Cost of Living in Australia- The Big Question

When all is said and done, what everyone wants to know is this- just how expensive is it to live in Australia?

Well, here's my take on this issue and that's an important point- this is my take on it and not a scholarly article

Nonetheless I'd like to lay some ground rules:

1) this is mainly comparing costs when moving from UK to Australia

2) I was a GP Principal in UK in a PMS practice and lived and worked in Coventry and in Australia I live in Wollongong and have only been here for 3 months or so

3) If you're looking for price comparisons for groceries etc read no further and more importantly reconsider your decision to emigrate!

4) Applies to people with 6 figure incomes in either denomination

Look at points 3&4. If you are on low incomes and emigrating, sure the price of your weekly shop is very important. In these situations I'm told a rough rule of thumb is to multiply your UK income by 2.5 rather than the exchange rate which is around 1.8 and then you should be fine. However, if you earn a million pounds in UK you clearly don't need 2.5million AUD to be able to afford groceries!

So, I've looked at what's really important. In my view gross earnings mean nothing- you want to know what you take home at the end of the day. This depends on several factors- income tax being the most obvious. 

But there are other factors- pension contributions, Health Funds, Debt servicing, property appreciation etc.

This is what I'm looking at right now in this blog.

Income tax- broadly speaking comparable in the 2 countries but on closer scrutiny not so. Australia is favourable because you don't loose the tax free personal allowance here unlike UK where you loose above 110K/year. Child care benefits are means tested in both countries but again I think for comparable incomes in both countries you might get benefits in Australia and not in UK (more later as to why)

Pensions contribution: This is responsible for a big chunk out of your gross earnings in UK. Of course as a partner you pay both Employer's and Employee's contribution in UK and combined this can be more than 20% (and rising). You do get a nice pension at the end of it and the NHS pension scheme is described as amongst the best in UK. but again there is a big caveat here. The govt can and has twice in recent past changed the regulations around NHS pensions. So, that nice pension I talked about is not a certainty. In fact everyone I spoke to before leaving was certain that in few years' time the tax free lump sum will become taxable and this will be huge dent in your pension. In Australia you pay into a superannuation; 9.5% minimum and upto 30K a year. But you pretty much invest where you like. Most people invest in property. Contributions are tax deductible and then you have the property to own (or shares or whatever) at the end. Policy may change but they can't take away your property! So, more to take home each month as less deducted at source and chance of having a better pension fund at the end (or of screwing it up as well!). But, once again, most GPs will invest wisely and be better off here in Australia I think.

For partners another factor comes into play and that is how payments are made in the NHS. QOF payments don't come till Sept or so the following year and several items have to be claimed for afterwards (imms and vacs etc). This means a sizeable portion of your income is tied up at any given time and you don't see it till you retire or leave partnership- the so called 'working capital'. My practice still owes me more than 40K. That means I earned 40K in the last 4-5 years, paid NI and tax on it but am yet to see it! 

In Australia I get 100% of what I earn every 2 weeks. Therefore, cash flow is much better and improved cash flow equates to better affordability for most things. I haven't got a credit card here and don't miss it!

Health Funds- In UK obviously there is universal coverage with NHS. But, you do pay a hefty price for it. Until recently, I thought it was good deal as literally everything was covered. But, with more and more cuts and stringent low priority procedures (varicose veins only if ulcerated, really??) I wonder if its a good deal anymore. For someone in good health like myself it means a lifetime of contributions with an uncertain benefit at the end or buy private cover on top. A double whammy! In Australia there is Medicare which is pretty basic compared to UK but so are the income contributions. The money saved there can be utilised to buy private health cover. This allows much greater flexibility. If you are young and single with no problems even no private health cover will do- ergo more to spend when you need it. But even a good level of cover for a family of 3 will cost about $4k/year here for me. This has some added benefits compared to NHS- I can get prescription lenses/glasses or remedial massages for example and I can see Consultants almost straight away, and for my situation this again works out better than it did in UK. There are tax benefits in having private health cover too so the final figure will be lower still.

