29 February 2008
The NHS is approaching 60 and – as deficits turn into surpluses – it's not looking bad for its age. But now everyone is anticipating the health minister's final report, and asking how much his radical makeover is going to cost. Seamus Ward reports
On the brink of its sixtieth birthday, the NHS would be in danger of writing its own good news story were it not for one thing. Although it is riding the crest of unprecedented investment, with a forecast £1.8bn in the black, and well on its way to achieving its targets, the public has yet to be convinced that Labour's reforms have made it better.
It's a conundrum that has stumped many. Three times as much will be spent on the NHS this year than in 1996/97. Waiting times have come down to such an extent that the Department of Health is confident that the service will reach its target by the end of next month. This means that at least 85% of patients will wait no longer than 18 weeks from referral by their GP to treatment.
At the same time, there has been significant progress on the biggest killers – cancer and heart disease. On February 18, the department announced that it had met its target of reducing deaths from cardiovascular disease in people under 75 by 40% – five years early.
And after the furore over health care-acquired infections late last year, the rates of both 'superbug' MRSA and C difficile are coming down.
The health service's financial standing has also improved following the 'blip' of 2005/06. Most observers agree that the English NHS's £547m deficit that year was a result of its efforts to reduce waiting times. The following year, the deficit had turned into a surplus of £515m (not counting foundation trusts) and the surplus this year is forecast to be £1.8bn – double the £916m required by the DoH.
The department wanted a surplus of £250m, plus 0.5% from each organisation for contingencies (which adds up to at least £526m). Then it expected a further £140m following the abolition of resource accounting and budgeting for NHS trusts.
So why is the NHS now expected to have around twice that figure? There are even rumours that the actual surplus is much higher but has been 'managed down' to avoid politicians' embarrassment.
The department says that some of the additional surplus has been created because NHS bodies required to put aside more than 0.5% for contingencies (because of a deficit in 2006/07, for example) have met or exceeded their cost improvement plans. In these cases, contingencies over and above the 0.5% have been returned.
Also, a national agreement on generic medicines has cut millions of pounds from PCTs' drugs bills, while successful savings plans have pushed some trusts from a forecast deficit to break-even or surplus.
There is some evidence that much of this year's surplus is being generated by primary care trusts. Some are accelerating their programmes (buying additional activity to hit their 18-week target sooner, for example) but many will be unable to spend all the money this year. To ensure they can use the cash in future years, some are banking their surplus funds with their strategic health authority.
David Stout, NHS Confederation primary care network director, says this is sensible. 'It's difficult to spend money wisely if you're trying to spend it quickly,' he says. 'If a surplus is unexpected and varies during the year, it can be quite difficult to spend it in a sensible way.' He adds that it is good financial planning to hold a contingency for future years.
PCTs say they need some money set aside because they are often asked to fund services with little notice or with no knowledge of how much they will cost. Their prescribing expenditure appears to be stabilising but some finance directors have told Public Finance that they fear a review being carried out by the National Institute for Health and Clinical Excellence could add further pressure. Nice is considering lowering its thresholds for defining high cholesterol in patients with type 2 diabetes (clinicians are likely to also apply these to patients at risk of developing the disease).
'This would mean using more aggressive and expensive cholesterol-lowering drugs on a wider section of the population. It could have a big effect on our budgets,' according to one PCT finance director.
The DoH itself is quite taken aback by the scale of the projected surplus but is keen to make the most of it. Senior Richmond House figures talk of 'long conversations' about how the money could be put to use. NHS chief executive David Nicholson has described it as a 'fantastic opportunity' to do the things the NHS has always wanted to do but could not because it did not have the money.
In The NHS in England: the operating framework for 2008/09, the DoH told primary care trusts and strategic health authorities that they must ensure they have a surplus that is at least the equivalent of the one they report at the end of the current financial year. Clearly, there is a feeling at the centre that a pot of money must be built up.
But what could they be hoping to spend the money on? True, the rate of growth in NHS funding over the next three years will slow. PCT finance directors say they must protect themselves against the leaner times ahead.
There's also some uncertainty about the future. With Labour's health reforms cutting little ice with the public, the NHS is once again in the midst of a review. Health Minister Lord Darzi will publish his vision for the NHS in England in June, days before the official sixtieth anniversary of the service's founding. And surpluses from this year and next could play a big part in implementing the Darzi recommendations.
Everyone from the Alzheimer's Society to the British Medical Association to Unison signed up to the NHS Plan – the ten-year improvement strategy published in 2000 – but it is unlikely they will all be queuing up to back Darzi's final report. Many thought his appointment was a masterstroke, as his reputation as a world-renowned surgeon would earn the respect of his peers and win over a public that is more inclined to listen to a doctor than a politician.
