The Maynard Doctrine: The vultures coming home to roost

Health economist Professor Alan Maynard looks at NHS-saving savings, taking in decremental salary scales, reviewing pharmaceutical price naughtiness and the incredible shrinking tariff.

As the new Secretary of State snuggles into Richmond House, he is no doubt contemplating tanks on the forecourt of Richmond House and the SAS in the corridor to protect him from the gathering storm in the NHS.

Where to start?

Let us start with QIPP (quality, improvement, productivity and prevention). Has it worked?

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A leading QIPPer on the Nicholson Commissioning Board, Jim Easton, has quit to transfer to the more tranquil waters in Care UK (owned by private equity firm Bridgepoint, whose European advisory board is chaired by that enthusiast of privatisation and former Labour Secretary of State, Alan Milburn.

Hopefully, the Health Select Committee, as it “investigates” public expenditure on the NHS, will ask some penetrating questions about QIPP - or transformation, as it is now apparently to be called.

The bleeding obvious
For 70 years we have known that clinical practice variations are a source of considerable inefficiency (e.g. Glover AJ. ‘The incidence of tonsillectomy in school children’ Proc R Soc Med 1938; 31: 1219-36; the DHSS’s ‘Priorities for Health and Personal Services in England’ (HMSO, London, 1976); and Jack Wennberg and his Dartmouth College colleagues’ Atlas in the US for 40 years).

But have the QIPPers actually managed to reduce any practice variations cost effectively? Where is the evidence, my dears? Rhetoric, exhortation and baloney are no substitutes for evidence.

The QIPPERs will of course note the “savings” made by the NHS and noisily claimed by government. But are these mere cost-cuttings, facilitated by sloppy management during the Blair bonanza?

As far as it possible to see in this fog of inadequate data, the QIPPers have yet to prove their claims i.e. the ‘savings’ are more likely due to squeezing out the provider excesses of the last decade, rather than demonstrable changes in clinical practice variations.

Squeezing wages and profits
Wage freezes are nice short-term quick-fixes - which usually rebound. Perhaps given austerity, the rebound will be modest. However, an intense focus on reforming pay is inevitable, since labour is the major cost in the NHS.

Furthermore, the British face declining living standards in the next decade. Inflation will further reduce our living standards.

A recent OECD report tackled the issue of the relative pay of NHS doctors compared with those in other European countries. Such exercises are fraught with difficulties, due to exchange rate issues, as well as doctors being categorised differently in different countries.

Despite such caveats, it seems UK doctors are the best paid in Europe.

Can the NHS afford such generosity, when the opportunity cost is treating fewer patients? The same issue arises in universities where the Research Assessment Exercise led to significant wage inflation as competing universities sought to buy ‘talent’.

In both sectors, facilities are under-utilised i.e. hospitals need to work 24/7 or at least 12/7 and Universities might usefully cease having long vacations and provide more two-year degrees with longer terms or semesters. After all, students no longer face the medieval pressures to return home to help with the harvest (although such pressures may return as food supply is disrupted by global warming and price rises incentivise home production!)

How could such changes be managed to produce more care / teaching at a lower cost? In both cases, the problem is quality: greater intensity of use of hospitals raises nice safety considerations. More intense use of university facilities in a competitive market with poor quality measures and marginal institutions facing bankruptcy may exacerbate the risks of dumbing-down.

However, staffing would also be an issue: work here would mean that employment contracts would have to be reformed. Doing this is always risky, as such professional groups often work unpaid hours. The EU working time directive turned many doctors, particular those in training, into clock-watchers.

From pay inflation to pay deflation
Controlling pay inflation and turning it into wage deflation will be controversial and potentially undermining of professionalism and morale. Who would dare to introduce decrimental pay scales?

But how else can the NHS be protected from austerity, given that the electorate has brought to power a government determined to slash the size of the public sector?

One option may be to press down on pharmaceutical prices, particularly ‘gouging’. This practice involves hiking prices when there is no market competition, such as in epilepsy and the use of thalidomide in the treatment of myeloma. The latter example is an old product, now used for a small market where treatment is urgent and where there are only very expensive alternatives. (Myeloma patients using thalidomide are warned not “to have sex with fertile women”. Chance would be a fine thing if you had this condition and consumed this foul but efficacious treatment!)

Why is gouging increasing? The failure to bring radical new treatments to market and the erosion of patents for previously profitable drugs is leading to a rapid contraction of the pharma industry. Also Big Pharma is also being increasingly recognised as Bad Pharma (see Ben Goldacre’s recent book of this title).

The effect of these changes is that the industry appears to be increasingly deviant. Gouging profits obliges the NHS to make cuts in patient care.

Over the 50 years of the Pharmaceutical Price Regulation Scheme (PPRS), governments (Labour even more so than Tory) have usually condoned such industry pricing malarkey. A reason for this is that not only does Big Pharma provides UK jobs, it also generates new profitable products for patients from its R&D budget.

Keeping UK prices high also means that export income is higher i.e. foreigners pay more, as well as Brits! Time to re-consider these trade-offs?

