Enthoven, and other believers in managed competition, freely admit that economic pressures in the doctor-dominated US medical market were inflationary, and encouraged profitable but irrational procedures. However, they claim that if medical autonomy were replaced by managerial autonomy, these would become a thing of the past. Though all the more or less socialised health care systems have more or less successfully contained clinical extravagance by overall curbs on funding, none have yet tried to interfere directly in clinical decision-making by imposing fixed clinical management protocols. Yet this is precisely what has happened to US doctors under managed competition, mainly through the Diagnosis-Related Group system for hospital funding. Paradoxically, this has brought US doctors, the fiercest opponents of State systems and defenders of professional autonomy, under the strictest managerial control. Few informed observers seem convinced that this has in fact controlled US health care costs.

We should also consider the possibly serious price we might pay in impaired professional morale, motivation, and imagination, if medical care continues to fragment into competing rather than co-operating ultra-specialities, based wholly on technology, and if the work of doctors and nurses is made to converge toward the soul-destroying “efficiencies” of commodity production. While there may well be short-term gains from maximised specialism and streamlined throughput, we delete the human face and wider imagination of medicine at our peril. The new endoscopists need never see patients’ faces at all, only their insides through a tube, projected to a closed-circuit television screen. Even in its present state, the huge majority of health workers and professionals of all grades are still chiefly motivated by a wish to do their work well, because it concerns the lives and happiness of human beings, and is not just a way of earning a living. It may be difficult to preserve, let alone develop motivation of this kind, if doctors relate to machines more than to people.

The industrialisation of care, whether by rationalising ward cleaning or by turning a broadly trained clinician into a conveyor-belt technician, will always be dangerous, but within a co-operative public service these effects might be minimised by all sorts of “uneconomic” measures to bring the fragments back together, to restore some sense of a shared human activity. It is entirely possible that in the not too distant future, many technical operative procedures in otherwise healthy people, such as repair of hernias or surgery for varicose veins, could with advantage be handed over entirely to technicians; but for such development to proceed safely, and without damage to overall staff morale, it must be planned with full regard to its entire social context, not as an opportunity to beat the competition.


In 1993 these two trends, withdrawal from continuing care and industrialisation of episodic cure or repair, were brought together in one logical conclusion. The District General Hospital (DGH) as we have known it, hitherto the main centre of both clinical activity and cost in the NHS, could disappear. In an important discussion document , the National Association of Health Authorities & Trusts suggested that most DGH functions could in the near future move either more centrally, to larger and more excellent hospitals able to provide the highest standards of combined specialism, or peripherally, to primary care teams making optimal use of their clinical skills in a better- resourced community setting.

Like earlier plans to close large mental hospitals, transferring a few difficult cases to smaller specialist units but most to community care, the overall strategy makes sense. Much evidence confirms that once their caseload has been accurately defined (a difficult task, not yet fully performed by primary care) general physicians and general surgeons do their work less efficiently (with higher dropout and higher mortality) than subspecialty physicians and surgeons at more central units, serving populations large enough to yield sufficient rare cases to develop and maintain expertise. Very roughly, the average DGH serves a catchment of about 250,000 people. Subspecialty (tertiary care) hospitals serve at least one to five million.

Once we have good primary generalist teams working well in all communities, much relatively simple work now done in hospitals (notably, most follow-up clinics for common chronic conditions such as high blood pressure, diabetes, asthma, epilepsy or psoriasis, and certainly most continuing care for the chronic sick, disabled and elderly) could be done better at primary care level, if primary care teams were fully integrated, staffed, housed, equipped and organised for the task.

Taken together, these two developments appear to remove most of the more obvious current functions of a DGH . There remains a continuing need for local facilities to provide 24-hour skilled medical and nursing cover for serious acute illness, beyond the scope of family doctors mainly because they do not see enough cases to maintain expertise, and because they require high quality laboratory and X-ray department backup which cannot be provided economically in the community. The new breed of NHS executives has an astonishing capacity to ignore clear evidence that this need will not only persist, but is still growing and has never been fully met. For example, the Greater Glasgow Health Board planned a reduction of 29% in acute beds by 2001, though Matthew Dunnigan, a consultant physician at Stobhill Hospital, had shown that demand for medical beds (measured by deaths and discharges) had risen by 32% from 1980 to 1991.

Moves away from the DGH concept also ignore the leadership function for hospital specialists such as diabetologists, cardiologists, paediatricians and neurologists, seen for example in some schemes already established for shared care of diabetes and high blood pressure . Such integrated schemes would be essential for any serious plans to shift continuing care of chronic disorders to primary care on a large scale. Given a major reorientation by specialists in their attitudes to primary care (of which there is already good evidence in a progressive minority of consultants), and big investments in primary care team development, this could be developed very effectively from the traditional DGH base, but an already difficult task would be made almost impossible if these specialists were further centralised.

