NHS reform – the politics is a smokescreen

Ever since the NHS was formed over 60 years ago, politicians have struggled to manage it.  Assorted ministers and policy wonks have dreamed up elegant reform plans, while the NHS’s insiders have undermined them in a bid to carry on much as before.  The NHS does change, but never quite along the path that the politicians have in mind.  That is as true now as ever.  The difference is that NHS management is promoting reform rather than resisting it; but they are going about it in their own way.  The fire and fury of the current political debate is mostly irrelevant.

I have already posted some thoughts on the NHS.  I considered the question of the timing of the reforms, alongside the £20bn cost-saving challenge posed by NHS Chief Executive Sir David Nicholson (referred to alternatively as “the Nicholson challenge” or “the QIPP*programme”).  My conclusion was that the main organisational damage has already been done, so we do not have much choice but to follow through.  I left aside the question of whether the reforms are wrong-headed.  I would like to consider this, before coming to an equally pragmatic conclusion.

What is being proposed?  A continuation of the big idea of the last 20 years or so: to create a purchaser/provider split, and to use this to introduce market mechanisms, under the banner of improving choice, to help ensure that the NHS is effective and efficient.  The problem that these reforms are supposed to solve is that the NHS is too dominated by hospitals, and the doctors who run them, who do not have enough incentive to change to meet new needs or to become more efficient.

In this latest incarnation, the purchaser element (now usually referred to as commissioners) of this set-up will be a combination of consortia of general practitioners (GPs), and an arms-length NHS Commissioning Board operating at national level (i.e. for England – the reforms don’t cover the other parts of the UK).  The intermediate commissioners under the current system, regional Strategic Health Authorities (SHAs) and district Primary Care Trusts (PCTs), are to be phased out.  On the provider side (i.e. the hospitals and other facilities), the idea is that all NHS facilities should be run by more or less independent Foundation Trusts, but that the commissioners will be allowed to secure services from “any qualified provider”, which will not be restricted to these trusts.

These reforms are a natural, if rather accelerated, continuation of the previous government’s NHS reforms.  Commissioning by GPs was already being piloted, and the idea of moving all hospitals to Foundation Trusts was the previous government’s idea too.  What is newer, and perhaps more radical, is the proposed regime of accountability that is being imposed on this.  Previously the NHS was run by the Secretary of State for Health, with very little restraint or accountability.  Now a complex framework of powers and accountabilities is being imposed, giving both parliament and local authorities a greater role.

The government argues that this is just evolutionary change.  But there has been vehement opposition from people who think that the new regime will end the NHS as we know it.  One problem is the commendable desire by the government to establish much of the framework in parliamentary law, rather than simply letting the minister rearrange things by fiat.  People now have the opportunity to project all their worst fears into the legislation on the basis that it does not specifically ban them.  In fact we are still being asked to trust ministers to do the right thing, only with more accountability.

Two lines of criticism that I can see have some kind of traction.  First is that the framework will open up the health market to competition law (and specifically European law) in the same way as for gas and electricity.  This means that the NHS trusts and the private sector would have to compete on a level playing field – and this might literally drive some NHS trusts out of business.  A lot of what NHS hospitals do is a natural monopoly (accident and emergency work, complex surgery, etc) , like the railways.  The fixed costs are so high that the market cannot sustain competition in most localities.  However, so the argument goes, these fixed costs also support activities where private sector competitors could undercut the NHS; if these are competed away then many hospitals would cease to be viable, and so the service on core activities would deteriorate.

Frankly I’m not stressed by this.  If a train wreck is on the way, it will be in very slow motion, giving time to take corrective action if need be.  More to the point, NHS professionals are masters at keeping the private sector at bay (except for NHS doctors doing private work on the side…), and they will only be seriously vulnerable in places were the service offered is ludicrously bad.  And as for European competition law, judging by its impact (not) on the French and German energy markets, there shouldn’t be anything that the politicians can’t handle.

The second criticism is more cogent.  It is that the rules for setting up GP commissioning consortia are a bit vague.  They could be set up in such a way that makes them very difficult to hold to account, or to act in partnership with other agencies.  For example, they may not be geographically coherent, cross local authority boundaries, and so on.  This does need some more thought – though again the worry is the direction reforms could take, rather than what is actually likely.

