No 18: History shows that more funding, not reorganisations, make the NHS better for us all

by Ian Greener

2018 marks the seventieth anniversary of the founding of the NHS. It’s also the fiftieth anniversary of the 1968 Green Paper that marked the beginning of a series of ongoing attempts to reorganise the NHS. What were these earlier reorganisations about, and did they work?

The problem of split-services

A most basic organisational challenge the NHS continues to face is the split between NHS, GP and community health services (including social care). This was the result of a political compromise in the founding of the NHS. The big idea in 1968 was bringing NHS organisational boundaries in line with those of local government. However, it did not succeed, failing again due to political constraints. That the split between the three areas of the NHS continues to cause us so many problems is a testament to the force that past decisions about organisational forms can continue to hold over us, decades later.

Inexpensive yet underfunded

Any discussion about the NHS inevitably takes us to the question of funding. In the 1950s there was a government inquiry examining why the NHS was costing so much more than anticipated. What it showed is that the NHS is, comparative to other healthcare systems, remarkably inexpensive. We still haven’t really learned that lesson. Apart from above-trend increases in funding in the 2000s, the UK has continued to lag behind its neighbours in funding healthcare, year after year. This seems to get somewhat lost when politicians make lazy claims about how ‘unaffordable’ the NHS is.

The rise and evolution of ‘management’ and ‘markets’

Since the 1980s, the two big reorganisational ideas have been about management markets. In the 1980s, general managers were put in hospitals to try and make the NHS more ‘business-like’ but that didn’t seem to make much difference other than to increase management pay. This led to an ‘internal market’ for care, in which public providers competed with one another for care contracts to try and bring the discipline of competition into the NHS. Apart from some innovative changes to the way GP practices worked, the internal market seemed to do little other than introduce new functions such as care purchasing, which did little to improve services.

When they came to power in 1997, Labour promised to abolish the internal market on the grounds that it was wasteful and bureaucratic. Labour also embraced the Conservative ‘Private Finance Initiative’ (PFI), which allowed it to move forward with a radical building plan for new hospitals without breaching their own budgetary rules. However, PFI deals were often negotiated locally and where poor bargains were struck, left the hospitals involved with substantial funding deficits running over decades.

In January 2000, the Prime Minister committed to increasing NHS funding to the European average, which took his cabinet (and Chancellor) by surprise, but, for a short period in the NHS’s history, gave it sufficient resources to avoid winter crises and reduce waiting lists. Then devolution happened and the paths of the home countries started going down different routes. In England, performance management and markets reigned. In Scotland, a more collaborative route was taken. At the end of the decade, evaluations suggested that there was actually little difference in reported health outcomes between the two, again raising questions about whether reorganisations actually improve things at all.

Labour put in place new performance management systems in hospitals and GP surgeries. The one in hospitals was widely gamed and seemed to lead to managers ‘hitting the target but missing the point’ at best. At worst, this practice was probably a causal factor in the horrific events at Mid-Staffordshire where staff became so driven to hit targets that they forgot about patients. The early years of the GP performance system appeared to show promise, with GPs being consulted upon and engaging strongly with the system. But, policymakers then extended it and introduced more bureaucracy until it became deeply unpopular. It has already been abolished in Scotland.

Labour’s new market for care created greater scope for private providers to enter in England and paved the way for an extended version of it appearing from the coalition government after 2010, which led to huge controversy and expense. What is remarkable is how little there was to show of this reorganization by the end of 2017. Much of the attempt at driving further competition in the NHS has been slowly abandoned in the face of budget pressures and high-profile cases of private provision failure. Reductions in budgets have, however, led the return of winter crises and budget overspends.

Clashes between NHS staff and government

The NHS is all about its staff, but relationships between the government and clinicians have gone through cycles of antagonism and co-operation. In the 1970s, industrial action and threats to the provision of services dominated, with governments fearful of challenging doctors. In the 1980s, staff protests continued, but with the government taking a harder line until they ignored doctors completely and introduced the internal market in the 1990s. Doctors got their revenge though, teaching the government the lesson that it is one thing to make policy and entirely another to implement it. Labour’s funding increases in the 2000s appear to have led to a period of cooperation, before the 2010 coalition government’s reorganisation led to a groundswell of opposition. Since then, relationships between Secretary of State Hunt and doctors — in renegotiating employment contracts or in demanding a ‘7-day NHS’ at a time of reduced budget settlements — have seldom been friendly. The basic lesson of industrial relations in the NHS, again not yet learned by politicians, is that it is unwise to introduce new policies unless you have the cooperation of those who must implement them.

By 2018 we’ve had 50 years of NHS reorganisation. Mostly, it hasn’t really made things better. Indeed, it is hard to see what much of it was actually for. We still haven’t managed to find a way of overcoming the tensions of the tripartite split. We know we need more collaboration between local government and the NHS, especially as the demands on social care services increase and the lack of funding for it has real consequences for services currently paid for by the NHS. However, for many of us, the boundary between health and social care is an artificial one that does not serve our needs.

What does seem to have made a difference is increased funding for the NHS, in real terms, in the 2000s, when a range of measured improvements came along soon after. These improvements are now in danger of disappearing in the austere environment of the 2010s. If there is a big lesson from the history of the last fifty years, it is that health reorganisations often do as much bad as good, but increasing funding for the NHS has a much better chance of improving healthcare for us all.

Ian Greener is Professor of Social Policy at the University of Strathclyde. He does his best to reply to Twitter notifications via @ijgreener.

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