Health policy debate
4-15 November 2005
Incentives
Strategic Health Authorities to have a role in market regulation
According to the leaked plans, Strategic Health Authorities will ‘take a very firm role’ in managing both PCT finances and the new primary care market.
The plan for SHAs to play a bigger role in regulating local markets confused some. Monitor, for example, is known to believe that it should be the sole economic regulator for healthcare – and it will ‘want to know where the paper’s parameters of SHA power begin and end.
The leaked plans raise many other proposals that we do not have full detail of. According to HSJ ‘the same document sets out a range of other possible powers’, including the ability to vary price at regional level…to shape market performance and activity’, assess commissioning performance and ‘insist on outsourcing or market-testing services to ensure contestability’.
Regional variations in tariff prices and market-testing services to ensure contestability
One of the leaked documents, is a letter from Mike Farrar to John Bacon (dated 27 October). He asks, ‘what levers will SHAs have to undertake their new roles effectively’ and poses a series of questions ‘that now need to be discussed with ministers’.
He suggests a list of options, including:
- ‘power to insist on outsourcing or market testing of service and functions if they deem insufficient contestability is present in the system’;
- powers to remove chief executives and board members if ‘the view is taken’ that they ‘will not pass the Monitor test for foundation trusts’;
- powers to vary price tariffs at regional level.
- whether work on public health and health protection currently done in regional offices of government should be transferred to SHAs. ‘Are we confident that CMO duties can be aligned and safeguarded effectively in this model?’;
- which structures and processes should be mandated for new organisations;
- whether all PCTs and SHAs should participate in shared financial function arrangements;
- whether all PCTs would be required to market test or even out-source their commissioning support functions, such as data analysis and procurement;
- whether PCTs and SHAs should have particular posts such as provider and commissioning development directors.
First nurse cooperative is established
The Observer reported that ‘nearly 800 NHS nurses and therapists in Surrey have formed themselves into a John Lewis-style employee-owned company and will find out [on the 15th November] whether they can sell medical services to Surrey Health Authority.
‘The new social enterprise, Central Surrey Health, is set to take the first large-scale transfer of key services to an employee-owned organisation within the NHS.’
While Labour MPs and unions have worried that opening the NHS up will leave it prey to big business, they may be more sympathetic to ‘see more social enterprises win contracts, as they tend to be community-based and more responsive to local needs’.
‘CSH will seek to win the £22 million contract to supply speech and occupational therapy services to stroke victims, those suffering back pain and people with disabilities. They will also offer district nursing and school visits. The company will be led by clinicians rather than administrators. ‘
However, to go forward, ‘CSH needs to receive confirmation that its employees will be entitled to NHS pension rights. This could be a stumbling block to the organisation starting work next year.’
More health staff forming companies to sell services back
Throughout the country doctors and dentists are beginning to form themselves into employee-owned co-operatives in a bid to win contracts from NHS commissioners. But they are finding it hard, as there appears to be a bias towards giving work to mainstream businesses. Jonathan Bland, chief executive of the Social Enterprise Coalition, said: 'The government is very committed to open markets in public services. But the default option will see big business run services unless there is intervention. People working in government need to unlock the potential of social enterprise’ [go to note 15].
Nick Timmins wrote in the FT, ‘Doctors are also creating new business, often known in shorthand as “chambers”…to sell their services both to the NHS and to privately run independent treatment centres that operate on NHS patients’.
BMI and Nuffield, large UK private hospital groups, are in talks with surgeons and anaesthetists to provide back-office support – for example billing and scheduling services – to groups of chambers which would supply services to both the private sector and the NHS.
NHS Elect, the umbrella confederation of NHS treatment centes is working with two groups of surgeons – a team of orthopaedic surgeons in south-west London and the Consultant Eye Surgeons Partnerships, which has nine groups of surgeons.
Andy Black, a management consultant, said the developments were “a logical outcome of the supplier market in healthcare the government is creating. He said the DH were watching developments “with a mix of fascination and fear”. “It can see there could be big gains in both quality and efficiency. But it also sees it as a loss of control as the NHS would no longer directly employ the staff. It tends to see them as defectors”.
Jonathan Fielden said that consultants were acting “partly to protect themselves as they feel under threat in the new NHS market” but “partly because they see opportunities to provide services more efficiently and take more control over their lives” [go to note 16].