Beware stumbling into another 'Tory top-down reorganisation of the NHS'

While the Lansley reforms simply strengthened the internal market, the intention this time – remarkably – is to curb or abolish it, potentially bringing to an end a 25-year-old era in the NHS.

Despite the upheaval this implies, the idea of change will be tempting for many in the health service.

The current setup is causing serious problems and, with NHS England preparing to announce the first set of “accountable care systems”, the service has already chosen to stick one foot into the revolving door of reorganisation.

The relevant lines in the Tory manifesto have been presented as an open offer to the NHS to help with its predicament. As in 2010, the starting point is not an explicit desire for a massive restructure.

But on the path of legislation or formal structure change, there’s every chance of stumbling into a full top-down reorganisation. There would also be some very knotty problems to deal with – here are a few…

1. There is no consensus about what new regional or local structure we want. Chatter converges on something with “accountable care” in its name, but I don’t think there is much understanding or agreement beyond that. While Simon Stevens has been keen on unpicking the purchaser/provider split for some time, NHS England has only recently backed away from “accountable care organisations” and put its energy into developing “accountable care systems”. These aren’t yet properly defined – their pioneers need to put flesh on the bones of the concept and try to show it works. Greater Manchester is in some ways a very promising model, but it’s early days, and it doesn’t anyway provide a straightforward, single, new breed structure: it is home to a mishmash of experimentation.

2. There would be big disagreements on the detail. What’s the local government role in decision making? Are social care budgets included? Are we scrapping the commissioner/payer function altogether – moving to a Scottish health board type model, for example – or creating bigger, less transactional commissioning/planning organisations? If NHS providers are directly funded, what will the checks and balances be? There would be fears that other things NHS commissioners fund – like GPs, continuing healthcare and non-NHS provided community services – would be eroded further. What choice should patients have of provider, and how will this be protected? Who will contract with general practice, or will it be nationalised? Are the accountable care structures defined by geography or provider catchments? If there are 40 or 50 of them, how will they relate to local councils? Those are just a few of the outstanding questions.

3. Social care is a big enough policy question right now and the NHS’s future depends on the answer. Funding policy for long term care is in complete disarray. The prime minister and her team have simmering ideas about social care provision and integration with the NHS. They plan a social care green paper in the “summer”. This won’t be settled quickly. And it would be silly to trigger a new round of NHS musical chairs without making sure it is choreographed with social care reform.

4. Reorganisation would probably not create “accountable care”. Getting incentives and financial flows right are important components of accountable care, and could help ease frustrations for the NHS’s efforts to join up care too. But changing them, through law or other means, isn’t enough to get the hoped for benefits for patients or the public. There is much more to it – whether that be leadership, management, new staff roles and culture, ensuring investment in prevention and primary care, technology, analytics, or tighter measurement of outcomes and performance. A hasty move to cut out commissioners wouldn’t magic up accountable care, or better care, and this would quickly become clear. The first recommendation of Nigel Edwards’ 2010 review of reorganisation was: “Make sure that the suggested solution actually matches the problem and is based on some evidence.” Is anyone sure of that?

5. Creating clearer local financial accountability is a large and tricky job. The relevant part of the Tory manifesto is not simply a big, open hearted offer to help the NHS. It is under the heading “holding NHS leaders to account”. A big priority for parts of government is “clear national [and] local accountability”. It reflects their feeling that the NHS isn’t delivering, especially on finances and emergency care; that at national level NHS accountability for this is weak and messy (they think this is helping Simon Stevens outmanoeuvre them); and that line of sight to local delivery is also inadequate and confusing.

On “local accountability” (I’ll cover the national picture below), it seems there is specific concern about financial grit – that local NHS organisations aren’t sufficiently accountable for managing their money. Soundings suggest that some in government have an idea that directly allocating budgets to provider trusts might be a way to help with this.

Meanwhile, the NHS does have a genuine and serious accountability and governance problem with STPs, ACSs and new care models – NHS Providers has spoken up about this.

Now, if the government were to go the whole hog and move to a unified provider/commissioner “health board” model across England, that would indeed strengthen line of sight and accountability – it could become crystal clear. It would also, however, be a huge reorganisation, and trigger many of the other problems I’ve raised. Not to mention that it wouldn’t solve the underlying financial problem: that funding is not meeting unavoidable cost pressures.

6. A halfway house workaround might not make things clearer. There appears to be a suggestion in government that there’s a non-legislative halfway house: perhaps allocating population budgets directly to a subset of providers that have earned it – those leading ACSs, well led trusts or Shelford Group giants? But I’m baffled over how introducing a completely different and untested funding/allocation model into a few areas of the country would make accountability clearer, rather than muddying it further.

