10 min read

Editorial Tuesday 2 February 2016: What do we do if the goodwill runs out before the money?

Dogs bark. Bears shit in the woods. And hogs whimper at some system leaders’ silliness as the money doesn’t magically stop being spent.

As I have previously observed, the doctots’ dispute is actually about pay, terms and conditions. There is nothing wrong with that.

Doctots are (for all the enjoyable nicknaming) mostly very hardworking, intelligent and dedicated people who do an awful lot of the work that happens in healthcare.

They are also, as Jeremy Hunt appears not to have noticed, the next generation of the key workforce of a key public service, and have a long memory: Geoffrey Rivett’s blog for the Nuffield Trust is good on this.

And the public consistently trust them.

That’s the good news for the doctots.

The bad news is that they are led by the British Medical Association: a body which amply proves Cowper’s First Rule Of Organisations: ‘any organisation run by an elected council of its members overwhelmingly attracts naïve, sub-student politicians, who will negatively affect its functioning and image’.

As I also previously mentioned, both sides in this dispute are depressingly and consistently shit at negotiating.

The BMA have communicated their members’ case with the clarity of a muddy puddle. To compound this GCSE-level error, their negotiators put the possibility of withdrawing from emergency care on view stupidly early. Cowper’s First Law Of Negotiation: keep your nuclear option hidden in reserve until you genuinely have no other options.

On the other side, we have seen the worst interventionist tendencies of health secretary Jeremy Hunt. NHS Employers’ supposed independence in negotiations has been shredded as the purest of fictions.

Facing a profession with a 98% mandate for action on a 76% turnout, and willing to act, Mr Hunt is betting the farm on intransigence. Like his recent suggestion that parents should try to diagnose skin diseases that might be signs of sepsis using pictures on the internet, this is rash.

Looking at the two sides leading this dispute, it’s tempting to wonder whether they couldn’t both lose. Indeed, that is the practical reality the sides face: both must move in some areas. Having let this dispute run so far out of control, both sides have entrenched their positions.

Concessions, which must follow if negotiation is to resolve the matter, will easily be framed as climbdowns.

Imposing the new contract would be a Pyrrhic victory, at best. The NHS has traditionally been a net importer of clinicians: if the present trend continues to go the other way, a workforce crisis is a nailed-on certainty.

A glimmer of self-awareness briefly hit the doctots’ negotiating team (in the wake of their leaking to HSJ the government’s proposed concessions summarised in Sir David Dalton’s letter, and the proposed second strike was suspended.

The Dalton proposals included limits on Saturday working and enhanced Saturday pay for some doctors.

Sadly, despite the interventions of NHS England’s Sun King Simon Stevens warning that “if he (Dalton) is unable to get a fair agreement with the BMA that works for both sides, it's not obvious that anyone can” and the medical professions’ advising Mr Hunt that ”these implications (of the dispute) have not been fully understood by the government, whose drive towards seven day services needs to be matched by a more realistic underpinning of support and value to those who are providing those services, including our trainees”, the renewed talks foundered on the issue of Saturday working.

Sir David Dalton’s letter to Mr Hunt says ”it is very disappointing that the BMA continues to refuse to negotiate on the issue of unsocial hours payment. I note that in the ACAS agreement of 30 November, both parties agreed to negotiate on the number of hours designated as plain time and I hope that the BMA will still agree to do that … I do not believe negotiations should restart unless the BMA state beforehand that they will negotiate on the principal outstanding issues. Should the BMA confirm that they will not negotiate and compromise on weekday and weekend plain time/unsocial hours, then I will have to conclude that there is no opportunity for a negotiated settlement, and I would then need to advise you accordingly”.

Location: Shit Creek. Paddle status: missing, presumed splintered.

The BMA have clearly been talking to a grown-up somewhere, and are not withdrawing their labour from emergency care on 10 February. While this move is a minor-league sign of tactical eptitude, it is welcome for patient safety.

Cabinet Office sources are shaking their heads at Mr Hunt’s handling of this dispute. They might do well to look at the advice from Google-loving, Restoration-faced Chancellor George Osborne that Mr Hunt should be “intensely muscular”.

Money and magical thinking
Still, at least the strike will save the NHS some money.

Who knows: perhaps Simon Stevens has been using Jedi mind-control to sabotage the negotiations? All the other attempts to forge an impression of achieving a financial year-end overspend no worse than 2014-15’s £1.8 billion show signs of magical thinking.

