Coalition NHS reforms may lead to serious pressures on clinical freedom

Under the coalition’s planned NHS reforms GPs could find themselves with serious headaches, with serious pressures on clinical freedom and financial viability.

This morning, health secretary Andrew Lansley addresses the Conservative party conference in Birmingham; here, former GP Dr Diarmid Weir – who has recently completed a PhD in monetary economics, assessing both mainstream and heterodox approaches – looks at the impact of the government’s NHS reforms on General Practitioners

Under the coalition’s planned NHS reforms GPs could find themselves with serious headaches. Patients armed with detailed outcome data and on-line hospital reviews may enter surgeries demanding referral to a named specialist at a hospital in another part of the country. The increasing patient-choice imperative will make this a difficult request for GPs to resist, but the financial and commissioning responsibilities handed to them by the reforms may give them worrying conflicts of priorities.

Under the proposed new system GPs, as well as being care providers in their own right, will form consortia to take on a role closely analogous to that of health insurers in countries such as Germany and Holland where healthcare is funded through more or less universal cover. These insurers become responsible for funding care for all applicants at a premium determined by their income.

The basic level of cover is determined by law, and high income, low risk individuals subsidise the low income and high risk through financial transfers. In effect, the new commissioning role for GPs differs only in that their consortia will have no option to feed rising costs back into higher premiums, as has happened both in Germany and in Holland.

GPs will therefore have the responsibility for contracting with every provider of healthcare to their patients within a fixed budget. Resisting any attempts by financially-focused providers to cut their own costs by reducing quality or to boost revenue by performing unnecessary procedures will require water-tight contracts and close monitoring by GP commissioners. The costs of this, when choice drives the use of multiple providers, may lead to serious pressures on clinical freedom and the financial viability of the GP consortia.

The coalition’s claim is that the NHS is not performing as it could or should, for which there is some justification from international performance and satisfaction surveys. They believe this stems from a lack of accountability to patients and top-down control that blunts incentives to quality and innovation.

But it could be argued that any relative failure of the NHS compared to comparable healthcare systems might be accounted for by an overall level of funding that is still generally 10-15 per cent lower than other European countries and by the repeated structural upheavals of the last 25 years. There is certainly no justification for believing that market-style structures are necessary for better outcomes and satisfaction with care.

Among the best performers on both counts are the almost wholly publicly funded and run Scandinavian systems. One of the worst performing healthcare systems in the developed world, and by far the most expensive, is the largely privately funded and privately provided US system.

The serious care and management failures uncovered last year at the Mid-Staffordshire Foundation Trust were not caused by a lack of financial motivation but by poor planning, absent communication and a culture of oppression. According to Professor Regina Herzlinger of Harvard Business School, the US record on innovation is actually quite poor, and more market-oriented care often appears to be a barrier, rather than an encouragement. But if incentive does have a role, it may be better to provide this in more flexible and targeted ways that go with the collaborative nature of healthcare and the high intrinsic motivation of healthcare workers.

Perhaps NHS providers could operate as John Lewis style partnerships, sharing bonuses for meeting specific yearly targets for cost-cutting or quality. A bonus fund, to be similarly shared, could be set up for successful innovations in care.

If decentralisation is important, this doesn’t necessarily require GP commissioners or providers to be independent of direct public control. Sweden, Denmark and Finland, all high performers on healthcare outcomes, satisfaction ratings and overall costs, have healthcare systems primarily local authority led and funded, so not only is there locally responsive control of healthcare, but also locally transparent costs, which the NHS’s funding from general taxation lacks. The results suggest this is the best of all worlds, and the shift to such a system would be hugely less risky and less costly than the coalition’s plans.

• The full analysis on which this piece is based is available at:

www.futureeconomics.org/articles/the-coalition-nhs-reforms

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20 Responses to “Coalition NHS reforms may lead to serious pressures on clinical freedom”

  1. Stefan

    RT @leftfootfwd: Coalition NHS reforms may lead to serious pressures on clinical freedom: http://bit.ly/dw77vq

  2. Neil Wigglesworth

    RT @leftfootfwd: Coalition NHS reforms may lead to serious pressures on clinical freedom: http://bit.ly/dw77vq

  3. NewLeftProject

    RT @leftfootfwd: Coalition NHS reforms may lead to serious pressures on clinical freedom: http://bit.ly/dw77vq

  4. Andy Sutherland

    RT @leftfootfwd: Coalition NHS reforms may lead to serious pressures on clinical freedom: http://bit.ly/dw77vq

  5. Dylan Barlow

    RT @leftfootfwd: Coalition NHS reforms may lead to serious pressures on clinical freedom: http://bit.ly/dw77vq

  6. Jordan Hall

    RT @leftfootfwd: Coalition NHS reforms may lead to serious pressures on clinical freedom: http://bit.ly/dw77vq

  7. Chattertrap

    Coalition NHS reforms may lead to serious pressures on clinical freedom http://chtr.it/PHnscD #hcr #healthcare

  8. Mark Whitehead

    RT @leftfootfwd: Coalition NHS reforms may lead to serious pressures on clinical freedom http://bit.ly/dw77vq

  9. Terry Connolly

    RT @leftfootfwd: Coalition NHS reforms may lead to serious pressures on clinical freedom: http://bit.ly/dw77vq

  10. Glue Web

    RT @leftfootfwd: Coalition NHS reforms may lead to serious pressures on clinical freedom http://bit.ly/dw77vq

  11. Anon E Mouse

    More scaremongering… yawn…

  12. Richard Blogger

    This is a pathetic article full of nasty, Blairite rhetoric.

