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Guest editorial Wednesday 23 March 2011: Pre-Budget thoughts on divided accountability and value delayed

In this guest editorial, Nick Seddon, deputy director of Reform thinktank assesses key issues which are dogging changes to the NHS

In its favour, the Government has recognised that the NHS needs reform. Spending doubled, performance dawdled, productivity dipped.

It is perverse to protect waste – most people agree – and there’s enormous scope for boosting value across the system, redesigning services to shift care out of old hospitals and into more appropriate and cost-effective settings.

Indeed, if the strategic planning exercise of the twenty-first century is to keep people out of hospital, that is at least in part because the global challenge of the twenty-first century is to make healthcare economically sustainable.

'The really inconvenient truth is that a lot of this Government's problems are of its own making.'

All of this will involve decommissioning beds and closing hospitals. It will involve encouraging the private and third sectors to engage. It will involve providing a service for citizens and patients, not doctors, nurses or managers: successful reform would make services accountable to patients through choice and create an open system for healthcare delivery by freeing providers from central control.

The Government’s NHS reforms are being ambushed and assaulted on all sides, but that’s hardly surprising. The medical unions have a track record of conservatism in the face of reform, whatever the colour of the government.

But the really inconvenient truth is that a lot of this Government's problems are of its own making.

In a recent report, Reform argued that consistency between the reform policies across Government would strengthen the whole programme. Equally inconsistency gives an air to unreality to the whole exercise.

Accountability is divided between GPs, local authorities and the National Commissioning Board. For all the talk of patient empowerment, professional capture rather than consumer choice is a more axiomatic element of the controversial plans to reorganise the commissioning structure.

The reforms make GPs responsible for commissioning medical services on behalf of patients; consortia are accountable to the Commissioning Board; local authorities will be responsible for public health, joining up commissioned services and leading strategic needs assessment.

As financial pressures grow, the Government will have to intervene to support GP consortia with PCT clusters, super-SHAs or other new bureaucracies.

An organisational shanty-town will grow, in which structures and systems are cobbled together or thrown up hastily, in the knowledge that they will be torn down in due course.

Sitting before the House of Commons Health Select Committee, Sir David Nicholson stated that “we’ll have to centralise more power in the very short term to deliver benefits”, and it is clear that the Commissioning Board – for which Sir David Nicholson has been chosen as chief executive – will be able to wrest funds from allocations to commissioners for the purpose of creating risk-sharing arrangements and to bail overspending consortia out, implying that surplus generating consortia might not have their full underspends returned to them each year.

This disincentivises success, and indicates that the desired healthcare market may advance no further than it did under the PCT structure, which was subject to such top-slicing under the previous Government.

In addition, having abolished targets, the Department of Health’s technical guidance for the 2011-12 Operating Framework runs to 261 pages and contains more than 100 indicators “against which the NHS will be held accountable”.

As for plans to open up the system to competition and a plurality of providers, they have hit the clappers. Until last week, Department of Health civil servants were under the impression that they were supposed to create an open NHS market including the private sector. They would have been confused by Nick Clegg’s statement on Sunday that he would prevent NHS “privatisation”.

The confusion deepened on Wednesday, when David Cameron mounted a furious (and entirely inaccurate) attack on private sector companies in the last Parliament cherry-picking NHS patients, using exactly the language that the BMA has always used. Anyone would think that the Government is retreating at full speed from its commitment to the private sector (just as it has in schools).

Equally, the decision to ban price competition makes a nonsense of the idea of getting “value”. The whole concept of more for less is meaningless if you can’t alter the denominator – the cost.

Committee stage – an opportunity to iron out the inconsistencies in the Bill and improve patient accountability – has introduced amendments that undermine the Bill’s strengths, creating an open market with a strong economic regulator – in the Bill.

The Prime Minister needs to think very carefully about the messages being sent out. Over a month ago, the Government promised a public service reform White Paper within a fortnight.  

We’re still waiting.

The point isn’t that any one White Paper will put everything straight.  It’s that a credible commitment to reform matters a great deal to its likelihood of success.

Perhaps the Budget is the moment to get things back on track...?

Nick Seddon is Deputy Director of the independent thinktank Reform.