Health economist Professor Alan Maynard reports not on Lib Dem education policy, but on the latest outburst of magical policy thinking

“There’s no such thing as a free lunch”
Clinical commissioning groups are under continuous pressure from patient groups, clinicians and others to expand services. As a patient, I have great sympathy with such advocacy, provide it is evidence based of course.

However, nationally and locally, there is sadly little recognition of the opportunity cost of such advocacy. Politicians, particularly in this pre-election period, conjure money out of hats for wheezes that their advisers regard as wise and vote-inducing. Their wisdom is often flawed. But even when it isn’t, there is little recognition of the opportunity cost of their policy choices.

When challenged they make vague statements about the sources of funding being e.g. “reserves” and “under-spending”.

Un-nutritious waffle
Such waffle is unacceptable. Raiding reserves (often stolen at the year’s end by the Treasury to cross-subsidise flagrant Whitehall over-spenders) and using departmental under-spend (who is responsible for such errors in budget management?) has clear opportunity costs.

Ministerial wheezes can be expensive errors - used to calm Daily Mail-induced panic, often produced by misinformation and ignorance. They deprive other citizens of care from which they could perhaps benefit. Valuable health gains for patients are forfeited by ineffective wheezes emanating from Richmond House.

National Institute for Cost-Effectiveness
The National Institute for Health and Clinical Excellence (NICE) operates on the principle of cost effectiveness (i.e. NICE as National Institute for Cost-Effectiveness). NICE produces mandatory technology appraisals and offers advisory guidance on clinical guidelines and public health.

Their activities inflate NHS expenditure by targeting resources at cost-effective interventions. Their work has inflated NHS expenditure by billions of pounds and brought evidence-based relief to many patients.

NICE has a major problem. Its work continually adds to the stock of treatments that have to be provided to patients (technology appraisals), and may be provided to patients (clinical guidelines). NICE rarely mandates or advises on what activities could be taken out of the NHS list of things suitable patients can receive.

In the first 15 years of its life, NICE has offered all too little advice on what NHS purchasers can curtail or eradicate e.g. excessive use of antibiotics, injections for low back pain and inflated levels of hysterectomy.

CCGs desperately need to identify and cease to fund “low value” interventions. Where is the NICE or Cochrane Collaboration list of such treatments? NICE is really the National Institute for Clinical Expansion, giving professionals more things they can do for patients, whilst ignoring the problem of opportunity cost.

Long live NICE - but can they or someone else advise on how expenditure can be curtailed by eradicating activity with little clinical gain?

Whilst CCGs await this advice they should use routine administrative data to identify and mitigate unwarranted clinical practice variations. We have known these exist for over 80 years but why don’t CCGs or even sleepy Whitehall or hopefully-emerging-from-hibernation NHS England issue edicts mandating things like publication of variations in GP referrals, blood tests and x-rays; the top 100 'frequent flyers' in terms of hospital admissions; and high users of integrated NHS and social care expenditure.

Absence of such routine good sense is indicative of the concept of opportunity cost not gripping the parts of NHS managers faced by austerity!

Not very SUSsed
An obstacle to such work is the delay in routine SUS-NHS activity data. At present, there is a continuing three-month lag. As a consequence, unverified data is in routine use to manage activity.

The debacle over patient data inhibits NHS management activity and research. Access to pseudo-anonymised data is urgently needed to facilitate e.g. evaluation of Better Care Fund interventions.

The pay freeze thaweth?
After the election next May, whoever is in power will face the problem of public sector pay. The Nicholson Challenge of yesteryear was largely achieved by making NHS staff poorer with a wage freeze.

As the economy expands, the demand for labour will increase and private sector pay will expand, potentially competing away NHS workers. The NHS is a den of poorly paid folk who (like porters, for instance) are essential for the delivery of patient care.

At the other end of the pay spectrum, we have expensive managers of budgets and patients. British Medical Association pay rates for general practitioners are eye-wateringly generous e.g. £85-90 per hour.

Hospital consultants can get annual, pensionable “Distinction Awards” ranging from £3,000 to £75,000 per year for being “meritorious”. Non-clinical NHS managers such as chief executives and directors of finance receive generous six figure salaries.

This expensive and often excellent workforce benefitted enormously from the “Blair bonanza” which doubled NHS expenditure, 50 per cent of which funded pay.

After the election, how to manage the pressure for pay increases? One principle for the well-paid (e.g. those in receipt of pay three times the national average wage?) might be pay cuts. Such a notion would not be popular, but could mitigate the excesses of the first decade of the century. It should be borne in mind that Simon Stevens voluntarily took a 10% pay cut when accepting his NHS England job. Six-figure pay recipients might useful emulate their chief executive in chief, and recognise the opportunity cost of their generous pay packets: high pay reduces the flow of patient care.

On that controversial note, I will rest my case for continuous attention to the concept of opportunity cost. Paying Peter means that you rob Paul in a world of scarce resources and flat NHS funding (an option invariably not welcomed by the Pauls of this world).

In addition to my long-suggested hospital and GP surgery signage of “In God we trust; all others bring data” we should add “Every choice that you make, implicit and explicit, has an opportunity cost” because there is no such thing as a free lunch.