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Key themes for the politics of recession – Health Policy Today, 15th October 2008

The economic crisis has stifled health policy debate for a week or two – including the regular updating of this summary – but with the worst of the emergency seemingly now over, we can look ahead to a more steady tumble into recession.

We are not going back to normal times, but instead entering a new period, what the BBC’s political editor Nick Robinson calls the politics of recession.  After a fortnight we will never forget, where are we with health policy?

Just a few weeks ago, Gordon Brown appeared to be a busted flush. The Prime Minister seemed to lack purpose, carrying on each day only in order to fight another and yet yesterday he was credited with leading the world out of its economic emergency by the newly endowed Nobel prize winner for economics. Paul Krugman asked yesterday in the New York Times: ‘has Gordon Brown saved the world economy?’  

The feting of the British prime minister leaves the British Conservatives in a difficult position.  They are still ahead in the polls, but Brown’s reputation is on the up.  The Conservatives still remain ahead, however, and Michael White reports a very good question apparently posed by a former cabinet colleague of Gordon Brown’s. Yes, “he’s got his dignity back, but will it last?”

Conservative Home (the website for Conservative activists) today gives a glimpse of how the party leadership plans is likely to respond.  A leaked strategy note says, ‘the Tories expect poll lead to fall to single digits.  In six months’ time Brown will be seen to have rescued the banks but not the real economy.  The Tories will get ‘back in the game’ with a laser beam focus on ‘real economy issues’.

With news today that unemployment has increased and is nearing the two million mark, it will be easier for the Conservatives to talk about problems in the real economy – jobs, mortgage payments and credit availability. They will encourage voters to thank Brown for helping to rescue the banks, but say that a different leader is needed to rescue the real economy.

In The Guardian today, Michael While says that even in the most optimistic scenario, the next 12 months ‘will be a grim year of rising unemployment, borrowing and (eventually taxes), followed by slow recovery.’

Last week, yet again, we saw yet more headlines about the level of GP earnings.  The chairman of the House of Commons’ Public Administration Committee, Edward Leigh said, “the new contract for GPs in England … has so far failed to live up to expectations.”  “It looks like the new pay for performance system made it too easy for GP practices to achieve high scores – resulting in their earning higher than expected levels of payments”.  He said, “the new contract has not led to general practices being opened longer or at more convenient times for patients”.  

A few days later, health minister Ben Bradshaw was pointing to newly released GP access figures, showing that more than half of practices are now opening for extra hours.  In the last six months, there has been a 40% increase in the number of practices offering more flexible opening hours.

Politically, it means that Gordon Brown’s pledge that 50% of practices would offer extended opening hours by the year has been met, three months ahead of target.

Six months ago the local press was full of stories about local GPs being run down by the government, but the Northern Echo now has an altogether different slant .  It congratulates GPs in Darlington, where ten out of 11 family doctors are offering extra hours.  The interesting thing about the figures released is the variation across areas.  While Darlington leads the way, only 40.5% of GPs offer the hours in Stockton-on-Tees, as the paper notes.

The paper quotes the prime minister saying he was pleased that so many practices were opening for evening or weekend sessions.  “When you put these improvements alongside dramatic falls in infection rates and some of the lowest ever waiting times since the NHS was established, I think we can see a picture of real improvement”.

On Monday 10th, the Government and the BMA announced agreement on revisions to the contract. It must have gone well because Ben Bradshaw, not widely known for his support for GPs, praised the BMA’s constructive approach to negotiations.  “I would not underestimate what this contributes to a peace settlement”, he said.  “We are extremely pleased at the approach the BMA has taken and even a little surprised that we have got as far as we have”.

Changes to the contract include phasing out by 2011 the minimum income guarantees that have been paid to practices since the contract was first signed.  The removal of this financial cushion will mean that a reduction in the people registered with the practice will lead to a commensurate drop in income, exposing GPs to greater competition.  Other changes make it easier for patients to switch practices.

But while the government will trumpet recent successes, the opposition will point to a long list of less successful investments and initiatives.

The Healthcare Commission will tomorrow publish its third Annual Health Check.  It will reveal the number of trusts who have improved the way that they handle their resources, over the three years that the AHC has been published.

Last year, there were two main headlines: C.diff levels were high and problematic, and across the board the PCTs received the lowest management ratings.  This year, journalists will be looking for improvements on both counts.  They are likely to find continuing problems with both.

There is a single line hint in a Guardian report that there may be an exciting headline as a result of the report.  ‘In an interview…Sir Ian Kennedy, chairman of the Healthcare Commission, said he has exposed shocking ignorance on NHS trust boards about hospital’s death rates.’

The Conservatives will jump on news that hospital acquired infections remain a problem.  The Annual Health Check could be used to increase the pressure on local managers.

Within the NHS, a key story from the Annual Health Check will be why the performance of PCTs is not improving quickly enough, particularly in the capital’, another source for increased pressure on local managers from central government.

Local authority managers have had a hard time over the news that many of them had significant investments in Iceland banks – two foundation trusts will also lose money.   As these managers are judged to be “informed investors” (“a joke”, in the view of a city friend of mine), they will not be entitled to the protection that ordinary savers receive.

A few weeks ago, Vince Cable suggested that all public sector managers earning over £100k should be forced to reapply for their jobs.  On the Daily Politics, he continued to lambast the decision making of local managers.  He pointed out that the financial pages had been full of warnings about Iceland since the early summer yet one local authority deposited a large sum of money just two weeks before the crash.  These managers are paid to protect the investment and, in the view of Cable and others, they were negligent not to disinvest their money.

