Under doctors' orders

12 Aug 10
The health white paper promises to liberate the NHS by abolishing expensive top-down red tape. But is handing financial control to GPs really sensible? David Williams weighs up the evidence

By David Williams

12 August 2010

The health white paper promises to liberate the NHS by abolishing expensive top-down red tape. But is handing financial control to GPs really sensible?  David Williams weighs up the evidence

Even people keeping a close eye on health policy could be forgiven for being confused about the intentions behind the government’s white paper, which was published with great fanfare last month.

Equity and excellence: liberating the NHS was billed as the ‘biggest revolution’ in the service since its inception 60 years ago. Health Secretary Andrew Lansley’s language was more restrained but still did not hide the scale of his ambitions: to cut management costs by 45%; junk primary care trusts and strategic health authorities; give all hospital trusts foundation status; and give GPs control of about £80bn, four-fifths of the NHS budget.

But a week after the paper’s July 12 launch, he was playing down the significance of the changes – the reforming zeal was gone as Lansley sought to convince critics that he wasn’t ­planning the end of the NHS as we know it.

‘If you’re working in a GP practice, this isn’t a big change – the change is empowerment,’ he told the Commons health select committee. ‘It doesn’t change the character of existing foundation trusts, and it was always the plan to give every hospital trust foundation status.’

But that 45% figure was a shock. So was the idea of scrapping PCTs, particularly as the coalition government had adopted the Liberal Democrat policy of locally elected PCT boards two months earlier. The coalition agreement also promised: ‘We will stop the top-down ­reorganisations of the NHS.’

The white paper did away with all that, and introduced one more piece of ugly technocratic jargon into the NHS lexicon: the GP commissioning consortium. GPs will assemble the consortiums locally, and every practice will be required to join one.  It is expected they could number up to 600 nationally, compared with 152 PCTs. Above them will be a new quango, the NHS Commissioning Board, which will set guidelines, design template contracts, and hold them to account over the quality of their commissioning.

Councils will be given responsibility for overseeing local health needs, and will be put in control of a ring-fenced public health budget. They will also get extra funding to fight health inequalities, in the form of a ‘health premium’.

Lansley claims the reforms are bottom-up, because they give more autonomy to people running the services. Jennifer Dixon, director of the Nuffield Trust, disagrees: ‘It is a top-down reshaping. There is no doubt about that. And it is ­effectively forced by the state of the ­public finances.’

But, she adds, the new role for GPs is not an illogical step, given the development of the NHS over the past two decades. It builds on practice-based commissioning, brought in by Labour to allow clinicians to become more involved in buying secondary care. The Conservative administrations of the 1990s established ‘GP fundholding’ when they developed the NHS’s internal market. And the consortiums bear a strong family resemblance to Labour’s smaller, clinically led primary care groups of the late-1990s.

Dr Richard Vautrey, deputy chair of the British Medical Association’s GPs committee, acknowledges the precedents. But he says the latest reform involves the mandatory grouping of GPs, rather than individual practices opting in. This makes it too different from previous ­experiments to be sure about the results.

Under the new model, the NHS Commissioning Board will distribute money to the consortiums based on the populations they serve. There will be financial incentives for improving health outcomes and good resource management. Intriguingly, the board will allocate a ‘maximum management allowance’, which the Department of Health says will reflect the costs of commissioning. The size of this will determine whether consortiums have enough resources to commission ­effectively – but details remain scant.

Lansley almost certainly intends it to be less than the £1.86bn PCTs and SHAs currently work with. His 45% cut will leave GPs with around £1bn, and it is not yet clear if the NHS Commissioning Board will also be funded from that.

The white paper makes it clear that consortiums will be free to buy in additional expertise for, say, contract management, assessing outcomes, or demographic data analysis. Much of this work is currently done by PCTs, but Lansley suggests that consortiums might form partnerships with private companies, councils or charities.

PCTs are allowed to do that already, under the Framework for procuring ­external support for commissioners, which the private sector complains is too restrictive (see box on page 18). But the framework is not mentioned in the white paper, implying that consortiums will be more free to use private firms.

Shadow health secretary Andy ­Burnham worries whether GPs have the accountancy skills to manage the £80bn or so that is headed their way. ‘The strength of the British health care system is general practice, but GPs are there to treat patients, not handle multimillion pound budgets,’ he said.

He might be reassured by the BMA’s take on what is to come. ‘The vast ­majority of GPs won’t be involved in the day-to-day commissioning arrangements,’ Vautrey says. Past experience indicates that only a small number will ­enthusiastically take up non-clinical duties.

How revolutionary the reforms turn out to be will therefore depend on whether consortiums decide to hire their own managers, emulating the PCT model, or use private contractors.

Noel Plumridge, NHS consultant and former health service finance director, says the government is fashioning an environment in which the private sector can thrive. A newly fragmented health service stripped of management expertise would present a significant opportunity for international firms such as United Health and Humana.

‘Good commissioning is about data,’ he tells Public Finance. ‘Where will the true balance of power lie? With 500 or 600 consortiums, or a few very large “support” firms doing the data manipulation in bulk? In that relationship, who is supporting whom? Who would have the ear of ministers?’

From this, says Plumridge, a new, centralised model of commissioning might emerge, based not on local haggling, but on bulk deals, administered largely by big companies and relying on data.

