The Rip-Off on Health

The costs of the health services have increased eleven-fold in the last 12 years. The major beneficiaries have been the doctors, the pharmacists, the drug companies and the politicians who have retained votes by opposing the rationalisation of the hospital service. The health of the community has marginally worsened.

 When Erskine Childers, as Minister for Health, redesigned the health services in 1970 he ensured a seemingly endless supply of blank cheques to the medical profession and their spin-off beneficiaries the drug companies and the pharmacists. The total bill has been allowed to rise from £86.6 million in 1971 to £960 million this year - a leap from 4.39 to 7 percent of Gross National Product. Supporting this huge service are the health boards, the bureaucratic costs of which have doubled in the past four years.


And, there is little evidence that all this expenditure is actually making us any healthier. In fact, the life expectancy of a middle aged man today is actually lower than it was thirty years ago. According to Professor John Keaveney of Trinity College's Department of Community Medicine, this is because "there has been no fundamental reorientation of the health services to tackle the disease problems of modern society when high technology medicine has limited success and prevention is fundamental in control."


Increased expenditure has come from increased use of the health services. With every year, doctors have seen their patients more often, written more prescriptions, prescribed more drugs, referred more patients on to hospitals. And, if there is no evidence that patients are becoming healthier from all this medical attention there is lots of evidence that doctors, pharmacists and drug companies are becoming wealthier. Another large chunk of money - as much as £100 million - is simply being wasted on maintaining more hospital beds than we need. The culprits for this are the politicians who have tended to see hospitals as job-creating local industries rather than efficient health services.


Doctors £21 million (1981)

It is not simply a matter of a few unscrupulous doctors abusing an otherwise good system. In 1981 the average payment to doctors for care of medical card patients was £15,337. This year an average doctor with an average number of medical card patients (1,000), who attend an average number of consultations (6.06), can expect an income from the consultations alone of £15,000. This average doctor will be paid extra for after hours consultations, house calls, and for various treatment procedures. This is before he or she collects a penny from private patients.

Last year 425 general practitioners (one third of the 1,364 operating the scheme) earned an income in excess of £20,000 from their medical card patients alone. 151 of those earned in excess of £30,000; 37 more than £40,000; 13 more than £50,000. This year, with increased fees, at least four doctors will earn more than £60,000 from their medical card patients. The top earner will probably reach £70,000.


There are two routes to these huge incomes. Either the doctor takes in as many patients as possible, or ensures that the patients attend frequently. One doctor in Donegal has over 3,000 medical card patients who he sees on average seven times per year. Another doctor in the Eastern Health Board area has about 2,000 patients, but manages to see each, on average, 13 times a year. Both doctors are in the £50,000 plus bracket.

The various medical associations have argued that the number of visits is not entirely within the doctor's control. However, doctors are paid per consultation which creates an incentive to keep their patients coming back as frequently as possible. All the evidence indicates that they are responding to that incentive. Since the medical card scheme began, the average number of consultations per patient has risen annually. Each rise of 1/2 consultation per patient per year costs the taxpayer about £6 million.

When the present health services were being formed in 1970, doctors anticipated that they would need to see each patient on average for 2.5 consultations per year. In 1977 the consultation rate was 5.3. Last year it was 6.03. The number of doctors seeing each patient for five consultations each year dropped from 53% in 1977 to 40% in 1981. During the same time span, those seeing their patients seven times per year rose from 28% to 41 %.


Either, as a nation, our health is deteriorating at an alarming rate (in which case the health services aren't working at all), or doctors are simply creating a demand for their services. Economists, Sean Barrett, Eithne FitzGerald, and Dale Tussing agree, as do successive Ministers for Health, that the latter is the case. The over-attentiveness of doctors, doesn't just line their pockets. It has spin-off benefits for two other groups who depend largely on the health services for their incomes - the pharmacists and the drug companies.

Trends over the last few years show that when the consultation rate goes up, so does the prescribing rate. Although the medical card population in 198 was about the same as it was in 1976, 1 1/4 million more items were prescribed, creating a bonanza for pharmacists and drug companies.

The health services offer no incentive for doctors to spend time with their patients. However, there is a great financial incentive to process patients as quickly as possible either by prescribing possibly unnecessary drugs, or by referring patients on to specialists clinics in the hospitals. Either option further escalates the cost to the taxpayer. And since the increase in the current number of items prescribed has exceeded even that to be expected from the increased consultation rate, the evidence that doctors are over prescribing is very strong.