Keeping control of NHS spending to maximise the production of high-quality care by controlling wages and industry profits will not be easy. Here the word “control” means reducing them, especially if the QIPPers fail.

Privatisation: a non-solution?
Could privatisation offer more flexibility i.e. capacity to cut wage bills? Only if NHS wages and conditions can be abolished! In which case, tanks around DH’s Richmond House may not be sufficient defence.

For thirty years there has been advocacy of provider ‘privatisation’. Nowadays, this is accompanied by advocacy of purchaser-commissioning privatisation. In 1983 the message from Whitehall Village was ‘partnership’ i.e. by linking up with private operatives NHS inefficiency would be reduced.

One observer concluded, “recent public policy has tended to leave many NHS problems untouched and to complicate these by new problems arising out of partnership. The time for superficial polemics is surely over and the time for sustained research and improved management, public and private, is surely dawning?” (Maynard A, Lloyds Bank Review, number 148, page 40, April, 1983).

Why do I quote myself? The reason is because the ‘ridiculous right’ - faith-based operatives, no better than the ‘loony left’ - are to this day still hammering on the door of the NHS advocating marketisation.

I have no ideological objection to privatising NHS provision or commissioning, but there is no evidence that the private sector can do this job better.

Can they manage doctors and nurses better? Where is the evidence?

Can they control the rapacious behaviour of deviant elements in Big Pharma better than the NHS? Where is the evidence?

The answer to these questions is ‘no’ and ‘there is none’, respectively.

In the USA, private insurers (i.e. purchasers, i.e. commissioners) fail to control expenditure; pass on cost inflation in higher premiums; and fail to contract for safety, quality and efficiency.

Consequently, American private hospitals can be dangerous, clinical practice variations are ubiquitous and physicians over-diagnose and are incentivised to deliver excessive testing and interventions by fee per item of service payment systems.

British insurers are no better. Organisations such as the British United Provident Association are seeking to cut fees to specialists and enforce evidence-based guidelines. Good on ’em; but they are hardly ahead of the NHS game.

Indeed with the UK private insurance industry having lost 10% of its members in the last three years (according to recent Laing and Buisson data), all these firms are seeking to cut costs - just like the NHS.

The current Competition Commission’s investigation into the sector is revealing not only for participants’ criticism of market dominance, but also for showing the distress of consultants in surgery, orthopaedics, anaesthesia and radiology as insurers (at last) use their market power to rifle their wallets.

Private sector hospitals with falling private insurance income are being kept alive by NHS patients exercising “choice” and opting for superior hotel facilities offered by private providers and getting NHS care there. These hospitals are profit –driven, and with NHS tariffs being driven down (as private insurers do likewise), some e.g. ISTC units are trembling on and going out of the NHS market.

Private hospitals are finding it difficult to make profits with NHS provider payment rates.

Like the insurers and the NHS, private hospital managers are no better at controlling clinical practice variations and costs. Furthermore, they will naturally and always look to cream the market, picking the less complex patients. Sadly, this is not reflected in NHS tariff setting; i.e. NHS hospitals taking more complex patients should get higher tariffs.

The 1983 revival
So we are back to 1983: where’s the evidence of private sector superiority? Prove it first, and then privatise!

However, if we can prove it and do privatise, this will require much greater transparency. Back to NHS consultants working in the private sector: how can we and the sleepy GMC be assured they are safe if not all of their activity and outcome data is available? All private work should produce comparable HES / PROMs / mortality data, so that the totality of their work is available for scrutiny.

There are stirrings in the private sector to do this after two decades of pressure by people like the former medical director of BUPA Andrew Vallance-Owen and me. Government and GMC complacency remains remarkable.

Privatisation requires greater transparency for it to be seen to be good value and to mitigate worries that the policy is merely a subsidy to private sector mates of those who govern us!

PCT ‘savings’ and failure to treat
NHS resources are allocated on the basis of need. NHS activity reflects local patient demand. Some PCTs out-spend their budget allocations, and now have to reveal their deficits. Some PCTs under-spend, and hand back some of their allocations to their SHA, perhaps with plaudits.

Instead of plaudits, perhaps under-spenders should be shot! If they under-spend needs-based funds, can they be said to be delivering high-quality care efficiently and effectively for their local community?

Those PCTs have significantly worse population health, and they appear to lack the management ability to spend their allocations. Time for close examination of these PCTs, as under-spending in places of health needs is surely unethical and deserving of the firing squad!

On explosive politicians
Mr Hunt may need more than tanks in front of Richmond House and the SAS defending his office. He may need a good bunker too, just in case. In addition to this latest NHS redisorganisation, acute reconfiguration and other unevidenced solutions to ill-defined problems, he has the problem of explosive politicians.

These curious folk are posing and trumpeting to defend facilities in their constituencies (e.g. William Hague and Northallerton Hospital: Northern Echo October 20th).

These political dynamite characters are demanding money and inquiries to defend their votes locally, and giving the Secretary of State an entertaining time! Good luck to him - and perhaps more so, to the NHS and its patients.