The Observer’s Editorial this weekend:
“Increased privatisation and making patients into “customers” is proving toxic and costly, but is yet another reorganisation the answer? Last Tuesday, Sir David Nicholson, the outgoing boss of the NHS, made a startling and little reported admission to the bullish members of the House of Commons health select committee, examining the progress of the immensely complex and unpopular umpteenth reorganisation of the NHS, steered by the battered and bruised Health and Social Care Act. Nicholson explained that competition, the key tool, allegedly, for improving quality, increasing productivity, driving down costs and widening choice for patients, is itself proving an expensive impediment to change as lawyers battle over the details of competition law and procurement on a “scale and nature” never anticipated. Nicholson’s warning is stark. The “medicine” of increased privatisation and the morphing of patients into “customers” is proving toxic, only months into an exercise intended to revolutionise the organisation that still has many more serious challenges and cuts to come. We should be alarmed.
The NHS, in its 65th year, is facing a set of Herculean tasks. Nicholson, as chief executive of NHS England and head of the NHS commissioning board, is accountable to parliament but no longer to the health secretary; he is now the boss of a business. Under the notorious Section 75 of the act, services must be tendered out, partly from the hands of GPs in the 211 clinical commissioning groups that have replaced primary care trusts and strategic health authorities; 49% of hospital services are also now open to the private sector. Management consultancy McKinsey has predicted that the private sector health market will be worth £200bn by 2030.
Last week, the scandalous amounts of money involved in achieving such huge staff reconfiguration were revealed when it emerged that a dozen executives, who received payouts of more than £100,000 when 161 statutory bodies were abolished this year, were subsequently re-employed by the NHS. The National Audit Office estimates that 10,000 people have so far lost their jobs at a total cost of £430m, but one in five has been re-employed by the health service.
The cost of reorganisation, put at up to £3bn, is now matched by the rising bill owed to competition lawyers. Or, as Nicholson said: “We are bogged down in a morass of competition law… we have competition lawyers all over the place telling us what to do, which is causing enormous difficulty.” He couldn’t give a figure but, last summer, a Freedom of Information request by Labour MP Fiona Mactaggart found hospitals had already spent £1.67m on legal advice.
Competition isn’t just costly; by its very nature, it stands in the way of the holistic integration of health and social care and the desperately needed move away from hospital crisis intervention to investment in prevention and support in the community.
Unless such transformational change occurs, the NHS will undoubtedly buckle at the knees and its (already challenged) key principle of a universal service, free at the point of use, will be in even more serious jeopardy.
The joint impact of demography in the form of an ageing population and medical breakthroughs that keep individuals alive for much longer are encapsulated in a single fact: 70% of the NHS budget is spent on 30% of the population who have long-term chronic conditions such as heart disease and diabetes. The future health of the NHS depends upon shifting services to encourage care in the home and greater investment in preventive measures – for instance, adapting homes to allow older people to maintain their independence for longer.
Last Tuesday, Nicholson told the health select committee that 14 “integration pioneers” had been established to test out different forms of unified health and social care; £2bn is to be siphoned away from acute care to fund the change. This is a reduction to the budget in addition to the £20bn of cuts that must be achieved by 2015. Nicholson concedes that greater integration is “highly ambitious” and “risky”, not least because it requires a reduction in the number of hospitals, always resisted forcibly by local communities, and good governance from the new, untested health and wellbeing boards in local authorities.
Attempts at integration, handicapped by accusations that they may be “anti-competitive”, are also being undertaken at a time of pay restraint and low staff morale and scandals, including the appalling lack of patient care revealed by the Francis inquiry into the Stafford hospital. The scandal took place partly under Nicholson’s watch. He will, nevertheless, leave the NHS next year with a £2m pension pot. The current investigation into the alleged cancer cover-up at Colchester hospital and the appalling standards in maternity care revealed last week mean that public support is falling for what is rightly considered, at its best, the most prominent public institution in the world. Add to that rapidly increasing waiting times for operations, failings in accident & emergency care and the increasing frustration at the apparent lack of accountability by “very senior NHS management”, and the challenges for Simon Stevens, a former adviser to Tony Blair, who takes over from Nicholson next year, are immense.
How to modernise and improve public services is a major test that faces every government. Labour’s remedy for the NHS was large-scale investment and an army of managers, targets, incentives and opening the door to the private sector. The coalition has placed its trust in competition and an ideological commitment to the market place. As a means to improving an organisation the size and breadth of the NHS, it is a faith not anchored in evidence. As Nicholson made clear to the health select committee, competition comes with a high price tag. Traditionally, administrative costs in the NHS have made up 6% of annual spend without the added fees of competition lawyers. Privatised and highly competitive US health care has admin costs of 31%, a ridiculous waste of resources. Is that the path the UK really wishes to take?
Labour has pledged to repeal the Health and Social Care Act, which means yet more reorganisation. That seems unavoidable if the current fragmentation of services is to stop; integration achieved; stability and continuity encouraged; and the acceleration in health inequalities and decline in standards and pay that competition also triggers, avoided. In three years, the private sector has acquired £7bn of business from the NHS and a whole new legal industry has flowered around competition and procurement. Improvements may have taken place but they are buried by daily headlines that associate the health service with chaos, mistrust, waiting-time queues and chronic compassion fatigue. The marketisation of the NHS is the wrong route to take. It is up to Labour to make clear, and in greater detail, what it would prescribe instead.” (http://www.theguardian.com/commentisfree/2013/nov/10/nhs-changes-toxic-david-nicholson)