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The Paul Noone Memorial Lecture

Delivered at the NHS Consultants' Association Conference,
University College London, 8 October 2005

NEWS FROM THE CENTRE FOR INTERNATIONAL PUBLIC HEALTH POLICY

'Evidence’ for using PFI built on sand

A new report by Prof Allyson Pollock, David Price, and Stewart Player shows that Private Finance Initiative (PFI) schemes do not out-perform public sector projects by coming in on time and on budget, as the government claims.

The private finance initiative: a policy built on sand , published by UNISON, nails the claim that the extra costs of PFI are offset by increased efficiency and it knocks out another of the government’s arguments for its continued use to build hospitals, schools, and other major public sector projects.

677 PFI projects have been approved since 1992, but the treasury has not fulfilled its objective of a “sound evidence base” for a “rigorous investigation” of PFI.

The treasury claims evaluations show that 88% of PFI schemes are delivered on time, whereas 70% of non-PFI projects are delivered late and 73% over budget. This report shows that five research studies, cited as the source of the cost and overrun data, are fatally flawed and therefore not credible.

The UK treasury cites five research studies as the source of the cost and overrun data. Of the five reports:

• Two were conducted by the National Audit Office and were surveys and consultations with project managers. They do not have any data on time and cost over runs.
• A third study, cited by the NAO, was conducted by a private sector body, Agile Construction Initiative. It was not designed to evaluate cost and time performance and has no data on cost and time overrun performance
• The treasury’s own report contains no data to assess the cost and time overrun claim and its methodology is not in the public domain.
• The fifth study was conducted by Mott MacDonald, a company which acts as a technical adviser on PFI deals. The report has no data to support treasury guidance. Numerous flaws in study design and methodology lead to a sample and measurement bias that renders the study uninterpretable. At the time of the study 500 PFI deals had already been signed at a value of £28bn. Mott MacDonald's sample, however, is based on just 11 PFI schemes and 39 non-PFI schemes - too few cases to make meaningful comparisons.

PDF document HERE

Questioning the Claims from Kaiser

An original paper by Alison Talbot-Smith, Shamini Gnani, Allyson M Pollock and Denis Pereira Gray, published in the British Journal of General Practice, June 2004.

PDF document HERE

The true extent and meaning of “choice” in the National Health Service.

The NHS Improvement Plan 2004 ( available at www.doh.gov.uk) states:

“We anticipate that by 2008 the independent sector will carry out up to 15% of procedures per annum for NHS patients paid for by the NHS; this includes managed care organisations from the United States, pharmaceutical companies with expertise in disease management and independent providers in the UK.” (p 52 para 5.5).

In this way and in the name of choice the market principles that were talked about in the 1980s have returned as a supposed driver for the Health Service. With an estimate of 250,000 procedures from the first wave of the independent treatment centres, it is clear that plans are advanced, indeed success is already acclaimed. In Paragraph 5.11: of the Plan we are assured that: -.

“Building on the success of the recent procurements of ground breaking mobile cataract and MRI scanning services, new market entrants will play an important role not only in providing additional new capacity but also by acting as catalysts for innovation.”

Magic is rightly viewed with circumspection in scientifically based health care circles so NHSCA thought that it was time to look critically at this issue. What was meant by ground breaking cataract services? The ophthalmologists among our number could perhaps help us on this.

A small survey was carried out and a literature review undertaken into the for profit health care companies involved.

The survey.

There was no doubt that the leaders of the specialty had anticipated the dangers of the changes. In early 2004, six months before publication of the Improvement Plan document, the President of the Royal College of Ophthalmology had firmly outlined some of the foreseen difficulties. For example:

• The lack of continuity of care in the mobile units with temporary staff.
• The lack of agreements about management of serious complications.
• The concept that local departments will be expected to take on patients with complications. The duty of care should be the same for all providers.
• How are patients with uncomplicated cataract to be selected?
• The effects on case-mix and subsequent training are not considered.
• The effects of diversion of funds from hospital eye departments are not considered.