If you have multiple long term conditions then the NHS may be better at least for now. Also note the difference between a health insurance (NHS) vs a Health Fund. Basically, in a health insurance scheme you make regular payments and only get something out if and when you need it and that is always decided by other people (NICE, EBM etc etc) In a health fund by contrast you get entitlements which you can use annually- prescriptions, visits to opticians, remedial massage etc. So you start seeing benefits of having a Health Fund from day 1

Debt Servicing- this is the next biggie and often overlooked I feel. By definition it just means the amount you pay (interest + principal) to pay off your debt. But, actual figures or even rates mean nothing by themselves. What I feel is more relevant is the difference between what the Banks pay you when you put your money in with them v/s what they charge you when you take a loan (mortgage, car, personal loan etc). Here, the UK loses out spectacularly. The base rate of the bank of England has been 0.5% for many years now and getting cheap loans should be easy. But based on the the BOE rates Banks have slashed the rates of interest they pay you- the Best buy ISAs only pay 0.5% or so after the initial headline grabbing introductory rate finishes. Some pay 0.1%. (see here and here to compare) Yet, the lending rates are still at the same levels as what they were when the BOE was was much higher (2.5% if memory serves me correctly). So, to get a mortgage at the best rates you need either 40% down payment or you pay around 4-5% interest and much higher if you buy to let. Car and other personal loans run around 5-6.5%. Clearly the difference in interest paid and earned is huge.

Neither is property appreciating in UK. I bought a house for 370K around 5 years ago. I'd struggle to sell for 400K now. Taking into account the land registry, interest paid and other charges if I were to sell now I'll have made a loss. It is equally hard to rent. I know of several GP friends who emigrated to Australia and had their houses lying empty for months. So, we pay high cost for servicing our debt and our assets are in a negative equity

In Australia, even high street banks are paying 2-5-3% interest on easy access savings accounts and a car loan I took out is 5.25%. The difference in interest paid and earned is much smaller. Similarly to buy a house you can do so with 10% equity (or even lower for GPs) and if you buy to let the rates are not higher! With ability to invest your superannuation in property it is quickly evident that debt servicing is going to be much cheaper in Australia and developing a property portfolio much easier. Less cost to service debt and assets appreciate

Lastly, I'd like to go back to income tax. I said the rates are broadly similar but in our situation not the effective tax rates. This is because unlike the NHS more or less all GPs here are independent contractors and work under an umbrella company and pay themselves a salary from this company. Apart from other benefits as far as I can see now this has 2 immediate effects- a) your own taxable income is lower (NB about child benefits above) and b) the taxable profit the company makes is taxed at corporate rates (30%) and not personal rates. So, in effect the effective overall tax rate works out to be less than in UK and you don't loose out on personal allowance either.

Time will tell how much (or how little) this works out to be in 1-2 years time but I feel confident that I'll be better off here and therefore when people talk about cost of bread or eating out in Australia I tune them out!

Australia- Clarity of Vision

Arrived in Australia on 5th May after flying roughly 19,000 Kms.

So this is my experience literally so far and so faaaar!

As part of visa requirements for coming to work in Australia I had to obtain medical insurance for myself and family. As UK citizens we are entitled to reciprocal care with Medicare but its easier to do that after arrival.

So, amongst the first things I did on landing in Australia was to visit the local Medicare office to get my reciprocal card. I quickly realised how streamlined and unambiguous the system is as opposed to the UK where the same system of reciprocal care exists. In Australia I cannot access healthcare without my medicare card (can do via the BUPA cover I got for my 457 visa, have free emergency treatment or pay personally). Moreover, my entitlements are stored on my Medicare card which I need to access any service and they are not down to the whims of a GP. Also, I can access care without having to see a GP for everything.

I needed a new pair of glasses so I went to see an optician. Turned out an eye test and consultation were actually covered by medicare so I got this for free and then only paid for my prescription glasses- at no point was a referral to a GP or a referral from a GP requested.

