he decade beginning in 1998 saw an unparalleled level of organisational change in the hope that NHS management could be made more effective. The complexity of the continuous changes, often unsynchronized from one part of the country to the other, present a messy story hard to present coherently. No official organisation charts seem to be available; the author provides two with no guarantee as to their accuracy. There were two phases that could be described in terms of the Secretary of State in charge, the Dobson phase (1997-1999) and the Milburn phase (1999 onwards). This page deals with the first. The direction of change was not consistent. There were U-turns on policy towards the private sector, the extent of power in the hands of primary health care, and devolution of decision-making. On taking power in 1997 the internal market was brought to an end, with the elimination of fundholding, and the substitution of 'commissioning' for the more overt 'contracting'. In a sense it was 'old Labour' and the key document was The new NHS - Modern, Dependable
The organisation of the NHS is unlike that of most other western health systems, as the ultimate responsibility lies with government and the responsible minister (the Secretary of State for Health, currently Alan Milburn). From 1948 until 1974 the organisational structure was unchanged. Since then there have been a series of modifications every few years under both Labour and Conservative governments. Generally management systems have been hierarchical with the Department of Health at the apex, and been based upon the idea of one district hospital for each area. Hospital medicine has usually been separate from the organisation of primary care, and remains so. During the successive reorganizations senior managers have often retired - or been culled - those remaining or promoted often feeling insecure, and of low morale. At the beginning of the 1990s the Conservatives introduced market features to the NHS, separating providers from purchasers and introducing an element of competition. Labour has reversed many of these changes, moved the system to something far more like managed health care, but around 2002 began to re-introduce ideas such as patient choice.
The NHS is funded almost entirely from central taxation, with only small contributions from users and from other sources. The money available to the service is therefore determined almost entirely by central government decision, and funds for health care compete with the requirements of welfare, education, the roads and the other calls upon government funds. The state of the economy sets the framework for funding decisions, which are taken after regular consultation between the Treasury and the Department of Health. The NHS is therefore "cash-limited" and not driven by demand. Demand is constrained by supply. The NHS probably makes more efficient use of its resources than most other countries, and aims for equitable provision. However various forms of rationing and demand management have always been a feature of the NHS and there have been recurrent arguments about whether the UK central funding system is ideal.
The second phase had a new and sometimes disruptive dynamism and is dealt with in the next section. Alan Milburn's changes were set in motion three years later, with mergers and the creation of new types of authorities. The key documents were the NHS Plan (2000), "Shifting the Balance of Power" (2001) & Delivering the NHS Plan (2002).
When Labour came to power in 1997 Frank Dobson (and Alan Milburn his minister) found to their dismay that in opposition the party had developed no health service policy worthy of the name that was ready for implementation. They were starting from scratch. In that December Labour issued the The new NHS - Modern, Dependable, which set out their initial vision for change to NHS structure, conceding that some of the features of the Conservatives' internal market were worth keeping. Labour wished to rebuild public confidence in the NHS. In fact they built on Conservative initiatives while denouncing them. The Labour Government wanted to get things done, top down, fast, and without necessarily relying on local management bodies. This approach, which owed something to Labour's experience of local government, affected education and housing, as well as the NHS. Watch-dogs, systems of audit, targets, and quantified, external and retrospective methods of control proliferated, as did "zones", initiatives and 'czars' with a responsibility for improving specific services.
None was revolutionary, all building upon trends already current. For example GP out-of-hours services had increasingly used nurses to assess emergency calls and the new national nurse-led help line, NHS Direct was a dramatic development of this, paralleling the call centres developed by private organisations. Electronic communication had been developing for twenty years, and hospitals and GPs were already being progressively connected to the NHSnet.
Second, the existing quality initiatives were disparate and it made sense to try to pull them together. Labour established a National Institute for Clinical Excellence (NICE) to look at what should be done, and a Commission for Health Improvement (CHI) to see what was in fact happening.
Third, the harder edges of the internal market, already softening, would be softened further. Fundholding was to go, co-operation replacing more extreme forms of competition. Health Action Zones would encourage cooperation between health and social services, an initiative that proved short-lived. ‘Partnership’ and ‘integration’ would replace the internal market and the jargon of the market was slowly replaced by that of New Labour. The Conservatives' ‘seamless services’ became ‘joined-up thinking’. National guidance (September 1998) stressed the interdependence of health and social care, and joint programmes. It was claimed that this partnership was novel, forgetting the attempts by Barbara Castle and David Owen in 1974 to integrate health and social services planning.