Savings proposals: gimcrack or tawdry?
Over the past ten days, my good colleagues at HSJ have had to recruit a fleet of plumbers, so numerous have been the leaks of policy proposals, whose wisdom and timeliness range from the gimcrack to the tawdry.

Putting the Carter before the horse
The first draft of the Carter review belies rumours that the process has been broadly sensible and welcome by trusts who have been participants.

It looks as if it has been ‘strengthened’ (yes, that’s irony) by the bright minds of the Department of Health.

What does the DH do any more, exactly? Seriously?

Anyway, of the stated £5 billion (whose methodology I described about 3/4 of the way down this blog), providers seem to be suggesting they may be able to do £3 billion, by 2020.

In a warming echo of the Lansley era’s proposals that the correct NHS management expenditure level is a) knowable and b) prescribable (45% of the 2008-9 level, as you’ll recall), the report is set to suggest that all hospital trusts’ management and administrative costs be limited to 7 per cent of income by April 2018.

Got it? 7%. So don’t even think about spending 7.5% or even 8% of income on management and administration. Even if having more effective management could make you more efficient.

The correct figure is 7%. Think of it as a target, if that helps.


This 7% cap also probably means the end of any further implementation of any electronic patient record system anywhere beyond 2018, which butts up uncomfortably against one of Jeremy Hunt’s key themes. It’s probably not going to happen by then, anyway.

What further fun lies in Carter? Ah yes, our old friend, innumeracy.

It is set to say that all trusts should operate at or above the average benchmarks for estates and facilities costs by April 2017, with these benchmarks set by NHS Improvement in April 2016.

Mmmm. Either the good Lord is a big fan of the Lake Wobegon works of Garrison Keillor ”where all the women are strong, all the men are good looking and all the children are above-average”, or he doesn’t quite understand the meaning of ‘average’. I don’t know which explanation I find funnier.

The provider sector will clearly have the management time and capacity to do all of this. It’s not as if five big trusts were seeking millions for reconfiguration, for example.

Minotaur: the regulator of NHS foundation trusts
Or as if Monitor had spotted that Basildon and Thurrock isn’t viable (albeit what they aim to do about this is opaque).

Fortunately, there was nothing wrong with their internal processes for authorising St Georges, which promptly found an enormous deficit.

Meanwhile, they could get stuck with
ruling on Care UK’s complaint about North-East London CCGs’ contracting for a 5-year deal to run North East London Treatment Centre, awarded to Barking, Havering and Redbridge University Hospitals Trust. (The centre is on the site of the King George Hospital run by BHR.)

And the Monitors are considering a generous subsidy to the poor, deprived and obviously highly-effective management consultancy turnaround industry, by throwing them 25 sacrificial providers. The evidence base for management consultancy’s ability to sustainably turn providers around, you say? I found this: it’s from 2009, and is sceptical.

Perhaps Monitor should rebrand itself as Minotaur, and hide in a labyrinth where it can eat people?

What do you mean, that’s what it already does?

The new NHS planning guidance was issued on 23 December, and NHS England wants draft plans back by 8 February.

As waiting times expert Rob Findlay rightly noted, this effectively asks the question “would you prefer the sums to be wrong, or the method unrealistic?”

A plethora of bad ideas are doing the rounds, as efforts to pretend the NHS won’t overspend by more than £1.8 billion in 2015-16 endure. It’s pretty much a full house: we have agency price caps and reducing headcount; we have fines and paybacks to the centre; we have NHS England pulling various one-off tricks to appear to underspend.

And this is on top of the permitting of capital-to-revenue transfers, which simply builds up a backlog of costly future maintenance needs.

All we are seeing is in effect a repetition of the financial fudging as practiced by PCTs on the organisational Liverpool Care Pathway, with the pushing off into the future of continuing healthcare claims.

I have seen photos taken on the last day of PCTs’ existence, of office desks piled to the ceiling with unaddressed claims. Why do we think PCTs appeared to end their days in broad financial balance?

As Paul Baumann’s finance report to the NHS England board makes clear, the continuing healthcare chickens are coming home to roost in 2016-17.

It’s worth reading Sally Gainsbury (in general, obvs), but in particular her latest finance analysis for Nuffield Trust. Her topic is financial recovery and the Amy Winehouse Fund.

