‘Reform our libel laws, but not our NHS’?
Civitas, 25 March 2010
The budget has set the challenge. By 2013-14, the NHS will be expected to deliver annual efficiency savings of £15 to 20 billion. The financial year 2010-11 will be the last year until at least 2013-14 (if not further) when the NHS will receive real terms increases in funding. Whatever they say currently, it will not be very different under a Tory government.
The implications of this are stark. Only a handful of times in its 62 year history has the NHS not seen a real-term rises in funding. Never has this been for more than one year. It is about to see a good few in a row. To add to the mettle, the NHS has got somewhat programmed to feeding off real increases of over 5% p.a. over the past decade. In fact, since 1999-2000 funding has increased by 95% in real terms. Perhaps unsurprisingly, productivity has fallen by 3% since 2001. More worryingly the biggest annual fall, of 0.7%, came in the last year measured: 2008.
So, how are we going to convert a 0.7% decrease to a 7% p.a. increase, that the King’s Fund estimate will be required (given rising expectations etc. on top of a static budget)? In essence, there are three options: i. Muddle along with the status quo; ii. Roll-back the split between purchasers and providers, and with it the internal market; iii. Create conditions for this market to work.
The present government, and the British Medical Journal (with its leader last week ‘Reform our libel laws, but not our NHS’), apparently favour option i., despite the evidence this is not bringing widespread benefits. If one thing can be garnered from the IHI and RAND reports on the NHS, commissioned and suppressed by the DH, it is of a system rolling to its own accord, obsessed with means (targets) and not ends. A culture of fear and ticking boxes.
The BMA favour the second option. But we should remember the faults of the system that existed before the purchaser/provider split and the internal market were introduced. One that was far more responsive to professionals and the state than patients. Central planning is full of well-documented problems, not least the perverse incentives associated with targets.
It is the third option we should be pushing for. While markets should never be allowed to ride roughshod over social cohesion, within a framework committed to universal coverage, free-at-the-point of need, they can offer real benefits to the NHS (in the right framework). Why? Because they embrace pluralism, and provide a place where new ideas can flourish – new ideas that the NHS urgently need to pull through the financial crisis it faces. And they ask organisations to keep proving they are good enough.
A few relevant results:
– Regulatory reforms that introduced competition into UK water, gas and electricity markets, for example, led to ‘phenomenal rates’ of productivity increase in the 1990s of over 10% p.a.
– Studies by the Dept for Business Enterprise and Regulatory Reform (the catchiest of government department names..?!) have shown that from refuse collection to healthcare, competitive tendering has produced cost savings of up to 30%.
– Julian Le Grand and colleagues at LSE have shown competition in the NHS (what little there is) to have improved clinical quality (measured by AMI) and managerial quality… so there is considerable potential, despite benefits not currently being in proportion to costs.
So, what is required? In three points:
- A clear and unambiguous re-affirmation of commitment to Principles and Rules for Cooperation and Competition. i.e. commissioning based on best value (cost and quality), be it from the NHS, independent or voluntary sectors.
- Removing rigidities that prevent the operation of an effective ‘market’; in payment; in contracting; in wage bargaining; in regulation; and in terms of PCT (Primary Care Trust – the commissioners of care) boundaries.
- Working to create a level playing field between providers. This would imply: enforcing full cost allocation and accounting; iron-out cost disadvantages for the independent sector (c.14% vis-a-vis the NHS); ensuring the publication of comparative quality data, preferably through multiple sources.
Or would such a move destroy the NHS?… Next week, the blog will focus on this question.