As famine looms, a chance for the NHS to sharpen its act

The next financial year, starting in April 2007, is the last year of feast before the Blair funding bonanza wanes and the familiar funding famine returns to the NHS. This relative famine is to be welcomed as whilst the benefits of increased funding are evident and not inconsiderable, much of the additional resource, for instance pay increases, appears to have been wasted with little benefit to patients or taxpayers.

Greater parsimony in funding will rightly focus the NHS on productivity. Economic history shows that for the economy in general, productivity tends to increase most rapidly in periods of economic distress. Service development in future depends on rooting out inefficient practices to fund innovation. The demand of Blair in 2000 that the NHS ‘act smarter’, will now have to be translated into practice if public expectations of the NHS are to be met.

Unusually the financial and contracting framework for 2007-8 has already been articulated quite comprehensively The operating framework has set out the service priorities as the 18 week maximum waiting time target from GP referral to the start of treatment for elective procedures, reductions in MRSA and other infections, achieving financial health and reducing health inequalities and promoting population health and well-being.

This operating framework has been complemented by clear instructions to Primary Care Trusts to improve their commissioning with explicit capacity planning that is consistent with NHS targets, and by publication of tariff uplifts for 2007-8.

Payment by results (PbR) tariffs are to rise by two and a half per cent, with emergency activity funded at tariff up to the 2005-6 out-turn level and subsequently at fifty per cent. As in 2006-7 the hope is that this two-part tariff will moderate emergency referral growth and incentivise improved care in the community.

Probably strictures about funding balance, together with top slicing at national and regional levels will produce the financial balance needed for Ms Hewitt to keep her job. The real challenge now is to produce the conditions for a productivity surge in NHS activity.

Three departmental committees are separately (and independently) addressing the issue of outcome measurement. The crucial policy issue is whether the increased spending has increased activity productivity and if it has or has not, has the additional funding increased patient outcome productivity.

The concern is not merely to do more for patients but demand evidence that increased activity improves patient reported outcome (PROM). The means to measure PROM have existed for decades but government and the medical profession is fixated with mere activity rather than whether increased activity improves patients’ mental and physical well-being.

With PROM it will be easier to identify what does and doesn’t benefit the patient and shift resources to more productive interventions. Change, however, will have to be incentivised. Currently both the GP and consultant contracts ignore the issue of success as measured by PROM. This must change and might best be done by incorporating PROM into the general practitioners’ Quality Outcome Framework (QOF), i.e. pay them to measure and manage their patients’ outcomes.

Outcome measures could also be used to alter consultant behaviour. By incorporating comparative data on activity and outcomes of individual consultants in job planning, appraisal, the allocation of clinical excellence awards and revalidation, practitioners could be incentivised to collect robust data and be more transparent in their practices.

Such reforms would improve both professional self government and the ability of managers to control resource use and engineer change. At present much of clinical practice is a black box to most managers. Clinicians do not regulate each other’s activities explicitly and professionally. Non-clinical managers remain anxious not to antagonise clinicians, whose goodwill is essential to meet government targets. Collaboration with clinical colleagues is important but the reactionary behaviours of a minority should not be allowed to perpetuate inefficient practices that damage patients and taxpayers.

As the NHS feast wanes, the management and policy focus on meaningful measurement and incentivisation of behaviours that improve patient outcomes must increase. Without this essential impetus to productivity enhancement, the NHS could become very sick indeed and may be treated with the usual evidence-free policies that perpetuate inefficiency and increase already significant inequalities in health.

Alan Maynard is Professor of Health Economics at the University of York and Adjunct Professor, Centre for Health Economics, University of Technology, Sydney, Australia. He is also Chair of the York NHS Trust.