We are now 6 months into the much touted reorganisation of the health service, with the advent in April this year of Clinical Commissioning Groups to replace Primary Care Trusts, the only real difference being that GPs run the Clinical Commissioning Groups.
The reorganisation did ensure a reduction in cost by the simple expedient of setting Clinical Commissioning Group administrative budgets one third below historic Primary Care Trust administrative cost, yielding a Clinical Commissioning Group admin cost of £25/head of population. There are 211 Clinical Commissioning Groups. The adjusted population figure is 53.8m, and so total Clinical Commissioning Group admin spend is £1.345bn. Clinical Commissioning Groups are administering a total health budget of £60bn, averaging £284m per Group. Clinical Commissioning Group admin costs are therefore 2.24% of total health service expenditure.
So much for cost, but what about effect? According to answers obtained from the NHS Commissioning Board, Clinical Commissioning Groups are responsible for
- planning services, based on assessing the needs of the local population
- securing services that meet those needs
- monitoring the quality of care provided
- meeting the costs of those services (with some exceptions)
- ensure that patients’ rights are met
Each Group estimates the health service needs of its local population from demographic data. A demographic health service need calculation is therefore repeated 211 times. It is not clear whether a standard methodology is used for this exercise, or whether each Clinical Commissioning Group decides its own. Whilst health service needs do clearly vary regionally, it is difficult to see how it can be more efficient to calculate this 211 times, rather than once nationally, with regional parameters included?
At this point, each Clinical Commissioning Group is supposed to independently determine which of these needs it will meet, to what standard and by what mechanism, and then to budget accordingly. In reality, the degrees of freedom for each in making this choice are very limited. If we are to avoid the familiar ‘postcode lottery’, all Clinical Commissioning Groups will have to provide similar availability of most sorts of medical facility. Heart, cancer, A&E provision can vary according to need, but a Clinical Commissioning Group cannot in reality decide to meet that need to different standards. Apart from marginal development of experimental services, provision across the country is going to be very uniform. Clinical Commissioning Groups are required to commission all treatments recommended by NICE (National Institute for Health and Care Excellence), and will have to meet the NHS Constitution rights on waiting times for treatment.
Clinical Commissioning Groups are also constrained in that the cost of all major medical procedures is set nationally. It is therefore not the case that they can ‘shop around’ for cost efficient alternatives. A Group determines that it needs X heart ops, Y cancer treatments, and Z hip ops, and then multiplies XYZ by their nationally set prices to arrive at its budget. Moreover, the resulting budgets are only indicative, and it is officially accepted that outturn expenditure may be very different.
But the biggest constraint is the existing health service infrastructure. Clinical Commissioning Groups do not commission investment in new hospitals, training of new doctors and nurses, or development of medical technology. They can only therefore allocate these pre-existing fixed resources to the health service needs of their population. Their role is primarily one of estimated resource allocation.
The most likely outcome for most of us is that we will continue to consult the same GP we have always done, at opening times which that GP decides, who will either write us a prescription to take to our local pharmacy, or book us to see a consultant at our local hospital, perhaps offering a choice of which consultant at which hospital. Thus it has always been – plus ça change? Where is the vast array of alternative suppliers? Anecdotal evidence abounds of Primary Care Trusts and their successor Clinical Commissioning Groups failing to make progress on local healthcare projects over many years. You might well wonder what the fuss is about, or what the £1.345bn really achieves?
* Geoff Crocker is a professional economist writing on technology at http://www.philosophyoftechnology.com and on basic income at www.ubi.org. His recent book ‘Basic Income and Sovereign Money – the alternative to economic crisis and austerity policy’ was recommended by Martin Wolf in the FT 2020 summer reading list.
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8 Comments
Reading Matthew d’Ancona’s ‘In It Together’ reminds me that even George Osborn did not know that Lansley has planned to put £80billion of public money into the hand of GPs. The NHS reforms are one of the coalitions biggest mistakes. An enabling bill, that could dismantle the NHS, has been passed without public consent. We only have to look across the Atlantic and the debate about Obamacare to understand the scale of the reverse that we have been a party to.
” We only have to look across the Atlantic and the debate about Obamacare to understand the scale of the reverse that we have been a party to.”
Whst is the conne ttion between the two? No one is suggestion the
Nhs will not be free at the point if use
As of this morning, out of the 25 contracts for services to have been awarded since April 1st 2013, under the NHS and Social Care Act 2012 ,21 have been awarded to Private Sector organisations and 4 to NHS Organisations.
See http://nhsforsale.info/.
Nuff said?.
By the way there are quite a few in the “pipeline”.
Dave Eastham
@ Dave Eastham
According to the figures on that site, private contractors only account for 7% of NHS spending. It might be growing, but to say that the NHS has been privatised is simply not true.