Take a typical scenario: relatives from UK visit family in Australia and someone falls sick. They go to see a GP. The GP will charge them if they don't have a Medicare card and then they will have to claim it back under the reciprocal care agreements. At no point will the GP be pressurised to see or treat the patient for free. Moreover, not only is the GP paid, medicare will claim the money back from the NHS in UK (that is what reciprocal care is all about).

Now, reverse the scenario: Australian visits family in UK and falls sick. Family member will ring and demand an emergency appointment with their own GP. Said GP will have to see the patient as a Temporary Resident. The guidance is to only provide emergency treatment but family will demand everything including prescriptions for routine items. Either the GP refuses and only provides emergency treatment in which case his own patient (the UK family member) is upset and may complain or he does a FP10 script (a NHS subsidised script as opposed to a private one). If he does an FP10, the UK taxpayer foots the bill! (In Australia regardless of who wrote the script, the prescription benefits are stored on the Medicare card and you pay accordingly to the chemist).

In either case, no reciprocal care has occurred. There is no way the GP can record or the NHS claim from Medicare Australia for the visit to the GP (Note that  the reverse occurs). If the patient goes to A&E(even for non emergency scenario), gets a prescription or has an investigation, no reciprocal claim is being made as the GP has done the referral. In fact the BMA guidance states explicitly that it is not the GPs job to highlight on the referral or test form that the patient is under reciprocal care or even not entitled to NHS treatment (if they are from a country with no reciprocal arrangements) and that such checks must be done by the Hospital Trust. The BBC ran a programme on NHS fraud and highlighted that these checks don't  occur in almost any Trust in UK and as a result millions on pounds are lost every year. Details here on a similar report

It also highlighted that other EU countries are very good at claiming their costs back- Brits go to Europe and fall sick and NHS has to pay. EU citizens come to UK, get treatment and the  NHS can't be bothered to claim!

Add to this the huge number of patients from countries with no reciprocal arrangements. Now, as a taxpayer are you happy that your Govt is wasting your money on people who have no entitlement to care whilst simultaneously cutting down services available to you? (As if to highlight the issue recently this post from an American Dr visiting the UK was published. Have a look here)

Finally, another typical situation which I come across here daily and can't help thinking how wrong we've got it in UK. I work in Wollongong, which is a big University town with lots of overseas students and in UK I worked in Coventry which has a big and expanding University and lots of overseas students.

In Australia, overseas students have to have medical insurance and treatment is not covered by Medicare.

If the Uni expands and more students arrive there is no problem. Surgeries will hire more Drs and Medicare budgets are not squeezed. If the referrals are higher -say to psychologists or sexual health etc no one points fingers at the GPs or tries to performance manage them. The GP is free to practice in a safe and sound clinical environment as opposed to a monetary one.

Equally if practice numbers are low for Dementia, CVD, strokes etc as would be expected for a younger population that comes with a University Practice, Medicare doesn't come chasing the GP. In Coventry the University practices got a visit from NHS England for this very reason (low prevalence of certain diseases). And their funding was being threatened as 100s of patients were being removed from their lists (Payment to GPs is capitation based and Temporary Residents earn the practice a lot less than permanent patients. Are foreign students permanent or temporary?) This is the type of crazy admin work GPs in UK have to deal with on a daily basis.

In UK, foreign students pay a much higher fee and are  therefore  entitled to free NHS treatment. Fair enough, I think.

But only if part of that higher fee is transferred to the NHS. Otherwise the taxpayer is footing the bill for the Universities and the Universities love overseas students because they charge them higher fees. So in a city like Coventry, more overseas students means less NHS budget for the local taxpaying population. Fair you think?

