Taken from Paul Corrigan’s blog commenting on the new NHS reforms white paper.
There is something ominous in the organisation of Next Steps, in that the section on providers of health care is in the chapter called “Regulating health care providers”. This chapter is nearly as long as the one on GP Commissioning – and two thirds of it is about the regulation of NHS health care.
The organisation of the argument betrays yet another contradiction for the current Secretary of State. Whilst he wants to emphasise how he is liberating the NHS, there are others in his Government who are very anxious about the whole system falling apart before the next election. The Treasury are especially anxious about the NHS going into deficit with uncontrolled expenditure of resources. Therefore the price for these reforms going ahead is very strong regulation with an old style NHS boss – David Nicholson – in charge.
The chapter starts with the recognition that increasing competition for the NHS is contentious. It is the issue that worries the BMA. They know that their power depends upon their holding a national monopoly of the organisation and provision of doctors in England and that competition in the NHS is likely to undermine that. So their interest as an organisation is in, and will remain, being against competition in NHS care. This puzzles the current Secretary of State because many of the BMA’s members work as private businessmen (GPs) and many more work with private health care providers as a way of making money. But the material position of the BMA rests on monopoly so they will resist competition.
Next steps is clear that competition – within a regulated market – will go ahead. Paragraph 6.12 ends by saying that structural reforms will be embedded before the end of this Parliament. So by 2014 a regulated market will exist. The problem that gives to organisations from the private or the third sector who may want to come and play in that market, is that it is quite a long way away. In terms of competition the earliest that the market in health care reforms will be ‘made’ is – at best – 40 months away. For the next 40 months new providers will be trying to develop products in a period where commissioners are all being turned upside down. What new providers want to know is “Who do I talk to about my new product”. It will not be an easy time to innovate in NHS health care.
Next steps persists in saying that the Government wants to create “the largest and most vibrant social enterprise sector in the world” and it would appear that most of the way in which this will happen is through FT providers. The Government have dropped the idea of creating FTs that are wholly owned by their employees because they quite rightly recognise that these are very large public assets. They do want to build on existing governance with many more members. They chose to do this by further empowering governors who are elected by members.
The important shift of power proposed is to decrease the powers of Monitor to regulate FT providers.
The Government will need FTs to become very active in merging and acquiring other NHS trusts. The paragraph on this – 6.22 – concentrates on the regulation of such activities. Over the next couple of years the Government will come to recognise that they have got their concern the wrong way round. The crucial policy area they will have to concentrate on will be providing incentives to FTs to engage in mergers and acquisitions. The Government badly need FTs to do this – a lot – in the next few years. Unless organisations can see what they can gain out of it, they won’t do it. If this does not happen the Secretary of State will have no-one (except the private sector) to take over the hospitals that fail because of the market forces he is creating.
There are a number of increases in the Secretary of State’s powers over FTs in terms of their right to collect information from FTs and to develop an arm’s length banking function for FTs. All FTs will be looking closely at this aspect of the legislation. Those who have been involved in the relationship between FTs and the DH over recent years will be wary of any new power which the Secretary of State has over them.
The Government will remove the cap on revenue from private patients. It is interesting that FTs see this as restricting their scope for innovation when their main innovation will always be with NHS patients who form a much bigger part of their business.
The pipeline for those providers that are not yet FTs gets some important attention. The government agrees that around 20 trusts cannot make it to FT status. In early 2011the Government will publish how the pipeline of organisations to become FTs will look. It will provide a map of all hospitals that are not FTs and expectations of when they will make it to FT status. It will outline a menu of local and national support for this pipeline. This will not just involve turnaround teams, but will also have plans for regional health economy reconfigurations, as well as options and mergers. Given the plan will focus on the most challenged trusts early on, this will be yet another moment of political challenge for the reform programme. Is the current Secretary of State really going to say to a number of Coalition MPs that their hospitals will either be merged, reconfigured or taken over? This will be an important event for the reforms. If at that moment they as little understood by the average Tory MP as they are now, there will be big problems.
We shall see. If he does then the reform programme for providers will go ahead. If he doesn’t, it wont.
To assist this process the Government will establish a Provider Development Agency which will report directly to the DH. The final date for applications to become a stand-alone FT will be 31/03/2013.
This will last for one year between 2013 and 2014 which will see those trusts which have failed to become FTs across the line before the deadline of 2014. The legislation will remove the status of non NHS FT trusts from the statute book for any trust beyond April 2014.
Within these plans the provider development agency will have one year to work with those organisations that have not applied to become an FT to ensure that they have plans for merger or acquisition before the non FT trust status is abolished.
If the coalition survives, the election will be between spring 2014 and 2015. This means that according to these plans about 20 hospitals will be closing or merging or being taken over in the year before the earliest date of the election. I will be interested to see how those in the Government who are interested in electoral politics take to this timetable. Does David Cameron know this?
Since the White Paper was published in July there has been a lot of discussion about who might run the FT compliance regime. Given that the philosophy behind this reform is that all organisations should be ‘liberated from NHS bosses’ and I am sure many FTs see Monitor as a new version of “NHS bosses”, the idea in the White Paper is that Monitor would no longer carry out the performance compliance regime for FTs. FTs would manage their own performance.
In any case, given the belief that Monitor would manage prices and competition for the whole system, if they also managed performance for FTs there might be a clash of interests. Would it not be in Monitor’s performance management interests to ensure that competition in some way helped FTs to perform?
Next steps recognises that there will need to be some performance management of some FTs. At the moment at the end of 2010, as the finances get tighter for the NHS, a larger number of FTs need some performance management. For there to be none at all in 18 months time would be very problematic. Next steps says that Monitor will have a two year programme of compliance for FTs between 2012 and 2014 for those post 2012 FTs and a subset of others.
This is one of the few amendments between the White Paper and Next steps where reality has been allowed to break into the model that has been developed in the current Secretary of State’s head. There will still be a number of FTs that might fall over in the year 2014/2015 for which there could be no system help. In the year before an election this could prove interesting.
Paragraphs 6.123 to 6.127 outline the creation of a special administration or failure regime. Given the powerful market forces that these proposals are unleashing, and given the coming problem about resources, there will be more hospital failures. The regime outlined here is planned to be put into operation by April 2014. There is a recognition that there needs to be some failure regime before then. The Bill will make this the responsibility of Monitor not the Secretary of State. We shall see.
In this chapter of Next steps there are 80 paragraphs about how regulation will work. As I read these an anxiety comes into my mind about the whole process. These paragraphs go into the detail of how economic regulation will work with the NHS. For most organisations in the NHS this will be a completely new world with new language. If they agree with the Government, the NHS will be looking forward to the liberation that follows these reforms. Those people might find 80 paragraphs on regulation as a template for liberation potentially disturbing.
This section of Next steps really gets into the world as it will exist according to the current Secretary of State. I know that he means to describe liberation, but it ends up really getting ‘into’ the nature and experience of regulation – how the environment around providers will mesh them round with duties.
Most people in the NHS are at best anxious about this new market world and those few that are excited, are excited by the liberation. Whitehall is gearing up for what it means by liberation and it’s a bit chilling. It looks pretty regulated to me.
I am not sure how this will create “the largest social enterprise sector in the world”.