The Government White Paper of 1989, entitled 'Working for Patients', was the precursor to the radical changes that have taken place in the NHS in recent years. It's origin was in a one-to-one television interview with the Prime Minister, Margaret Thatcher, a few years previously. Under some heavy interview fire she announced, quite unexpectedly, that the Government was going to undertake a fundamental review of the National Health Service. Whether or not she had been thinking of this for some time is not known, but certainly it would appear that this very public announcement was the first that any of her Ministers had heard of the plan. Having made the announcement, political expediency required that not only the review, but also any implementation of its recommendations, should be completed in a very short timescale - before the next election, then three years away. The review was placed under the stewardship of Kenneth Clarke, Minister for Health. Renowned as someone who relishes a political fight and possesses an aggressive and provocative style, Mr Clarke chose to tackle the review phase by assembling a task force comprising a small number of managers and doctors sympathetic to the idea. The introduction of some form of market forces into health care provision was dreamt up by this group, whilst GP Fundholding itself was the creation of Mr Clarke personally, whilst he was on holiday in Portugal.
The fundamental changes introduced by the White Paper are embodied in the concepts of Trust Hospitals, Fund-Holding General Practices and the Purchaser/Provider Split:
Individual hospitals, and also individual providers of care in the community, have been given the option to become self-governing. This means that such units can decide for themselves what services they will provide, negotiate the price of those services to their various customers, and thereby generate income within the constraints of the Health and Medicines Act 1988. In addition to being able to determine their own management structures independent of any Health Authority or Central control, they are able to hire and fire whatever staff they feel necessary and determine their own levels of pay and conditions of service. This includes the right to issue Consultants with local contracts, in place of their Regionally held contracts. They also have the power to acquire, own and dispose of assets. They may also retain operating profits, maintain surpluses and, subject to an annual financing limit, borrow money. Trusts are answerable directly to the Secretary of State for Health.
This freedom compares with the situation prior to this wherein the management structure of a hospital and the services it provided were determined by the DHA, which also handed the hospital a fixed sum of money at the start of the financial year with which to provide those services. Any surplus was clawed back (and often led to reduced funding in subsequent years) and borrowing of money was not possible. Any significant capital expenditure (e.g. for a new building) required a competitive bid for the money to be made to the Regional Health Authority. Whilst the numbers of staff employed were not dictated, their levels of pay and Terms of Service were agreed nationally by the Whitley Council. Some Trust Hospitals, including Brighton Health Care NHS Trustand Stockport Healthcare NHS Trust now operate their own Web pages.
At the same time as Trusts have been empowered to become independent providers of Health Care, General Practitioners (GPs) have been given the opportunity to become independent purchasers of Health Care. Prior to this, GPs in any one locale were obliged to refer most of their patients to the local hospital. By giving them a budget of their own, they become free to negotiate the provision of certain services wherever they wish, including from the Private (Non-NHS) Hospitals. Services covered by the Fund include Elective Surgery, Pathology, Out Patients and Community Nursing. Services not covered by the Fund include Accident and Emergency. Fund holders are also given a separate budget with which to pay for drug prescriptions generated by the practice itself. Any savings from either budget at the end of the year may be used to pay for improvements 'for the benefit of patients' within the practice itself. The incumbent Conservative government wishes to extend the principles of Fundholding, and at the present time (Oct 95) there are several pilot sites for 'Total Fundholding', where the GPs control the budget for all service for their patients.
In practical terms, GP Fund holders never possess the money from the Fund in terms of it being in their Bank Accounts. The practice negotiates with Hospitals to provide various services, either on:
In either case, the money is actually held by the Family Health Services Authority (the renamed and more powerful Family Practitioner Committee) and the money is paid out from there. FHSAs, incidentally, are now answerable to their Regional Health Authority rather than to the DHSS.
Underspends from the Fund may be used to employ, for example, a Physiotherapist or a Counsellor within the practice, to redecorate the waiting room or to purchase new equipment. They may not be paid to the GPs running the fund, at least not directly. Some GPs initially contracted themselves to their own practice as providers of a variety of services which the fund covers, e.g. certain minor surgical procedures. They were then able to 'refer' patients to themselves and receive money out of the Fund. This practice was clearly open to abuse, and has subsequently been specifically prohibited. GPs are still free to perform such work for other Fund Holding practices, and receive payment.
Apart from externally contracted work, as outlined above, Fund Holding GPs with a surplus can benefit financially, albeit indirectly: without the fund, a practice must maintain, upgrade or replace its equipment out of the total practice income which arises from General Medical Services work. Thus, an individual GPs salary is a partnership share of the money left over when the cost of Staffing, Equipment and Capital have been deducted from the total practice income. If a proportion of the Equipment and Capital costs can be charged to the Fund, while the income remains the same, the GPs must receive more money.
Fund overspends of up to 5% will be deducted from the following years Fund, and overspends more than 5% may result in withdrawal of Fund holding status.
This has already been outlined above: in essence it draws a distinction between those who provide Health Care (e.g. Hospitals and Community Care Providers) and those who purchase it (e.g. District Health Authorities and Fund holding GPs). The most important point is that providers no longer receive monies as of right, rather they must compete with all the other providers to sell their services competitively to the purchasers. GP Fund holders purchase care on behalf of their patients only, whilst DHAs purchase care on behalf of all non-Fund holding GPs in the district. Services not covered by the Funds, e.g. A&E, are purchased on behalf of all by the DHA. The political rhetoric to justify this division and empowerment of the purchasers was that it would give patients more choice as to when and where they could receive treatment because 'The money would follow the patient'.
This split has the effect that Non-Trust Hospitals find themselves in the invidious position of being obliged to compete for custom, negotiate prices and invoice purchasers for services rendered, but are unable to directly use any profits they might make. Unsurprisingly, almost all hospitals have rushed to become Trusts.
Implicit in the split is the possibility that an uncompetitive Provider might become non-viable (i.e. Bankrupt) but it is unclear whether the government is prepared to let rationalisation by the market place actually occur. They appear to be cautiously in favour of it in general terms, but no hospital has been allowed to close in this way so far.
The notable omissions from the 'Changes' were any clear strategy for maintaining any Supra-District Public Health Perspective, for maintaining In-Service Training for Doctors and Technical Staff within an environment where time is money, and a strategy for the provision of Supra-Regional Specialist Services such as Intensive Care Beds.