Changes in the legislative basis of professional self regulation of the General Medical Council
New sanctions for NHS tribunals enabling them to disqualify doctors and other family practitioners who act fraudulently of in a way detrimental to the health services.
Source BMJ 1999; 318: 317
The new NHS - Modern, Dependable, involved substantial structural change. The regional offices of the Department of Health’s Management Executive were declared (in 1998) central to the system, and had new functions including commissioning of specialist services required on a regional rather than a district basis, and oversight of the quality of breast and cervical cancer screening programmes. Within the boundaries of the then eight regional offices continuing mergers and reorganisations took place. In April 1999 certain readjustments took place, as a result of which a single region was established for London.
Primary care had changed comparatively little in its organisation and funding over the years. Now there were radical and progressive alterations. Labour had decided early on to abolish fundholding, and it made the formation of primary care groups a centrepieceof its NHS reforms. The knock-on effect of this on the rest of the NHS structure was not immediately appreciated. Health service money would increasingly be disbursed through management bodies with (on the face of it) a primary care slant. Many NHS managers had little experience in this field and that, combined with a welter of new initiatives and desire to limit spending on bureaucracy, meant a deficiency of organisational development and training, information technology, and the resources necessary to develop the changes Government wished to see.
Formerly autonomous GPs were organizationally brought together with community nurses in large Primary Care Groups (PCGs) - later Primary Care Trusts - and their services integrated with community health and social services. Legislation underpinned their introduction in April 1999 when 481 PCGs were established in England, Family Health Services Authorities (FHSAs) disappeared, and fundholding ended in England. Trusts that had previously provided community health services were generally combined with these PCGs. PCGs were a first step for GPs into a corporate world, with complex functions including the provision and commissioning of care, partnership across public, private, personal and voluntary care sectors.
PCGs were to play a leading rolein improving health, reducing inequalities, managing a unifiedbudget for the health care of their registered populations, improving quality, and integrating services throughcloser partnerships. Initially operating as subcommittees of healthauthorities, they brought together general practitioners, nurses,other health professionals, managers and representatives of otherservice providers, to manage local services. They were encouraged to seek greater responsibilities as Primary Care Trusts, within which clinical and financial responsibility would be brought together in, for example, prescribing and referral decisions.
Hospital trusts were far less affected by Labour's decisions than other management bodies. They became accountable to regional offices for their statutory duties, and to health authorities and primary care for the services they delivered. The separation of planning from provision and decentralization of hospital management was maintained. However, Trusts would have greater public accountability, more say in strategic planning and a commitment to quality - the improvement of patients’ experience of health care and its outcome. Trusts had new and major tasks, from the provision of family friendly employment policies, to partnerships of clinicians within the NHS, and with social services. The number of Trusts fell through merger; 22 trusts merged in 1998 and a further 49 in 1999.
The number of health authorities also began to fall, driven by a progressive reduction in their responsibility for commissioning services, as primary care groups and later trusts were established. The staff of these authorities was distracted from their managerial functions by personal priorities, the safeguarding as far as possible of their own future. Research by the London School of Hygiene and Tropical Medicine suggested that the motives for a merger were not always made explicit; reducing deficits, putting the good management of one trust into the poor management of another, and hospital closures. Financial savings were seldom as great as imagined (c.f. hospital closures in the 1970s and 1980s). Service planning was often delayed as a result of loss of managerial control, perhaps by as much as 18 months.
World-wide, health care systems were under financial pressure. In the US, for example, there was an acceleration in growth of expenditure in part because of the slower growth in managed care enrollment, and a movement towards less restrictive forms of managed care driven by consumer pressure. Some thought that managed care was an experiment now shown to have failed. US Government figures suggested that expenditure would reach 16.2% of Gross Domestic Product (GDP) by 2008, after stabilizing within a 13.5-13.7 percent band for the period from 1993 through 1998, with growth projected to average 1.8 percentage points above the growth rate of GDP for 1998-2008. The UK was therefore not alone in facing demands for more expenditure.
