Professor Alan Maynard looks at the oncoming financial storm facing the NHS, and explains why health policy Nirvania is home to unicorns and zombies.

Into the NHS storm with all hands on deck
The Department’s productivity challenge has translated into harvesting the low-hanging fruit: squeezing costs. How far can this continue before quality declines and rationing hits political sensitivities where they hurt?

Where to now, given that the easy cost savings have been made? What is the substance of the ‘productivity challenge’ (or Nicholson Challenge, or QIPP, or CIP …) - and what are the myths? Is it time to summon all hands on deck to avoid serious damage to the good ship NHS?

Nirvania - a land of zombies and unicorns
Currently we are journeying through Nirvania - a policy land inhabited by zombies and unicorns.

For those unfamiliar with these terms, a zombie policy is one that continually pops up despite being slain as useless in the last policy round. This classic term was pioneered by Professor Bob Evans and colleagues in Canadian debates about user charges.

Juveniles in policy ‘think’-tanks (hereafter the ‘tankers’) resurrect this zombie regularly. Given their age and lack of familiarity with the literature, they advocate it as novel and evidence-based.

Indeed, user charges are evidence-based: if you want to screw the ill, shift costs from government to individuals and inflate healthcare costs, then user charges are for you.

User charges have the potential to cause cost inflation because they may reduce provider income due to lower patient utilisation. If this happens, providers will induce demand to keep themselves in the style to which they are accustomed.

Add in the administrative costs of user charges, and the problem that if you charge for X (e.g.GP visits) you may increase Y (e.g. A&E attendances), one can only conclude that user charges are at best unattractive, and at worst daft.

It’s the supply side, stupid!
Indeed they are mere reflections of a healthcare system’s unwillingness to tackle its core problems:. it’s a supply-side problem, stupid! Focus on provider power and inefficiency in healthcare supply; not patient demand. Screen out the siren calls of zombie-masters, such as tankers and McKinseys.

On unicorn policy
What is a unicorn policy? This is a mythical beast, prevalent in international healthcare policy-making; much-discussed in approving terms by the cognoscenti - especially tankers - but never discovered in replicable form in the real world of the NHS or any other healthcare system.

Friends on Twitter (where I can be found as @ProfAlanMaynard) have offered many examples of policy unicorns: electronic patient records; pay for performance incentives; GP commissioning; pooled budgets; centralised purchasing; integrated care; the private sector’s superiority to the NHS; patient self-management; and foundation trusts.

We would all like to believe that these items are do-able and efficient. Furthermore, they are sexy and (by and large) in what passes for fashion in policy circles.

Yet we lack evidence they work: they are largely faith-based unicorns, prancing about in policymakers’ delusions.

Can it be proven or replicated?
Let us take the example of Kaiser Permanente in California; long-acclaimed as the example of efficient, integrated care. Even if this is so, it has not proved replicable in the USA or any other setting.

Integrated care was advocated in the Department of Health and Social Security document, Priorities in Health and Social Care, in 1976: 40 years later, we await its widespread use. Torbay, held up by the tankers, as the epitome of how to develop integrated care, took 10 years to develop.

I fear we lack the assistance of my childhood puppet hero Sooty and his magic wand to do it faster and better in 2012. So this unicorn remains elusive in the short run, when we need to produce wondrous savings by system re-design. And the matter is urgent.

NHS ‘transformation’
Given these zombies and unicorns (many of which are ignored by ever-optimistic faith-based policymakers), what shall we do to survive in these times of Coalition parsimony, when patient demand is increasing?

Have no fear, says the rhetoric of the NCB (Nicholson Commissioning Board) and Whitehall: all is well (e.g. see Nicholson’s annual NHS report earlier this year).

Indeed one of the recently appointed junior health ministers was daft enough to say on BBC Radio York (September 27th) that all was well now the NHS was run by clinicians in CCGs! Dr Daniel Poulter is clearly certifiable if he really believes this: the good folk in CCGs face the same constraints and incentive problems as the previous regime.

As with the past dozen NHS redisorganisations, the 2012 version involves us all jumping on the spot energetically. It may prevent osteoporosis.

A Comrade on thin ice
Wise and energetic though David Nicholson is, he must recognise he is jumping on thin ice! What change instruments has he got to save himself from the House of Lords?

The GP quality outcomes framework costs £1.2 billion annually. This is slowly being turned round to incentivise GPs to control referrals, prescribing and other costly activities. However, the government should reform the GP contract and address the issue of demand control and quality improvements (e.g. reductions in unwarranted variations in practice) fundamentally. But a Spanish attitude prevails: manana (tomorrow). Let’s not rouse the BMA on reforming the GP contract before the next election!

The consultant contract gave practitioners a 27% pay increase over three years in exchange for productivity increases of 1.5%. This activity increase has not been delivered.

Have there been compensating improvements in safety and outcomes? If so, where are the data? Why have those who have managed this contract been so abysmally weak in developing its potential and monitoring performance? Why are medical directors so passive?

The old-fashioned amongst us would expect that if a party to a contract failed to deliver the agreed outcomes, that contract should be null and void - i.e. the pay increase might be reversed. Perhaps Mr Hunt might mention this to the BMA?

The NCB clearly has to improve doctor contracts to ensure better value for money. This should not prejudice attempts to get the doctors to heal themselves with better audit and reputational incentives.

In the meantime, what can be done? Might it be too naughty to suggest that CCGs devolve their budgets to large GP practices and empower them to buy all the care needed for the patients on their list within a fixed budget? Put another way, how about CCGs re-inventing GP fundholding? This is an obvious alternative to replacing PbR with block contracts for hospitals.