Sally rightly notes that the provider sector deficit ”is born of a trading gap between the income hospitals and other NHS providers earn and their costs”.

She’ll be interested in the latest publication by Andrew Street and colleagues on NHS productivity, which finds that it’s increasing.

Street and colleagues find that ”output growth is measured at 2.64% for the NHS as a whole, with improvements in quality accounting for 0.27% of this growth … input growth is low, at around 0.55%, and down from 2.36% on the previous year. This is mainly due to replacement of Primary Care Trusts by Clinical Commissioning Groups, following the 2012 Health & Social Care Act. Productivity growth between 2012/13 and 2013/14 for the NHS was 2.07%. This represents a substantial rise on the 0.36% estimate recorded for the previous financial year, and is the fourth consecutive period of positive year-on-year productivity growth”.

What future for the money? NHS England's Sun King Simon Stevens told The Guardian that in the hypothetically theoretical abstract, it may be time to look at fiscal policy and intergenerational fairness: “he talks of trying to get a national consensus by 2018 on ’properly resourced and functioning social care services’. But he does ask pointed questions: ’Would intergenerational fairness support a further increase in the share of public spending on retirees, at the expense of children and working-age people? Should it be easier for families to flexibly fund social care by drawing down resources tied up in housing, pension pots and other benefits?.”

Ex-health ministers Norman Lamb and Liz Kendall secured a backbench debate on a commission for NHS and social care funding in the Commons (scroll down to 12.33 for the start). This is a well-intentioned and serious-minded idea, if probably not aerodynamic: as I suggested, the Government don’t need this (yet).

A health and care funding commission was also punted by Lamb in concert with ex-health secretary Alan Milburn and NHS Confederation chair and former health secretary and health select committee chair Stephen Dorrell, who told The House magazine that “the Five Year Forward View was predicated on a social care system that was ’sustainable and continued to develop. There’s developing evidence that we are going to need to do more about funding of social care’. The proposed commission will be looking to ensure there is 'sufficient resource’ in the overall budget, he says, but one revenue source he does not expect to be tapped is the state pension. Stevens had floated the idea of revisiting the ‘triple lock’ pledge which ensures the pension will rise significantly every year. ’In any discussion about tax and spend, you have to recognise political commitments that have been given and then ask yourself where the opportunities are for flexibility to deliver better outcomes’, Dorrell says”.


Three main problems
We have three main problems at present.

The first is that it is now politically evident there will need to be a significant overspending problem before health and care funding can be revisited. NHS managers are smart enough not to be making this a care quality crisis, so it will be a financial one. That will waste public money on recovery, but hopefully it means that patients – your friends and relatives and mine – are not harmed.

This problem is soluble through putting funding in that may be adequate to meet demand.

The second problem is that some system leaders are trying to ‘get tough’. Whether it is by putting pressure on CCGs or providers to push off settling bills; by forcing commissioners to fine like there’s an amnesia epidemic and no tomorrow; or simply by getting finance folk to cook the books a la carte, it all has a curious air of impertinence.

The major mistake the centre made was to allow the percentage of trusts in deficit to go over 40%. That was the point in time to have stopped and fixed the tariff, and to have been publicly clear with government that there was an unsustainable funding mismatch.

Once you’re over 40% of providers in deficit, you’re far too near to 50%. Once you’re at 50%, deficit is the new normal.

In this situation, system leaders trying to get tough with organisations remind us of musician Noel Gallagher’s comment on his brother Liam: “he’s like a man with a fork in a world of soup”.

Please, system leaders, stop trying to be seen to get tough. It's forking stupid, and it’s time to stop - for your own dignity, and before we harm ourselves laughing.

The third problem is the really big problem. It has long been predicted by many people that the money would run out and the deficit would exceed last year’s. That’s ultimately a financial problem: no more, no less. Those problems are fixable.

This third problem may not be.

I mentioned earlier the tsunami of leaks: this is what happens when people have lost the fear of losing either their jobs or potential advancement. It’s a sign of desperation in the NHS, not liberation. We journalists are almost Welsh in our love of leaks, but they are not a sign of a well-functioning system.

On top of this, we have the unnecessary self-harming of the doctots’ dispute.

And NHS managers are not feeling too prized just now.

The NHS runs on goodwill. Always has done.

This is the really difficult question that we need to face: what do we do if the goodwill runs out before the money?