The nine ophthalmologists who were also members of NHSCA and some others were approached. All responded to a letter and phone call. All were aware of the plans of the Government concerning private health care companies. In conversation it was pointed out that ophthalmology seemed particularly vulnerable to intervention by private and often foreign health care companies. They were asked:

• Were they aware of such health care companies operating in their area?
• Had patients already been transferred to other providers?
• Had there been an impact on training of junior staff?
• Had there been an impact on the financial stability of their unit?
• Had colleagues been woo-ed to work for a competing service?
• Had valued trained staff been approached to take part in a competing service?

One colleague, who had built up an excellent service from almost nothing and had no significant waiting list, had come under great pressure from a primary care trust to agree to a private company working in his area. The name of this company was withheld from him “for reasons of commercial confidentiality”. This proposal, if implemented, would have completely disrupted plans that had been put in place over many years. Redundancies of highly skilled staff could have been made necessary as a result of these sudden, ideologically driven proposals. Another possibility, of colleagues choosing to work sessions for the private company, was an added source of tension within the consultant group. Fortunately our colleague was able to fight of the threat successfully.

Several colleagues explained to their PCT that they had never had a long waiting list and so were able to resist the imposition of an independent sector provider. One colleague mentioned that the good leadership and cooperation among the consultant team had meant that no pretext could be found for the introduction of an outside company and that this had been accepted. In another case the PCT had found provision from local resources to correct the waiting list problems.

One colleague felt unsupported and undermined. It was clear that the haphazard management of the trust to which he was attached extended far beyond his personal practice and that the finances and leadership of the trust were in a parlous state. A for-profit foreign health care company had gained a substantial foothold in the area and several of their patients who had developed complications had been dumped on his department. This was not a training department, nevertheless his view was that in no way could training be developed in the current environment. His views reflected a widespread opinion and a high level of mistrust among the consultant group to whom I spoke.

The development of services.

So-called Independent Sector Treatment Providers (ISTCs) have not been slow to come forward and there are signs that they have been heavily encouraged to do so by the Government. For example, the 15% proportion of private contractors mentioned in the introduction above are rumoured to have had added opaque capital inducement funding at the outset. In other words, the private companies are not competing on a level playing field but with collusive Government support weighing in on their side.

Further evidence for this is in the public domain. Thames Valley Strategic Health Authority commissioned a Review of their ophthalmology services from Finimore Management Consultants and in June 2004 the result was posted on the internet. As usual, the name of the commercial company concerned is not disclosed but nevertheless the management consultants give a full account of their penetration into the Thames Valley “market”. The Strategic Health Authority had entered into legally binding contracts on behalf of each of the PCTs for up to a total of 21.3% of their expected number of cataract operations. In addition a staggering 10,341 excess additional operations (5.3% of the total provision) were contracted from within Thames Valley. These operations have to be paid for whether or not they are actually carried out and they are in excess of the carefully estimated demand. On behalf of the taxpayer, I wish Thames Valley SHA luck in finding patients on whom to operate.

The Finimore report excluded consideration of both children’s ophthalmic services and cancer care- two of the most sensitive and potentially expensive aspects of service provision in ophthalmology - but revealed that 10,341 operations-worth of resources was already spent on operations for which there are no patients. We do not have access to the details of how these decisions are made but this doesn’t look like a “level playing field” for competition. Should anyone think that this has been a simple administrative blunder, allow me to direct them to a questions and answer leaflet also published on the internet entitled “Independent Sector Treatment Centre Ophthalmology: Questions and Answers”. For example:

Question: Why is an Independent Sector Treatment Centre required in an area where ophthalmology waiting times do not exceed 3 months?

Answer: ITSCs have been established where local NHS capacity planning results indicate need and also to introduce patient choice.