But it seems to have backfired. Darzi's interim report was published last autumn and proposed longer GP surgery opening hours and a network of local polyclinics (where patients could see GPs and more specialist clinicians, as well as have diagnostic tests). The BMA opposed both, though it has since backed down on the former. As a result, the public have been faced with the spectacle of the medical establishment and the establishment's medic arguing over GP opening hours and polyclinics.
When the Darzi report emerges it will do so in a different world to the one that greeted the NHS Plan. Yes, there is more money in the system but patients also have higher expectations.
Against this background, the government will want implementation – which will not begin in earnest until the 2009/10 financial year – to go well and this is where the money could be important.
Quality and the need to personalise the service will be major themes running through Darzi's report. He wants to re-energise the public's belief in the NHS by preventing as well as treating illness and harnessing new technology, but most of all by connecting up different parts of the service to make the patient journey from symptoms to treatment easier. He might recommend that patients are given personal guides to help them navigate their way through the system.
Primary care trusts are likely to be encouraged to make care more transparent by developing care pathways, which detail the steps that should be taken when a patient is diagnosed with a particular disease.
However, perhaps the most controversial aspect of Darzi's plans will be the drive to localise care where possible and centralise where necessary – first heralded in his review of the future of health care in London last year.
To many this means the Darzi report will read as an obituary for the district general hospital as we know it. More care will move into the community – diagnostics and outpatient consultant appointments, for example – and complex care will be centralised into regional specialist units. Would this leave district hospitals with just routine surgery, maternity and elderly care?
Darzi has said his reforms will not necessarily cost a great deal of money but they will require a rethink of where services are provided. No doubt some money will be needed to oil the wheels of his reforms. For example, he is keen on avoiding gaps in services when, say, a consultant's dermatology clinic is to move from a hospital to a large community health centre. In his London report, Darzi insisted there should be double-running so patients will know the new service is available before the familiar one closes its doors. While it is a sensible idea, the commissioners and providers of the service will have to bear the cost of keeping both services going.
NHS Alliance chief officer Michael Sobanja supports the notion of polyclinics but he acknowledges they will require investment. 'Polyclinics mean different things to different people – a lot of people will see them as buildings but I think it's about GP networking, with practices teaming up. It doesn't necessarily mean there will be capital build implications,' he says.
However, technology will be needed to support these virtual polyclinics. 'You can't possibly bring every service patients need under one roof. But polyclinics will need telemedicine links, the National Programme for IT, the GP records sharing service – a whole set of infrastructure needs to be in place.'
No doubt PCTs will be aware that Darzi is on the horizon but Stout says they are not yet planning for it, never mind earmarking cash for it.
'It is difficult to plan for specifics in the Darzi review. PCTs are required to present their operational plans for next year around now but the Darzi timescale is going to be longer than that,' he adds.
Another problem for PCTs is that they have not received notice of their allocations for 2009/10 and 2010/11, making it difficult to plan beyond 2008/09. These are due to be announced in the summer and it does not take a huge leap to connect them with the outcome of the Darzi review.
Indeed, Nicholson told the Commons Public Accounts Committee recently: '[The surplus] gives us the opportunity in years two and three to be really clear about some of the things that we have wanted to do for a long time in the NHS.' He cited 'a big strategic change' that would need double-running costs and 'delivering a much more equitable service to our patients'.
Foundation trusts have also got an eye on the opportunities that could be offered by Darzi. They, too, have surpluses and many are keen to provide community services. They will have noted the encouragement the prime minister gave to such entrepreneurship in his New Year message to the NHS, and believe there are advantages for the patient in this form of vertical integration. Having all your care provided by one organisation should mean a seamless journey from referral to treatment, for example.
As Darzi acknowledges, his reforms will mean changes in the payment by results provider funding system. A DoH consultation on the future shape of PBR has now ended but the department says any changes will wait until after the eminent surgeon presents his report.
Both the department's consultation paper and the Audit Commission's recent report on payment by results suggest reforms that will fit well with the Darzi model. The commission criticised the levels of efficiency generated under PBR and suggested replacing the current tariff, which is based on average price, with one set by the lowest cost trusts. It proposed a 'normative' tariff – that is, one with specific quality targets.
The department seems open to all these options but, as with the fate of the surpluses, nothing will come clear until Darzi presents his report. In the run-up to the sixtieth anniversary, the NHS will receive many plaudits, although no doubt it will have bad news days. The challenge for Darzi and an NHS that suddenly has a lot of money at its disposal is to create a service so good that the public view the latter as aberrations.
For this to happen, nothing short of a world-class, quality, value-for-money and personalised service will be acceptable.
PFfeb2008
