Article by Dr Steve Iliffe for Health Matters 2003

At the heart of government is the fear that “the public believe the NHS is no better” because services are “too indifferent” to the needs of patients. Ignoring the conceptual difficulty of “sufficient indifference”, the Secretary of State for Health believes that public confidence demands “not just a change in structure but a change in culture too.” The New Labour government is attempting to put this right through a top-down programme of service monitoring and investment.

What the government has learned is that investment “cannot be used to ossify the system (but) must be used to change it.” If this does not happen more citizens will use their rising disposable income to join commercial insurance schemes, enlarging the commercial sector beyond its present 7 million members and allowing it to broaden its range of services. The political objective, therefore, is to retain the allegiance of the middle classes. The questions of who the “public” is, and what “public confidence” is about, are answered.

New Labour re-affirms public service values and rejects market mechanisms as ways of bringing about change in the NHS. It has a twin track policy, with devolution of commissioning to (unelected) PCTs and the creation of Foundation Hospitals, run by quangos of local worthies, plus “Patient Choice”, based on organisational diversity – a mixed economy of public, commercial and voluntary services in which the balance shifts towards commercial and voluntary.

The possibilities and pitfalls of devolution have been discussed elsewhere in Health Matters. This article focuses on how improvements will be driven from below, using a strategy of “Patient Choice”. The aim of the ‘Patient Choice’ policy is to increase competition between the NHS and the commercial sector, particularly in the affluent South where the commercial sector is strongest and the NHS least flexible. Most private health insurance excludes GP services, maternity care and psychiatric and long-term treatments. The NHS will retain these monopolies but challenge the commercial sector in the lucrative area of surgery.

The government wants to avoid the vote-loosing situation where a retired person has to choose between waiting (potentially a long time) for necessary surgery and spending their savings (or their family’s) on a fast-track operation in the commercial sector. Typically these operations will be for hip and knee joint replacement, and for cataract extraction, but the menu will enlarge over a relatively short period of time. For example, offering choices of where cataract surgery can be done is designed to reduce waiting time to 6 months by 2004 and 3 months by 2005. And from the summer of 2004 all patients waiting for any elective operation will be able to choose at least one and normally four alternatives, private or public. By 2005 the choice will be made at referral, not after 6 months wait. To service this diversity new diagnostic and treatment centres (DTCs), some run by commercial organisations, will be created to concentrate on surgery that is not urgent, with a target of treating 250,000 patients by 2005.

This is a huge, high-risk gamble on the ability of the NHS to change and of the professions to co-operate. The government’s encounter with specialists over their new contract demonstrated that they would forego substantial pay increases to avoid being more managed and more “flexible”. We do not yet know if general practitioners will accept similar large increases in income in return for co-operation with the planned reforms. But we do know that professionals can sabotage attempts at change, especially when lucrative private practice is under threat. A campaign against “Patient Choice” may be hard to mount, given the commercial sector’s reliance on the idea, but it should be anticipated. There is comfort in the successes of NHS walk-in centres in demolishing their commercial rivals, and in the dominance of NHS out-of-hours co-operatives over commercial deputising services, but these are small changes compared with the “Patient Choice” plans.

It is not clear which agency will act as broker for choice, drawing up the list of alternative hospitals and offering it to the patients awaiting surgery, but it is clear who will not have that role. Giving patients free choice, rather than a restricted range, would be too destabilising; the fundholding debacle showed that letting GP’s control choices would be similarly burdensome. Presumably Primary Care Trusts would intercept referrals and act as the brokers, checking waiting times, cost and quality like financial advisors assess mortgage offers or stock options. Whether the PCTs have the capacity to do this is also unclear, and PCT mergers may follow to achieve economies of administrative scale, perhaps with the re-invention of Health Authorities.

Hospital managers are likely to be galvanised by “Patient Choice”, because each operation will attract an NHS fee. In effect this policy will make all NHS hospitals sub-contractors to the public sector, and many commercial hospitals could take the same role, and become subject to the same regulatory processes. The hospital sector would then become a franchised network, using local expertise and knowledge to shape the quality of care, deploying a variety of local, national or even multinational resources to modernise and expand buildings, whilst trading under the public sector’s name. Commercial hospitals may buy into this policy because their throughput and cash flow could increase, in predictable ways at first, and they could conceivably become dominant providers in their localities. Specialists might change allegiance, weakening some public hospitals whilst strengthening commercial ones, or vice versa. PCTs would have to retain a local provider, even if the costs rise as burgeoning commercial hospitals exploit a new-found dominant position to hike prices, so shopping around may prove difficult.

Opportunity costs are bound to arise as attention, time and resources are focussed on re-engineering surgical services. No prizes for guessing that long-term care, particularly for frail older people, will be the looser, along with the other Cinderella services for mental health and disability. A policy initiative around expanding social care, increasing the number and accessibility of psychologists or creating a network of rapid-response disability prevention and treatment centres might have enormous benefits for some, but does not have a high enough political profile to make it a possibility. Nor would it act as a counter-attack against the commercial sector, which as a whole does not offer much outside physiotherapy for sports injures and some limited psychiatric care for the seriously affluent. In fact the commercial sector may prefer such a policy, which would allow it to concentrate on ‘complementing’ the provisions of the NHS.

The “Patient Choice” policy has some merit and many associated risks, but perhaps more important it has no competition. If the fundamental argument that “public confidence” in the NHS has to be restored is correct, then Milburn has no rivals to his left, because there is as yet no coherent alternative strategy for the NHS emerging from the trades unions and those who campaign against the Private Finance Initiative and Foundation hospitals. The argument may be false, of course, and reflect the ability of a conservative fraction of the population to dominate the political agenda, even if it cannot elect its own party to government office, but this is no consolation. “Public confidence” may be Milburnese for the Daily Mail’s opinion, but once decoded it still a threat to the public health service.

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