Pharmacists £11 million (1981)

 The cost of excessive prescribing is huge. With the average medical card patient receiving about 25 items annually, the payment to pharmacists for dispensing services alone last year was over £11 million. (In 1977 it was £5 million.) This explains the vehement opposition of chemists to the Minister for Health's decision to remove certain "over-the-counter" medicines and appliances from the medical card scheme. The chemists stand to lose the £2 million they would normally collect "dispensing" these items. (In the case of over-the-counter items, "dispensing" is a matter of simply handing the item to the customer.) Even Michael Woods' political opponents agree that this was a system which made no economic sense whatsoever. Basically, to get a free packet of aspirin a medical card holder had to go to a doctor (at a cost of £2.50 to the taxpayer) and get a prescription. The pharmacist would fill the "prescription" (at a further cost of 85p). Total cost: £2.50 + .85 + retail cost of the aspirin, (which already involves a substantial mark-up).


Economist Sean Barrett argues that it would be cheaper and more sensible to give the money directly to the medical card holder. Eithne FitzGerald, who was Eileen Desmond's advisor in the Department of Health, agrees that the over-the-counter system made economic "nonsense" and in some cases was open to "genuine fraud", but thinks that alternative arrangements "possibly for a drug refund scheme" should be made to avoid actual hardship. She also thinks that a more important and more productive target for cutbacks is the drug companies.


Entry into the guaranteed market of medical card holders is cushioned by health department grants for stocking up on drugs. Money is advanced to each chemist upon entry into the scheme. The money is not paid back, but is retained while the chemist remains in the scheme, as a kind of permanent advance payment. The total number of pharmacies involved in the General Medical Services has remained relatively static (1,138 in 1976, 1,116 in 1981). The amount of money advanced has grown from a total of £880,445 in 1976 to £2,218,481 in 1981.

And, there are further perks for pharmacists. The "Long Term Illnesses" scheme provides free medicine for anyone, regardless of income, with certain chronic illnesses such as epilepsy or diabetes. For the pharmacists, this scheme provides another steady market, and they are paid, according to the Department of Health: "ingredient (drug) cost, plus a 50 percent mark-up, and a dispensing fee of 50p".



Drug Companies £70 million

One way or another - through the general medical services, the drug refund scheme, or the tax relief subsidy to VHI - the state pays for about 90% of all drugs bought. The only effort at price control is the National Prices Commission, which monitors profit margins for importers and wholesalers. There is no control of price at point of entry. Most of our drugs are imported from Britain, and according to the findings of the Trident report on drugs, they suffer an inexplicable price hike of 18% between export from Britain and import into Ireland. The Department of Health has made several attempts to get expenditure on drugs (the total bill is about £70 million) under control. In fact the Trident report is the third such attempt. The first two were complete failures.


According to Eithne FitzGerald, previous reports recommended that doctors be told the price of drugs, informed of the less expensive brands and asked to use the less expensive equivalents of the most popular drugs. This didn't work. Doctors, subject to intensive advertising campaigns by the drug companies, continued to prescribe the well known expensive brand names.

The Trident report recommended the use of generic drugs, a kind of government "own brand" on the most used drugs. This would have two effects. First, it would bypass the expensive big name drugs. Also, in inviting tenders for the supply of these generic drugs (and creating competition among the big drug companies for the market). the government would have some control over the prices of imported drugs. This suggestion is currently being studied within the Department of Health. Since generic drugs are, on average, one-third cheaper than the popular brands, this could represent a substantial saving and an end to the current drugs free-for-all.


Hospitals £450 million

Half of the total health expenditure goes on hospitals. The most alarming aspect of this development is that hospital care, reckoned to be the most expensive, is on the increase, while community care, always cheaper and often aimed at preventative medicine, is on the decrease. An indication of our dependence on expensive hospital care is the number of nurses employed, 25,399. This is a higher ratio of nurses per population than any other EEC country.

Community care which accounted for 23.4% of the total health budget in 1976, dropped to 20.7% in 1981. Hospitals in 1976 took 48%. In 1981 that rose to 53.3%. This development is at odds with the current needs of medical care. Professor Keaveney says, "Disease patterns have changed ... The health services have successfully limited and controlled and prevented the traditional causes of mortality such as infectious diseases. The problem now is controlling the diseases of affluence (heart disease and cancer) ... What's needed and what will work are preventative activities and promotion of good health. There is no question that this is what is required. Diagnostic and curative medicine hasn't worked with the diseases of affluence."