Labour initially fell into the same trap as in the 1970s, willing the ends without providing the means. Then as now each new policy, each improvement, carried a price tag but one that was not costed. For example in January 2002 a House of Commons health committee inquiry heard that in Croydon implementing the government's top 20 priorities would cost £70 million, at least ten times the available budget. In Lambeth, Southwark and Lewisham Health Authority NICE guidance would cost £15 million to implement, depriving patients of other equally effective new treatments, such as new anti-rheumatic drugs. One policy would have to take a back seat in the attempt to meet the government's other top priorities. (BMJ 2002: 324; 258)
Repetitively more money for the NHS would be announced for the NHS, first in 1998 at the time of the 50th anniversary celebrations. However when inflation was taken into account there was less money than was vaunted, some was immediately required to cover existing overspends, and settlement of pay claims had a substantial impact on funding of the many new tasks laid upon the service. Labour also had a disarming tendency to announce the additional money available over the next three years, apparently tripling its generosity.
By 1998 managers had become fearful that the additional resources would not eliminate delays in the treatment of winter emergencies. Sir Alexander Macara, Chairman of the BMA Council was not impressed by Labour's vaunted largesse. ‘Rationing could not be wished away by a facile denial in the White paper… The chronic and debilitating under-funding of the NHS did not need repeating.’
Although it had undeniable strengths, the NHS had some important strategic weaknesses. In particular, it lacked a clear purpose. It had a fantastic capacity to do things, but it was unclear whether it should be meeting everybody’s needs or a more limited subset - e.g. emergency rather than "lifestyle" medicine. If comfortable middle class Britain lost confidence in the service, and began to make other arrangements, a three tier service might be the result, fee for service care for the very rich, insurance based managed care for the middle class, and rough and ready care for the poor.
Labour, scared by a series of quality problems in the NHS, reacted by dumping on chief executives a flood of central initiatives, requests for returns, demands for reassurance, and circulars. Central direction and centralization was in the ascendant. The time available for managing the service itself was reduced. Yet the centre had reason to believe that the NHS could not be allowed to plough its own furrow independently. Cost, as well as quality, varied widely. Performance indicators had long included unit costs, yet these still varied massively even for common and straightforward procedures such as appendicectomy (£470 - £2,100 per case). Why? Were the reasons justifiable, or a quirk of the arithmetic? What should be done about them?
Professor Alain Enthoven, whose ideas had crystallized the way of thinking about the NHS in the mid-eighties, published an analysis of the results of the 1991 reforms. He saw advantages in the competition and innovation that had been introduced, and thought there had been a slight rise in productivity although there had been higher ‘transaction costs’. Fundholding tilted the balance of power from secondary to primary care, and in some trusts improvements had resulted from increased locally responsibility for performance. However he thought that the information about costs and quality was often not available, and incentives were sometimes perverse, with patients following the money allocated contractually, instead of money following patients to the hospital where they wished, or needed, to be treated. He argued for far greater attention to continuous quality improvement in the NHS, and Enthoven (1999) doubted
"Whether it was possible to create and sustain a culture of innovation, efficiency and good public service in a public sector monopoly with excess demand and limited resources, where individual units did not get more resources for caring for more patients...
"Whether Labour could make the NHS more responsive to the public, without introducing consumer choice, competition and substantially more money.
Enthoven considered that more money, fundamental reform and examination of performance variation was required. He cautioned against ‘quick fixes’ and Labour’s tendency to centralize management and policy making. He argued that consumer choice - to which the Conservatives had been moving - was essential.
NHS staff were caught like hamsters in a wheel that must go faster and faster. Within two years of election, Labour like the Tories, was on the rack over the NHS. Its honeymoon with the BMA was over. It was failing to meet the expectations that had been aroused, to deliver services of the standard of that available elsewhere in Europe, and to bridge the gap between limitless demand and finite resources. For a while it took refuge in the politics of denial and crisis management. The infrastructure (for example the number of acute hospital beds) provided by the NHS was being reduced and the publication of likely deficits by NHS Finance Managers was profoundly unpopular with the government. The blame for lack of progress was placed upon the health professions, who were becoming disillusioned with Labour. Alongside judges, the police force, the armed forces and the universities the fault was with the conservatism of the professionals, not the politicians. Despite the promise of greater openness, the government seemed as anxious as its Conservative predecessor to suppress bad news about the NHS. Openness was a career-limiting move. In an interview with the New Statesman, Lord Winston, a Labour Peer, said that the NHS was continually deteriorating and either more money had to be found from taxation, or a private system introduced. While he was called in for an urgent discussion with Ministers, there was widespread agreement with his position. Labour was slowly coming to accept that it had to act if the quality NHS was not to become an electoral liability.