U.S. HMO Beats Britain’s NHS

Published March 1, 2002

U.K. Chancellor Gordon Brown took new Labour’s biggest gamble when he said the way to give Britain a “world-class” health service is to increase future taxes.

According to Brown, “a significantly higher share of national income should be devoted to health care to correct decades of under-funding.” Brown used the release of an independent report on long-term health demands to rule out extensions of private finance, declaring a publicly funded system would always be best for Britain.

According to projections by PricewaterhouseCoopers, taxes would have to rise by L10 billion—$14.5 billion—to restore the NHS to respectability.

But Kaiser Permanente, a California-based nonprofit health maintenance organization, shows money isn’t everything.

According to a detailed study of the costs and performance of the two systems, the U.S. HMO has costs similar to those of the entire NHS system … but the HMO performs considerably better. The report was produced for the Institute for Global Health at the University of California by the group’s director, Richard G. A. Feachem, its CEO, Neelam K. Sekhri, and its programme development officer, Karen L White.

The adjusted costs of the two systems and their performance were compared on measures of inputs, use, access to services, and responsiveness, and handful of quality indicators.


The per-capita costs of the NHS, converted to U.S. dollars and adjusted for variations in benefits, special activities, demographics, and the single-payer environment, were just 10 percent less than Kaiser-Permanente’s per-capita costs: $1,764 per person for the NHS, and $1,951 for Kaiser.

Yet the HMO’s members receive more comprehensive and convenient primary care services and have much quicker access to consultant and hospital services than do patients who rely on the NHS’s socialized medicine.

The difference is explained by better management, better use of integrated systems, greater investment in technology, and free-market competition.

The analysis does not support a notion widely held and often repeated in the U.K.: that the NHS is efficient, and poor performance is explained by a lack of money.

Richard Smith, editor of the British Medical Journal, writes about the study,

“It is a broad brush comparison between the NHS and Kaiser Permanente, a health maintenance organisation that cares for some 6.1 million Californians. The study finds that the two systems have similar resources but that Kaiser performs substantially better.

“In particular, patients from Kaiser have faster access to both primary and secondary care doctors. In other words, the widely held idea that the NHS albeit cheap is remarkably efficient may be wrong.”

Smith continues, “Comparisons between systems are always difficult, and readers will rightly be sceptical, not least because they challenge a belief that is widely and deeply held in Britain. Our reviewers and editorial team started from that position but concluded that the results could not be explained by artefacts in the study or differences in the two populations.”

“The conclusion that Kaiser performs much better for similar costs stands,” concludes Smith. “Why? The [study] authors think that Kaiser may perform better because primary and secondary care are better integrated and the whole system better managed; because it has hospital stays a third the length of those in the NHS and much better information technology or because of competition.”

For more information …

The report, “Getting More for Their Dollar: A Comparison of the NHS with California’s Kaiser Permanente,” is available on the Internet, in HTML and PDF formats, at the British Medical Journal‘s Web site at http://bmj.com/cgi/content/full/324/7330/135#Top.