack will be less.  You save more over time by buying 3 bottles at a time.  Spending more, then, means spending less.  In time.

Few of us buy raw materials.  Few have a need for crude oil.  Iron ore.  Coal.  Limestone.  Manganese.  But they make the stuff we buy.  A lot of things have to happen before those raw materials make it to us in those things we buy.  It has to be mined or drilled/pumped.  Transported.  Processed.  Stored.  Transported again.  Processed again.  Stored again.  Transported again.  There are many different stages between extracting raw materials from the earth and incorporating them into a final product we consumers buy.  At every stage there are costs.  And inefficiencies.  Which add to costs.  By reducing these costs along the way, the component materials used at the final manufacturing stage cost less.  This reduces the selling price of the final product.  This is what vertical integration does.  It puts everything from the extraction of raw materials to the incorporation of those processed materials into the final product for sale under control of the final user.  It brings in a high level of quality, cost containment and reduction of inefficiencies into the entire process resulting in a high quality, mass produced, inexpensive product.

Not everyone can do these things.  You have to live and breathe the industry you’re in.  You have to understand it intimately.  An industrialist at the top of his game can do this.  A politician can’t.  States trying to take control of their economy have failed.  Every time they’ve tried.  Why?  Politicians are ‘intellectuals’.  They’ve never run a business.  They only thought about it.  And, somehow, that gives them the moral authority to tamper in something they are simply unqualified to do.  And when they meddle, they destroy.  Purposely.  Or through unintended consequences.  In the process, though, they enrich themselves.  And their cronies.

ANDREW CARNEGIE WAS a brilliant entrepreneur.  After working for a railroad, he saw the future.  Railroads.  And he would build its rails.  And its bridges.  With his Keystone Bridge Company.  Which used steel and iron.  So he built his Union Mills.  Which needed pig iron.  So he built his Lucy blast furnace.  Which consumed raw material (iron, coke, limestone).  So he secured his own sources of raw materials. 

His Lucy blast furnace set world records, nearly doubling the weekly output of his steel competitors.  No one made more steel than Carnegie.  For less.  In about 20 years, he brought the price down for steel rails from $160/ton to $17/ton.  And got rich in the process.

Economies of scale.  Vertical integration.  And innovation.  Carnegie hired the best people he could find and used the latest technology.  Always improving.  Always cutting costs.  Always making steel more plentiful.  And cheaper.  His steel built a nation.  Dominated the industry.  And destroyed the competition.  Of course, that drew the attention of the government.  And they tried to break up the steel giant because it was unfair to the competition.  Who couldn’t sell steel as cheap as he could.

JOHN D. ROCKEFELLER was a brilliant entrepreneur.  After trying the oil drilling business, he saw the future.  The refining business.  For America lit the night with kerosene.  And he would provide that kerosene.  At prices that a poor man could afford.  And he did.  And he saved the whales in the process (his cheap kerosene put the whale oil business out of business).

Like Carnegie, cutting costs and production efficiencies consumed him.  He built his own kilns and used his own timber for fuel.  He made his own barrels from his own timber.  He used his own horse-drawn carts, boats, rail cars and pipelines.  He bought up competitors.  He grew to dominate the industry.  By far the biggest shipper, he got better shipping rates than his competitors.  And he constantly innovated.  When others were dumping the gasoline byproduct from refining kerosene into the river (no internal combustion engine yet), he was using it for fuel.  He hired the best talent available to find a use for every byproduct from the refining process, giving us everything from industrial lubricants to petroleum jelly (i.e., Vaseline).

His company, Standard Oil, was close to being a monopoly.  When they controlled 90% of the market kerosene was never cheaper.  He brought the price down from $0.26/gallon to $0.08/gallon.  And that was an outrage.  We can’t allow any one company to control 90% of the market.  Sure, consumers were doing well, but the higher-cost competitors could not stay in business selling at those low prices.  So the government broke up Standard Oil via antitrust legislation (the Sherman Act).  To protect the country from monopolistic practices.  And cheap kerosene, apparently.

BILL GATES WAS a brilliant entrepreneur in building Microsoft.  The personal computer (PC) was new.  You couldn’t do much with it in the early days unless you were pretty computer savvy.  But programs were available that made them great business tools (word processing and spreadsheet programs). 

IBM created the PC.  And they licensed it so others could make IBM-like machines.  IBM clones.  The PC industry chewed each other up.  But Gates did well.  Because all of these machines used his operating system (Microsoft’s Disk Operating System – DOS).  Apple developed the Macintosh (with a mouse and Graphical User Interface – GUI) but it was expensive.  Anyone who used one in college wanted to buy one.  Until they saw the price.  So they bought an IBM clone instead.  And when Gates came out with Windows, they were just as easy to use as the Macs.

Because of the higher volume of the IBM platform sold, Microsoft flourished.  Software was bundled.  New machines came preloaded with Windows.  And Internet Explorer.  And Windows Media Player.  You got a lot of bang for the buck going with a Windows-based PC.  And Windows dominated the market.  Consumers weren’t complaining.  Much.  Sure, there were things they did bitch about (glitches, drivers, viruses, etc.), but it sure wasn’t price.

Of course, Microsoft’s competitors were hurting.  They couldn’t sell their products if Microsoft was giving away a similar product free.  Because they were hurting their competitors, the government tried to break up the company with the Sherman Act. 

THE NORTHERN SECURITIES SUIT of 1902 found a holding company guilty of not yet committing a crime.  Teddy Roosevelt’s administration filed a Sherman antitrust suit against Northern Securities.  This was a holding company for Northern Pacific, Great Northern, and Chicago, Burlington, and Quincy Railroads.  What’s a holding company?  It replaced a trust.   Which large corporations created in response to government’s attacks on large corporations.

Small competitors feared large corporations.  They could not compete against their economies of scale and vertical integration.  The little guys couldn’t sell things as cheap as the big corporations could.  So the government intervened to protect the little guy.  So they could sell at higher prices.

But businesses grow.  All big corporations started out as little guys.  And the growing process doesn’t stop.  So the big corporations had to find other ways to grow.  They formed trusts.  Then the trust-busters busted up the trusts.  The next form was the holding company. 

The trust-busters said that the big corporations, trusts and holding companies were all trying to become monopolies.  And once they eliminated all competitors, they would raise their prices and gouge the consumers.  Northern Securities never did.  But they could.  So they were guilty.  Because they might commit a crime.  One day.

ALL BUSINESS OWNERS aren’t morally ethical and honest.  But the market is, albeit cruel.  Economies of scales will always put the little guy out of business.  Sad, yes, for the little guy.  But for every little guy put out of business, millions of consumers save money.  They can buy things for less.  Which means they have more money to buy more things.  New things.  Different things.  From new little guys who now have a chance with this new surplus of purchasing power.

But when politicians get involved, consumers lose.  When they help a competitor, they help them by keeping prices high.  To keep competition ‘fair’.  For the politically connected.

Consumers never complain about low prices.  Only competitors do.  Or their employees.  Those working on whaling ships didn’t like to see the low price of Rockefeller’s kerosene.  But the new refining industry (and its auxiliaries) created far more jobs than were lost on the whaling ships.  We call it progress.  And with it comes a better life for the many.  Even if it is at the expense of the few.


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