Personally, I don’t place a huge amount of faith in the purchaser/provider split and the marvels of choice anyway in this context.  There are two big problems: that the buyers (you and me) don’t know enough about what they are buying, and have to rely on intermediaries, whose incentives distort the picture.  The second is that so many providers are natural monopolies.  After decades of reform, the NHS does not remotely resemble a market economy.  It reminds me of a large company trying to introduce market-style rules for internal transactions; these systems never achieve as much as their proposers hope, since everything is trumped by politics in the end.  There have been two big achievements of the NHS reform process.  First is that hospitals are gradually being forced to be more efficient and accountable; this has mainly been achieved by good old-fashioned management, of which the “Nicholson Challenge” is but the latest example.  The second is that commissioning processes have forced NHS managers to address the question of what society actually needs, and then try to reorganise the service to meet these needs.  This last development is the more recent, and the the reorganisation of PCTs has interrupted it – but the new arrangements will probably be more effective in the long run.

The big prize to be won from the current reforms is hardly spoken of at all.  It is that GPs will start to come under the same sort scrutiny as hospitals have.  The consortia themselves will do some of this; the NHS Commissioning Board, which must authorise the consortia, will also be on the case.  The PCTs were supposed to be doing this, but were mostly pretty ineffectual.  The important point is that we should be in no hurry to authorise the consortia, to allow this scrutiny process to have real bite.  This seems to be exactly what Sir David Nicholson (who will chair the NHS Commissioning Board) has in mind.

Meanwhile the over-large number of PCTs has been reorganised into a more manageable number of “clusters”; these and the SHAs will no doubt live on as embodiments of the Commissioning Board.  The NHS will become much more centralised in the short term.  With some very sharp minds at the centre, including Sir David, this doesn’t have to end badly.  But the politcal arguments are mostly a smokescreen.

*QIPP stands for Quality, Innovation, Productivity, Prevention

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2 thoughts on “NHS reform – the politics is a smokescreen”

  1. Interesting, but I think you are not aware of some important points, which I think will change your perspective.

    First, QIPP. Yes, the NHS is constantly in the mode of an economy drive, the claims of NHS waste never seem to identify what the “waste” is, only that it is “vast”. Last year, while waiting to see a consultant the guy next to me started telling me about how the hospital can save on its administration: there are too many administrators, they should get rid of some. I asked him: “like who, the receptionist? the people who arranged your appointment? the people who handle your records, make sure your tests results are here, now?” No, apparently those administrators are needed. So I asked him to identify who these administrators were: he told me that it was those up high, there’s too many of them. So I explained to him: “do you realise that over the summer the ventilation system in all the operating theatres will be replaced? do you also know that the hospital will still perform the same number of operations, and still manage emergency operations in a temporary theatre? do you realise how much organisation that took?” No, he didn’t, but still insisted that there were too many managers. “So, if you let me know who they are I will challenge the chief executive over this inefficient employment, as a governor of this hospital”. I don’t know if it was the governor bit, or the fact that he did not know who the excess managers were, but he was quiet until his appointment. The fact is “there’s too many managers” is a nice tabloid headline but when you get rid of many of the managers and the hospital stops working the tabloids are all too quick to criticise the managers who remain.

    Interestingly, QIPP (essentially, you must get more efficient because the money is not there) is not the only way to make providers more efficient. Payments By Results gave providers an incentive. The original design (bastardised by the current government into something very different ) was that it was the average of the cost of a procedure across all providers in England. All providers were paid this fixed amount and were allowed to keep the surplus (to subsidise other services, or to re-invest as more facilities) if they provided the service at a lower rate. Over time, this incentive, of course, should lower the cost as more providers attempt to generate surpluses. The studies since PbR was introduced has shown that since it was fixed price it tended to raise quality.

    PbR is now a bureaucratically determined by DH (it was cut by 1.5% in April) and will be bureaucratically determined by the National Commissioning Board and Monitor if the Bill is implemented. The natural incentive to drive down costs will no longer be driven by the provider (trying to generate a surplus) and will be imposed centrally by NCB/Monitor. I don’t think that will work. It is one, of several examples of how this bill is actually more about centralising power in the NCB quango, rather than “liberation” or autonomy as it was touted to be.

    You seem to think that the Bill will provide more accountability. I beg to differ. Consortia will have to provide strategies on outcomes and health inequalities and through these will be accountable to the NCB. The NCB will only be accountable to parliament once a year, and even then, they will have three year strategies from the SoS renewable once a year. The public accountability is through two organisations, Healthwatch and the local authority Health and Wellbeing boards. The former is merely a version of existing LINk and the later are a version of the current Health Scrutiny boards. In other words, no new accountability. In exchange we lose the ability to hold commissioners to account (you can attend PCT board meetings and board papers are public; GP consortia will not give you those rights). Currently NHS providers are subject to FoI requests and NHS Trusts hold public board meetings. FT do not have to hold public board meetings (some do, some don’t) but are still (at the moment) subject to FOI. private providers are not subject to FoI. So private sector involvement will reduce public accountability of providers to zero.