Any health care system will have advantages and disadvantages. All systems are prone to misuse/abuse but in Australia I think there is a clear vision- your entitlements are clearly defined and carried by you on your medicare card. No one can sidestep that. Sure, there are losers and winners but the rules are clear. Medical professionals do not have to juggle financial, ethical, moral and clinical decisions. If the Govt wants to make cuts it simply changes the benefits available via your card. For example if you have diabetes you can get 5 visits to allied health professionals in a year (podiatrist, physio, dietitian etc). If the Govt decided to save and reduce costs they would simply reduce that number to say 4/year. Or if they thought diabetes is under diagnosed/treated etc it could increase the benefits. The GP doesn't bear the wrath of the patient nor is there any ambiguity as with all NICE guidelines for example (they recommend a treatment algorithmn and then say its up to the clinician's decision and patient choice should be respected). Look at the contradictory advice regarding glucose testing strips from NICE and DVLA for example. NHS would love you to stick to NICE guidance, but if a patient has a hypo at the wheel and you have not given enough testing strips as recommended by DVLA you get sued or struck off. A ridiculous situation to practice medicine in.

In UK, the Govt leaves everything, deliberately I feel a bit muddy. You are not entitled to free care if you're not from a country with reciprocal agreements but it's up to the GP to see them as a temporary resident and if the GP feels its appropriate they can register the patient. The NHS charter says tests, referrals etc must be paid for but the BMA advises against it to GPs. When things go wrong the Regulatory bodies- GMC etc will use the higher moral ground and stick to BMA guidance. But, in order to drive costs down the Govt uses all its might to make you go against BMA advice- the erstwhile PCT and now NHSE, CQC, NHS Choices, the complaints procedure for the NHS all make it impossible for frontline staff to follow the BMA guidance. In short, its clear as mud.

This kind of muddy thinking pervades all spheres of UK Govt and policy. When Coventry built a new Super Hospital the number of parking spaces were reduced as compared to the old Hospital because more parking spaces were against the Govt's 'Green Agenda'. Now, the hospital is notoriously congested and when the Air Ambulance lands or takes off even Ambulances are queuing just outside the hospital and the local residents are fed up. The Hospital has put up several bids to ease the parking problems and all have failed. 

Take this 'Green Agenda' a bit further. UK Govt says its committed to reducing ownership of cars and would like people to use public transport and greener cars. Yet, when the depression hit, one of the premier policies of the Govt to get us out of it was the car scrappage scheme which put thousands of new cars on the road. 

Equally if you follow this logic of less people buying cars and using public transport instead being good for the country, then all British car manufacturers will go bust. British car manufacturers are either at the Luxury end of the market(JLR, Rolls Royce etc) or bespoke sports cars- Morgan, TVR, Bristol etc. All these cars are distinctly eco-unfriendly. Is the govt prepared to see them go under? When JLR hired new people in Coventry this was greeted by Ministers as a step forward and a sign on investor confidence returning in UK. Surely, they should have been lamenting the fact that more gas guzzling, CO2 spewing cars were going to be manufactured?

I feel things in Australia are much clearer. They may not be to your liking but they are clearer. Australia has a big land mass and Australians drive long distances over roads that are often uneven. Ergo, they drive big cars and houses, garages, parking spaces etc are built to accommodate this. In Wollongong, in order to promote public transport we don't have congestion charging or prohibitive parking charges. Instead, in true Aussie style we have the The Gong Shuttle- a free bus service that connects all the major spots and the University. It runs a schedule that is better than any paid for variety in Coventry and also runs on Public Holidays and weekends (see schedule here).
Australians love the outdoors and the vast majority live by the coast. So, in Wollongong the council is spending money on running free swimming pools, public baths, free beaches with life guards (see here for details) and is also spending millions on a cycling/running path running some 20 odd kms. 

What exactly does UK stand for currently? I actually struggled to come up with an answer to that. I would have thought that education and the English language itself,  and the NHS would surely be in the top 10. Yet, Councils are busy closing down public libraries, toy libraries and Schools have had a freeze on funding and the NHS is facing massive cuts.

Time to ask- what exactly does being a Brit mean? What values, institutions etc would you like to preserve? And time to get voting my friends!  

Open letter to Health Secretary

Not quite 4 score and 7 years ago but I came to this country in 2001. As a Doctor trained in India I was neither an asylum seeker nor an economic migrant. In fact I was working in the Middle East before coming to the UK.

I was and am an intellectual migrant. People use and abuse the term racism and perhaps sections of society are racist here. 

But in India, we practice all the isms that you can think of - racism, sexism, ageism, nepotism we have down to a fine art. Add casteism and sectarianism and you have a system where talent and hard work counts for nothing. This is what I was fleeing.

The NHS was a breath of fresh air. My first job interview consisted of a panel of Drs comprising an Irish consultant, and Egyptian and a Brit with an British Asian medical staffing representative. Amongst several candidates including home grown ones I was selected. During the 6 month post I was not only encouraged to develop myself further but given leave and paid to go on courses which I could only dream of affording/attending in India or the Middle East. 

This nurturing of talent and knowledge continued and within 3 years of coming here, I was Associate Tutor of the Royal College of Physicians whilst doing a medical rotation and today I am a GP appraiser and a GP principal. When CCGs came into existence I was elected onto the board and again my training needs were met and encouraged. 

I spoke of being an intellectual migrant. The idea I was attracted to is simple enough in concept but hard to achieve in practice. It is simply this- everyone should have access to health care that is free at point of care and more over is the same high standard for everyone regardless of their paying capacity. 

The NHS does this better than anyone else in the world I feel. Any fee based system whether paid for by patient or insurance cannot match it. Here, in the UK I have been able to practice medicine that is 'evidence based' or 'best practice' and never had to think about the paying capacity of the individual I was treating. 

And over the last 13 years I've bought and sold several cars, houses and staycationed all over the UK and have visited most places from John O' Groats to Land's End. I have used no public funds and have broken no laws apart from a couple of traffic offences. Under the new scheme I would retire at 67. In the next 25 years I calculate I would contribute at least a million pounds to the exchequer.

And yet...

Having reached the pinnacle of my profession- a principal GP, working for the CCG and as an Appraiser one would have thought I would now be settling down and enjoying my success.

But, I'm now in the process of emigrating to Australia.

Why? If I were a hot shot Banker or a young Turk working in the city that had failed to hold me back the reasons behind my decision would be debated on TV, perhaps even in parliament. 

Is it the lack of another runway at Heathrow, our corporate tax laws, banking bonuses, house prices etc etc. But it's an NHS employee leaving and nobody bats an eyelid. The NHS has over a million employees and counts amongst it members some of the most highly regarded professionals ranging from paramedics to nurses to GPs. These professionals routinely trounce MPs, Councillors and other professionals in the public eye for trust.

Yet, not a single day goes by when the NHS is not denigrated by the press in an attack which often seems to be orchestrated by your office. Staff morale is at an all time low. There is a looming workforce crisis in District Nursing, A&E Drs, social workers, GPs etc.  these issues are routinely glossed over and anybody fighting for better working conditions is painted as a money grabbing no gooder. 

Mr Minister let me tell you something- the NHS, like our armed forces is staffed by people you could never pay enough. People working 12-14 hrs a day in highly stressful situations like A&E; often without adequate breaks or support and to the detriment of their own health is not an exception but the norm across the NHS. These people don't want more money; they demand some respect. They want to work in an environment that's supportive and appreciative. They want an end to the constant top down restructuring and endless clinically irrelevant targets. They don't want to go to work everyday feeling like they are getting ready to do battle and they want you to tell the public the truth. You promise the population a world class health service yet you steadily cut services and front line staff face the criticism.

There is an old saying- do a job you love and you never have to work a day for the rest of your life. The people I alluded to earlier do this job because they love it. The changes ushered by your department since the White Paper are making more and more NHS staff less and less in love with their jobs. People like me who seemingly have it all. There are 5 GPs, all fairly young leaving for Australia from my town. On Facebook there is a group made specially of UK GPs in Australia and it has more than 200 members. The GP in Birmingham who did the medical for my visa is retiring from the NHS aged 49. He is going into private practice. This is a terrible brain drain and the loss of talent is stupendous and unprecedented. Almost all of the psychiatry consultants have emigrated to Canada from the local Trust and many GPs are on the verge of retiring. 

In the end, I'd like you to ask yourself one question. It is this- why are you letting a million pound asset like me leave? Do you have what it takes to do a bit of soul searching required to answer that question?

And I'd like to end by asking you one question. Can you reassure the end users of the NHS which is pretty much everyone in the country that the NHS is in a fit state to tackle the looming problems that a Country with an ageing population needs and that despite all the cutbacks the needs of the populace are safeguarded?

I may not be around to see how or indeed if you respond. But, I'm an ardent admirer and supporter of the NHS and for the sake of the millions of people who work in it and just about everyone else who relies on it I sincerely hope you do.

Dr Gaurav Tewary
GP

Part 3- Melbourne

A trip to Australia wouldn't be complete without some wildlife shots! Visited a small farmhouse with some animals. Aryan loved it and we finally got to see some live Kangaroos(saw lots of Roadkill!!!)

Pics are a random assortment of what we saw.

Arrived in Melbourne and met some close friends after many years. He's a GP near melbourne and got talking about our Health Systems. He was surprised to hear how much non clinical stuff we GPs in UK have to do and was also shocked to hear that we have no system of checking for eligibility. In Australia no one gets through without a Medicare card. I was surprised to hear that they have literally next to no admin work to do. Seemed a very relaxed and clinically driven environment to work in. 15 min appointments, no telephone triage, visits etc. If you choose to work at weekends or OOHs you get paid 1.5-2 times regular rates. What's not to like? Why I wonder do we choose to performance manage GPs and lumber them with mountains and paperwork and then complain that they do not spend enough time treating patients?

Melbourne Skyline

With my friend took the Great ocean Drive to the 12 Apostles. Stayed at Apollo Bay and visited Lorne. Pretty seaside resorts both. Lorne is popular with 'Schoolies' and they were out in force when we arrived. Enjoyed the cafe lifestyle and Aryan loved the beach and play facilities that all Australian cities seem to have. Stayed in another lovely apartment.

12 Apostles

The Apartment at Apollo Bay

After that it was back to blighty unfortnately. Our trip gave us plenty to mull over. The lifestyle and opportunities on offer were hard to overlook and the Health System and job offers were equally tough to ignore.  Having found family and friends there too was an added bonus.

Waiting to board the A380 didn't seem glamorous anymore the second time round. More like cattle waiting to be herded onto a lorry!

Waiting to Board at Melbourne Airport

Next blog- The Big Question. To emigrate or not?

Part 2 of Australian Adventure- Sydney to The Gold Coast

Drove from Sydney to Surfer's Paradise along the Pacific Highway. Distances are in Kms but the speed limit was 90 Km/Hr and in many places there was construction going on to build bypasses  avoiding towns and temporary speed limit of  70km/hr were in place.

Wherever possible we took the designated scenic routes;  so we took our time- the whole point of driving! We had a Holden Commodore- an Aussie built 'large car'. 3.6lt Aussie muscle-very comfortable and great suspension for the roads and a huge boot which easily swallowed our luggage and baby stuff. We were very impressed with the  car- sad to hear its ceasing production soon. A couple of Aussie Motel owners were very impressed that I had chosen to rent one of these.

Must mention the highway- everyone follows the speed limit. 90km/hr means just that. Signs warn 'Speed cameras anywhere, anytime' and Police hand out on the spot penalties and fines. Saw some patrol cars but even on deserted roads everyone stuck to the legal limit. Made for a much more relaxed driving experience. In fact everywhere we went people were much more law abiding. No graffiti, litter, drinking on the beaches or public places etc. Again we were impressed and it was noticeable on a short stay. Nor did it feel oppressive like a police state.

