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This year will be the year when healthcare reform becomes a make or break for the Blair government

Blair is taking a gamble on reforms that need Tory backing to become a reality

This year will be the year when healthcare reform becomes a make or break for the Blair government.

In acute and mental health services, the government has in place a blueprint to support both patient choice and increased competition through the creation of Foundation Trusts, which have greater financial freedoms and are able to compete for increased business alongside other providers, including the private sector.

Just before the end of 2005, the Secretary of State for Health reduced the hurdles for NHS Trusts seeking to be Foundation Trusts by allowing two star outfits to bid for this coveted status.

As a result, 2006 is likely to see many more Foundation Trusts in place, and in an NHS where payment by results is set to bite, better run Trusts will attract more patients and, in theory, get more cash.

This will lead to less efficient providers losing cash and potential viability.

The drive here is to increase competition and independent sector providers will play an increased role in delivering publicly-funded activity.

In forensic mental health, the private sector is already the majority provider of beds for NHS use. In the elective surgery market, the private sector has been crucial in bringing down waiting times and reducing waiting lists. In short, the scene is set for a potentially open market to emerge.

In commissioning and Primary Care, Blair has made less progress. Primary Care Organisations (PCOs) in England remain monopolistic providers of great swathes of bread and butter community services, as well as commissioning other services.

Full apology
The Secretary of State for Health, Patricia Hewitt, is about to consult on a rethink on the role and configuration of PCOs. The original idea was that PCOs should merge, with practice-based commissioning as the local arm of the bigger PCOs.

In this scenario, the PCO of the future would not be allowed to be a provider, opening up non-acute community services to greater competition.

Sir Nigel Crisp made a hash of announcing these changes and, as reported in the December issue of Pharmaceutical Marketing, he and Hewitt apologised for the ham-fisted way in which these changes were announced: pretty rare as an event!

In November last year, the Department of Health published some guidance to the NHS about how reconfiguration in England would be managed, subject to consultation on the White Paper on non-hospital services. This document suggests that the unions have had a big say in how any change might occur in the year ahead. The document instructs local NHS bodies to involve the unions in full partnerships in any local restructure. A polite euphemism, which means `carry the local unions with you or you will be in trouble'.

The guidance makes soothing noises to existing NHS staff in community services around protection of terms and conditions of service; it also backs off the notion that the PCO cannot be a service provider. If the local PCO wants to hang on to services it can do so, subject to consultation.

The Crisp/Hewitt apologia regretted the prescriptive nature of the proposals.

loyalty wanes In discussions with a number of MPs, it is clear that NHS unions want to water down the more market-driven changes in Primary Care and have lobbied the Labour Party fiercely.

Many MPs have made it clear to Hewitt that they will vote against any ideas that do not carry local support. In shorthand that means if a local Labour MP does not like the look of reconfigurations on their patch, then it is unlikely to get the green light from Hewitt.

At a meeting of the parliamentary Labour party before Christmas, Labour MPs gave Hewitt a very rough ride. Many of her opponents were MPs normally loyal to Blair and the reform agenda.

We have yet to see the detail of the White Paper, but if the proposals are seen to radically reduce the role and number of PCOs, and farm out services to non-NHS providers, there will be a bloody time.

We could see a Blair government dependent on a Cameron-led Tory party to get health legislation through the commons. In Education, where the Kelly reforms are deeply unpopular on the Labour benches, Cameron has indicated that he will support Blair against any Labour rebellion.

In education, two big opponents of reform, as proposed, are former education secretaries who were loyal to Blair, namely David Blunkett and Estelle Morris. We know that Frank Dobson, former Secretary of State for Health is opposed to change in Primary Care, but as in education, we will see other unlikely rebels in the health debate.

The prospect of a Labour government reliant on the Tory benches to secure public service reform in the third Blair term is dangerous.

The unions, many MPs and large chunks of the Labour party would find such a scenario deeply unacceptable. Blair is Prime Minister because he is leader of his party. If he alienates his party too much they are likely to want him replaced sooner rather than later.

Blair might think that he can risk all as he does not need to face the electorate again, but he is not master of his own destiny. If the Labour party decides he is no longer viable as its leader, his premiership is finished. The politics of the first half of 2006 look very interesting and uncertain.

A silver lining
The sad element of the poorly presented changes is that some of the ideas make sense. The notion of allowing a specific focus on improved and more robust commissioning in an NHS where money follows patients and providers are paid by results, suggests the need for beefed up commissioning led by Primary Care.

The number of PCOs needed in England to do this could have been debated sensibly, but it is perfectly possible to align practice-led commissioning frameworks beneath the PCO to local authority boundaries. This would protect the co-terminosity between the NHS and local government, allowing sensible joint planning.

Service provision outside hospitals could have seen some very creative models blossom. Why not build a provider framework around social enterprise, where organisations similar to Foundation Trusts could be formed?

Foundation Trusts are already seeking partnerships with private sector providers, but they remain a part of the NHS.

Social entrepreneurs from different backgrounds (eg, doctors, nurses and therapists) could have come together to create such enterprises. This would free PCO provision of services, offering a model that might have been more acceptable to NHS staff and unions.

With battles likely in parliament over the White Paper it may not be too late to redeem the situation and retain some of the better elements of the proposals for non-hospital services. The risk is that we end up with a muddled patchwork quilt of Primary Care in England.

Seeing red
The NHS will end the financial year in April with a deficit just below £1bn. In a total spend of around £46bn this is serious, but not catastrophic. We will witness closed wards, deferred operations and job freezes or cuts.

The problem with the new money going to the NHS lies in the fact that too much of the money has been gobbled up by centrally-driven initiatives. The new GP contract and the deal for hospital consultants has thrown huge sums of money at doctors with very little extra performance tied to the goodies.

The new NHS pay deal will also consume vast sums and possibly fail to deliver a better-motivated workforce. The decision to cave in on public sector pension rights and retirement ages places further strain on NHS budgets.

This leaves little prospect of real growth at the sharp end of patient care, as illustrated in an excellent analysis of the spending of new money in the NHS by the independent Kings Fund at the end of 2005.

By the end of 2006 the strain on NHS finances could look bleak. I would not bet on the job security of Sir Nigel Crisp in such a scenario!

Does this pave the way, in the run up to the next election in 2008, for a fresh look at how we provide healthcare in the UK or at least in England? In short, will the public be exasperated by an NHS that swallows large sums of public money, yet remains unable to deliver effectively and efficiently?

Bill Morris, former leader of the Transport Workers Union suggests that bodies like the World Bank and EU institutions see a tax-based healthcare system free to all as anachronistic.

In the context of the EU, the UK system remains unique, with the rest of the EU relying on a far greater mix of private and public money to deliver healthcare.

If the strain on the NHS remains unresolved by 2007, it is clear that politicians and the public might just
decide that the NHS that we created in 1948 has passed its sell-by date!

2006 will be the year in which the very nature of health provision will come up for discussion.

The authors
Ray Rowden is a health policy analyst and a member of the Labour Party

2nd September 2008


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