James Gubb: Government must not back down on NHS competition as force for change

The NHS should be on high-alert as David Cameron looks to take personal charge of the coalition’s health reforms. Currently ring-fenced, yet carrying one of the largest expenditure burdens on the Treasury, it is likely to be on the firing line. Modest real-terms increases may well turn into modest real-terms cuts – indeed, some think they already have.

The implications of this are stark. With just modest real- terms increases, the NHS already faces the challenge of its lifetime: delivering some four per cent of efficiency savings per annum over this Parliament. Such figures are far in excess of anything it has ever achieved. Some hospitals, where the squeeze is really being put on, are reporting a reality of a seven or eight per cent challenge. Any cut in funding and the figures will only grow.

But what does this mean for you or me?

Quite simply, if the NHS fails to deliver such savings, waiting lists will grow and treatments will be rationed, either absolutely (we’re not doing it) or by raising treatment thresholds. Both are already happening.

Here, though, is the good news. Look across the NHS – as reference cost data and the recently published NHS Atlas show only too clearly – and you’ll find some pretty fantastic variations in performance and efficiency, far greater than the efficiency savings needed.

There is, in other words, some grossly inefficient practice and some extremely poor management. Modern management techniques have largely passed the NHS by.

Very few hospitals, let alone community care and general practice, really know the cost of a hernia operation, A&E visit or home visit. Even fewer then use this data to benchmark, drive performance and change behaviour.

And yet, speak to the vast majority of people in the NHS and they will tell you what needs to happen. Costs need to be understood. Hospitals need to downsize and some need to close.

Certain obstructive staff need to go; as do arcane boundaries between primary and secondary care. Much more health care should be done in the community or in specialist, disease-specific centres or networks.

But here’s the crux. Has such change happened? Yes, but only too rarely, we are always merely talking of “examples”.

Why? Most fundamentally because such change is hard and carries enormous personal sacrifice, particularly in the NHS: battles with staff (not least consultants), trade unions, the media, the local MP, the local council, the Strategic Health Authority, the Department of Health, pressure groups... the list goes on. The status quo is easier: it upsets far less people.

In one sense, then, the imperative to make efficiency savings well may have a silver lining. But still the easier option may be to subtly ration, to salami-slice or seek bail-outs from others (at which NHS organisations are past-masters).

No, to create the absolute necessity for change, the NHS must open up to competition; must open up the real possibility that if this hospital or that clinic does not change then there is this company, that social enterprise or this NHS organisation that will do it; and do it better.

This is not privatising the NHS. Everyone still has access to health care when they need it. Competition is a means, a mechanism, by which higher standards, greater efficiency and new ideas can be reached by all – when properly regulated. It is not the oracle. Unfortunately, on competition in the NHS, the Government is on something of a climb-down. Too much time and energy is being diverted into reforming the commissioning infrastructure (Primary Care Trusts go, GP consortia take their place), in such a way that threatens to be little more than an expensive rendition of musical chairs.

Meanwhile, the Health Secretary has apparently ruled out competition on price, despite this being one of the most powerful means by which efficiency savings can be passed onto you and me, through commissioners getting a better deal.

Worse, a “right-to-provide” has been instituted for any organisation or group spinning out of the NHS to set up on their own as a social enterprise. This is not clever.

Of course, any good commissioner should seek to develop and expand the supply base, but you don’t do this by instituting monopoly.

I know a few people leading such social enterprises; they want to be able to make difficult decisions, on staff, on shift patterns, on reconfiguring services, that they know will benefit patients. Their jobs will be made a whole lot harder by staff knowing they have the right to provide whether or not such changes are made.

On competition, we must hold the line.

James Gubb is director of the health unit at Civitas, an independent social policy think tank.