NHS reforms should be included in deficit debate

NHS £30bn deficit: what makes up the numbers? PA/Lynne Cameron

The NHS is heading towards a £30 billion deficit within seven years if we’re to believe David Nicholson, Chief Executive of the NHS in England.

We have had no figures or discussion about how this deficit was calculated, so we have no way of knowing whether it is right or wrong.

But much of the blame is being placed on doctors and nurses for providing poor care. We, the public, are also handed our share of the blame – living unhealthy lives and living longer, therefore using the NHS too much and costing too much.

Statements claiming that by 2020 the NHS will be billions of pounds in the red will make people wonder whether we can still afford it. However, it doesn’t take much investigation to unpack some of these statements and some of the misinformation behind them.

There’s been lots of publicity about hospitals where things have clearly gone wrong and people have died unnecessarily - the mid-Staffordshire scandal is one example. But does this happen because the doctors and nurses are horrible people who want to hurt patients or because the system isn’t working? If it’s the former, why did 50,000 people (half the population of Stafford) attend a demonstration this year to save Stafford hospital from closure?

Let’s not forget PFI

Private Finance Initiative (PFI) payments will contribute to some of the estimated £30 billion shortfall. PFI schemes use private sector funding to build new hospitals (and schools) removing the need for the government to borrow money to do it. Developers borrow the money, build the hospital and then lease it back to us.

These schemes are a massive drain on hospital budgets: Carlisle city hospital was built for £67m in 2000. In 2012, repayments were around £18m a year. PFI payments are ringfenced in a budget, which means that if the hospital runs into financial difficulty, cuts and savings must be made elsewhere while these payments are protected.

PFI payments will run into billions of pounds in the next ten years.

Chopping and changing

Another question that needs to be asked about the impending deficit is: how much has changing the infrastructure of the NHS cost?

There is a huge administrative bureaucracy working in the health service to run contracts, chase contract payments, run tendering processes for services, pay consultants to advise on PFI schemes etc.

Consider the money spent this year on creating disbanding Primary Care Trusts in favour of the new Clinical Commissioning Groups that put doctors in the driving seat of healthcare spending, transferring public health to local authorities, turning hospitals into foundation trusts and so on. One study suggested that the cost of reforming the NHS may exceed any savings.

In a statement to parliament, Health Secretary Jeremy Hunt said the cost of controversial NHS reforms had passed £1bn. This includes more than £500m for closing groups that oversaw local health services and opening new ones; £54m on new IT systems and £435m on staff redundancies.

Discussions about deficits in NHS budgets focus on costs of treatment and hospital efficiency, they never question the way that the health service itself has been organised in recent years - the internal market or the role of private providers for example.

This should be part of the public consultation about the future of the NHS.

Specialist services work in the city

One proposed solution to deal with the deficit is to centralise specialist services. There is a strong clinical argument for this - that this ensures patients are treated in places where doctors also gain experience in complex conditions. This argument was put forward in relation to children’s heart surgery at the Leeds General Infirmary, which was criticised over it’s death rates. Surgeons were not treating enough cases to maintain and improve their skills.

Nicholson used the example of improved outcomes for stroke patients in London after concentrating treatment in specialist centres.

This strategy is fine in London where there are a lot of hospitals relatively close together, with good transport links. That isn’t the case outside London where creating specialist centres will mean patients travelling many miles away their family and support networks.

Returning to the example of Leeds, this would mean parents travelling over 100 miles to Newcastle for an uncertain amount of time - this could potentially split families if one parent has to remain behind with other children or is unable to take time off work.

Another strategy often put forward to “save the NHS” is to prevent people from ending up in hospital in the first place. Prevention is obviously better than waiting until people are sick and then treating them, and it is cheaper.

But prevention is a long term strategy – you have to invest in prevention services now. But people are sick now and need to be treated, so the two have to be run in parallel until prevention strategies pay off. This costs more.

At the moment, the NHS is organised to meet short-term financial targets and private providers in the NHS are looking to make profits now, not in ten years time. It is something that politicians seem loathe to face.

Prevention is central to public health services, but the government has just transferred public health services out of the NHS to local authorities.

PFI and the markets

Paying off PFI contracts now would be a huge cost, but would save billions in the longer term - billions that can be channelled into patient care instead of cutting services.

We need to remove the internal market and private providers from the NHS. The internal market is a costly diversion away from focusing on patient care, creating pointless competition between hospitals for patient “business”. Healthcare should not be an opportunity to make profits for private companies. The drive to make bigger profits leads to cuts in services, cuts in staff and poorer quality services.

And if the £30 billion figure is to be believed, we need to be clear about what it includes.