Similarly, there is the idea of passing “enabling” legislation that wouldn’t restructure everywhere, but would allow the NHS to properly create new legal forms (ACS, ACO or whatever) area-by-area as they become ready. Perhaps allowing trust chief executives to also be the accounting officers of CCGs; or giving a better legislative basis to Greater Manchester style autonomy. It is true there is already huge diversity in NHS structures, but a legislated “two tier” budget/planning system might be too much to sustain; and hardly makes for clear accountability.

7. Savings from scrapping CCGs and the “internal market” are overestimated. The Conservative manifesto says the NHS internal market “creates costly bureaucracy”, and it’s highly plausible that some in the Treasury, perhaps the Cabinet Office and Number 10 too, have an eye on management cost cuts. There is understandably more pressure every day within the NHS, too, to take out commissioning overheads.

But unfortunately, any direct savings would be small. The annual budget for running CCGs is about £1.2bn, a sum which clearly wouldn’t go amiss, although only about £50m goes on running their independent governing bodies. The main issue is that the great bulk of commissioners’ functions (planning, monitoring, budgeting, paying) would continue, simply transferred to new organisations along with many of their staff. Some people would argue (see point 2) that more expertise is needed on things like predicting risk and population health management, for example. Greater Manchester has an £8m annual admin budget, on top of continuing costs (albeit presumably reduced) in the rest of the system. The next steps need careful thought to make sure they actually take out running costs.

8. The cost of distraction and disruption. One legislation-light option that might simplify decision making and reduce transactional costs would be to force through mass CCG mergers, bringing the number of commissioners down to around 50 or, if you want to protect links to local government/social care/public health, 150. Government could give political and legal cover for NHS England to force this through. This is probably one of the more viable options, but there is still huge risk of distraction and disruption. 

HSJ has wished CCGs a good death but also warned that if the centre moves too fast or is too prescriptive, it will end badly.

Like other options, this would immediately shift attention to structures, jobs and drawing new lines on a map – hardly the “sleeves rolled up” focus on efficiency, emergency care and other priorities which government and Mr Stevens have asked for. Surely there is enough sense around to avoid a repeat of the huge and unforgivable opportunity cost of the Lansley reforms – taking the NHS’s focus off quality and efficiency for three years. But even approaching it would be madness amid the current eye-watering financial settlement. A big boost to spending from government could make the path smoother, but it seems very unlikely to pay that price tag.

9. Merging NHS Improvement (and other ALBs) with NHS England might not make them more effective. Reorganisation of the centre is a bit more palatable and there’s more chance of consensus, excluding the arm’s length bodies’ own staff at least. There are strong signals that parts of government would like to do this in order to strengthen “national accountability” – especially to ensure Mr Stevens is responsible for all NHS finance rather than only the commissioner side. Removing the competing drags on the system from NHSE and NHSI – closing the purchaser/provider split in the centre – could be helpful; and, for Mr Stevens, new levers over provision might be attractive.

One problem is continued turmoil for staff (NHSI staff having merged from Monitor and the NHS Trust Development Authority last year). Another is the risk of ending up with an even bigger failing organisation. There are plenty of complaints about NHS England being dysfunctional and horrendous for many of its staff. It is probably simply too big, with 6,155 heads at last count. Adding NHSI would bring another 1,000; Health Education England has 2,700; and Public Health England has 5,500. Putting people under the same banner doesn’t guarantee they all pull in the same direction either.

Most of these people should rightly be put back in separate, credible local and regional tiers - but for that I refer you to point 8.

Neither is there much reason to think merging financial accountability under Mr Stevens would work: would trusts respond to his yanking on the levers?

Another option would be to bring it all together under an all round NHS chief executive post, or NHS management board/executive, probably in the Department of Health. This wouldn’t be straightforward, and could sacrifice the bits of independence NHS England has maintained, while likely senior personnel change at the top would make for more instability.

10. One thing leads to another. Could NHS Improvement (in law, still Monitor and the TDA) be merged into NHS England (in law, still the NHS Commissioning Board) without a big replumbing job on other parts of the system? The functions of the former are woven in with the status of NHS providers, the operation of the provider market and competition/procurement rules. Jeremy Hunt managed to fold Monitor (including its competition functions) in with the TDA without too much bother, but merging with NHSE might be overstretching it.

11. Brexit’s implications for NHS competition and procurement rules are overestimated. NHS leaders often complain about competition rules getting in their way: ACSs prevented from bringing together commissioners and providers to make decisions; cost saving trust mergers abandoned; CCGs feeling the need to tender community services and spending millions on advice. So, senior staff would probably support change, and the massive legislative programme involved in leaving the EU, as Mr Stevens has spotted, could provide cover for this and wider changes (another vehicle could be safety investigation legislation planned for this year). But simply changing competition rules wouldn’t remove the internal market, nor solve many of the current structure problems. