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Editorial Tuesday 24 January 2012: Why Andrew Lansley is absolutely right and his opponents are completely wrong

Westminster Village humour
Q: What's the difference between Chris Huhne and Andrew Lansley?
A: Chris Huhne can get his points across.

The health select committee's report on The Nicholson Challenge (aka NHS public expenditure) is now available. It is an accurate portrayal of what seems (according to various contacts across the NHS) to be happening.


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The report's conclusions are clear: "The Nicholson Challenge can only be achieved by making fundamental changes to the way care is delivered. It is neither possible nor desirable to achieve the required levels of efficiency gain through existing structures and any attempt to do so would result in a combination of inefficiency and poor quality which would (rightly) undermine public confidence in the system and represent an indefensible use of taxpayers' funds.

"We are concerned, however, that evidence does not suggest that the magnitude of this challenge has been fully grasped. Although it is relatively early days, and there are certainly localised examples of welcome innovation, there is also disturbing evidence that the measures currently being used to try to control the financial situation could fairly be described as "short-­term expedients" or "salami slicing". We are not persuaded that the actions currently being planned will allow the situation to be sustainable over the four years of the Spending Review.

"The first year of this process ought to see the changes being made that will facilitate future redesign and yield further savings as the programme progresses—instead, as we discuss in the remainder of this report, we have the impression that NHS organisations are making do and squeezing savings from existing services simply to get through the first year of the programme. We heard little to persuade us that this overriding need to do things differently is being planned for in future years and we are convinced that the required level of efficiency gain will not be achieved without significant change in the care model.

"The Committee believes that the distinction between healthcare and social care, which has its roots in institutional decisions made in the 1940s, is now a major cause of inefficiency and service breakdown. The persistent failure of successive governments to address the requirement for more integrated, patient focussed care is creating powerful perverse incentives in the care system which are driving up costs at the same time as undermining the ability of the system to meet the needs of its patients. It is also increasingly apparent that the contribution that social housing could make to a proper integrated service is also impeded by institutional structures.

"While the separate governance and funding systems make full-scale integration a challenging prospect, health and social care must be seen as two aspects of the same service and planned together in every area for there to be any chance of a high quality and efficient service being provided which meets the needs of the local population within the funding available. We would like to see best practice in this rolled out across the Health Service and underperforming commissioners held to account for failure to engage in this necessary process of change ... improving the interaction between health and social care will be very important if the necessary cost savings on both sides are to be realised. The potential to make savings in this area has long been acknowledged, but has not yet been properly realised. We believe that it is mission-critical to successful delivery of the Nicholson Challenge to achieve a quantum leap in the efficiency of this interface".

The report also warns of "the marked disconnect between the concerns expressed by those responsible for delivering services, and the relative optimism of the Government". Likewise, the recent 'splash of cash' initiative gets short shrift, with the DH: "asking for bids for £300m of capital funding for projects beginning this financial year and ending in 2012-13. The Department asked for applications by 12 January for projects which would require at least £5m. At a time when all NHS bodies are being required to make efficiencies and need to plan strategically to reshape services it is unhelpful for the Department of Health to require them to make bids for capital funding to such short deadlines and without adequate preparation".

Let the tariff take the strain
The committee also warns that "national policy guidance has emphasised the scale of service change required to deliver the Nicholson Challenge, the Committee is concerned that local reality does not reflect the national policy objectives.

"The Committee is particularly concerned that the statistical distinction drawn by the Department between 20% of savings arising from service reconfiguration and 40% arising from reduced tariff is misleading. National policy guidance emphasises the importance of substantial service change, while the statistical presentation appears to suggest that traditional salami slicing will yield savings which are twice as large as the savings delivered by service change.

"The Committee regards tariff reduction as a tool not a policy. It should be used to promote necessary service reconfiguration; the danger in the present approach is that it implies that service change has only a relatively minor contribution to make to the efficiency gain required to meet the Nicholson Challenge.