Nambucca Heads on the Pacific highway

View from Motel
A typical Aussie motel- room with separate kitchen and a balcony. Much easier to live in than a typical hotel room especially with Aryan. He always had space to play and run around. In the little Gazebo was a BBQ and the owners were very friendly and helpful- again an Aussie trait if Motel Owners are anything to go by

Aparthotel Q1 Resort, Surfer's Paradise- Very swish!

View from 21st Floor Balcony

At the Beach Surfer's Paradise

Q1 Resort Pool

View from the Observation Deck on the  78th Floor

So, we loved the drive and arriving in Surfer's Paradise and especially the apartment at Q1 Resort was magical. 

The promised lifestyle and weather were all present in abundance and its easy to see why people fall in love with the place. We returned not via the pacific highway but on the inner roads which were better in many ways. After a short stay in Kiama which was highly recommended by my cousin we headed on to Melbourne to visit friends and from there to the 12 Apostles and then sadly back home to blighty!

Part 3- Melbourne

Our Australian Adventure- part 1 Getting there!

Packed and ready to go

On the plane- Birmingham -Dubai with Emirates

Dubai from the Air

The A380 beofre boarding. From Dubai to Sydney. 14 long hours!

Sydney Airport. After 24 hrs in the air and almost 36 hours later. Gruelling

First impressions- much smaller than we thought. Comparable to Birmingham Airport. People are much more friendly and there are lots of languages being spoken; most we can't recognise!

Next Blog: Sydney and the Gold Coast

Costs and Outcomes- NHS v/s Medicare

So how exactly does the Australian system compare vis a vis the NHS?

Does giving Drs complete freedom make them irresponsible clinicians? Do costs skyrocket?

What about outcomes- how do they compare?

Exact comparisons are of course well nigh impossible but people have made a stab at comparing health systems- each one invariably comes out with a different outcome but have a look at the link below. It talks about the most efficient health systems. I think the gym analogy ends here for several reasons:

• The health industry is much more regulated.
• Though there may be competition most countries will map Drs to demand. In UK the average GP has 1800-2000 patients registered with them. In Australia, the govt earmarks Areas of Need (AON) and District of workforce shortage (DWS) where it tries to match numbers of Drs to demand and actively directs Drs where there is a shortage. So unlike a gym when GP surgeries exist close to each other the number of patients is sufficient for both to exist.

Bloomberg has used what it calls 'Efficient health Care' as a means of judging success- this is based on several parametes including life expectancy and per capita costs. UK is number 14 on the chart. And Australia? No. 7. For a full list see here (Updated 2/12/14 the link has been updated and some rankings/figures are now different)

So clearly a capitation based system cannot be said to be superior in principle. There is some merit in saying that a free market economy model does lead to spiraling costs as in the USA (ranked 46) but this is an Insurance lead model and not a levy on income based model like medicare.

But, is it that important? Even UK is not badly placed and 14 isn't too bad. However, there are some compounding problems which I feel will widen this gap to the detriment of UK. UK has an ageing population and though Australia is aging too it is a)younger to begin with and b)growing older more slowly. The median age (Median age is the age that divides a population into two numerically equal groups - that is, half the people are younger than this age and half are older) of Australia is 37.5 and of the UK 40.5 (For a full list see here)

If that wasn't enough the projected number of people over the age of 65 in 2020 stands at over 19% for UK and just under 16% for Australia. Even in 2050 Australia will have less over 65s than UK (see here).

Remember what I said about 10% of your population using up 90% of resources? Well, the vast majority of those reside in the over 65 age group. So, if a country has a higher burden of over 65s and this is projected to grow; where should said country concentrate its resources? But, just at this crucial juncture the NHS has embarked on a project to save £20 billion by 2020!!

