Health economist Professor Alan Maynard outlines the sanity deficits and supply-induced demand risks in current policy trends

Current NHS policy is founded on delusions about how the NHS is organised and how it can be improved. Have decision-makers gone mad or are they suffering ‘innovation’ diarrhoea induced by panic over austerity and continuous faith-based policymaking?

Where to start? The Better Care Fund initiative shifts an additional £3 billion out of the “ring-fenced” NHS budget and into social care. Social care budgets have been devastated by local authority budget cuts. Mr Pickles’ regime of terror, with its northern bias, has produced a considerable proportion of the expenditure cuts of the Coalition.

Whitehall departments have come off relatively lightly. Defusing misery to the provinces defuses political consequences for the Coalition until after the general election next May.

Having grossly undermined local social care budgets, Whitehall “experts” became imbued with the notion that the NHS could afford to bail out local government with an additional £3 billion cash swop from 2015-16 (i.e. after the election). They further offered energetic faith-based advice that this cash transfer must be used efficiently to cut acute services admissions, and thus reduce the size of the hospital sector. Without such cuts in hospital activity, the NHS will be bankrupted.

The sanity deficit
Bonkers! Despite the views of some think-tanks that social and community care ‘innovation’ can be used to shrink hospitals, there is little evidence from robust, scientific trials and systematic reviews to support this nonsense.

The evidence base about interventions that reduce admissions to hospitals remains poor (e.g. Sarah Purdy, Kings Fund 2010). Putting £3 billion of scarce NHS financial eggs into this basket may be appealing in electoral terms, but as usual, its appeal is not based on robust evidence of cost-effectiveness.

The most likely outcome from this policy is that the acute sector will maintain its activity and, with CCGs losing £3 billion, they will go bankrupt.

NHS managers have to be sure that social and community care ‘innovations’ are substitutes rather than a complements for acute care. Otherwise Better Care Fund spending will destabilise the NHS as hospital providers carry on processing patients at current or increasing levels as NHS budgets shrink

This scepticism is countered by optimists, who offer evidence-free alternatives. For instance: let’s press GPs to merge into larger groups. They could offer economies in terms of back office activities. But if such back office economies can be harvested, what is the likely effect?

Supply-induced demand
GP back office economies will free up doctors and nurses time to care for patients. Very nice and most welcome, but … this will lead to more diagnostic tests and more hospital referrals. Supply creates its own demand, as ever.

Thus back office economies may be cost saving in primary care, but they may create NHS expenditure inflation if activity is driven up in the acute sector. Do take care!

Alternatively, we can re-create capitated general practice fund holding (GPFH) with pooled health and social care budgets. Interesting! Before Blair destroyed them in 1999, GPFH appeared to have reduced elective activity in hospitals. But how to persuade the acute sector to enter such budget-threatening projects when PbR (despite ‘fines’) supports them?

Advocates of such policies have to address such scenarios and evidence them. There is a significant risk that the re-disorganisation of primary care, together with the Better Care Fund and GPFH-like organisations, will lead to the recognition rather than the resolution of unmet need. In other words it may be inflationary and destabilising for a system facing increased demand and covert, diminished political interest in its survival.

A Department of Health-funded systematic review of integrated care experiments in Australia, US and the UK will be published next month and should give all policy makers and managers pause for thought (Mason, Goddard and Weatherly, Centre for Health Economics, York, forthcoming).

Using the evidence or Maoism for managers?
So for those determined to use evidence to inform difficult Better Care Fund choices and reduce admissions to hospitals, the message is avoid the misinformation from blind enthusiasts, including well-intentioned but ignorant politicians and the vague blandishments of enthusiasts in “think”tanks.

The task is very difficult because evidence is lacking. Enthusiasts may be inducing us to leap over a cliff, and we are uncertain whether the fall is a marginal couple of feet and manageable, or 2,000 feet and system-smashing!

NHS managers will, in the best Maoist tradition, let a thousand flowers bloom i. e. they will innovate, often duplicating others’ efforts as has been usual for 60 years. They will espouse evaluation, but will fail to design such activity in a scientific manner and fail to fund it adequately. Compared to those ‘villains’, the pharmaceutical industry, they will break every rule of efficient trial design even more successfully than drug pushers! (www.equator-network.org )

Cock-up beats conspiracy
The outcome of policy built on delusions of how the NHS respond to radical, new reform might be used by its supporters to substantiate their argument that it is the intention of the Coalition to destroy the NHS. This conspiracy theory could be reinforced by the fact that much of the current turmoil being created now is artfully designed to come to pass after the 2015 election.

However, being more realistic I would sign up to the “cock-up” explanation. Like the Blair reforms of the noughties, the Con-Dem Coalition reforms continue to be based on faith and arrogant disbelief that they may have got it wrong. Most reforms in the last 30 years (and more) have had little beneficial effect on the performance of the NHS and have cost billions. The current bout of fun and games may offer little improvement in how NHS resources are used and how patients are treated.

Time for creative warping
As ever, it is up to NHS clinical and managerial staff to curb the excesses of madness offered by our well-meaning but daft political leaders and their obsequious civil servants. By creative warping of the dictates of competing and feuding national agencies such as the Department of Health, Monitor, the Care Quality Commission and NHS England, hopefully the NHS will survive.

P.S. For those interested in an American view of our re-disorganisation of the NHS please read “A reorganisation you can see from space: the architecture of power in the new NHS” by SL Greer, H Jarman and A. Azorsky, Centre for Health and the Public Interest. Reflective and insightful, it demonstrates the castration of the Department of Health and the emerging dominance of Monitor, and its ex-consultancy industry leadership cadre!