    For a start the US system is not “largely privately funded and privately provided”. In fact about half of US hospitals are not-for-profit the “social enterprises” that Lansley is so keen to have in the UK. However, although these are nominally not-for-profit, they are still private businesses with a business plan and the result of these business plans (whether for-profit, or not-for-profit) have pushed costs to ludicrous levels. (In a recent scandal, one not-for-profit hospital – Sutter Davis – was reported as charging $4700 for a CT scan that an NHS hospital will be paid £200. Interestingly, you can get the same type of CT scan in a UK private hospital for not much more than the NHS rate, and the reason is that the NHS rates keep the private rates down.)

    As for “largely privately funded well, when you tot up the funding for VA (Veterans healthcare), Medicare (pensioners healthcare) and Medicaid (funding for healthcare for the poor) before Obama’s reforms the cost is half of all healthcare spending in the US. The fact is, the US has an extremely expensive, unequal system where half of it is funded from the public purse.

    Lansley wets his knickers when he thinks about the US system, because, as I have said, half of the hospitals are not-for-profit (which instantly highlights the lie that he gave today of wanting to create “the largest social enterprise sector in the world”). Lansley is looking at companies like Kaiser Permanente and Sutter Davis as the model for the NHS.

    The problem is that Ed Miliband is wetting his knickers too. As the Minister for the Third Sector he was responsible for the laws that will enable Lansl;ey to take all NHS hospitals out of public ownership.

    A bonus fund, to be similarly shared, could be set up for successful innovations in care.

    There is already a bonus schem,e in the NHS and Lansley is about to cut it. Do plesae keep up to date.

    Perhaps NHS providers could operate as John Lewis style partnerships, sharing bonuses for meeting specific yearly targets for cost-cutting or quality.

    WHAT!!!!! The NHS is a service I suggest Dr Weir goes back into the NHS and see how it works. Yet again Dr Weir is mouthing the nasty Blairite nonsense that provision of healthcare should not be a public responsibility. This is a horrible concept started by Blair and now enthusiastically continued by Lansley and Cameron. Our hospitals should be publicly owned and publicly run.

    The very first responsibility of the government is provision of healthcare. Blair wanted to shirk that responsibility but (thankfully) was prevented from going the full way by Brown. Lansley wants to complete the Blairite plan. It is about time that Ed Miliband tells us whether he is a Blairite-Lansleyite-Cameroon, or whether he stands up for the NHS and announces that he wants to keep it public, just like the BMA announced last week.

  13. Diarmid Weir

    Anon E. Mouse

    Only a coalition cheerleader would claim there are no risks to their plans. I’m just trying to explain where these risks might be, and how the same goals might be achieved with less risk. If you think I’m wrong, please engage.

    Richard Blogger

    I think you’re a little unfair. This is starting from the coalition’s plans, so I am not necessarily advocating all the things I mention. What I am saying is that ‘if’ financial incentives and local autonomy are good things (which they might or might not be, depending on context), they don’t need institutional market mechanisms. And as you seem to agree, institutional market mechanisms in healthcare are not associated with better outcomes – quite the opposite.

  14. Jack Stone

    Coalition NHS reforms may lead to serious pressures on clinical freedom | Left Foot Forward – http://goo.gl/acoK

  15. Mr. Sensible

    This plan has several issues.

    For 1, as well as treating patients, GPs would become accountants.

    For another, I am wouried about increased involvement in the NHS of the private sector.

    I think Andrew Lansley should listen to medical professionals on this; the verdict of the BMA and RCN could not have been clearer.

  16. Anon E Mouse

    Mr.Sensible – Why do you think external bodies know the medical needs on the ground of GP patients better than the local experts?

    You display the old fashioned “Government knows best” attitude – the one that was rejected by the electorate in May this year.

    There’s a new politics in town Mr.S – did you not hear a single word of Ed Miliband’s speech last week?

  17. Mr. Sensible

    Mouse these changes weren’t in either the Tory or Lib Dem manifesto, nore were they even in the coalition agreement.

  18. Redthread

    “@glue_web: RT @leftfootfwd: Coalition NHS reforms may lead to serious pressures on clinical freedom http://bit.ly/dw77vq”

  19. Anon E Mouse

    Sensible – So?

    Did you not hear a single word of Ed Miliband’s speech last week?

  20. NHS Reform – for Worse or for Better? « Future Economics

    […] Published on Left Foot Forward on October 5th […]

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