    Also we will lose the ability to involve our MPs. This is a key aim of the Bill, to make politicians no longer accountable. Politicians must be accountable because the NHS spends taxpayers money: our money. But the Bill removes that. In the future, if you go to your MP and complain about your local GP consortium or hospital your MP will say “you have the choice: choose another GP/hospital”. HealthWatch and the H&WB Boards have no teeth and will be run by unaccountable amateurs, they will not have the effect that complaining to your MP has now.

    The Health Select Committee point out how ineffective this policy will be:

    “The Committee welcomes the stated intention of decentralising power within the NHS and loosening political control of day-to-day decision making. Voters will, however, rightly continue to regard the Secretary of State as accountable for the development of the NHS—there can and should be no doubt that ultimate responsibility rests with him. The Government must therefore put in place structures which enable the Secretary of State to respond to this political reality.”

    As to clusters. Well before the election PCTs were clustering voluntarily. Then when they received their death sentence they stopped that process (why bother?) and as the NHS started to fall apart Nicholson ordered PCTs to cluster. There was a six month hiatus when clustering was halted. Basically, that was a prime example of the incompetence of Lansley, he should have allowed the PCT clustering to continue, he should not have given deadlines in July last year. That incompetent act has cost the NHS hundreds of millions by destablising the service.

    You’ve also must realise that Any Qualified Provider (AWP as it was) is no longer about the choice of using a private hospital. Most private hospitals are no longer interested in NHS work because they cannot make a profit on the NHS rates (remember, they were cut by 1.5% in April). (private hospitals can, however, make a profit from NHS rationing pushing patients to go private, this is nothing to do with AQP). Because of this, the Dept of Health have changed the focus of the policy. AQP is smaller scale. It is about groups of district nurses choosing to provide the care in a small town, through their own company. The Right to Provider (R2P) policy is not competitive tendering because as long as the providers are “qualified” (ie meet Monitor and CQC criteria) and hence are AQP they will be handed the contract. Further, as a patient you will be able to choose *any* AQP (say, a district nurse, physio, or the orthopaedic surgeon) from the list of Qualified Providers. I fail to see how this system will work because it will be a bureaucratic nightmare to maintain the list and pay the individuals, and no one has quite explained how R2P and AQP will work when providers go bankrupt (as small, new companies do all too regularly).

    1. Thank you Richard for this reply. I’m an NHS outsider and rely on press coverage mainly, plus a few bits from party conference, relatives, job interviews, etc. – so comments from people closer to the pulse are welcome. I actually agree with most of what you have written.

      The political stuff around excessive numbers of managers is mainly noise. It does do some damage, but I don’t think Nicholson and Co believe it any more than you do when trying to drive through QIPP. They are looking for savings from what we (outside NHS) used to call business process reengineering (and this has some plausibility, though I couldn’t comment on £20bn of plausibility). Exception is that I think a lot of blather was/is being dropped on NHS organisations from on high (different sorts of reports; endless targets; a plethora of supervisory bodies; piles of “helpful” guidance); all this will have generated excess management workload. What amazes me is the complete lack of political challenge to QIPP; I’ve heard Labour politicians accepting it as fact. Even more amazing, if it’s true, is the report that government ministers think that QIPP does not mean hospital closures.

      My point is that QIPP is the big game; it is run by Nicholson and co almost regardless of the Lansley reforms, which are serving as a distraction or smokescreen.

      On accountability you make a very good point about GP consortia. But this is the sort of thing that MPs are good at picking up, and I gather it is one of the top issues for the Lib Dem rebels. But the NCP bringing its plans to parliament is a lot more than the Sec of State ever used to; it gives something for politicians at all levels to take aim at. And I hope that the Health & Wellbeing Boards will have a lot more clout than the old scrutiny committees, but no doubt there are big battles ahead on that.

      My understanding on AQP is different, but maybe I misunderstood. I thought the whip hand was with commissioners rather than patients, so they would be quite able to use tendering. A lot of the work will surely be based on long term contracts. And, except for NHS trusts, the providers (including social enterprises) have no security; if they don’t make enough money they are out . The hot potato is that nobody has made clear what happens when an NHS trust is not financially viable – because nobody has said that insolvency rules will apply. And if they don’t then we have competition issues.

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