The move to use short term private resources to tackle waiting lists is reasonable It is quite another matter to form long term contracts, paid for in advance in the bogus name of “choice”, “competition” and “driving up standards”. They introduce confusion and distrust, interfere with training, de-stabilise financial flows (as in the Thames Valley example) and threaten safety. They also drain resources away from the development of a full diversity of badly needed services. Those effective NHS services that have been able so far to ward off invasion from Government supported private firms can expect further disruption.

RORY NICOL.
With many thanks to Eunice Goes for help in the research.

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THE ROOT CAUSE OF THE PROBLEM?

Included in the burning issues of today for the NHS are:

• the Government’s promotion of patient choice. This to the point where we are seeing NHS wards having to close and patients being denied the choice of their local hospital.
• payment by results
• the further anchoring into place of competition by the creation of foundation trusts
• the independent sector treatment centres.

The effects of these policies vary but they interact with each other.

They can perhaps be summed up as choice, competition and consumerism.

But there is a common thread running through them all, without which they would either not exist or at least pose little threat – the artificial division into Purchaser and Provider.

This began first in other areas of the public services. I remember as a County Councillor in the late 80s the County Engineer’s department being obliged to split itself in two on these lines to no obvious benefit.

It came into the NHS as part of the Thatcher “reforms” of 1990 heralded by the White Paper entitled “Working for Patients” which introduced the internal market. Without such a separation of course the market could not have begun to function.

During the prolonged campaign against this legislation I saw how the theory might work out in practice in my own small DGH and spoke to my (Conservative) MP, putting to him the following:

• that Outpatient waiting times in our hospital were relatively short. In my own practice this had been achieved by organisation, having an enthusiastic secretary and cooperative colleagues in the outpatient and appointments departments who saw to it that any space caused by a cancellation or another consultant’s absence was immediately filled. The same applied to GI Endoscopy.

• that once this information became available to general practitioners outside our normal catchment area we were likely to be swamped with referrals and there was no way this rapid service could be maintained for the local patients, who also happened to be his constituents.

• that people were prepared to go the extra mile for their local community but could not and would not attempt to do it for the whole country. He took the point and promised to raise it with Kenneth Clarke, the then Secretary of State for Health. The reply we got was vague and unconvincing, as it was bound to be. The case was as unanswerable then as it is now.

Of course the Opposition parties campaigned against the introduction of a market system, as did NHSCA, BMA, other professional bodies, trades unions and many others but to no avail, until we thought relief had arrived in 1997. The new government had promised to remove the market and later talked (and still does) as if it had. But no amount of tinkering about with tiers of management, or titles, or token representatives of local communities can obscure the fact that if you have Purchasers on the one side and Providers competing on the other you have a market - a system which has a respectable role in many aspects of our society but the NHS is not one of them.

Sir Douglas Black, author of the famous report “Inequalities in Health” and a former President of the College, wrote an Editorial for the Journal of the Royal College of Physicians of London in which he said;

“ What remains of the welfare state must be cherished and what has been destroyed must be restored. The particular responsibility of the Medical Royal Colleges is to maintain standards of practice in the interests of patients. Standards of care cannot be fully maintained unless they are the prime object of a service, not subordinated to the commercial and managerial expediencies of a ‘managed market’. What has to be done is open to argument, but my personal suggestion is a radical one – to disband not only the artificial pseudo-market, but also the purchaser-provider split which lies at its heart, and indeed was created only to make it possible. The split represents an artificial division in the pursuit of what should be a common aim.”

The piece was written in early 1997, shortly before the General Election, apparently in a spirit of some optimism. But Sir Douglas was too radical for the politicians then and remains too radical for those of today. The Conservatives have remained wedded to the split they introduced, Labour has embraced it with enthusiasm and I was disappointed to find, in a recent exchange in the Letters page of the Guardian with the Liberal Democrat health spokesman, that his party too does not see the need to rid us of this incubus.

All the indications are that we are once more in a pre-election period and indeed by the time the next Newsletter comes out we are likely to have a new government. Sadly, Sir Douglas is no longer with us. I wonder what he would think and say if he were? Certainly his wisdom is sorely missed.

