Public Services News Bulletin w/c February 26, 2007
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A short letter published in the Telegraph this week highlighted
the contradiction inherent in the Government's attempts
to improve the cost-effectiveness of the NHS. David Nunn,
a consultant orthopaedic surgeon at Guy's and St Thomas'
Hospital Trust pointed out that the drive to reduce waiting
lists by performing more operations means that hospitals
are losing substantial sums for each additional operation
carried out. 'This is unsustainable,' wrote Mr Nunn. 'Tony
Blair knows that his policies will lead to an implosion
of the NHS but he will be out of office when it finally
occurs.' What Mr Nunn was referring to is an accounting
error built into the NHS, an error which means that, despite
the most drastic measures, such as ward closures, staff
cuts and withdrawal of certain treatments and services,
the books can never be balanced. The introduction of the
NHS tariff in 2002 - a standardised price list for operations
and procedures to apply nationally - was intended to reform
hospital accounting. It was also seen as crucial to the
war on waiting lists, helping to ensure better use of
beds and theatre time by allowing patients to travel around
the country for their operations with the procedure being
paid for by their own primary care trust (PCT). Money
following the patient in this way was a fine idea in theory,
but in practice the tariff has one massive flaw. Every
price for every procedure on the list is a guesstimate.
No one in the whole system can say for certain that the
price hospitals charge a PCT for work has any relation
to the real cost of that procedure. In the majority of
cases, it is simply wrong. When the tariff was first set
up, financial directors from hospitals around the country
were asked to submit the price they put on a particular
procedure. The figures varied enormously, so the administrators
took a mean figure and decided that was close enough.
None of the participating hospitals performed an audit
to crosscheck the figures they had submitted. No one asked
the surgeons if they thought these figures were correct.
Whitehall signed them off - and the price list was fixed.
Mr Charlie Chan, a surgeon specialising in breast cancer
at Cheltenham General Hospital, says no one has any idea
how much operations really cost. Yet, as he points out,
pricing them is not a difficult thing to do. 'We know
the cost of running a hospital theatre, we know the costs
of hip implants, for example. Even though surgeons operate
at different speeds and use different quantities of sutures,
it is possible to work out a consistent rate, as any 'sensible'
audit would find.' Following the introduction of the tariff,
hospitals managed to balance their books by juggling operations.
As many as possible of the cheaper, quicker jobs, hernia
repairs or bunion removals, for example, were slotted
in around major life-saving procedures that cost tens
of thousands of pounds. In effect, the simple operations
subsidised the complicated ones.
But with the opening of independent sector treatment centres
(ISTCs) - privately run clinics endorsed by the Government
with the intention of helping to cut NHS waiting lists
- there were fewer simple operations for the hospitals
to perform. Bunion sufferers no longer had to wait or
go private. They could have their operations performed
much more quickly at an ISTC or at special NHS clinics
established for the same purpose. The ISTCs weren't governed
by the troublesome tariff system either. The NHS would
pay a fixed lump sum, in separately negotiated business
contracts, for the procedures to be carried out there.
Economies of scale meant that a smart, bustling little
unit carrying out routine surgery from 9-5, with an hour's
lunch break, using cheaper, sometimes foreign staff, found
it much more economical to operate on a bunion than the
giant teaching hospital next door, which was paid according
to the inaccurate tariff. Staff at the Royal National
Orthopaedic Hospital in Stanmore, Middlesex, must deal
with realities of this every day. Mr Steve Cannon, for
example, runs a unit dealing with complicated sarcomas
(bone and soft tissue cancers), and correcting complications
of knee and hip surgery.
Cannon estimates that inaccurate pricing means he loses
about £1,000 a case. 'We used to balance the books
by performing arthroscopies [exploratory joint surgery],'
he says. 'But if you remove these simple procedures, sending
them to ISTCs or special NHS clinics, we can't make any
profit. The proposed tariffs for what we have to do are
inadequate. 'For an operation to excise a soft tissue
sarcoma, the tariff allows £1,428 per case. Add
in a minimum of three days in hospital, perhaps one night
in intensive care, and a top-up payment, as it is a specialist
area, and the cost we can claim is £5,216 each patient.
