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John Reid was appointed as Secretary of State for Health on 12 June 2003, following the surprise resignation of Alan Milburn. Reid had moved repeatedly between senior positions over the previous year. Deeply committed to Bevan's vision of a national health service, The Times wished him a stay long enough to take his coat off. He did. Vested interests were, as was conventional, quick to establish communication with the new Secretary of State. With the exception of his Minister, John Hutton, there was an entirely new ministerial team. On the positive side staff numbers were rising and more money was beginning to flow into the service. No further organisational changes seemed to be scheduled. The 2003 report of the Chief Executive at last showed improvements in waiting lists and staffing. John Reid said that, half way through the ten year NHS Plan, the focus was shifting from national to local initiatives to make the system more responsive and patient centered. However on taking office the Department of Health was facing accusations of micro-managing the NHS and increasing management costs. Foundation hospitals had become a divisive issue, consultants had walked away from a new contract long in gestation, GPs after initially rejecting their new contract were to vote on a modification, patients' complaints procedures were in disarray and it seemed unlikely that the additional money available would overcome the financial problems of the NHS. The leaders of the consultants and the general practitioners both sent him immediate invitations to meet, to attempt to resolve conflicts and improve relationships between the profession and the Department of Health. Beverly Malone, General Secretary of the Royal College of Nursing, said the College looked forward to doing business with Dr John Reid, 'a straight talking heavy hitter whom we hope is as passionately committed to the core principles of the NHS as Alan Milburn'...he will need to work in partnership with the Royal College of Nursing ...and Dr Reid must ensure that funding hits the frontline - investing in nursing is investing in patient care.... improving patient care will only become a reality when nursing is represented at every decision making table. Within days John Reid had good news (acceptance by the GPs of their new contract) and bad news, the resolve of the consultants to ballot on industrial action over their contract. He did a deal with the consultants as had his predecessor, Barbara Castle, under similar duress in 1976. The consultants agreed to vote on the revised proposals and accepted them. Reid continued to argue for foundation trusts, and issued a simple guide to them. Two weeks after taking office he spoke to the NHS Confederation setting out the principles that would guide him
In December 2003, a report (Securing good health for the population), commissioned by the Treasury six months previously from the former banker Derek Wanless, was released with a minimum of publicity. Setting out the public health challenges to be faced it the Wanless "fully engaged" scenario was to be met, it painted a picture of a country that compares unfavourably with other major Western countries in terms of mortality and morbidity from cancer and heart disease. Derek Wanless also found wide variations in life expectancy across the socioeconomic groups. John Reid subsequently opened consultation on the steps that might improve the health of the country. The Department of Health continued to claim steady improvement in the NHS, for example in the Annual Report published by the Chief Executive, Sir Nigel Crisp, in May 2004. He also established a review of the many "arm's length bodies", most of which dealt with education and training, regulation, or service & back office functions. The aim was to save some 500 million pounds in staff costs, devolve decisions and reduce overlapping functions. A year after taking office, and four years after the publication of the NHS Plan, John Reid published the NHS Improvement Plan. The Plan drew attention to recent and real improvements in the health service, for example falling maximum waiting times, new hospital buildings, increasing numbers of doctors and nurses, and facilities such as NHS Direct. It set out the importance of the care of chronic diseases (responsible for so many hospital admissions) and of public health (included in the Treasury Public Service Agreements and also the subject of a future White Paper). It described the Department of Health vision for the future of the NHS, a maximum of 18 weeks from GP referral to hospital treatment, increasing choice of hospitals and treatment centres, and improving quality of care as a result of the efforts of the Healthcare Commission.