Though there has been much talk of community hospitals on essentially the same lines as the old cottage hospitals, where family doctors could supervise nursing care of simple though often serious illness, it is not at all clear that this has been fully thought through by anyone. Few family doctors actually want this responsibility, particularly when they realise there will be no resident medical staff and they must cover night emergencies. There is real danger that unless family doctors are encouraged to do community hospital work by fees, they won’t do enough, and that if they are so encouraged, they may undertake work beyond their competence. Few urban districts are far from existing DGHs, so community hospitals would not be much more accessible. Nor, if they are properly staffed and equipped, would they be much cheaper; after all, the excuse for closing cottage hospitals everywhere in the 1960s was that they were uneconomic to run.

This is not the first time that the economics of medical care have been revolutionised by technical advance. Since the second world war we have lived through at least three comparable revolutions in hospital care; elimination of tuberculosis, elimination of fevers and poliomyelitis, and control of psychotic mental illness. In every case there were huge savings, but redeployment of these savings to other parts of the NHS was never simple, overall expansion of the NHS always continued, and local hospitals on DGH lines remained its most important planning unit. In future even more than in the past, DGH design will need to be flexible, modular, and adaptable to a very wide range of as yet unforeseeable future developments in care, but to suggest that some kind of locally accessible centre will not still need to exist for populations of 100,000-300,000 is socially irresponsible.

As transfer of care for mental illness from hospitals to community has shown, strategies for shifting institutional care to the community will always require extremely critical scrutiny. Little though we like what we have, without cast-iron guarantees of adequate resourcing, in a period of general retreat it is likely to be better than any alternative on offer, however imaginative. More than any administrator, experienced health workers know how costly it would actually be to transfer care of current hospital standards into the community, though few want to endanger funding of general practice by saying so. There is some published experience of primary care teams which have actually done work of this kind over many years, measuring both inputs and outputs of a systematic shift to continuing anticipatory care in the community and away from episodic hospital referrals. Their clear conclusion is that though change of this sort is possible, necessary, and very effective, it requires a much larger and more diverse staff, complete reorientation of all professionals (and eventually of patients), much more consultation time, a major programme of postgraduate in-service continuing education in protected time, and new approaches to medical records, teaching and research .

Few health economists have enough experience of or respect for the daily work of primary care to understand the scale or nature of the changes required. As for administrators, NHS experience now seems almost to disqualify applicants; when the “reforms” hit the NHS in 1990, almost half of all Family Practitioner Committee (now FHSA) administrators were sacked, and almost half the new appointees came from outside the NHS, nearly all from industry or the armed forces .


The NHS “reforms”, a mixture of Thatcherite fundamentalism and Majorite opportunism, are an obvious mess, and many people who voted Conservative in 1992 are now ashamed of themselves. Only a Labour government can provide the collective and co- operative philosophy necessary to get us out of it, and resume progressive development of the NHS as a public service rather than a business opportunity.

It is difficult for people immediately responsible for patient care to avoid being swept into grudging acceptance of the new era of managed competition, particularly when they get little help from most of their professional leaders. One by one, most have accommodated to what seems to them more or less permanent Conservative rule. There is a very general feeling that though the NHS has been badly damaged by managed competition, some good things have come out of it; that though a new government, less obsessed by the market and more willing simply to try things out and see if they work, would be welcome, the thought of yet another root-and-branch reorganisation of the NHS might be the last straw.

In reforming the “reforms”, many will expect a Labour government to retain the good bits and discard the bad ones, but so far as possible retain the overall structure much as it has now become. Some of the more brutal executives would probably go, but few will want any witch-hunt of collaborators corresponding to the purge of progressives throughout the years of Conservative rule. In Health 2000 , the Labour Party is already committed to “three key areas which must be addressed”, and presumably opposed:

  1. The fragmentation of the funding, planning and prioritising of health care and equal access to the service, through the creation of GP fundholding.
  2. The development of a commercialised and competitive internal market, based on a contract system designed to replace a co-ordinated and planned approach.
  3. The operation of a purchaser-provider split in a manner designed to facilitate (i) and (ii) above.

Though much of Health 2000 provides good material for discussion, it evades any serious discussion of local democratic control, either through existing Local Government or other elected agencies, and discussion of the purchaser-provider split is unclear.


