Paul Corrigan on the new NHS value for money

As the NHS is paid for out of national taxation and levels of national taxation are essentially political, the NHS is fixated on understanding what exactly the health secretary had for political breakfast and how their digestion of that meal will impinge upon how we, who work in the NHS, carry out our work.

But for the next few months this set of skills will become of less significance than others. In truth, whatever Andrew Lansley individually wants, given the lack of a majority for his party’s manifesto, the development of any new strategic direction that is separate from concerns about resources will only take place over the longer term. Of course new things will happen, but it’s difficult to see how the supertanker will turn in a different direction.

So the important NHS leadership skill will move inexorably from an understanding of the ruling parties’ policy to that of the practice of economics.

And I mean economics, not accountancy. Over the last few years, as the strength of the bung culture has diminished, more NHS organisations have had to get better at accountancy. To be effective they have had to recognise that accountancy is an active process that demands intervention in both income and expenditure.

The development of service-line reporting assumes that costs and income are not immutable - they can be decreased or increased by the real activity of the organisation. 

The next step on from this is an economics that looks at how some resource, if invested in a certain way, stops the spending of more money in another part of the system. Of course, NHS managers understand this. For years they have been investing in one area to save in another. Business case after business case has been agreed because new services will save money in closing old services.

But the problem is that most of the old services didn’t close. Now real practical economics demands the new gets rid of the old and the old stops. When retail banking made a business case first for the expenditure on telephone banking and second on the development of web-based banking, the case only made sense if the banks closed branches and redeployed bank tellers.

Practical economics is an active process of getting rid of the old and not just investing in the new. To make this happen we are going to have to rigorously apply some new practical ideas.

What business model are we using to deliver this service? Last year a GP described their business model thus: “The business model that GPs based their work on was to wait in a room until people who thought they were sick came in to that room to see them.”

It would be an entirely different model if GPs went out searching for people who were sick. But that is the business model the NHS now needs primary care to develop.

QOF starts the remuneration of that new model but only on the edges. If GPs receive capitation the only way they will succeed under those economics is to develop a much more active business model which deals with sickness in a way that involves their much earlier intervention. For if they “seek out sickness” and then work with it within the same model, they will be engulfed. So an active primary care business model will demand that nearly everything changes.

The new business models of all NHS organisations will have to create significantly more value for the same resource. And to start that process they will have to understand exactly what value is. What value do we create with our existing interventions and how do we create more by doing this differently?

NHS evidence has started to ask some really interesting questions about this. As does the quality, innovation, productivity and prevention (QIPP) data base. Some of the answers contained in this material, such as employing Red Cross volunteers to sit with people and stop emergency admissions, demonstrate a completely new value proposition which delivers a lot more for less.

Economics will demand that these new services only provide better value if we stop paying for the old services. The main politics we will need is using the alliances of doctors and the public that have agreed we may have too many hospital beds to help realise these economic gains.