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Lets wait and see, by Anthony Harrison and John Appleby

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19 August 2005

Finally, a hospital waiting time target that should genuinely help patients. But can the tough new plan to cut the time from GP referral to treatment to 18 weeks be achieved? Anthony Harrison and John Appleby investigate

Flushed, perhaps, with its success in bringing down very long waits, the government last summer set the NHS in England a new target for reducing waiting times: by 2008, no one should wait more than 18 weeks for hospital treatment after being referred by their GP.

While there are reasons to be optimistic that this target – the toughest set so far – can be achieved, there is also a real risk of failure. 

From the patients' viewpoint, the way the target is defined represents a significant improvement over previous targets. Labour came to power pledging to reduce the number of people waiting by 100,000. By the time it succeeded in doing so in early 2000, it had acknowledged that waiting times were what mattered to patients – not waiting lists – and so new maximum wait targets were set in the NHS Plan later that year.

But as these targets came within reach, it was apparent that they too were not properly formulated. Crucially, they omitted the time that some patients had to wait to receive the diagnostic tests needed to determine what treatment they required. They also failed to take into account any time spent waiting after the initial outpatient appointment if they were referred on to another consultant. There are no national data on these 'lost' waits, but ad hoc surveys have revealed they can be very long. Hence the 18-week start-to-finish target represents a major improvement – if it can be achieved.

From the point of view of hospitals, the target represents a really tough challenge. So far, the maximum waiting time targets have been met and there have been striking reductions in England in particular areas – some heart and eye operations, for example. But there is still a long way to go to cut the whole patient journey down to 18 weeks.

Nevertheless, as a recent King's Fund report concluded, ministers probably feel quite confident that the new target can be met. This is for three main reasons. First, the government has already commissioned a substantial amount of new capacity from the private sector. The actual contribution so far has been small, but provision of treatment and diagnostics is set to expand rapidly. Although the private sector input will still contribute only about 5% of total activity, that increment could be crucial. While the NHS has been increasing total elective activity in recent years, the share of that devoted to waiting list patients has been falling. This year should see the first significant increase in waiting list activity since 1999.

Second, the introduction of Patient Choice, first in London and then nationally, has opened the way for patients themselves to seek out providers with shorter waiting times. Evaluation of the London experiment has been largely positive, with a significant number of patients being prepared to travel away from their local hospital to be treated more quickly.

Third, payment by results – the new system of financing hospital treatment brought in to support Patient Choice – will put pressure on poor providers to improve their performance, both in terms of costs and shorter waiting times, and allow good hospitals to expand to meet the extra demand they attract.

Until now the improvements in waiting times that have been achieved have arguably been the result of the sustained pressure exerted by central performance management. From now on, this will be reinforced by market-type pressures. With both belt and braces in place, performance should improve. But will it?

There are several reasons for caution. For a start, Patient Choice might be less effective than the early results suggest. In other words, London might not be typical. In much of the rest of the country, people have fewer options within easy reach and some research suggests a greater reluctance to travel than has been apparent so far.

More important, if waiting times do even out as a result of some patients exercising choice, the incentive for others to do so will be reduced. Equally, if overall waiting times fall, the benefits of travelling away from the local hospital will also fall.

Another concern is that the provider response to the financial incentives of payment by results might not be in line with the expectation that efficient providers will expand at the expense of the less efficient. Analysis of the first year of payment by results found it had no impact on the pattern of activity.

That may reflect a sensible degree of caution in the face of a new and unfamiliar environment (and the fact that the payment system covered only a very small fraction of trusts' income). But there is a long-term risk that hospitals will not respond 'appropriately' to the new financial incentives for a variety of reasons. One of the most important is that they will have to increase their knowledge and understanding of their cost structures significantly, particularly of their marginal costs, before they can make sensible decisions. Even with this knowledge, they might decide to use any surpluses to improve their competitive position by raising quality rather than expanding activity.

But even where efficient providers seek to expand in areas where they perform well, they will come up against the same constraints that have hindered progress so far – shortages of key staff and other pressures on their time. The crude productivity of surgical consultants has been steadily falling for years, in part because of their increasing workload in teaching and supervision. The government itself has recognised the existence of staff shortages in key functions such as radiology.

Financial pressures are creating yet more hurdles. The Healthcare Commission has recently reported substantial deficits in the English NHS, for example. And some of the NHS's own treatment centres are running with spare capacity, in part because purchasers have kept spending on elective care down to the minimum required to meet existing targets. Reaching the new target will require a greater financial commitment both to diagnostics – where the government has commissioned extra capacity from the private sector – and treatment itself.

But there are other claims on those resources. Some, such as the new proposals for mainstreaming mental health care services for the elderly, might be sidelined. But others, such as new drugs approved by the National Institute for Health and Clinical Excellence, soaring Private Finance Initiative costs and rising pay bills, are largely unavoidable.

The NHS Confederation has already told the government that the health service cannot meet all the targets it has been set. The health secretary has replied by emphasising the scope for releasing resources through improvements in productivity. There is undoubtedly scope for more day surgery, where progress has been slower than expected, and further reductions in lengths of stay in hospital. The incentives created by payment by results will support measures of this kind.

But when it is applied to all areas of hospital care, payment by results might undermine the government's objectives. Earlier this year, the government decided to postpone the application of the new payment regime to emergency admissions, while reaffirming its intention to do so. Assuming it does, it will provide hospitals with an incentive to increase short-stay admissions and a disincentive to reduce other admissions, provided they can reduce lengths of stay. Primary care trusts might therefore find themselves paying for more activity of a kind they do not want, and hence find it harder to pay for what they do want.

A major uncertainty, on both the elective and the emergency front, is the level of future demand. As far as elective care is concerned, research suggests that as waiting times fall, more demand will appear. GPs might be more inclined to refer patients to hospital rather than try alternatives; some private sector patients, particularly self-payers, might decide that the NHS is now 'competitive'; and new forms of treatment might emerge.

On the emergency side, admissions have been rising in some parts of the country. This is partly as a result of long-term factors, such as the rising number of the very elderly living alone, and also as a response to the four-hour targets for maximum treatment times in A&E.  A&E activity itself has been growing, probably as a result of improvements in waiting times and difficulties faced by patients in accessing primary care.

Some primary care trusts have brought in measures of demand management – for example, by exercising some degree of control over referrals to hospitals or by offering alternatives in the community. Unfortunately for them, payment by results creates the very opposite incentive for providers – to take on as much (profitable) activity as they can. Within such an environment, the 18-week target might seem even tougher than it does now.

Anthony Harrison and John Appleby are respectively senior fellow and chief economist at the King's Fund

PFaug2005

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