As Health 2000 points out, GP-fundholding is the most immediate and urgent threat to the NHS as an integrated public service, more so even than Hospital Trusts. Even under the internal market, it takes time to shift large organisations from traditions of public service to corporate competition, but the small population units of general practice are more manoeuvrable and have therefore been effective agents of rapid change (a point we should bear in mind when Labour gets the driving seat).

The comprehensive BMA survey of GPs in 1992 showed that 10% supported fundholding and 76% had opposed it when it was first introduced the previous year. After another year’s experience of lavish financial assistance to fundholders and hard times for GPs who stayed out, support rose to 20%, and opposition fell to 62%. It is difficult to know how much of support or opposition was principled, and how much was adaptation to perceived necessity; arrangements for fundholders were generous, and some practices were unable to keep large teams together in any other way. Even among first-wave fundholders, 13% said they currently opposed the whole idea of fundholding, although they felt forced to accept it in order to maintain standards of care. Among second and third wave fundholders, the proportions opposed rose to 18% and 40% respectively.

The effect of all free market competition is to reward success and penalise failure. This is the opposite strategy from a unified public service, in which success normally looks after itself, but failure attracts constructive criticism and support. This did not happen in NHS general practice, precisely because it was not a unified public service, but relied on independent contractors. The declared strategy behind fundholding is to push all general practice forward by subsidising competition from the “best” practices as currently perceived. Inevitably, these “best” practices are mostly to be found where workloads are lowest, morbidity and workload are least, net earnings are highest, and recruitment of well-trained staff is easiest ; in fact just those nice areas with nice people, most sought after by young doctors looking for comfortable work and high incomes.

Once hospitals have met their contracted targets for clinical activity, further work is not funded, and can be found only from fund-holding practices. Months before the end of the 1993 financial year, hospitals all over Britain had to stop further admissions from non-fundholding practices. By December 1993, surveys by both the BMA and the Labour Party confirmed that two out of five hospitals were giving preferential admission to the patients of fundholding practices. A two-tier service is a present reality, an obvious and intended consequence of the fundholding strategy which none of its supporters can credibly deplore.

In the biblical spirit to be expected from Conservative government, to them that have is given, and (because all GP earnings come from a closed budget) from those that have not, even that which they have is taken away. In 1991-2 the Labour Party surveyed 90 FHSAs , getting replies from 69. There were nearly 300 fundholding practices, of which about 30 had set themselves up as trading companies, making profits up to £100,000. Each fundholding practice spent an average of £12,500 buying care in the private sector, and got £20,000 to spend on computers, four times as much as non-fundholding practices. By 1993, there were about 600 fundholding practices, the average allowance for administrative costs for each was £32,500, compared with 1,600 for non-fundholders, and all fundholding GPs together controlled £1.8bn of hospital costs annually.

In its discussion paper Health 2000 and in many other public statements, the Labour Party has already committed itself clearly to elimination of fundholding practice if it wins power, and few socialists are likely to disagree.


We are fortunate that the beginnings of an alternative to fundholding have already evolved naturally from the initiatives of increasing numbers of progressive FHSA administrators and non-fundholding GPs now taking part in locality or area commissioning. Consortia of non-fundholding GPs and FHSAs in more than 60 localities are already known to be negotiating contracts with hospitals in this way, and before the next general election, there will be many more. From such experience, the Labour Party should be able to devise less adversarial ways of connecting hospital provision with local needs.

Fundholding practices are not only likely to pursue their own short-term advantages at the expense of other NHS users, but have small practice populations, rarely over 20,000, and sometimes as low as 7,000. Experience everywhere shows that efficient planning for health care requires minimum populations of 50-100,000. This is because even the commoner technical procedures, such as coronary bypass grafts or hip replacements, occur at very low rates in small populations, making budget forecasts extremely inaccurate. Area or locality commissioning, on the other hand, can normally include well over 100,000 people, and can use the real skills of FHSA planners and community physicians, not just the supposed skills of GPs acting as amateur businessmen.

The essence of this need not be a purchaser-provider split, but simply recognition of the growing division of labour between community-based generalists and hospital-based specialists in our health service ever since Lloyd George. Much though this has been deplored by US observers convinced that hospital specialism is the only possible leading edge for medical science , until British GPs were effectively excluded from hospital work, there was no possibility of developing the skills necessary for community- based primary generalists, the most important single achievement of British medicine since the Second World War . Primary care should be growing in the opposite direction, toward the community, not back to the hospital. Primary generalists need to learn to accept more help from other, non-medical health professionals, and from patients themselves. As we have seen, new personal relationships between health professionals and patients as co-producers need to be developed through more imaginative and generous styles of consultation. The practical way to do this is through locality or area commissioning, so that functions performed at any level, in the community or in hospitals, are properly resourced.

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