In the current Health Service Journal is another story about local managers failing to withdraw their investments - this time, PCT managers.  It reports a survey of PCTs showing that two-thirds of them failed to decommission any services last year.  

The reason that the survey will worry the Department of Health is that none of the above is likely to be achieved without decommissioning services.  The national clinical director for primary care, David Colin-Thome says he would “like some of the work on disinvestment to become more intense over the next few years”.

Even those that had decommissioned services did so any a tiny scale.  ‘The total value of services decommissioned across the 60 trusts that responded was £14m – a tiny fraction of the £70bn spent each year.’  The journal suggests that the figures reflect efforts to meet the 18-week target as well as ‘guaranteed volume contracts with the independent sector’.
Westminster PCT is name-checked for ending a contract for intermediate care beds and recomissioning the service at a saving of £1.6m.  Part of becoming a World Class Commissioner involves PCTs demonstrating that they can “stimulate the market”, “manage the local health system” and “make sound financial investments”.  

Mike Farrar, head of the North West SHA, told HSJ that he expected the first round of world class commissioning assessments to push PCTs into becoming "more forensic" about which services were delivering the best return. "You should be able to explain the pattern of services you're commissioning and be on top of the economics of what you're buying".  He predicted that PCTs would have to start managing contracts more actively next year as budgets were squeezed.

In his conference speech, Gordon Brown said the country needed a new settlement for new times and positioned himself as the man best placed to achieve this.  Yet there remains a sense that politicians are not fully prepared to explain the full implications of the current economic emergency for the next five or more years, needs are likely to rise but available resources will diminish, unless new funding sources can be found.

The Times’ world business briefing today says ‘what lies ahead is a recession of unknown length and severity.’  Analysts are warning that the recent increase in inflation could ‘blow a £3bn hole in Britain’s welfare budget’.  The peak has direct consequences on public spending, since pensions and benefits are uprated each year by a figure based on the September retail price index.  Government have planned on an assumption of 3.25% when the real figure was 5%.

In addition, today’s rise in unemployment is expected to continue in future months, adding further pressure on the country’s finances.  The Times’ today suggests that 10,000 jobs will go in the prison and court services. A senior economist has suggested the total jobless figure could be 2 million by Christmas.  Today’s figures run up to August and do not include those who have been released since the economic emergency began.

We are awaiting two decisions from the Government that will give some indication of a new settlement for changing economic times. One relates to copayments, and the other to the funding of long-term care.

There seems to be very little debate on the funding of long-term care, despite us being beyond the middle of a six-month debate.  The favoured solution of those who understand the surrounding issues, earlier this year, was to introduce a shared payment between government and individuals, with the latter perhaps being funded by an insurance scheme.  

Is the economic crisis likely to change this in anyway?  Could it change the planned proportion of the co-payers?  Will the insurance element be met through private firms or a dedicated state scheme?

It is difficult to tell, but the economic crisis makes it unlikely that government will be able to increase their proportion of the payment, which means that individuals could be asked to make the choice to fund future care needs, which is an important change in the way public services are delivered.  It has important implications.

Although there have been claims in the economic emergency that the case for greater state intervention has increased, and that the case for private enterprise trumping public endeavour has been weakened, in healthcare it is unlikely that the brakes will be put on reforms that produce a greater mix in the funding and provision of care.  Indeed, a heavily regulated quasi-market for services may be seen as an effective way of ensuring value for money.

It now seems certain that theGovernment will allow copayment for expensive drugs in some form, as there appears to be a consensus to allow copayments at the margins.  Many groups have reached this position with very little enthusiasm.  

The detail of the arrangements set in place are critically important for how the scheme develops over time and the impact it has on the mix between private and public funding.  

The BBC yesterday reported that some consultants have found a way around the obstacle to top-up payments .  Their approach resolves the problem of having two patients, side by side on a ward, receiving different treatment because the drug that is purchased by an individual is administered at home by a private firm, Healthcare at Home.  

The negative side of the arrangement, for many, will be involvement of a private firm in the solution – yet both the Labour and Conservative Parties seem keen to avoid some individuals in NHS wards receiving private care while others do not.  Therefore the idea of a privately administered intervention away from the NHS may make sense.

It was a consultant oncologist, Nick James, who came up with the idea of helping patients.  “Nowhere does it say that an episode of care is from diagnosis, to death.  So we’ve just interpreted the rules in a way which is in favour of the patients”.

30 trusts have apparently made arrangements via Healthcare at Home, involving something like 1000 patients.

Lib Dem health spokesman Norman Lamb said “we are in an outrageous situation where patients are left in a lottery, dependent on a few hospitals which are bending the rules”.  This accusation will make the government smart and their challenge will be to come up with consistent rules.  A DH person said this was the aim of Professor Richards who “is looking at how a consistent approach across the country might best be achieved’.

The Conservative Andrew Lansley said the whole debate missed the point, which is to explore why new drugs are not made available in the first place.  He sticks to his idea of paying by results for pharmaceuticals.  While the argument has some merit and allows the Conservatives to steer clear of a difficult political hot potato, it will not alone solve the problem of a limited, and shrinking, budget at the same time as new drugs are being proposed for treatment.

As we enter the politics of recession and questions of finance receive greater scrutiny, there will be a need for a frank debate on the changing financial settlement in public services