John Reid looked to a continuing fall in the death rates from heart diseases, stroke and cancer, success in tackling smoking and obesity, and - organizationally - more foundation trusts. Charts spelt out the changes planned in commissioning, the supply of services and inspection, and the way in which increased resources, incentives, developments in the workforce and information technology, would assist NHS development. The Improvement Plan, like the NHS Plan before it, set out a multitude of initiatives, many already underway, that would assist common, and over-arching, policies. Reid made a commitment to offering patients a choice of 4 to 5 providers at the time that they are referred for treatment by their GP, and by 2008, the choice for every patient referred by their GP to be treated at any facility in England – including their local hospital – that met NHS standards and which can provide care at the NHS price for the procedure that they need. Reid summarized the strategic direction as
There would be a combination of national and local target setting with fewer national targets, which would be largely about health outcomes and outputs and not inputs. Trusts locally would be asked to set their own targets covering service gaps, the needs of the local population, equity audit which paying particular attention to the needs of black and minority ethnic groups, evidence based actions and interventions and shared targets with other NHS organisations and local authorities. The annual report of the Chief Executive published in December 2004 continued to publicise the successes in delivering more care, better care, and care within a changing framework that provided new forms of access, e.g. the walk-in centres and NHS Direct on-line. Labour had not traditionally adhered to the concept of choice in public services although in 1948, with the creation of the NHS, Bevan had made it possible for patients to be treated according to their clinical need in any NHS hospital. When GPs initiated a referral they usually suggested the hospital and the consultant, guided by their local knowledge of waiting lists and the quality of the consultants. They could, and often did, refer patients to hospitals well outside their own locality if they or their patients felt this best. This freedom of choice was constrained a little by the Conservative NHS Reforms, and considerably more by the Labour administration of 1997. Alan Milburn, however, started to reverse this and the process was continued by John Reid. Indeed the relationship of choice and equity looked likely to be characteristic of Reid's regime, and was a theme echoed more widely in the Labour administration. Perhaps in an organisation the size of the NHS there were too many institutions, interests and ways to manipulate the system for it to be possible to give everyone the best possible service. Handing over some control to the patients might help. Choice, or as it later became known "personalised care", became a key policy. The ability of people to chose where they might treated, whether they were treated and the nature of the treatment, might help to overcome a systemic problem; choice might of itself improve the system. Mooney H & McLellan A, HSJ 2003, 9 October, 12-3 The Department held a national consultation on how best to improve choice, responsiveness and equity in the NHS and social care "to improve patient and user experience and build new partnerships between those who use health and social care and those who work in them." In December 2003, the government published a strategy paper “Building on the Best; Choice, Responsiveness and Equity in the NHS” which developed the main themes that emerged from the consultation. Proposals included:
While there was concern about its financial consequences and the quality of the data systems to hand, from autumn 2004 patients waiting more than six months for elective surgery were offered the choice of faster treatment in at least one alternative hospital. Primary Care Trusts established referral management centres, sometimes brining in clinical expertise to assess patient problems. Because of success in reducing waiting lists there appeared to be only 75.000 'six-month waiters'. The alternative providers were largely in the independent sector or newly established independent treatment centres, plus some trusts with spare capacity. It was an aim to offer patients choice at the time their GP decides to refer them for treatment. By offering choice, said the Secretary of State, patients would be given the chance to control their own destiny and to choose the hospital that best suited their needs. A 65 million pound contract to provide all GPs with the ability to make outpatient appointments electronically would assist this. However what was, centrally, a laudable aspiration presented locally the problem of ensuring that financial limits were not exceeded. Choice was not, as yet, to be placed in the hands of the patients. Managers and clinicians remained in control of how far patients could be offered new options, and the capacity of the NHS to provide services might constrain choice for practical reasons. Nevertheless, as part of the NHS Improvement Plan, PCTs were told to offer patients four or five choices as to where they should receive treatment said that private/independent care should feature amongst these.
