The present rows about the status of Foundation Trusts demonstrates some of the contradictions that have developed in NHS policy. In theory we have a developing market in which patients have increasing choice among service providers. Foundation Trusts are answerable to their members and to the PCTs who commission their services. There is a level playing field between NHS institutions and private providers.

But in reality we find that the Department of Health still wants to issue instructions to Foundation Trusts about how to clean the wards and about what staff to employ. There are a couple of million members of Foundation Trusts but they have less control over their institutions than the shareholders of Northern Rock had over theirs. Participation by members is limited to the receipt of glossy brochures and the opportunity to vote, once every few years, for a selection of candidates for the board of governors none of whom give any indication of what policy they might want the Trust to follow. And if they did have any ideas they would find the Trust Board, just like their PCT, spends all its time working out how to deliver Departmental targets so has little energy or inclination to respond to the needs of the local population. PCT boards, while increasingly sophisticated managerially are completely devoid of any democratic legitimacy, which might be thought necessary to enable them to make decisions about the local provision of services.

The playing field when it comes to allocating new contracts is distinctly biassed in favour of private providers. New treatment centres are dropped into the system by the Department of Health and guaranteed payment regardless of whether they meet their targets. Alternative Provider Medical Services are allocated in a way that excludes traditional primary care providers.

Targets have played an important part in raising the standards of service delivery, but they are a pretty blunt way of giving patients what they want. Increasingly they get in the way, as anyone who wants an appointment with their GP more than 48 hours ahead will find. It is well known that indicators adopted as targets quickly lose their usefulness as indicators and we think that targets are now of limited usefulness in driving further improvements.

The other main driver we rely on in health is choice and competition. This has certainly produced considerable improvements in elective surgery. But elective surgery is small part of the work of the NHS. The choices we offer to patients may be useful to drive the efficiency of the service, but they are not the choices patients are interested in. In mental health and maternity services, most patients are still denied any real choices. In acute and chronic medical care most patients are in no position to make choices, especially if the choice on offer is to access care further away from their homes. The system claims to be about Payment by Results. In reality of course payments are not for the results which patients want. The payment is for medical intervention, and in particular for hospitalization. Again this system seems a considerable improvement on the historical incrementalism which preceded it, but it is not clear that it can deliver much further improvement because there is no mechanism to drive the provision of appropriate treatments outside hospital. There are examples of integrated clinical services where primary and secondary care work together, but they only happen where there is enlightened and charismatic leadership and mutual trust. We need a system which can deliver reliably even when those valuable characteristics are in short supply. We see a place for competition, but it needs to be a competition with the right rewards.

We need a system where patients and local communities are given control over their healthcare decisions, and the role of government is to create healthy incentives and disincentives, and to regulate providers. It makes no sense to pretend that PCTs and Foundation Trusts are making their own decisions if the Government keeps telling them how to deliver services. If we are going to have a market Commissioners should be deciding what services they want, and to what standards. They should not be paying for poor services – such as prolonged hospital stays resulting from hospital acquired infections. And we need to harness the competitive motive to deliver what patients want – which is not hospitalisation. We need a system which provides reward for keeping people healthy and encourages staff to innovate and deliver the most cost effective care. The system developed by Kaiser Permanente in California seems to be a good model. Clinical systems are integrated with a shared budget between hospital and community services. Kaiser owns large, effective primary care centres which are dedicated to chronic disease management as well as hospitals. These diseases include coronary heart disease, cerebrovascular disease, chronic pulmonary disease, diabetes and renal failure, which result in so many unplanned admissions to acute trusts in the NHS. In Kaiser, primary care centres enlist help from specialists employed in their own system, routinely and when needed, to provide expertise in the community setting, supporting primary care and family medicine. An unplanned admission to hospital with an acute on chronic exacerbation of, e.g. chronic bronchitis, is regarded as a failure of the whole system of vertically integrated care. They are, in the USA, in competition with other health insurance systems. We have no desire to move to an insurance based system, which is ridiculously inefficient and inequitable, but we can see the virtues of an element of competition if the competition can be properly directed. If patients with long term conditions were offered different treatment and care systems – a healthcare plan of vertically-integrated services – they might be much more interested in the choice than they are in choosing between different hospitals for surgery. And if the key outcome for each health system was increased expectancy of healthy life we might be able to build in real drivers to improve the health of the population rather than just drivers for indefinite expansion of the health service.

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