Negating the Human Factor and Substituting Callous Cash Criteria and Competition

Workers' Daily Internet Edition: Article Index :

Payment by Results:
Negating the Human Factor and Substituting Callous Cash Criteria and Competition

NHS Foundation Trusts Not Making Enough Money, Regulator Warns

Prescriptions and Outcomes

It could be said that the NHS policy and strategy of the New Labour government when it came to power in 1997 was one of incoherence. It could not be made sense of, for while on the one hand it said that it rejected the NHS "internal market" instituted by the Conservative government, it retained the so-called purchaser/provider split of hospitals as "providers" of health care and the other parts of the health service such as primary care as "purchasers" of health care. While declaring that the health service should be "patient-centred" and not based on competition between hospitals, the Labour government nevertheless maintained the basic mechanism and outlook of the "market", and of the patient as a supposed "consumer" of health care. How would this be resolved? What did the "Third Way" in health care have in store?

In actual fact, there was really never any question of the direction in which Labour wished to take the NHS. There may have been illusions in some quarters that the New Britain which had been promised would favour the working class and people and not the rich. But the crisis of privatisation which had swept Britain and elsewhere, exacerbated by the monetarism and "free-market" economics of Thatcherism, demanded that the rich find a new champion to rescue them from the people’s opposition and demand that their claims on society be met. The programme of New Labour was to take Thatcherism forward under a different signboard.

It was during Labour’s second term that the anti-social offensive was again stepped up in earnest, along with the Labour government demonstrating that it too was the Party of war and aggression. In the Health Service, a clear agenda emerged when, in October 2002, the Department of Health published the document "Reforming NHS financial flows: Introducing Payment by Results". This was part and parcel of the programme of "investment with reform" that ensured on the one hand that funds would only be provided to the health service if its structure and ethos was reformed and on the other that funds would be channelled through PFI and other means into the coffers of private business, the monopolies and the financiers.

Now Labour’s third term is proving to be one of consolidation of this anti-social agenda, an all-out attack on the well-being of the people and utilisation of the government to service the unbridled dictate of the monopolies.

What is being implemented at present, with some tactical withdrawals necessitated by the opposition of the people, including health workers and professionals, is a much more thorough-going transformation of the NHS into one where business considerations and the ethos and practice of neo-liberal capitalism hold sway than was ever attempted or dreamt of by the Conservatives. There is a vestigial recognition of the "interests of the patient", but it is the patient as "consumer", followed by their "funding", and able to exercise "choice" between "competing" hospitals. The whole theory and practice of "payment by results", which seemed so absurd when it was first mooted and now appears so outrageous, and its accompanying "financial flow", is based on the model of a manufacturing enterprise operating in a capitalist market, complete with "productivity" and "efficiency". In this model, as in the capitalist market itself, the public well-being, the social economy and the material and cultural needs of the people are negated and what remains are callous cash criteria and the fetish of competition.

There is little hint that the health service should be there as of right to meet the claims of the people on society for a healthy life, of the health service as a social programme which cares for the people, of health workers and professionals as people who are dedicated to the service of the public or who are following a vocation to either care for the ill or work for the prevention of illness or accidents in the community and society.

Under the agenda of "payment by results" (PbR), there is a scale of national tariffs for "work done" by hospitals paid for by funding which follows "patient choice". There is a long list of procedures, such as hip replacements or treatment for heart attacks, each with its own Healthcare Resource Groups (HRG) code, of which there are more than 1,000. The price of each HRG procedure is fixed as a national tariff. PbR therefore means that each hospital is paid a fixed price for every treatment it undertakes. If the treatment actually costs more, then the hospital is expected to find ways of bringing down the cost or of raising "productivity" and carrying out more treatments or operations to generate extra cash. If on the other hand the hospital trust finds ways to undercut the fixed tariff, then it is allowed to pocket the difference by analogy with a business retaining profits, and therefore the incentive is to compete with other hospitals in attracting more patients or in increasing the volume of treatments or operations. It should also be remembered that the budgets have been set for the trusts and they are expected to keep within budget, hence the hysteria that has been generated of late about the NHS "deficits". The stated assumption is that there will be a spur to the hospital trusts to make a surplus on top of their legal obligation to "balance the books". The plan is for this system to be fully operational in 2008/9, when the target is for 90% of hospital care to be covered by this practice. The PbR regime is providing a boon for accountants, and is being sophisticated with such refinements as the "Market Forces Factor" (MFF) and "purchaser parity adjustments".

The King’s Fund, in a background paper in April last year, had the following to say: "Payment by results rewards volume, not quality. Hospitals can make money if they bring costs down, or increase the amount of work they do. But cutting costs might be at the expense of better-quality equipment or staff numbers.

