Editor’s blog Wednesday 16 June 2010: Two views on the NHS future

In a recent Public Policy Projects discussion breakfast at the House of Commons, two speakers – a management consultant and former DH director and a current acute chief executive (anonymised on the Chatham House rule) – discussed their thoughts on the next stage of UK heath reform in economically straitened times.

The first speaker outlined four prerequisites for recovery:
1. building public consensus for political prioritisation of public spending
2. spare no sector from cuts of 10-15%
3. radically commercialise public management and assets
4. create bottom-up alignment of professional accountability and responsibility to drive a revolution in productivity

He stated that no government had successfully done all four.

Sweden had, he added, drioven 12% reductions in every deparment of public spending for four years to recover from recession, but this had knocked out inniovation from the system.

Canada had created a legally independent arms’ length body to rule on cuts, finding a chief executive wealthy enough not to need the money or care about the media and public opprobrium.

He stated that competition is required to sustain productivity in difficult times, adding that if the UK’s public sector had emulated the labour productivity growth of its private sector, it would have made savings of £60 billion (the current approximate size of the UK structural deficit).

Competition, he added, drives innovation, increases service and cuts price.

He suggested that the Blair era health reforms had started in the wrong place, and should have emphasised choice in primary care. His corrolary was that free choice of GP should follow with the new integrated care / commissioning organisations that are apparently planned by the Coalition government.

Funding proposals for the new organisations should not, he added, be along the PMS ‘global sum’ contractual arrangement, but should involve full capitation and associated risk and reward for those who sign up to it.

ICOs should employ consultasnts, and use a mixture of the provisions in the consultant and GP contracts. He envisaged that doctors should be partners in ICOs, to interest them in taking prevention seriously.

He suggested that ICOs should, if competitive, be able to achieve savings of 15-20%. He added that ICOs will need strong regulation, asking whether the independent NHS Commissioning Board promised by the Coalition government will regulate ICOs.

He suggested that the 2008 project for new primary care ‘Darzi’ centres in under-doctored areas demonstrated that GPs will respond to competition, citing the speed of specification and completion of 9 months for the projecvt and noting that 30% of the contracts were won by GPs (22% went to the private sector; 15% by the third, not-for-profit sector; 7% by the PCT provider arm and 2% by a GP-cum-private grouping).

He concluded by suggesting that ICOs are not a structured response, but an organic response which he believes wil move to taking the full capitated risk. He ended with the suggestion that ICOs can save £2 billion within 6-18 months.

The second speaker, an acute chief executive, suggested that the current configuration of the NHS represents almost a political mantra against integrated systems, characterising GP practice-based commissioning (PBC) as not necessarily integrated at all, focusing as it does on primary care.

He suggested two broad models for integration: either to empower the whole of the system and have shared incentives across primary and secondary care (and other sectors); or to have an intra-competitive system, where the power accrues to just one side – be that primary or secondary care.

He proposed that if all power resides with the acute sector, it will not fix primary care’s deficiencies.

If incentives are use, the second speaker proposed that they must incentivise all sides involved in healthcare provision. A capitated system, sharing risks and rewards between primary and secondary care, will get all the key people around the table.

He raised the crucial issue of executive authority: the issue of who sacks people and decides on bale-outs.

A capitated and integrated system is the ideal solution, he suggested, sharing risks and rewards up and down the system.

Choice between ICOs in the US and Holland is possible at year end, and the second speaker proposed that because of the NHS’s low transaction costs, similar choice to move should be possible and cheap. He also suggested patients should be able to choose part of another ICO’s service for the same reason.

He concluded that the boundaries between primary and secondary care are ridiculous, and should be removed. The current health secretary had been consistent for six years in promising to put GPs at the centre of commissioning: now it is here, he said it should be regarded as a fantastic opportunity.