NHSCA has always maintained its independence and stance of not being aligned to any political party. Nor would we suggest to members how they should vote – it would in any case be more than usually difficult on this occasion. The Executive Committee is however working on a form of “manifesto”, indicating the sort of policies and priorities we would wish the next government to follow and we hope to have that displayed on our website and publicised in other ways before the Election comes.

PETER FISHER

President

March 2005

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THE GENERAL ELECTION

This event failed to stir great excitement, except in a few constituencies with special factors, with the reasons for holding it a year early never adequately explained.

All parties have claimed a degree of success but the major ones at least probably all felt disappointment that their message did not generate more enthusiasm.

Little seems to have changed as a result of the reduced government majority, indeed early pronouncements on health suggest even more of the same.

In April the Executive Committee drew up a “manifesto” of what we would wish the incoming government to do, more as a statement of beliefs and a benchmark for the future than with any great optimism that we would get an administration that was prepared to listen.

NHSCA MANIFESTO April 2005

A publicly funded, publicly provided and publicly accountable NHS is the fairest, most effective and most cost efficient way of providing health care.

The aim should be that essential additional funding is used for patient care and not wasted in market bureaucracy such as billing, invoicing and marketing nor in the diversion of public funds to private profit.

To this end the structure and processes should be as streamlined and transparent as possible, particularly where the involvement of the public is being sought. In particular no further “modernisation” or “reform” should be introduced without careful assessment of the long term consequences and wherever possible a pilot study.

The vast majority of health service staff in all disciplines, including management, are motivated to provide the best possible service without the need for performance frameworks and the rewards and sanctions of “sticks and carrots”.

The capacity and staffing of the NHS must be developed to the point where it can meet all its commitments, namely universal, comprehensive health care free at the point of delivery according to need and not ability to pay. There is evidence that the use of public money to purchase care in the private sector is destabilising the NHS by fragmenting services, undermining provision for training and recruitment and retention of NHS staff. It is introducing new inequities in access to care through mechanisms which allow health care providers to select out profitable treatments, patients and services.

We deplore the renewed emphasis on market forces in the form of payment by results, foundation hospitals and the use of “choice” to promulgate greater privatisation of care. These processes introduce new costs including marketing and billing and distort service priorities with an increasing emphasis on profitable treatments, patients and services. They put at risk the health care needs of the whole population and above all access to high quality local services.

We advocate the abolition of the purchaser provider split, foundation trusts, capital charges and the contracting out of clinical services to the private sector. We support an integrated health system which will protect our rights to universal comprehensive health care free at the point of delivery. The NHS must be returned to public ownership and control with attention paid to bringing in systems which put public health, planning, political accountability and equity before profit.

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Does the government have a clear and specific mandate to privatise more of the NHS?

The recent reductions in NHS waiting lists are excellent but the public funding of private surgical capacity on a permanent rather than temporary basis is totally unacceptable. The NHS should be built up now that significant public funds are at last available, not health corporations. In announcing controversial 5-year NHS contracts for more private surgery in England to raise its proportion within the NHS to 11%, Patricia Hewitt, the health secretary said "I want to make clear my determination to continue both the direction and the pace of reform set out by the prime minister and my predecessors to deliver the patient-led NHS for which the government has a mandate."

The Health Service Journal was not alone in being none too impressed that this announcement came only days after the new health secretary had promised to spend her first three months 'listening and learning from the service'. Clearly neither Patrica Hewitt nor Tony Blair could be accurately described as experts in health policy but their arrogance seems to know no bounds. A New Labour trademark?

Over the coming months, it is a safe bet that we shall hear a lot about the government having a mandate for what amounts to developing corporate services with public funds. Perhaps the first point is that only 22% of the electorate voted for the government and of those who voted, only 36% backed it. In this extraordinary situation, there is no meaningful mandate for any controversial policy however much ministers continue to bluster.