'At present, even with all our cost-cutting measures in
place, each of these cases actually costs us £8,674.
We will be short by £900,000 next year on that group
of patients alone. 'Overall, we are looking at a deficit
next year of £1,786,000 - all because of the tariffs.
We will go on till we are bankrupt and have to close.
But then where will the patients go? No one else will
want to take on this work as it will cost them too much,
nor will you get the same concentration of special skills.
It is a horrific situation. People will suffer - this
situation has become dire.' In the longer term, the impact
on surgical training is also causing concern. Mr Nunn,
who wrote to the Telegraph, says that so much work is
being performed in ISTCs by non-NHS doctors that there
is no work in hospitals for recent surgical graduates,
and no jobs for them to go to. 'Not one of our graduates
at Guy's has a consultant job,' he says. 'We will have
a whole generation of junior doctors who won't be able
to do simple operations on their own, let alone complex
ones; and in turn they won't be able to train the next
generation. It's self-perpetuating. This will destroy
the health service.' Perhaps Tony Blair should look elsewhere
for a legacy of his premiership.
A leading architect of Tony Blair's health reforms warns
in the Guardian today that the NHS will not survive as
a universal tax-funded service without a change of policy.
Chris Ham, professor of health policy at Birmingham University,
said a 'fundamental weakness in the design of the reforms'
made it impossible for the NHS to deliver the improvements
in efficiency that will be needed when growth in its budget
slows next year. Prof Ham, director of strategy at the
Department of Health from 2001 to 2004, said the government
hoped to increase efficiency by making hospitals compete
for NHS patients. This gave them a strong incentive to
raise quality and cut costs. But most hospital beds were
occupied by patients who were admitted as emergencies
- mostly older people who had no choice where the ambulance
took them. They could be kept well at home if GPs, community
nurses and hospital specialists worked closely together.
But Prof Ham said: 'With healthcare organisations competing
with each other for a bigger share of the NHS budget,
there is little incentive for them to collaborate to substitute
care in the community for care in hospitals.' The government
had strengthened the position of foundation hospitals
and private-sector treatment centres, but gave 'scant
attention' to building up the power of primary care trusts
that buy services from them on behalf of NHS patients.
'This has created a fundamental weakness in the design
of the reforms with the purchasers of care lacking the
expertise and resources needed to make the healthcare
market work efficiently,' Prof Ham said. 'The levers and
incentives do not exist to reduce variations in productivity
and performance on the scale needed to fund future medical
advances.' His analysis reflected majority opinion among
leading doctors, NHS managers and Whitehall policymakers
who attended a series of private seminars at the Nuffield
Trust, an influential health research institute.
The seminars, chaired by Prof Ham, concluded that the
government's policies are in danger of sucking more resources
into hospitals and starving primary care. He said the
reforms had to be reformed to achieve a sustainable universal
service and called on Gordon Brown, as chancellor and
prime minister in waiting, to address the problem. The
warning came as the NHS begins to prepare for the end
of record growth in the health budget. Since 2002 health
spending has increased by about 7% a year in real terms,
but this rate of growth is due to end in March 2007. The
NHS expects its subsequent funding to keep pace with the
general rate of inflation, but managers fear this will
be not nearly enough to keep pace with the rising cost
of drugs and increasing demand from larger numbers of
older people. Prof Ham said it was unrealistic to expect
sufficient savings from eliminating waste or cutting bureaucracy.
The only way of balancing the books was to change 'core
medical processes' by winning support from doctors and
nurses for new ways of working - often outside hospital,
closer to patients' homes.
Many NHS hospitals are being forced to delay operations
in a bid to save money, it has been claimed. As part of
an investigation by Channel 4's Dispatches programme into
NHS funds, a poll questioned 60 hospitals and found 'minimum
waiting times' had been imposed on 43% of them by their
Primary Care Trusts (PCTs). A quarter of the PCTs questioned
admitted they were demanding delays. The programme, to
be broadcast on Monday night looks into why, despite the
billions of pounds being pumped into the NHS in recent
years, there are still huge deficits. It says GPs are
being banned from sending patients for hospital treatment
and hospital doctors are being asked to delay operation
by 'cash-strapped' PCTs attempting to balance their books.