A recent kings Fund report states :From 2012 to 2032 the populations of 65-84 year olds and the over 85s are set to increase by 39 and 106 per cent respectively whereas 0-14 and 15-64 year olds are set to increase by 11 per cent and 7 per cent respectively.

That means the work force will shrink and those requiring increasing support will increase exponentially. Whilst the report states that the elderly still make a net contribution to the economy even after taking the increased health care costs it is clear that health care costs do go up. 

At precisely this time the NHS is faced with low staff morale and reduced staffing levels. The RCN(Royal College of Nursing) has identified 68,880 NHS posts marked for cuts by 2015; of these 24,836 have already gone, of which 4,837 are nurses, midwives or health visitors, and 4,042 are healthcare assistants. 

Five Psychiartry consultants from my local hospital have upped sticks and gone to Canada- this at a time when a dementia epidemic is predicted! And the number of Drs requesting Certificates of good Standing from the GMC (a surrogate marker for Drs intending to migrate) is going up.

As a clinician I can't help but feel alarmed at these changes. And as a potential patient? Is this why we are going to work longer, pay more in NHS contributions, taxes etc? The focus seems to be on short term gains and a longer strategic vision seems to be missing. 

This I must point out is not an inherent fault of the Capitation based system. It does, in my view lead to the wide variation in primary care that is evident in UK and some people think the NHS reforms were motivated by a desire to dismantle this. 

If true, it seems an unnecessarily convoluted way of doing things and may have potentially disastrous and unintended consequences

I started by ending an analogy. I'll end by starting another. The NHS reforms centered around making Drs commissioners and putting them in charge of budgets instead of managers. The presumption I guess was that as clinicians they would make sound clinical decisions and commission more cost effective services based on their local population needs. 

But is there any evidence that this is the case? You could argue that its too soon to say. But the effects of this reorganisation itself; seem to me atleast, to be having the opposite effect.

So the analogy? If we assume the NHS was the military and apply the same principle- ministers, managers, manufracturers are messing up the budget so lets give control to the soldiers. Therefore like CCGs commanders from the 3 services lead and control expenses, acquisitions, deployment etc. Makes sense? 

Now in this scenario, can you imagine a Commander from any service going up to Parliament and willingly accepting cuts? Or actually making bigger savings than targeted (for 2011/12 the NHS delivered a surplus of over £2billion!) and then accepting even bigger cuts year on year? This is exactly what Drs as commissioners are doing (my personal opinion again). So they may make cuts in troop sizes (NHS is loosing frontline staff so an apt comparison), reduce services altogether like close bases (akin to closing hospitals or A&E departments). Is that what  the armed forces do? or the police chiefs??

No- they have budget cuts imposed on them. They protest loudly and spell out the dangers of those cuts that they foresee. Then they try and deliver what they can. They are candid with the public- the police chiefs come out and say openly that due to cuts there will be less bobbies on the street for example.

But, when it comes to the NHS,  politicians promise a world class health system to the public. Yet, they allocate a budget which makes it impossible to deliver this, leave alone investing for the future. And the Commissioner Drs? Do they protest like the Police chiefs or Army generals? No! they act like they believe the cuts are justified themselves and make compromises to deliver what they have been asked to. This erodes patient confidence in their GP. This to my mind is the biggest debacle of the whole situation. If the Govt is unwilling or indeed simply unable to spend what it takes to deliver a world class health system then it should be candid about this with the public. 

We as Drs should demand more funding and expenditure per capita if that is what is required (and evidence I have presented above would indicate that it is). We are always told that there isn't an infinite pot of money- in fact there is! The spend on NHS as a percentage of GDP is not only tiny but shrinking. 

The govt will shout form the rooftops that spending per capita on NHS is increasing year on year. However, as a percentage of GDP it is falling!

Don't believe me? Look here at the figures  for yourselves. 

I ask again- with an ageing and growing population should the Govt spend more or less on the NHS as a percentage of GDP? And as Drs what is your duty to your patients. Think long and hard before you answer that if you're a Dr.

Next blog- I visit Australia!