Market forces alone will not deliver essential changes to hospital services, says The King's Fund

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The King’s Fund has questioned whether the government’s health reforms will deliver much-needed changes to the provision of hospital services, in a new report published today.

The report, Reconfiguring hospital services: lessons from South East London, outlines recommendations for policy-makers to ensure that so-called 'reconfigurations' of hospital services improve the quality of care for patients. It is based on a detailed analysis of protracted efforts to reorganise services in South East London, where financial problems and concerns about patient care have plagued four of its six local hospitals. (1)

With the NHS needing to find up to £20 billion in productivity improvements over the next few years, the report warns that major changes to the provision of hospital services are urgent and essential. It shows that relying on market forces alone will not deliver the changes needed, with the risk that the quality of patient care will deteriorate in hospitals faced with large financial deficits.

The report highlights the need for strong, strategic commissioning to reconfigure some services such as cancer, cardiac and stroke care across large geographical areas. It argues that this will not be delivered by the government’s health reforms, which will abolish the strategic health authorities currently responsible for leading this work and leave GP consortia to fill the gap, a task they are unlikely to be able to fulfil.

The report recommends that future hospital reconfigurations are based on ‘best practice’ models of care, with specialist services concentrated in centres of excellence and other sites providing more routine care and rehabilitation, rather than all the hospitals in a local area providing a full range of services. While this would require major changes to the way hospitals are organised, including the closure of some facilities, evidence shows that these ‘networks’ of care improve outcomes for patients and are more cost effective. (2)

The recommendations in the report include:

  • amending the Health and Social Care Bill to ensure that the new NHS Commissioning Board is able to drive the changes needed in the best interests of patient

  • changing the way hospitals are funded to help those struggling to manage large debts as a result of PFI contracts (3)

  • supporting the acquisition of hospitals with large financial deficits by high-performing foundation trusts. (4)

The report’s author, Keith Palmer, said:

‘With the NHS facing an unprecedented financial challenge, major changes to the way hospital services are provided are essential. Relying on market forces alone will not deliver the changes needed, with the risk that patient care will suffer. It is vital that the Health Bill currently before parliament provides the right levers to drive the changes needed.’

The report is published ahead of a number of decisions on hospital reconfigurations that are likely to be announced over the coming months. Shortly after the coalition government came to power, it called a halt to all planned reconfigurations and subsequently announced four key tests against which they should be assessed. (5) Hospital reconfigurations will also be driven over the next few years by the requirement for all hospital trusts to achieve foundation trust status by 2014. (6)

Read the report: Reconfiguring hospital services: lessons from South East London

Notes to editors

For further information or to request an interview, please contact The King’s Fund press office on 020 7307 2585 (or 07584 146035 if calling out of hours).

(1) South East London incorporates two large teaching and research hospitals - Guy’s and St Thomas’ and King’s - and four district general hospitals - Queen Elizabeth, Woolwich; University Hospital, Lewisham; Queen Mary’s, Sidcup; and Bromley Hospitals NHS Trust. The latter four hospitals have faced chronic financial and quality issues for a number of years. The reconfiguration process (‘A Picture of Health’) began in 2005. In December 2010, NHS London announced that the proposed reconfiguration met the four tests set by the government.

(2) For example, strong evidence is cited in the report of lower mortality rates for stroke and heart services delivered in this way.

(3) The report recommends funding the capital component of the tariff paid to hospitals so that it reflects differences in fixed capital costs, rather than paying the average capital costs of all hospitals as at present. This would increase funding for hospitals with large PFI debts at no net cost to the NHS.

(4) The report recommends that the Department of Health support acquisitions of hospitals in financial difficulty by high-performing foundation trusts. While this may reduce competition, it is the most effective way of accelerating the adoption of ‘best practice’ models of care to improve quality for patients.

(5) The four tests are (i) support from GP commissioners; (ii) strengthened public and patient engagement; (iii) clarity on the clinical evidence base; and (iv) consistency with current and prospective patient choice.

(6) Around 70 hospital trusts have yet to achieve the financial performance and quality of care needed to become foundation trusts. Many have significant financial deficits, often as a result of large PFI schemes.

London NHS Trust and a former non-executive director of Guy's and St Thomas' Foundation Trust. He is a senior associate at the Nuffield Trust and a former senior associate at The King’s Fund. He was a founder member of the South East London Service Redesign and Sustainability Board.

(8) The King’s Fund is a charity that seeks to understand how the health system in England can be improved. Using that insight, we help to shape policy, transform services and bring about behaviour change. Our work includes research, analysis, leadership development and service improvement. We also offer a wide range of resources to help everyone working in health to share knowledge, learning and ideas.