"One lesson from other countries is that quality of care can suffer when hospitals are given incentives of this kind. For example, there is some evidence that patient mortality in the United States increased in the period soon after discharge from hospital. This is likely to be one of aspects of the new system that the Healthcare Commission, which inspects and monitors hospitals, will be watching closely over the next few years.

"Another is that hospitals can start to cheat on coding. For instance, the NHS tariff pays two prices for different kinds of heart attack treatment: £1,775 for treatment of patients without medical complications, £3,676 for those with complications. The risk is that hospitals will falsify the code (or, worse still, give unnecessary treatment) in order to make more money.

Just one example of the effects of PbR can be seen at the East Kent Hospitals NHS Trust. The national treatment tariffs have meant that the trust is losing £20m on top of £15m savings already agreed in its budget, it was reported in April, thus causing a £35m shortfall. The trust board therefore proposes axing 160 beds over the next two years, cutting back on temporary staff and ensuring that patients spend less time in hospital. Its chief executive said that there had been no financial mismanagement, and they were having to respond to the reality. He said of the extra £20m shortfall, "It is 10 per cent of income and we are not in a position to do this in a traditional way. We’ve looked at procurement but we need to raise our game even more."

The Department of Health are also emphasising that information technology is an integral and key part of PbR, with a "national reporting system" as part of the "Secondary Users Service" (SUS). Literally tens of billions of pounds are being spent by the NHS on computer systems which simply are not working, not to mention the billions finding their way into the hands of the drug monopolies and so on.

Investment in the health service in a modern society is investment in the society and for the people’s well-being. It is both a duty of government to provide such a health service and the resources required to fund it and a right of the people to claim it from a government which is composed of their representatives.

The working class and people must demand and fight for a halt this programme of "investment with reform" which is destroying the basis of a modern health service and is enriching the private monopolists. The human factor must be put at the centre of considerations. It is necessary for the movement to be stepped up to safeguard the future of the NHS, with the perspective that the patient is not a "consumer" but that the health of the people as a whole is paramount together with the claims of individuals for the highest health care that society can provide. To give a lasting guarantee that this is the case, health workers and professionals must be able to participate in deciding the direction of the NHS, and the people must be in the position of the decision-makers in society.

By Nicholas Timmins, Public Policy Editor, Financial Times, June 6, 2006

Foundation trusts, the pioneers of the government's drive to turn National Health Service providers into independent businesses, are not making enough money to invest in the renewal of their assets, their regulator warned.

The first 32 trusts had put in "a strong performance" in what, even for the oldest of them, was only the second full year of operation, Monitor said as it published their unaudited final accounts.

While across the rest of the NHS the net deficit has been rising, foundation trusts reduced their net deficit last year by £13m, down to £24m.

However, some are having trouble getting paid. The 32 trusts have made provision for £28m of "bad debt", where they fear cash-strapped primary care trusts will not pay them for work carried out.

Monitor said yesterday that without that, foundation trusts would have recorded a small net surplus and it was a matter of "serious concern" that trusts feared they would not be paid, in spite of the existence of legally binding contracts.

More worrying for the longer term, however, was that only eight of the 32 recorded a surplus of more than £1m, while seven made losses of that scale or larger.

"It is essential," Monitor said, "that we move swiftly to an environment in which generating significant surpluses is the norm, rather than the exception."

Both the level of surpluses and the number of foundation trusts making them needed to increase, it said, "if asset renewal is to be possible at an acceptable level".

The only sources of investment finance that the foundation trusts had for new buildings and equipment was their retained earnings and borrowing – and few had yet taken the risk of substantial borrowing.

Without decent surpluses foundation trusts "will not be able to invest in the new facilities and improved services that patients will expect", Monitor said.

It added that, with much of the NHS under financial pressure, foundation trusts appeared to be reluctant to be seen to be generating surpluses, not least for fear that primary care trusts or strategic health authorities would try to claw the money back. In practice "the system does not work like that any more" and trusts needed to generate surpluses to invest.

Meanwhile, Bupa has been named as the preferred provider for the first of a new wave of 13 independent treatment centre schemes.

[The straightforward business view of the NHS – WDIE Ed.]

Feature by Richard Sarson, IT Adviser, Issue 43, May/June 2006

On the 23rd of April 2006 a number of academics wrote to the House of Commons Health Select Committee expressing their concerns about the "technical viability" of the NHS's National Programme for IT (NPfIT). They asked whether "the NPfIT has a robust, comprehensive technical architecture, project plan and detailed design?" And they complained that "Concrete, objective information about NPfIT's progress is not available to external observers." These concerns are not confined to academics. MPs, the British Computer Society and health care professionals within the NHS have all expressed worry. A report by the National Audit Office, delayed from last year, will appear this summer. It is expected to be critical. So, what was prescribed four years ago, and what are the outcomes so far?

