Health Policy Insight
Healthcare management online analysis and intelligence
The home of UK health policy

The Maynard Doctrine: Managing NHS demand

Professor Alan Maynard on managing demand and perverse incentives, and the need for major change in primary care.

Compared to the cuts in local councils’ budgets, the NHS financial challenge could be viewed as modest. However, life is complicated by The Lansley’s re-disorganisation of the NHS which is reducing management capacity and destroying historical memory.

What is remarkable about the Nicholson challenge is its focus on the reduction of hospital care by mergers and closures and the need to develop “community care”.


Click here for details of 'The Tao of Andrew Lansley', the new issue of subscription-based Health Policy Intelligence.


The missing element in this shower of often evidence-free assertion about what is “best” (i.e. cost-effective) is the continuing lack of attention to primary care.

In the land of perverse incentives
The NHS is inefficient because policymakers have created perverse incentives. Thus with 60 per cent plus of hospital income produced by tariffs (PbR) a finance director merely has to ‘turn up’ activity to increase income. PbR incentivises supplier-induced demand and makes it very difficult for commissioners seeking to achieve financial balance.

Financial balance is of course of primary importance for Foundation Trusts “worried” by the regulatory bulldog, Monitor. The perversity of PbR is now compounded by Lansley lunacy i.e. giving the management of PbR to Monitor.

Monitor’s role was to manage providers or suppliers of health care i.e. Foundation Trusts. Now it has control of FT income; a demand-side role.

PbR to the NHSCB
PbR should be controlled by the Commissioning Board as a mechanism of budgetary control, not by Monitor whose primary role is to keep the FTs in the style to which they are accustomed.

No doubt Monitor will say it can efficiently separate these functions. Just like Mr Hunt separated his preferences from his semi-judicial role as arbiter of the BSkyB acquisition, methinks?

Open-ended fee for service is also a problem in primary care. A recent Parliamentary Question revealed that the GP’s Quality Outcomes Framework (QoF) cost £1.2 billion per year. Like PbR, the QOF has a lying title: PbR does not pay for results but for activity; the QoF also pays for activity and not outcomes.

What does the QoF show us?
The literature shows some nice characteristics of the QoF. Firstly most of the initial targets were not evidence based (Fleetcroft and Cookson, 2006) and only slowly is the influence of NICE beginning to affect the selection of activity targets. Secondly there is evidence that GPs were paid from the QoF for activities they were already achieving pre-Incentivisation (e.g. testing blood pressure; BMJ 2011) and there is evidence that due to “light touch regulation” there is cheating (Gravelle and Sutton, 2010).

The QoF was introduced to encourage GPs to do what they should already have been doing! Instead of enforcing the “Red Book” contract, policymakers chose to create a nice bureaucracy of reporting which leads to professional moans about their administrative burden and the employment of nurses to harvest the practices’ QoF money.

Perverse incentives, epitomised by PbR and the QoF, once created are difficult to remove. These examples complement hospital consultant reward systems that have failed e.g. clinical excellence awards (cost over £200mn per year) and the Labour consultant contract which was supposed to enhance activity by 1.5% per annum and has totally failed to do so!

These policies were introduced by Labour to increase activity almost regardless of efficiency: the “waiting time” panic! They are largely untouched by Lansley’s reforms despite the fact that they will determine the future of the NHS. The challenge now is to control activity and target resources more efficiently by for instance cutting unwarranted variations in clinical practice. How to progress this agenda as we are distracted by structural upheaval largely irrelevant to the efficient delivery of health care to patients?

Whither primary care?
Progressing the improvement agenda in the NHS will fail unless primary care, largely untouched since 1948 and protect by the most powerful trade union in the land (BMA), is radically changed. In principle, wise CCG management may facilitate change - but not without contractual reform which provides levers to alter provision and ensure greater efficiency.

A central rationing agent in the NHS is the GPs. They handle over 95 percent of patient care each day. It is they who order many blood tests, x-rays and other investigative procedures (what is the variation in such procedures in your locality?). It is they who prescribe drugs with considerable variations. It is they who refer patients to hospital, an activity as yet feebly managed by the QoF despite good data about levels and variations available in hospital episode statistics.

How can these good and industrious folk be helped to improve their rationing activities and perhaps thereby reduce demand for hospitals and consequently economise the use of scarce resources?

Some not so random issues:
1) Residential and nursing homes: large practices should take on the care of these facilities to ensure high quality care. This care should ensure minimal referral to hospitals and incentivise owners to care for patients in house and manage end of life care. Trucking dying elderly residents to a NHS hospital, as so often happens with homes seeking to minimise their problems, is unethical and inhumane (and of course a product of poor management by practices and the owners seeking to minimise their costs!)

2) Rumour has it that Whitehall village will not seek reform of the GP contract until after the election in 2015: a classic exercise in cowardice and the condoning of inefficiency in the face of the Nicholson challenge! This behaviour will restrict the ability of the Commissioning Board and CCGs to monitor and manage general practice. The existing payment systems, GMS and salaried, both lack clarity and accountability. The objective of reform would be to exploit professional management of reputational incentives i.e. peers querying activity and outcome performance in order to improve the median and reduce dispersion . To do this comparative data on activity and outcomes where possible should be made available to practices and practitioners in real time.

3) Why not transfer patient reported outcome measurement (PROMs) from hospitals to general practice? This would involve patient completing quality of life questionnaires whilst they waited to see their GPs. The GPs would have information about the patient’s quality of life (their self assessed physical and psychological functioning) over time on their screens and this might facilitate diagnosis and improved care. The PROM results of hospitalisation would be used by GPs to inform referral and contracting.

4) Pathways, integrated care and protecting the patient: here it is necessary to proceed with care as the evidence base is poor (e.g. see Sarah Purdy, Kings Fund 2010). The annoying thing is that everyone in the NHS appears to be “innovating” in the NHS but few are evaluating the costs and benefits of their chucking taxpayers’ money around. All too often NHS managers ideas of evaluation are characterised by daft designs will tell us nowt about owt. This is a product of researchers not getting out into the NHS and selling their wares and managers in the NHS and local government being grossly ignorant about how to design an efficient evaluation as they squirt scarce resources into projects informed by their prejudices and hopes!

5) There are some neat ideas that require careful evaluation and emulation. For instance the North West Thames diabetes project whereby highly dependent patients are identified and managed across an evidence-based pathway in primary and secondary care seems sensible and appears to be reducing emergency admissions (e.g. see BMJ, June 8th, 2012). The remarkable thing about this work is why it has not been attempted before: a product of care fragmentation produced by perverse incentives?

6) Another nice approach to engender improved patient care also involves diabetes patients. How about taking Diabetes UK’s list of 15 “standards” of good care, identifying which practices meet these standards and then targeting diabetics with this information in order to get them to exercise choice and sign up with good practices. As ever, reputational incentives could alter the nature of patient care as competing practices pursue good practice standards to stay in business!?

The National Commissioning Board of the NHS (NCB) has many competing demands! However, like any other organisation, it has to prioritise its options for change.

If this does not result in the reform of primary care being the immediate focus of NCB activity, patients will suffer as resources continue to be wasted.

GPs and their practices are the key to better resource management in the NHS. Hopefully political cowardice will not prevent changes that facilitate increased NHS productivity and a better deal for patients and taxpayers.

Note Further elaboration of these issues can be found in an article published in the Journal of the Royal Society of Medicine, June 2012.