Lansley’s sympathetic attitude to commercial companies is evident elsewhere – he wants services to be contracted to ‘any willing provider’, public or private, which is a distinct shift away from Burnham’s principle that public organisations should be preferred. And Lansley plans to remove the limit on how much income a hospital trust can make from the private sector. The ­secretary of state links the quality of ­cancer services at the Royal Marsden Hospital, for example, to its ­exemption from Labour’s 2% cap.

But opinion is split on how far the door will open to the health care giants. The BMA argues that consortiums will have their own ‘lay managers’, and that most of these will currently be working for PCTs. Vautrey says: ‘It’s really important that we don’t lose some of the significant expertise within PCTs. It would be a real loss if they leave the service, only for us to have to buy them back through a ­private company.’

John Appleby, chief economist at the King’s Fund, says a potential pitfall is that GP surgeries have fuzzy catchment areas, which can overlap or cross council borders. This could make data-based commissioning difficult, he warns, as much information on populations is divided into local authority areas. Appleby predicts GPs will come to realise the benefits of sharing boundaries with councils – mirroring the 2005 reforms which brought most PCTs in line with local councils.

A pivotal factor will be the ­consortiums’ statutory requirements. Lansley might instinctively want to bin all non-clinical targets, but somebody will have to define what they’re supposed to be doing, ­Appleby says. If the requirements are as loose as ‘improve the health of your population’, he says. ‘You quickly slide into having to measure things and setting out what the population’s health is, and what’s important, and so on.’ And that would take the NHS back to PCT-like ­organisations with complex PCT-like requirements.

‘Every reorganisation of the NHS finds this out,’ Appleby adds.

Karen Jennings, Unison’s head of health, says it is not clear whether GP consortiums will be private bodies or be publicly owned. She suspects the government’s goal is to transfer thousands of workers from the public balance sheet to the private and voluntary sectors. Over a generation, that could mean many fewer public sector pensions to pay. And the exodus might not be confined to the commissioners: Lansley also aims to create the ‘biggest social enterprise sector in the world’, with foundation trusts run as ­mutuals by staff.

‘This is about making the NHS into something other than a public sector institution,’ Jennings says. ‘It’s driven by ideology – there’s no evidence of cost ­savings here.’

She also attacks the government for holding back NHS funds to push the changes through. Lansley has been open about this – a £1.7bn real-terms funding increase for 2010/11 has been set aside for ‘non-recurrent expenditure that would help the NHS adjust and meet its long-term obligations for the future’.

But we still don’t know how many staff will be laid off, whether any will be transferred directly to GP consortiums, and how many redundancies the £1.7bn would pay for. A brain drain is a serious risk: in one PCT with a commissioning team of 100, nine have left since the launch of the white paper. Unless the consortiums are established quickly and good managers moved across fast, the brightest and the best are likely to be scooped up by a buoyant private sector gearing up for expansion.

Kieran Walshe, professor of health ­policy at Manchester Business School, wrote in the British Medical Journal that the turmoil was likely to cost £2bn–£3bn in total. The Civitas think-tank estimates the reforms will set the NHS back three years, because managers will be preoccupied with reforming themselves out of existence instead of improving services.

And for what? The basic assumptions underpinning the NHS of today – the purchaser/provider split, the ­commissioning concept, individually-run hospital trusts, and the option to buy in services from the private sector – remain intact.

Appleby suggests that Labour, by adopting the internal market philosophy, effectively ‘triangulated Conservative policy out of existence’. Lansley is left with the sole option of making the NHS like it ­already is, only more so.

As the service plunges into another round of centrally dictated managerial upheaval, British society continues to age, more people live longer with chronic and expensive to treat conditions, and the cost of drugs and therapies continues to balloon.

Lansley acknowledges this – it is significant that one Labour target he has chosen to retain is saving £20bn through genuine ­efficiency by 2014.

Yet there is no strategy for how this is going to happen, Appleby says. The document contains only two mentions of the Quality, Innovation, Productivity and Prevention programme designed to realise those savings – the NHS must do more of it, and it will become more

The plan is to find the productivity gains by spending £850m less on managers and improving commissioning through greater clinical involvement, ­patient choice and external contracting.

Appleby says there is no evidence that GP-fronted bodies will be better at designing a complete care package for, say, a chronic diabetes patient, than a PCT is already. ‘It does make you wonder what’s the point,’ he concludes.

David Furness, head of health policy at the Social Market Foundation, crystallises the problem: ‘It’s a bit like BP being presented with an oil spill, so the board get together and say “what we need is to get absolutely the right management structure to deal with this”. It just doesn’t seem like the appropriate priority.’

Jennifer Dixon believes quick and easy productivity gains are there for the taking, just not through any means spelt out in the white paper. A more integrated, continuous health service, which links acute services, GPs, other community-based ­clinicians and social care, could support people at home and reduce emergency ­admissions by up to 60%, she estimates.

Better community care would lead to falling demand for hospital places – but policy on redesigning services has been mixed. Lansley argued against accident & emergency unit closures before the general election, and has scrapped Lord ­Darzi’s plan to increase community provision in London at the expense of some general hospitals. A pre-election moratorium on reconfiguration has been lifted, but Lansley will not allow hospital cuts without the say-so of councils – who will always be hostage to impassioned local electorates. Dixon predicts either a U-turn from Lansley on reconfiguration, or an ­‘almighty mess’.

Until something gives, Lansley is ­enacting a lop-sided sort of radicalism, in which primary care is turned on its head, but with little significant change on the provider side.

The centrepiece of the new government’s health policy is a white paper bold in its readiness to tear up management structures, but timid in its acceptance of popular assumptions about how the NHS should be composed.

Did you enjoy this article?