'Market rules' for the NHS urgently needed, says new report from The King's Fund

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A clear set of rules for competition within the NHS is urgently needed to ensure that all players – commissioners, providers, public sector and private – can plan for the future and that the emergent market works in the interests of patients.

That is the verdict of a new report published today by The King's Fund in partnership with Monitor and Nuffield Hospitals.

Windmill 2007: The future of health care reforms in England draws on a two-day simulation of a fictional, but realistic, health economy from 2008 to 2011 with 70 senior managers, clinicians, policy-makers and regulators plus a series of workshops involving a further 30 key players in the health system. The project was commissioned from Loop2, whose co-director Laurie McMahon pioneered the use of simulation techniques to model health service futures in the 1990s.

The report identifies nine key challenges for the NHS and makes recommendations for action under each one. The key challenges include:

  • resolving the current ambiguity over whether market forces or central control are to be the main lever for reform
  • clarifying and focusing the roles of the Healthcare Commission, Monitor, strategic health authorities and primary care trusts to ensure that competition works in the interests of patients and the public
  • transforming primary care trusts into impartial commissioners on behalf of their populations, leaving providers to focus on service planning
  • boosting the supply and quality of primary care, possibly through increasing competition to provide services
  • ensuring that the opportunities for improving services offered by practice-based commissioning are fully realised and, for practices that do extend their range and volume of services, an effective regulatory system is in place.

Report co-author Laurie McMahon said: 'The current ambiguity within the health system brings the worst of both worlds – the costs of competitive processes without any of the benefits that could be delivered. The changes have yet to reach the 'tipping point'. Allowing the two philosophies – a regulated market and a centrally managed system – to run at the same time is one of the greatest dangers facing the NHS in England. It could prove disastrous.'

King's Fund chief executive Niall Dickson said: 'At the dawn of a new political administration, our hope is that this important piece of work will fuel a wide debate about how best we can embrace the changes that work, address the areas of weakness and provide a clear vision for the future. If we are to achieve higher productivity and a more responsive health service difficult decisions will have to be made – that is the challenge that the Windmill lays down for all of us working in this field.'

Monitor’s director of strategy Adrian Masters said: 'In an emerging market, clear rules for competition, the remit of regulators and clarity over who will intervene when things go wrong are absolutely essential. Windmill helps us understand the issues around those issues and plot a way forward.'

Nuffield Hospitals' chief executive David Mobbs said: 'The Windmill report importantly highlights the ambiguities and inconsistencies in the way the market currently operates as well as the difficulty some NHS organisations seem to have in adapting to the new world. It will, I hope, lead to renewed commitment to a market based on rules which are clear, fair and enforced – for the benefit of patients.'

Read the report:Windmill 2007: The future of health care reforms in England

Notes to editors

  1. The report will be formally launched at a breakfast discussion event on 16 July at the King’s Fund. Speakers will include King’s Fund chief executive Niall Dickson, Monitor’s chairman William Moyes, Nuffield Hospital’s chief executive David Mobbs, and report co-author Laurie McMahon. Media are invited to attend.
  2. Windmill 2007 is named after the 'Rubber Windmill', a simulation process developed in 1990 by Laurie McMahon and others at the Office for Public Management for East Anglian Regional Health Authority to explore how the health service was responding to the internal market being developed at the time. The Windmill approach is a way of looking at the future that is ‘soft’ rather than 'hard' because it relies on using the combined experience and judgement of real players in the system rather than by extrapolating quantitative data. It is particularly useful with complex social systems where there are a large number of contradictory forces at work. The original Rubber Windmill produced some key findings that influenced the 1990 reforms. The event and its outcomes have, in effect, passed into the folklore of the NHS, and smaller versions of the simulation event have been used over the years to model the impact of new policies or initiatives. But a large-scale, whole-system simulation has not been undertaken since 1990.
  3. The Windmill 2007 project team included Laurie McMahon and Sarah Harvey of Loop2; Alasdair Liddell, King’s Fund Senior Associate and commissioner of the original Rubber Windmill in 1990 while chief executive of East Anglian Regional Health Authority; and John Appleby, chief economist at the King’s Fund.
  4. The King’s Fund is an independent charitable foundation working for better health, especially in London. We carry out research, policy analysis and development activities, working on our own, in partnerships, and through funding. We are a major resource to people working in health and social care, offering leadership development programmes; conferences, seminars and workshops; publications; information and library services; and conference and meeting facilities.
  5. Monitor authorises and regulates NHS foundation trusts ensuring they are well managed and financially strong in order to deliver high-quality health care for patients. It was established in January 2004. It is independent of government and accountable to Parliament. Monitor’s functions and powers are set out in the National Health Service Act 2006.
  6. Nuffield Hospitals is the UK's largest not-for-profit hospital group and one of the UK's largest charities. The organisation offers a broad range of services from its 40 hospitals (39 of them in England and one in Scotland). Additionally, Nuffield owns and runs Vanguard Healthcare, Europe's only fleet of fully equipped mobile hospitals, and Nuffield Proactive Health, providing health, vitality and wellness services for employees in their place of work.
  7. For further information or interviews, please contact the King’s Fund media and public relations office on 020 7307 2585, 020 7307 2632 or 020 7307 2581. An ISDN line is available for interviews on 020 7637 0185.