Second, what does it mean for a government to have a specific mandate? The Oxford Concise Dictionary of Politics suggests that "If a particular issue dominates a successful election campaign, then it might reasonably claim to have a mandate to pursue that issue." Not even the government could claim that its plans to further develop private surgical and other facilities with public funds were widely aired at the hustings. In no way did they dominate discussions.

It might be argued that a government has a specific mandate if its particular plans were clearly laid out in its manifesto. In general terms, Labour made much of its 'detailed' manifesto but what, for example, do the 12 pocket-book pages on health tell us about Patricia Hewitt's "reform...to deliver a patient-led NHS"? The short answer is - very little that is specific.

For instance, it means (without explanation) "fundamentally reforming the NHS to meet new challenges..." Or, "We will deliver...by using new providers where they add capacity or promote innovation, and most importantly by giving more power to patients over their own treatment and over their own health ." Significantly it adds "We promised to revive the NHS; we have. In our third term we will make the NHS safe for a generation." Within a week, the government had brought significantly more privatisation and - very important - destabilisation. Sound planning, for which the NHS was once admired, is further jeopardised. The big bills that will eventually accrue from major planning errors along with the heavy 30-year bills from PFI schemes constitute an appalling legacy.

On bureaucracy there is the comment "by strengthening accountability and cutting bureaucracy, we shall ensure that the new investment is not squandered. We are decreasing the number of staff in the Department of Health by a third..." The reader would have no idea of Labour's ill-advised earlier decision to keep the expensive bureaucracy of the Tory 'internal market' with all its current expensive ramifications to promote 'collaboration with the independent sector.' The Health Policy Network estimated that the original internal market cost no less than about 5% of the NHS budget.

Similarly, the cost estimates for the very heavy IT and staff time to run the controversial 'choice' apparatus are not given. Indeed, the opposite overall impression is fostered - of cutting bureaucracy and of "freeing up £500 million for front-line staff."

Involvement of the private sector is described in general terms and nowhere is there a recognition that relationships with vast health corporations can be highly problematic. "Expansion in NHS capacity will come both from the National Health Service...as well as from the independent and voluntary sector..." Nowhere are the growing NHS staffing levels given in terms of staff in relation to population and in comparison with levels in other developed countries. Nowhere is there a discussion of the need to strengthen measures to avoid stealing trained staff from poor countries.

To add insult to injury, commercial medicine is presented naively as a panacea - as the source of reform, innovation and 'contestability' as though innovation and comparisons within the NHS are worthless. "We shall continue to encourage innovation and reform through the use of the independent sector to add capacity to, and drive contestability within, the NHS. We have already commissioned 460,000 operations from the independent sector...Whenever NHS patients need new capacity for their healthcare, we will ensure that it is provided from whatever source." Critics might add "and without considering the medium- and long-term consequences - developing commercial medicine is paramount not strengthening NHS weak spots". Even the few NHS Treatment Centres are to be put up for sale (Hospital Doctor).

The Labour Party did not have even a 'manifesto mandate' for the post-election increase in private surgery - it had a manifesto smokescreen. And what little there was in the manifesto was not used as a basis to inform the electorate about Labour intentions .

The government in no way has a clear and specific mandate for significant privatisation of the NHS. However, as we can already see, Mr Blair, more desperate than ever to salvage a legacy - which seems to include breaking up what he insultingly characterises as the 'monolithic' NHS - is roaring ahead and has taken the chairmanship of the relevant cabinet committee. Would it make any difference if Gordon Brown became prime minister? Robert Peston's highly acclaimed Brown's Britain strongly suggests it would. Peston reports Brown as judging that the health sector is inappropriate for markets - unlike Blair. Sadly, however, it looks as though Brown has retreated from his defence of the NHS from privatisation.. All the more need for vigorous opposition to further privatisation wherever possible - the government has no mandate and we must make that crystal clear.

PETER DRAPER