 As long ago as 1968 this trend in health care needs was recognised. The FitzGerald report (1968) on the future of the hospital service recommended a rationalisation programme aimed at fewer acute hospital beds and more community care. The report has never been implemented largely because of political pressure to keep the small hospitals open. Professor Keaveney says, "There are votes in hospitals, there are none in health education." In fact, in recent years the hospitals have been used as local job-creation schemes. Employment in the health services has gone up by 35 percent in the last ten years.

We now have 19,000 acute hospital beds. The FitzGerald report recommended a ratio of just over 4 beds per 1000 of the population. This means we currently have 5,000 more beds than we need. The Department of Health reckons that a cut of 5,000 acute beds would eventually result in a saving of £100 million. The excess of hospital beds does not mean that these beds remain unused. Eithne FitzGerald says, "According to health economics, demand expands to fill supply." And this is precisely what has happened. Our hospital admissions rate is 23% higher than in the UK. It has risen from 368,000 in 1972 to 520,000 in 1979. The bed occupancy rate is high at about 82%.

The method of payment of consultants actually encourages long stays in hospitals, because doctors are paid per "patient-day" (i.e. the number of days a patient stays in hospital). The Department of Health is currently revising this scheme and introducing an hourly rate of £13.25 for consultants.


A further incentive for over-use of hospitals is the fact that whereas one third of the population has free access to a GP, nearly everyone can avail of free hospital care, either through the health services or through heavily subsidised VHI. Although there are no statistics on referral rates, one Dublin GP who surveyed his practice found he referred 20% of patients to specialists.


Private health care is heavily subsidised. The state absorbs 50% of the cost of private beds in voluntary public hospitals (about £42 per bed per day). There is a further subsidy of £1.85 a day for each bed in private hospitals. There is a further VHI subsidy in the form of tax relief which represents £8 million in lost revenue annually. And there are hidden subsidies in the extent to which private patients have access to publicly funded facilities such as operating theatres in the larger hospitals.

Expenditure on the health service is completely out of control because there is no in-built mechanism for economic restraint or evaluation. Budgets are usually based on last year's costs. They are invariably overshot. General practitioners have an open ended claim to public money for treating the medical card population. The 1981 budget allocated £16.4 million for general practitioners' fees. £21 million was actually spent. The budget is never more than a rough estimate.


A large chunk of health expenditure is administered by the medical profession who are unlikely to be the harshest evaluators of the service they provide, or the money they spend. Most members of health boards are also doctors or other medical personnel. Economist Sean Barrett says that one of the main problems is that doctors "are generating the demand for their own services". Professor Keaveney says, "There is a lack of quality research to provide cost effectiveness studies of comparative treatment, or to provide adequate information for effective planning ... information which is needed to make the right decisions."


The current cuts to the health services are a crude effort to halt expenditure growth rather than the result of a cost effectiveness study. Health board budgets have simply been cut by 1.9% (except for the Eastern Health Board which is exceptional because it doesn't administer the voluntary hospitals in its geographic area). Still, even with the cuts, the health boards have been allocated more than the 1982 Coalition budget allowed for. And, in the past four years expenditure for administering the health boards themselves has jumped from £13 million to a 1982 estimate of £25.5 million. ."


Eithne FitzGerald thinks that the cuts are "the wrong approach" to getting expenditure under control. "They are trying to set a cash limit on the health boards and this has never worked."


The areas any health board can easily cut are limited. The General Medical Services have an open ended contract. Whatever bill they end up with, the Department is contractually obliged to pay. What the boards can cut easily are grants to voluntary bodies. Already Dublin's Hope hostel for homeless boys has lost financial support. Other areas are meals on wheels, home helps, in fact all the low cost community oriented health services.


Eithne FitzGerald thinks expenditure can be brought down only if "there is a fundamental examination of why expenditure is going up, for the wrong reasons. Reasons that don't result in a better service. I don't think that examination is taking place. We need policy decisions that will reduce visiting rates, tackle the drug companies, reduce the surplus manpower which is a result of the health services being used as a job creation agency in the last few years, look at referral and hospital admissions patterns and stop the big. building, . high technology,  programmes. "