Making the NHS cost effective

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Niall Dickson and Jennifer Dixon argue that the government needs to focus on improving health to avoid costly hospitalisation.

There is a simple truth behind the government's latest White Paper on the future of out of hospital health (and social) care in England – the way in which services are currently delivered is inefficient and unsustainable.

Despite substantial change over many years, there is too much secondary care, too many patients are referred unnecessarily to hospital, too many are unnecessarily admitted, and too many stay too long.

All this has been known for many years yet the UK has been relatively slow in reshaping its services. The focus of National Health Service (NHS) policy has until very recently been on reducing waiting, rather than avoiding costly admissions, particularly for people with long-term conditions.

There are gross and unaccountable variations in referral rates between family doctors and hospitalisation rates by primary care trusts of residence.

The NHS spends 6 per cent less on primary care than the OECD average; Germany has moved virtually all its outpatient work away from hospitals, and it is hard to explain away the shorter bed stays in systems such as Kaiser Permanente in the USA. Will the NHS repeat the mistake it made in the 1990s – words and no action based on ignorance of new models of care in other parts of the world?

The absence of action so far has not been helped by the long-standing schism within the medical profession, shown in the organisational divide between primary and secondary care. Progress has been hampered too by a lack of leadership among politicians and professionals, who together have been unwilling to wean the British public away from its obsession with the bricks and mortar of institutions and to focus instead on accessibility and quality of services. But probably most important has been the absence of effective incentives to bring about change. A successful strategy will need to include both hard levers of change and the softer cultural elements to win support from staff and patients.

Now at last in the White Paper there is official recognition and commitment to a fundamental shift based on a belief that the 20th century topography of health care cannot survive. The latest review on long-term funding of social care for older people by Sir Derek Wanless included new evidence that, although healthy life expectancy is increasing, there will be an even faster growth of older people with dementia and other conditions requiring support. Unless the health and social care system changes, it will not only fail to cope with the current needs of more than 15 million people with long-term conditions in England but it will also be overwhelmed by increased morbidity and associated costs. This should not be – as the White Paper suggests – a response to popular demand for services closer to home. It should be about developing a system that is much more efficient.

There is much in the White Paper that is excellent, the danger is that the fundamental hard objective of boosting the cost-effectiveness of care is lost in the desire to do everything that seems to be good. This straightforward objective is obscured in the confetti of reforms whose effect is at times conflicting and at times cumulative. Many of the tensions are well known – care close to home needs to be balanced by factors of cost, quality and safety; the drive to increase hospital performance may run counter to the desire for more care in the community; commissioners may be compromised if they are also providers; the drive towards competition and diversity of provision does not always sit easily with an apparent enthusiasm for integration, care pathways, and clinical networks. More than a few observers have noted that the government's enthusiasm for longer doctor opening hours is hard to reconcile with the new contract recently signed with the British Medical Association ending responsibility for 24h care and in effect closing hundreds of Saturday morning surgeries.

There is also a mismatch between the championing of greater patient choice and the obvious need to manage demand, between the vision of tomorrow's care and the reality of today's struggling service. All this serves to undermine the credibility of the reform process. Within weeks of the White Paper being launched, when ministers were waxing lyrical about the merits of care in the community, at least one primary care trust was drawing up plans to make community nurses redundant.

Thus while the aims might be laudable the means must be questioned. First, is there clarity about what will bring about the necessary changes? Implementation has long been the curse of well-intentioned policymaking. This time real teeth will not be found in the glossy coloured pages of the White Paper itself but in the operational framework released a few days earlier. Here the incentive for transferring at least some of the funds from secondary care becomes clear — squeeze the tariff. The price for the work hospitals undertake will rise by only 1·5 per cent — well below the extra costs they will face while they must still meet demanding government targets for access and waiting. This is a high-risk approach. Latest estimates suggest that the NHS has notched up a £600 million to £1·2 billion deficit in the past year and that the hospital sector is now carrying substantial debts into next year. Many health economies will struggle to cope with the impact of payments by results and although some of the pain might be necessary to improve the efficiency of individual services, the danger is either that the traditional fudge (using one part of the system to bail out another) re-emerges, and allows unsustainable configurations to continue, or that hospitals become so unstable that politicians lose their nerve. Both are possible.

Second, is there a clear idea of how the reforms as a whole will effect the ambitions set out in the White Paper? Just consider the cumulative effect of payment by results, practice-based commissioning, the reduced tariff, moves to Foundation Trust status, smaller primary care trusts, and larger strategic health authorities, changes in both family doctor and consultant incentives, re-grading via agenda for change, and thousands of redundancies. Some of these can mitigate the effect of others, some will have a multiplying effect – no one knows. The degree of disruption, the distraction from operational issues is seldom acknowledged and almost never factored in. And underlying this is still confusion over the role of government, commissioning, regulation and what should be the real drivers of change.

Is this to be a devolved system in which government sets national standards, devises incentives, and concentrates on results? At times, the White Paper suggests this is the future, at others it indulges in process and central direction - why for example are health trainers being rolled out across the country? They may or may not be the way to tackle poor lifestyles, but why should the Department of Health dictate that this is the (as yet untried) method by which this desired result should be achieved?

The White Paper is a laudable attempt to realign the health and social care systems – but the government needs to focus on a small number of key areas over the next few years, in particular improving health to avoid costly hospitalisation. If this objective moves out of focus, the danger must be that the whole process of health reform will be derailed – already those who have always resisted change and those who want an end to the tax-funded system are knocking at the door.