Civitas think tank, which has been doing some good work on health for some time, held a lunchtime seminar-cum-debate on the topic ‘Who (should) run the NHS?’

The presentation was given by a former senior regulator whose departure was long-trailed (yes, it was Chatham House Rules, so no names, no packdrill).

It was fascinating. Here is a summary of the presentation.

The presentation
The concept presented by the ex-regulator was that the NHS should return to something closer to the original Beveridge concept of a mutual insurance system. The present situation, whereby the Secretary of State for Health is effectively the chief executive of an NHS hospitals company and everything else beside, with the DH as HQ.

The ex-regulator’s presentation was framed around four questions:
1. what is the NHS and why is it run by amateurs, rather than experts?
2. might healthcare be better and cheaper if the system were run differently?
3. if so, how would we structure and organise it to deliver better, cheaper healthcare?
4. how do we get from here to there?

The nationalisation of all existing provision in 1948 under the NHS Act meant that the state owned assets and employed staff. Quickly, the public began to believe that the essential thing about the NHS was its physical assets, in buildings and staff, rather than its role as a mutual insurance scheme.

Mutualisation and nationalisation thus created unwanted consequences, making it difficult to create an efficient, high-quality cost-effective healthcare system because:

1. patients do not connect healthcare use and tax payment: NHS services become an entitlement as a citizen
2. doctors and nurses have no idea how much things cost and how much is paid for them, so no financial pressure arises to limit demand or aim for economy and efficiency
3. as the owner, the Secretary Of State becomes responsible for everything: capital investment; decisions on closures, new builds, designs and technology. All these subjects become political and thus party-political. Lobbying ministers becomes the determining method to implement (or prevent) change. Nobody has done this lobbying better than the clinical community, the ex-regulator added.

Healthcare policy and operational issues, being party-political, also become electorally cyclical (with high volatility in the 1960s and 70s). It becomes very difficult for ministers to admit wrong decisions and change them (the ‘U-Turn’). Politics being partisan and not always rational, this is not widely seen to be a good way to run a large and important industry.

The DH concluded that the only way to function in this context was to exert tight central control over planning of capacity and workforce, with capital allocated centrally. There would be no competition (which would require wasteful spare capacity), and profits made by the UK’s small private sector became perceived as ‘money the DH need not have spent’.

Choice was not a feature of the paternalistic system of doctor-and-civil-servant-knows-best. And cheapest was deemed to equal best value. As owner of the monopoly system, the focus was all on provision and not commissioning.

In this way, the concept of mutual insurance, and all it could mean, get lost. Instead of acting as commissioners, the DH and NHS became the monopoly supplier of health services. The 1960s-70s era, with trades unions’ power at its height, gave staff good terms and conditions of employment, with minimal performance management.

Nye Bevan’s high ideals, the ex-regulator concluded, left patients to like it or lump it. The consequences have been seen in low and falling labour productivity; terms and conditions of employment made nationally and not locally leading to inappropriate labour allocation; too many hospitals of varying quality and cost; unskilled boards focused on political priorities; weak scrutiny and no response to management failure; weak management; and little or no information for patients or option to influence the care received.

A different system would undoubtedly be better and cheaper. The above-listed failures are products of one way of thinking, and the behaviour of individuals operating in the system. All are capable of being tackled. The recent Nuffield Trust study of the NHS in the four home nations shows that structures and ways of working affect performance and delivery, demonstrating that the English NHS offers better value at lower costs.

How should the NHS be organised to deliver better care at lower costs? Most policies exist already, but need to be used properly. Competition and patient choice are both essential. The recent ‘preferred provider’ policy was ridiculous. The system needs the innovation of new entrants and the promotion of choice (as the Labour manifesto seems to agree).

The ex-regulator suggested that the Foundation Trust (FT) model seems to be a good one for the acute sector, with the evidence (such as it is, thin and sporadic) suggesting that acute FTs perform better than non-FT. It offers incentives for efficiency and effectiveness, as well as scope for good governance through better boards, and the built-in focus group of membership that can be used well.

Integrated services would be positive, could still allow opportunities for competition. We need a tariff for whole pathways of care, not just for HRGs. But the ex-regulator had less optimism and enthusiasm about the current policy vogue for integrated institutions: these could easily work against patients. There are therefore worries about FTs acquiring and buying up community services.

The NHS’s primary care is deemed less good by the ex-regulator, calling the GP small business self-ownership model ‘discredited’. Instead, primary care should be about highly preventive services to prevent acute admissions. This is not just putting in polyclinics, though they were ‘sensible’. The need is to rethink the GP role, promoting cost-effectiveness and quality from the moment a patient interacts with the NHS. This will be very important if GPs are to become commissioners with hard budgets.

The ex-regulator wants to keep the purchaser-provider split, driving it forward but also rethinking it. He aimed to see challenges to referral patterns and bringing in new providers to challenge practices and really think about the health need of populations; ease of access; and clinical performance - not just how we expect surgery or medicine to be delivered.

The future should be to commission services that meet needs and challenge providers that don’t, based on information, analysis and real dialogue with the community, not on the current drivers of invoice processing and political noise.

Much of the mechanics of commissioning can be outsourced, and NHS commissioners can be fewer, and focus on service design and managing change.

PCTs and SHAs are not both required; SHAs mostly inhibit improvement, and should go. The DH should become HQ of commissioning, acting always as the patient’s champion. The DH should define its expectations of PCTs and assess PCTs’ performance.

The independent NHS board proposed y the Conservatives is on the whole consistent with all this, but ministers must remain finally responsible for the allocation of the money and the policy framework around commissioning.

Tariff must change from an average price to an optimal performers’ price, and must be taken out of the DH and set by a properly-skilled and well-resourced organisation. Provision of healthcare should not be run by orders from above.

A lively debate followed …
The concept of PCTs as mini-insurers competing for choice of enrolee was much debated. The ex-regulator felt this would be effective, but people should not be able to opt out of the system.

The involvement of clinicians in ‘administration’ was felt not to be happening, although the system has long claimed to value their input. The ex-regulator said that they had never experienced an industry where the actual experts did not want to run organisations, but this is not the case in the NHS. It is, however, in high-performing organisations such as the Mayo Clinic.

Strongly-contrasting views were heard on the subject of marketisation, and its impact of professionalism, participants’ definition of which was far from clear. Some suggested that doctors were “anti-market by nature”; others argued that the GP small business model demonstrated that this was untrue. A measure of agreement appeared to emerge that clinicians do not like bureaucracy and hierarchy.

The general public’s understanding of decisions about disinvestment and closure was noted to be poor. The ex-regulator expressed optimism that they could be engaged in a dialogue.

Another observation was made about the time of costly clinical staff spent doing what they regarded as their job, and the need to better match tasks with competencies. The ex-regulator said that in their experience, public sector management was not interested in how happy, productive or innovative its staff were, whereas the private sector had been.

The ex-regulator also suggested that the NHS Trust system with a board of directors for organisations that are not genuinely autonomous is ridiculous, and also described the non-legally-binding NHS Constitution as “a bit of a fraud on the public”.

The ex-regulator concluded the current dire economic situation was a great opportunity, affording as it will no cash to throw at the problems: “we’re going to have to actually solve them. Get the politics in the proper context of deciding on what are the legitimate expectations of what the public get for their tax money (and how much of that money to spend), but keep the politics right out of how we deliver that.

"It’s not about lots of new policies and initiatives; it’s about how we use them intelligently”.