James Johnson, chair of the British Medical Association
told the programme: 'The really ridiculous thing is that
in the hospital you're having to wait to go in to, the
beds are probably empty, the doctors are doing nothing,
the nurses are doing nothing.
'They've just been told by their purchasers not to do
the work. Now that is a crazy situation which goes against
absolutely everything we stand for as doctors.' Dispatches
quotes North Yorkshire GP Dr Pat McGrann, who says he
was sent a list by his PCT in January of procedures which
cannot currently be carried out in hospital. It claims
the ban is in place at least until March 31. Types of
treatments to be sidelined include non-life threatening
procedures such as varicose vain surgery. The programme
says much of the multi-billion-pound investment has been
'squandered' on 'New Labour's complex health bureaucracy',
with the large number of recent reforms leaving those
running the NHS tied up in red tape. It also claims the
Government's new IT system for the NHS, expensive Private
Finance Initiatives and pay deals for medical staff like
GPs have helped compound the problem.
Controversial city academies have come under fire again
- just days before the launch of a public consultation
into plans for one in Norwich. The proposal to turn Heartsease
High School into an academy is due to come a step further
in March as families, the local community and stakeholders
are consulted. The news comes as the Government spending
watchdog said today Tony Blair's £5bn city academies
programme is raising school standards - but pupils are
still failing to master the three Rs. The National Audit
Office (NAO) criticised the academies scheme for millions
of pounds of cost-overruns, low exam results, poor A-level
provision and a failure to collaborate with neighbouring
schools. Ian Gibson, Norwich North MP, has voiced his
concerns about academies ever since the Heartsease plan
was first mooted, in particular the effect it would have
on neighbouring schools.
He said: Given the information that's coming through
and the effectiveness of the academies, they would do
well to examine their bid for such a school in Norwich.
Teachers' unions and MPs have criticised the prime minister
over the academies programme, which was set up to transform
failing comprehensives in poor areas. In exchange
for up to £2m, private sponsors, such as business
figures and faith groups gain control of an academy, setting
its ethos and appointing governors. In the case of Heartsease
the sponsors are the Bishop of Norwich and city businessman
Graham Dacre. In a new report, the NAO said academies
cost more than other schools to build and most of the
projects ran over-budget by an average of £3m. Pupils'
A-level grades have been poor and GCSE results in English
and maths are not good enough. Most academies are not
achieving good results at A-level, and there is a risk
that poor quality academy sixth-forms could even lower
educational standards in the local area, the NAO said.
The report also reveals that academies are being forced
to restrict community groups from using their facilities
in order to avoid VAT liability, despite the fact that
academy buildings were always intended for community use.
South Norfolk MP Richard Bacon called for the Government
to resolve the tax issue and also called for better project
management to stop building costs over running. He said:
VAT is stopping academies from playing a full role
in their local communities..
The Heartsease proposal is being project managed by Cambridge
Education. A spokesman for Cambridge Education, which
is managing the Heartsease proposal, said: Cambridge
Education is currently managing a feasibility study for
a proposed academy in Norwich. As part of the feasibility
study Cambridge Education will be undertaking a full consultation
process. This is anticipated to start in March and finish
in July, but we are currently taking advice on the impact
of local elections on this timetable. What do you
think of the idea for an academy in Norwich? Write to
Evening News Letters, Prospect House, Rouen Road, Norwich,
REWARD schemes where pupils' efforts can lead to prizes
are having a positive impact in Lancashire classrooms.
That is the verdict of an education chief who says rewarding
children for anything from good truancy records to getting
better grades than expected is paying dividends. Coun
Alan Whittaker, Lancashire County Council's cabinet member
for schools, said: 'There's nothing wrong with a bit of
encouragement. 'Parents do need to follow it up and carry
on the praise when they get home.' But a parent group
has blasted the reward schemes, saying pupils should know
how to conduct themselves without 'needless bribery.'
Nick Seaton, chairman of The Campaign for Real Education,
which pushes for more parental choice in UK schools, has
attacked such schemes. He said: 'It's giving out the wrong
message saying you will reward children for what they
should be doing anyway - it's using public money for a
form of bribery.'