I don’t favour privatisation. Its track record in other public services has been appalling in many cases. But then so has the publicly owned and run NHS in many instances. The Liberal Democrat policy has to be one of looking at what actually works and trying to set a level playing field between providers (something Labour failed to do). We said we would open the NHS up to a variety of providers and that is what we are doing. Other countries like Germany, which have considerable private involvement, also have excellent healthcare. So just as I don’t accept that public is bad, nor do I believe in principle that private is either.
I’m sure many Conservatives would dearly love to privatise the NHS on ideological grounds but they must know that the public would never stand for it and that any such proposals would play straight into Labour’s hands – not to mention going down badly with their own supporters. So how might this nefarious end be achieved?
Well, one way would be to arrange matters so that little by little power would pass to private firms but keeping sell offs small and local so they never trip the alarm. It’s the gently boiled frog principle in action. And where better to start than with the friendly GP’s we all know and respect. What could possibly go wrong?
But is it really our local GP who will run the Clinical Commissioning Groups? Aren’t they all rather busy delivering front-line medical care? The next act in this play will be for local surgeries to be acquired one by one by large health conglomerates, some of them American. Then the words will say “GPs run the procurement …” but the reality will be a profit-hungry corporation. And the incentives are enormous. If I am not mistaken Lansley set it up so that GP practices – err, the corporate interests behind them – are able to buy services from firms in which they have a direct financial interest even though he was warned that this would lead to malpractice.
I predict an unmitigated disaster but one that will take some years to emerge.
To me the main point is that this was a notally unnecessary reorganisation. There was shallow talk about taking power out of the hands of bureaucrats and even doing away with them. The bureaucrats are still needed and a few GPs replaced the old board members. Knowhow and relations with local authorities and the voluntary sector that had been built up over years were discarded and are having to be painfully rebuilt.
The basic idea seemed to be that GPs not only understood what their patients needed, but also how this fitted together into a strategic picture. This was, to put it mildly, unproven. Any reorganisation is expensive in the sense that people are diverted from their previous tasks to applying for jobs and (if they are successful) learning new roles and structures. One of the few plus points about Labour’s stewardship of the NHS in 1997-2010 was simply that they reorganised once and then there was only a relatively minor reorganisation, in contrast to the repeated reorganisations of the Thatcher-Major years.
We could simply have rejected Lansley’s reform on the grounds that it contradicted the coalition agreement.
@Simon Banks
Exactly my feelings, excellently put. The money, the staff time and the goodwill wasted on this pointless exercise in political dosomethingism makes me weep.
@ RC
The site as you point out, only quotes the actual contracts that have been so far awarded which is worth 7% of NHS spending. I don’t think anyone, certainly not me, has suggested that, at this moment as you say ” to say that the NHS has been privatised is simply not true”. There are rather more contracts in the “pipeline”. The section 75 regulations to the 2012 Act predicates the direction of travel and it ain’t towards public sector organisations. Sure, there have been examples under the process where it hasn’t happened. There is the example of the award of the GP out of hours contract in Hackney to a GP Social enterprise. (Replacing the failed private sector service introduced on the Watch of a certain previous Government, who have a lot to answer for in the “Privatisation of the NHS stakes” – but that’s another story) Which even involves a more expensive contract than some of the unsuccessful commercial bids and is one good positive example of GP led commissioning but it against the trend.
Yes Liberal Democrats policy should be, in your words ,” Liberal Democrat policy has to be one of looking at what actually works and trying to set a level playing field between providers “. But that is not what is happening. Yes it was something the previous Labour Government “failed to do” as you say. Actually they in effect biased it in favour of private organisations (ISTC’s anyone?) – but again, that’s another story.
The problem is the 2012 Act is a Tory led Coalition one not a Liberal one and, as others have pointed out, was not actually in the Coalition agreement. Or even in reality, in the Manifestos – despite the desperate “spinning of selected bits of tenuous text at the time. Whilst there is no doubt the Lib Dems did manage to amend it, the direction of Travel is still the old Tory agenda of commercialisation/privatisation. I rather fear the Lib Dem aspirations for the integration Health and Social Care and Mental health will wither on the Vine. Section 75 and European Competition law will set the tone. Especially if the World Trade negotiations accept the notion that Health is a trade-able commodity.
Having worked in Health Care all my working life, I have no illusions that the classic NHS was/is in anyway perfect. However, I have also seen at close hand the involvement of Private Sector organisations as well and it ain’t pretty. If you think the classic NHS model is bad, you wait to the 2012 Act really becomes embedded. Liberal aspirations will be as sand. And no, this is not a vested staff interest plea.
Finally, just to put it into a human context you could do worse than visit http://www.nhscampaign.org/ and look at the video by the sadly recently deceased Professor Harry Keen, who was a GP both before the NHS and was one on the first day in 1948.
Some further references
EU Competition law – http://eutopialaw.com/2013/07/19/is-the-nhs-subject-to-competition-law/#more-1980
City and Hackney out of hours contract
http://hackneycitizen.co.uk/2013/10/01/chuhse-wins-out-of-hours-contract/?oo=0
Oh yes , and I am a member of the NHS Support Federation