The organisational changes now taking place were essentially those determined previously while Alan Milburn was Secretary of State. The regional offices were running down, and - although there was an embargo on major structural change - PCTs continued to merge or be associated in clusters. The NHS structure was roughly as below (July 2004).
source Healthcare Commission State of Healthcare Report 2004 In October 2003 John Reid, Secretary of State, told a Commons health select committee that he intended to review NHS "arms' length bodies" (ALB) with a view to rationalization. The number had risen substantially since the 'Quango hunt" of the 1980s (Quasi-autonomous non-governmental bodies). Education and training, regulation, and service/back office functions, were handled by 42 bodies. Together they employed ten times the number of people employed in the slimmed-down Department of Health. In July 2004 the results of the review were published, with a four year programme of implementation. Some bodies were to be abolished (e.g. the Commission for Patient and Public Involvement in Health, only established a year or so previously. Others to be combined, e.g. the National Clinical Assessment Authority with the National Patient Safety Agency; and the Health Development Agency with the National Institute for Clinical Excellence. Some, such as NHS Professionals, a temporary staff agency, seemed likely to be sold off. ALBs were grouped into categories according to function. An implementation framework and timetable was published in November 2004 to maintain momentum, setting out in detail the various changes to take place. Foundation Trusts [see earlier material under Alan Milburn] Foundation trusts remained a divisive issue. Some claimed that to remove hospitals from direct government control was in the teeth of Bevan's vision for the NHS and disturbed concepts of equity and universality. There were no controls that would protect the principles of redistribution through resource allocation, integration of services, and planning based on needs; and the policy might lead to multiple systems of care in England. (Obviously Scotland, Wales and Ireland already had different systems). Others believed that a varying quality of service from place to place was inevitable within such an immense health care system, that patient choice was required and that more freedom encouraged development and improvement of the NHS to the benefit of all. In its tortuous path through parliament, during which concessions were made by government to its opponents, the Health and Social Care (Community Health and Standards) Bill 2003 appeared the most controversial piece of legislation to come out of the government's 10 year strategy for the NHS in England. It eventually passed both Houses in November 2003. To ease the passage of legislation through the House, a moratorium was announced to permit the Healthcare Commission to review the impact of foundation hospitals on the NHS. At the same time it was a ministerial objective to offer all trusts the opportunity of foundation status within five years and John Reed gave a further twenty the green light to apply for foundation status in July 2004. The assessment process for the first waves was rigorous, and it was doubtful if all trusts could meet the high standards demanded. There was concern that standards would be dropped to ensure all trusts could take part. NHS Foundation Trusts differed from existing NHS Trusts in three key ways:
The Department of Health wished the membership of the trusts to be a large as possible, democratic but manageable, perhaps 10,000 or so in size. Trusts themselves should be responsible for the structure and organization of their own membership arrangements and the elections to the board of governors. A late amendment allowed staff and patients to become members of the trust without great formality. The precise numbers of governors selected varied from trust to trust but elected governors made up a majority of the board, with additional nominated governors. The model was that of a cooperative or mutual society. In the event, the experience of the first foundation trusts was that in spite of their efforts it was difficult to stimulate interest among either the public or staff, and comparatively few registered their interest or voted in the elections. New ideas take a while to settle in. However at Homerton, the first public meeting of the foundation trust in September 2004 was unexpectedly swamped by a vociferous public and an overflow session was required. The foundation trusts would alter the commissioning process between PCTs and trusts markedly. Service level agreements between PCTs and trusts had not been legally binding as both sides to the agreement were accountable to the Secretary of State for Health through the SHAs. The foundations' free-standing status would end this, and in future the agreements would be legally binding. Foundation trusts would also pilot payment by results and fixed price tariffs - payment by results. It was important to ensure that trusts undertaking complex and expensive procedures did not become bankrupt as a result, or they would not sign up. Many of the first trusts to achieve foundation status were teaching or specialist hospitals and the Health Resource Group system probably did not reflect the widely varying costs of expensive procedures. The Department of Health established a £40 million rescue fund to avoid potential financial meltdown and support the seven teaching hospitals applying for foundation status that opted to implement payment by results a year ahead of the rest of the NHS, potentially saddling them with huge losses. Commercial banks seemed unwilling to lend money to Foundation Trusts, as the debt could not be secured against the trusts' assets. A Foundation Trusts Financing Facility was established by government to lend money. One of the first Foundation Trusts, Bradford Teaching Hospitals, moved rapidly into deficit and auditors were called in. Subsequent waves were delayed to ensure that the latest financial guidance on PbR was taken into account. To attempt to give advance warning of possible trouble ahead, Monitor proposed systems of assessing and publicizing foundation trust performance. Assessments would be made of the effectiveness of governance and the provision of mandatory services, and also of financial performance. The independent regulatory body or Monitor was appointed, under the Health and Social Care (Community Health and Standards) Act 2003. It was chaired by Bill Moyes, previously the Director-General of the British Retail Consortium from 2000 to 2004. The Regulator considered the applicants, dividing them into two groups, those with simpler organizational and financial problems, and others that were more complex, mainly teaching hospitals. A first wave of foundation trusts was approved from April 2004, and was followed by a second group of ten, approved in July 2004.