On the 12th of June 2002, the Health Minister of the day, Lord Hunt, announced the publication of "Delivering 21st Century IT support across the NHS". It had four main planks: a new fast network linking every NHS site in the country, an e-booking system for GP referrals to hospital appointments, e-prescribing between GPs and pharmacies, and, most important of all, e-health records which would follow the patient from cradle to the grave.

The prescription: the need for speed
In October 2002, Richard Granger, ex-Deloitte management consultant, was appointed Director General of the NPfIT, or Tsar, with a budget of £6.2 billion. He soon revealed his hand. The imperatives were speed and ruthlessness. He saw that the NHS's problem in the past was that Trusts would waste months or even years, engaging in what he wryly called the NHS "rich tradition of debate", specifying complex systems with fancy features. By the time the systems were implemented the half-life of the technology was long gone.

The time scales for rollout of the NPfIT were therefore set for 2005.

Richard Granger gathered together a team of project managers from outside the NHS, to help him hit this demanding target. He initiated a series of punishing contract negotiations and by the end of 2003 signed contracts with four consortia who would mastermind the four main tasks in the plan. In the past, the job specification and contract negotiation for a Trust's system could take four years. Granger also divided the country into five "clusters", and, to implement the tasks, appointed a set of private sector Local Service Providers: BT for London, Accenture for the North East and Eastern clusters, CSC for the North West and West Midlands, and Fujitsu Alliance for the Southern Cluster. He made it very clear that any vendor not performing would be replaced or penalised.

Outcome: vendors going down like ninepins
He was as good as his word. In March 2004, Granger cancelled the ten-year contract with EDS for a national NHS e-mail and directory service, only 18 months after it was signed, and called in Cable & Wireless. The reason given was that EDS was failing to deliver the system as specified, and, as a result, only 62,000 of the 1.2 million NHS staff had taken up the service.

In December 2004, he claimed £4.5 million in penalties from BT because of delays on N3, the broadband network for the NHS. The Granger touch went further down the supply-chain. In June 2005, the Fujitsu Alliance replaced IDX by Cerner for its hospital clinical systems in the south, because of lack of performance. Because Granger has withheld payments for systems in the East and North East, Accenture has announced $450 million provision for losses on the NPfIT contracts for 2005. A sub-contracting software company, iSoft, has also written down its profits.

As a result of this and other delays, there has been recent speculation that there was an under-spend of £700 million out of the £1200 million budget for 2005, which will be paid back to the Treasury. This is good news for the taxpayer, but must make the vendors wonder whether to bid for further NHS business. And it is an indication that the project is behind its deadlines.

Diagnosis: a Tsar or a quarter master?
Because there had never been a top-down IT project like it in the history of the NHS, the NPfIT needed a new commandstructure. Richard Granger was billed as the IT Tsar, and was put in the Information Policy Unit, reporting to Sir John Pattison, Director Research, Analysis and Information, who was Senior Responsible Officer for the NPfIT. In the three and a half years as "IT Tsar", Granger has had five SROs, culminating with Sir Ian Carruthers, the present acting Chief Executive of the NHS. This chopping and changing of SROs, now considered bad practice for major IT projects, has not helped the NPfIT. Nor was Granger Tsar of all he surveyed in the NHS IT superstructure. The Information Policy Unit, NHS Information Agency and the Modernisation Agency were all independent quangos. It was not until the summer of 2004 that the decision was taken to abolish these or to transfer most of their functions to Granger's control.

Nor was it entirely clear who was responsible for specifying the tasks to be achieved by the NPfIT, the Department of Health Policy Unit or Granger's NPfIT team. Initially, he followed the broad-brush outline of the tasks in the June 2002 "Delivering 21st Century IT support across the NHS", to draw up the contracts. But then the division of responsibility became hazier, particularly when, in late 2003, the Government changed the simple e-booking system to "Choose and Book", to incorporate its "choice" agenda.

Outcome: little support among the clinicians
A result of this hazy line of responsibility is that throughout the four years of the project, GPs and hospital doctors and nurses have complained about not being consulted. In a survey carried out by the health-care consultancy Medix in 2003, only two per cent said they had been adequately consulted. In a similar survey published in January this year, this figure had only risen to five per cent, although many of the systems are beginning to be implemented.

More alarming is a decline of support for the project as a whole. Whereas two years ago 56 per cent of GPs and 75 per cent of other doctors were fairly or very enthusiastic about NPfIT, this year the figures are 26 per cent and 45 per cent. This meant that respondents were originally dissatisfied by the IT systems they had inherited, and embraced the more coherent "top down" approach. Now they are disappointed with what has belatedly been presented to them, and afraid that they will not receive enough training and support in the new systems.