"The Government's response to the Committee's 2010 Report endorsed this approach. It noted that "changes to tariff prices do not, in themselves, deliver efficiency improvements and NHS organisations need to identify underlying efficiencies to enable them to live within tariff prices".

"We are concerned that these important points are not sufficiently well understood. We have already noted that the squeeze on tariff payments has placed significant pressure on acute hospital services. John Appleby of the King's Fund noted that this risked creating perverse effects: 'If you squeeze down too much on price, trusts may think, "Is it worth us supplying this high cost service? We can't do anything more about the cost. We simply won't supply this service anymore and we'll focus on other things'.

"Jo Webber of the NHS Confederation argued that the tariff was only partially useful: "tariff should help you to improve productivity, but there are still also the issues of rising demand and of those services that are not covered by tariff". She added that "one could argue that if our demand is due to long-term conditions and an aging population, then [the tariff] does not cover, except for very precise episodes, the vast majority of where the demand is increasing". Mike Farrar noted that the tariff may be effective in driving efficiency at an aggregate level, but that it could be a "crude mechanism" and did not take account of variations at a local level".

The report's conclusions and recommendations are clear. The language, while measured, is strong - the splash of cash approach is "unhelpful"; and the "reorganisation process continues to complicate the push for efficiency gains".

Meanwhile, the biggest recommendation is unambiguous, and has largely been missed in the media coverage: "The Committee believes that, as a matter of urgency, the Department of Health should investigate the practicalities of greater passporting of NHS funding to social care". That is a radical statement: the Committee believes that the issues in social care cannot wait for the Dilnot proposals to get a response.

The report is sensible and proportionate.

So. How did Andrew Lansley (saviour, liberator) respond to it?

I think it is fair to say that Mr Lansley's many fans will be neither disappointed nor surprised. His interview on the BBC Radio 4 Today flagship this morning was a classic example of the Lansley 'Non Carborundum' genre.

On salami-slicing, Mr Lansley said, "I don't find any evidence in the report of where and in what way that is happening".

Our Saviour And Liberator added that "across the country, sometimes in any organisation as large as the NHS, there are places where people will make the wrong judgments about how they should spend their resources for the best interest of patients", later citing the case of PCTs doing this. Which is as fascinating a take on the drive to decentralisation, local decision-making and liberation as you might hope to hear.

Mr Lansley was as disingenous as you like when he said "we have 150 different places across the country where they have to make decision about their local priorities; and it's not my job to second-guess all of those".

Um, firstly, no: there are now 50 PCT clusters, in heavy thrall to four clustered strategic health authorities. So there are 1/3 as many organisations in which an omniscient Liberator-In-Chief would need to monitor poor-quality rationing. Secondly, Mr Lansley presents his reforms as cutting bureaucracy: at Dave West of HSJ's last formal count, there were 279 pathfinder clinical commissioning groups. Last time I checked, 279 was more than 54.

Mr Lansley did not accept Health Select Committee chair Stephen Dorrell MP's examples that physiotherapy services to older people were being cut and operations were being delayed, continuing that the report "offers no specific evidence of where that is happening".

In a frustration that will not be unknown to longstanding Lansley-watchers, BBC presenter Justin Webb asked (4 minutes 27) whether "you are rejecting everything critical in this report about what's going on at the moment": OSAL said that was "trying to characterise; you ask me specific questions and I'll give you specific answers ... let me tell you what I think, because I think probably it's better if I do that". Mmmm. A career in media training clearly awaits Mr Lansley, once a grateful nation tires of his health policy echt.

Mr Lansley's defence was that doctors and nurses in CCGs "are there, they are doing it, they are re-shpaing services in precisely the way that the health select committee says needs to happen looking to the long term".

Mr Lansley told the nation, "we are doing it the right way". Of course. How could it be otherwise?

It takes a spectacular lack of doubt on his part to see that only an utter system-wide top-down reorganisation of the NHS, with a system logic which prioritises choice, competition and commissioning and renders major central planning effectively redundant, will fit the bill.

I am not uncertain about much as regards Mr Lansley, but I am uncertain whether his conviction is the result of far too much imagination - or far, far too little.