The BNP is against road pricing, which is just another
scheme to extract money for us to provide infrastructure
we have already paid for with petrol tax.
By midnight tonight, around 1.7m people will have played
their part in one of the most popular and unexpected experiments
in online democracy the UK has had. For the past three
months, from Land's End to Shetland, men and women have
been putting their names and e-mail addresses to a petition
on the Downing Street website calling for ministers to
scrap all plans for road pricing. Tracking and billing
every vehicle in the country by satellite is not only
'sinister and wrong', the new pay-by-the-mile tax will
be unfair on those living apart from loved ones and the
poor, runs the petition's rallying cry. The threat of
paying extra for the school run or a weekend drive has
generated a huge response from the public, catching the
government off-guard and prompting Tony Blair to promise
a reply to all who sign the petition before it closes
tonight. But with the technology to pinpoint every vehicle
on the road still a decade away and politicians scared
of enraging the 74% of households regularly using a car,
is the reaction proportionate?
The Westminster government has certainly put itself behind
road pricing in theory, suggesting new charges could be
offset by cutting fuel duty and road tax, and improving
public transport to offer drivers an alternative. The
busiest roads would be the most expensive to drive on
- estimates go up to £1.50 a mile - while quiet
roads, such as those in rural areas, would be priced at
the lowest level or not at all. Last December, the idea
seemed sealed when a Treasury report - for which read
approved by Gordon Brown - warned congestion would cost
the economy £22bn a year by 2025, the equivalent
of £900 a household. Stephen Ladyman, UK roads minister,
also declared recently that a national roads pricing scheme
was 'inevitable'. However, 1.7 million angry voters are
hard to ignore, and 'inevitable' covers an awfully long
time. According to Paul Watters, head of roads and transport
policy with the AA, a more likely short-term future is
a series of local congestion schemes on the lines of the
one pioneered in London by Mayor Ken Livingstone in 2003.
Mr Watters said that over the next 10 to 15 years he expected
Manchester to follow suit, and speculated Glasgow might
dabble with the idea, despite the massive rejection of
a congestion charge in Edinburgh. 'I think the government
do understand motorists' sensitivities.
The sad thing about what the government is doing is that
it keeps telling us road pricing is worth thinking about,
yet don't tell us how it's going to work in practice.
People should be sceptical but not paranoid about it.'
The difficulties certainly should not be underestimated.
Vast, complicated and intrusive, any satellite tracking
system would also need to be backed up by a massive billing
system. At the moment, the government cannot guarantee
cars on the road are even taxed and insured. Why should
rogue drivers be any keener to install a black box to
monitor their every move, and pay up to £600 for
the privilege? Moreover, despite some talk of road pricing
being piloted, it would need to arrive as a big bang''.
It would be impossible to cut fuel duty in some parts
of the country but not others without causing yet more
congestion as people flocked to trial areas to fill their
tanks cheaply. Although tracking technology could be tested
to generate notional bills, they would not change driver
behaviour, making it difficult to say if a nationwide
rollout would work. In Scotland, where car ownership is
lower than the rest of the UK, congestion policy is lagging
behind Westminster. In part, this is because the UK government
funds work on schemes south of the border.
So far, 10 areas have been given money to develop congestion
schemes, including Manchester and Bristol. In Scotland,
councils have also been chastened by the backlash to the
early Edinburgh proposal. Duncan McLaren, chief executive
of Friends of the Earth Scotland, yesterday urged MSPs
to look hard at congestion charging as an alternative
to more road building. However, when our politicians debate
the issue at Holyrood on Thursday, they are more likely
to be looking hard at their shoes as they avoid saying
anything too contentious before the election. A Scottish
Labour spokesman last night said road pricing had 'not
been ruled outand doing nothing was not an option', but
was not ready to name his party's particular prescription.
Fergus Ewing, SNP transport spokesman, said road pricing
was 'plainly a possible system', but not one which energised
him. The Tories are fiercely opposed to any form of road
charges. The executive is pro-road pricing in theory,
so long as it is part of a UK-wide scheme - as are the
Scottish LibDems, although if UK reform remains 'glacial'
they would lobby for road and fuel tax to be devolved
in order to scrap them and go it alone on pricing.