But what can be done in addition to this?

Firstly, Nicholson can skim budgets. As a learned University colleague emphasises to me in on-going debate about the North Yorkshire and York PCT budget deficit, commissioners budgets are needs-based but local NHS expenditure is demand-based. So deprived areas get better budgets quite rightly - but they often under-spend them.

In the past this has enabled SHA bosses to redistribute funding from under-spending deprived areas to over-spending more affluent areas and still declare a surplus at the SHA level This has now been decreed to be unacceptable by the NCB. Such manoeuvres yield surpluses which David Nicholson and company sweep up and seek to protect (often with limited success) from Treasury scavengers.

The consequence of the new rule that ‘thou shalt not use such surpluses to bail out bankrupt Foundation Trust hospitals and PCTs’ means that both have to declare difficulties and providers will have to indulge in ‘reconfiguration’. This is becoming increasingly prevalent.

But what does it mean: merger and / or closures of capacity? What are the implications?

There is a conundrum inherent in reconfiguration if it means mergers. There is evidence that for some procedures, better outcomes are achieved if facilities are concentrated in large specialised centres.

Thus for the last 20 years, the NHS has groped its way to centralising the provision of paediatric cardiac surgery and trauma centres. Neither policy is popular with the public, who often prefer more local and smaller facilities which are more successful at killing and maiming them.

The evidence base for private sector mergers indicates that they generally fail to generate either quality improvements or cost savings (see the Department of Health-funded paper by Gaynor, Laudicella and Propper in the Journal of Health Economics 31,528-543, 2012). Furthermore they reduce intra-NHS competition which Propper and Cooper have shown yields economic benefits

If reconfiguration means cutting capacity to facilitate productivity gains from 24/7 or 12/7 activity, it is unclear whether this will add to costs. Again, concentration of activity will reduce intra-system competition and increase the travel time costs for patients and ambulance service activity. Helicopters are fine for delivering patients to hospitals in daylight hours, but night flying is the preserve of the armed forces.

What about privatisation of hospitals? The example of Blair’s Independent Service Treatment Centres (ISTCs) is underwhelming with private operatives sometimes withdrawing from NHS ‘combat’ due to squeezed PbR tariffs and their inability to make profits.

For public and private providers, the failure regime is a central issue. East Coast rail privatisation led to failure and service withdrawal by the private provider and the enterprise going back into government control. First’s handling of the Great Western contract and the riskiness of 15-year contracts for both public and private purses is exemplified in the failed bidding process for the West Coast line.

What if a privately run NHS hospital fails? Who takes over? Contracts with the private sector need transparent conditions which protect patients from disruptions of care and taxpayers from financial penalties.

The crowded top quartile
CQUIN and QIPP consist of a torrent of initiatives to reduce clinical practice variations (see the Department of Health website to be awed). It supposes that everyone can be persuaded to get into the top quartile of performance. This would lead to a very crowded top quartile if successful!

Still, the rhetoric is fun – even if the evidence of such shifts being achieved at all or efficiently is very limited, if not absent. It appears to most that QIPP equals cost-cutting, supplemented by reducing administrative staff and pay freezes.

The QIPP programme is a product of knowing that clinical practice variations are universal but uncertainty as to which of them is warranted and how to alter behaviour in a cost effective manner.

Perhaps the NCB could demonstrate that QIPP is producing savings with no adverse effects on accessibility and the quality of care - i.e. actually offering real productivity gains? In the absence of such evidence we can assume rationing is becoming more prevalent and fingers are crossed in Whitehall village that quality problems will not lead to a repeat of Mid-Staffs. But don’t count on it.

Conclusions
Whether it is the contracts of employment of doctors, QIPP, CQUIN and other efforts to free resources to meet increasing patient demand, the primary characteristic of the NHS drive to increase productivity is exhortation and rhetoric, with a dash of prayer.

Testing and evidencing the frenetic changes in NHS policymaking are as common as hen’s teeth. Consequently, there is little evidence of productivity improvements and widespread tacit acknowledgement of cost-cutting

All this is accompanied by redisorganisation, or musical chairs. CCGs are focused on the 119 criteria which consume their managerial attention in order to acquire authorisation from the NCB. These efforts are nicely inflating the incomes of folk such as Hay Associates training all CCG operatives hopefully to be better managers and Ipsos MORI doing often unhelpful 360 degree assessments of local attitudes to emerging CCGs (with inadequate response sample sizes).

It is pertinent to repeat what the 1979 Royal Commission concluded about the first NHS redisorganisation in 1974. The Royal Commission judged that it produced “an immense amount of administrative work in preparation for the new machinery; disruption of ordinary work, both before and after reorganisation caused by the need to prepare and implement the changes; the breakdown of well-established formal and informal networks; the loss of experienced staff through early retirement and resignation; the stresses and strains on some staff of having to compete for new jobs”.

Does this sound familiar for those being redisorganised today? This of course could never happen again. Sadly but unsurprisingly, boomerang health policy rules.

For the NHS to survive and prosper in the increasingly stormy waters of austerity and Coalition naivety, greater intelligence and courage are required from all working in the NHS.

Labour’s promise to hand over the NHS to local government merely repeats the mistakes of the past: where’s the evidence for such nonsense? Let us be sceptical of the siren songs of the purveyors of zombies and unicorns in Nirvania – also known as Whitehall Village, the NCB, politics and the dafter ‘think’ tanks.

We should always remember and celebrate that “scepticism is dangerous. That’s exactly its function. It is the business of scepticism to be dangerous. And that is why there is a great reluctance to teach it in schools” (Carl Sagan). Likewise in universities, and likewise in medical schools.