Along side "patient choice" the system distributing money from the centre to local providers changed. Historically lump sums had been paid to individual hospitals. Then a system of block contracts, negotiated with the hospital was established. Now payments received by trusts would increasingly depend upon the number of cases handled, paid for on the basis of a national tariff. Increasingly money would move with patients. This had been the intention with the Conservative NHS reforms in 1990 but the costing systems were inadequately developed. The same approach had been adopted in the US for Medicare payments, based on diagnosis related groups. The policy was foreshadowed by Alan Milburn, and more details appeared in a consultation document launched by John Reid in August 2003. The aims according to the Department were
Prices would have to vary because costs genuinely did differ from place to place. However it was hoped that patient choice, quality and access would drive changes in patient flows. The payment received by trusts would increasingly depend upon the number of cases handle and the national tariff would need adjustment for local market forces (London weighting was, after all, a fact of life). There were many other factors to be taken into consideration, for example the development of new units, the higher expenses of teaching hospitals, the funding of services that were complex and essential, almost regardless of demand (e.g. burns units) and whether private or NHS facilities were involved. How varying tariffs would affect the long term policy of equalization of resources (RAWP) was uncertain. Using Health Resource Groups (HRGs), not unlike the diagnosis related group (DRG) system in the USA, tariffs would operate for additional elective activity in 15 groups in 2003/4, and 48 groups in 2004/5 covering all surgical and most medical specialties, with cost and volume contracts adjusted for case-mix. The complexity of the system increased as the details were worked out. Reference costs were calculated to provide the unit cost for a wide range of treatments and procedures, to provide a basis for comparison within and outside the NHS, down to the level of individual treatments. A tariff, derived from them, would underpin the Payment by Results system providing a national price schedule for treatment in England. Moving from the existing financial system to the new one would require careful management in the transition period, because the new financial system would create winners and losers. In theory around 70 trusts would lose over 25% of their current income. Others would receive significantly more than they were spending. All income would reflect activity, no portion relating to fixed costs. The detailed rules seemed to be made up as problems became apparent. Nor was there any guarantee that after many local adjustments had been made the sums payable would fall within budget allocated. The sum of the many bills payable might exceed the funds voted by Parliament by a substantial measure. Indeed the initial reference costs were reduced to keep within the total budget The NHS Bank, established by Alan Milburn in April 2002, would play a key role. It provided risk reserves for Primary Care Trusts and overdraft facilities for NHS trusts, replacing the informal system of brokerage in which NHS Trusts with a cash surplus were able to lend to others, under the guidance of Whitehall. Key concerns were
A review commissioned by the Department of Health proposed that windfall gains should be capped or partially redistributed. The advantages - already diluted - of being a foundation trust might shrink even more. New guidance on PbR was issued in October 2004. The new system was going through a teething period. The new system was going through a teething period. On top of PbR came practice led commissioning, in 2004/5, in 2004/5, suggesting a transfer of purchasing power to the front line. There was now extensive experience of many different patterns of commissioning, some with high transaction costs, others that permitted a greater degree of patient choice and responsiveness. There were few clear lessons from evaluation studies save, perhaps, that the NHS needed a raft of different but effective commissioning models. Commissioning at single or group practice level might be best for some services. Others needing larger populations might need a regional or national system.
source Health Foundation Report, September 2004 . |