As with the Senior Responsible Officers, the officials responsible for selling the project to the doctors have come and gone in a twinkling of an eye. The first one, Professor Peter Hutton was only appointed in October 2003. He was followed at six month intervals by four others. To lose one clinical lead is a misfortune. To lose four can be counted as carelessness. And it left hospital doctors and GPs in the dark and untrained.

Sir John Bourn, head of the National Audit Office, has said that his forthcoming report "will make clear the failure to take the people in the National Health Service with them."

Outcome: the good news
Despite these difficulties, some of the NPfIT streams have made good progress.

The new Broadband network, N3, is nearly complete, after initial difficulties. Granger points out that it is "the largest virtual private network in Europe".

Running over N3 is NHSmail, a secure e-mail and directory service, supplied by Cable & Wireless. Most doctors and hospitals have been connected, and 400,000 nurses are planned to be connected in six months.

The e-prescription service has had some delays, but Granger claims that 279 active locations are now active, and that approximately 558,000 prescriptions have been transmitted electronically from GPs to pharmacies. It is planned that all prescriptions will be electronic by the beginning of next year.

GP-to-GP software, the transfer of a patient's medical record from one GP to another, is only just being piloted between GPs using the same GP software (EMIS). The real test will come when records are transferred from one GP system supplier's software to another.

Outcome: the not-so good news
The Patient Administration Systems being supplied to Hospital Trusts are up to a year late in London and some other areas. About ten PAS have been delivered. There have been cases where the new systems do not have the functionality of the legacy system they were scheduled to replace. And they are not so far offering the electronic patient records which are needed for full e-prescribing and links to GPs.

The Patient Archiving and Communication System (PACS), a late addition to the national plan, is also behind schedule, as suppliers have been slow to deliver usable systems.

More serious are the delays on Choose and Book, the politically sensitive hospital appointment and referral system. Complete roll-out was due by the end of 2005. But many GPs' practices are only just starting now.

However, e-bookings are at last picking up, from 6,000 per week last December to 4,000 bookings per day in March. This is significant progress, but whether it will be enough to achieve the new December target of 80 per cent is doubtful.

Prescription: the Care Record service
The cornerstone of the whole NPfIT is the NHS Care Record Service (NHS CRS), a central database of patient records from the cradle to the grave. The Care Record became known as the "spine".

In Feb 2003, Richard Granger gave the medical professionals a "punishing timetable" for finalising the content of the National Health Record and the data standards. In May 2003, the Royal Colleges signed off the first version of the national Electronic Health Record. As well as personal details, this was to include blood groups and allergies, summaries of operations and treatments and names of GPs and hospitals where detailed patient records are held.

Originally, this "basic patient information" was to be available by the end of 2005. By this summer, clinicians were to have been able to make e-orders for path tests and e-images. By 2010, records for health and social care would be integrated.

Outcome: spinal tap
Arguments about patient confidentiality, and whether patients should "opt in" or "opt out" to allowing their data to appear on the spine, have delayed the implementation of the CRS. More recently, there have been doubts about whether the existing patient records are accurate enough. To give time to check the data accuracy – a massive task for GPs and patients – a new timescale has been given whereby only allergies and prescriptions will appear for pilots later this year. Details of historical diagnoses and procedures will only be included later, for rolling out some time in 2007-08. Thus the core of the NPfIT will only be put in place two to three years after it was originally planned, and five to six years after Lord Hunt, announced "Delivering 21st Century IT support across the NHS".

Where does Connecting for Health go from here?
The slippages have undermined Richard Granger's original insistence on the need for speed and his vow to avoid "scope creep". At the Health Care IT conference in Harrogate in March, he said "If it doesn't match up to a vision set in 2002 then I don't think we should be embarrassed about that". To him what matters is that "an unstoppable momentum has been reached". Indeed, Granger has changed the NHS's IT infrastructure. There is now a standard e-mail service over a fast network. There is, or shortly will be, better interoperability and connectivity between applications and between GPs and hospitals. NHS IT will never be the same again, at a high price – £6.2 billion.

But there could be change coming. Richard Jeavons, NPfIT's clinical lead, announced at Harrogate a "refresh", reflecting the need for a stronger voice for patients. This could involve "a change of priorities". He sees that "the next year will be one of transition from a national programme to one of local implementation". And Richard Granger has welcomed the initiative by the 23 academics and has agreed a review of the technical basis of the NPfIT. After all, the NHS itself is changing, with practice based commissioning, payment by results, foundation trusts and independent treatment centres – leading to a mixed economy of care. Four years is a long time in the politics of health care IT. A refresh is needed.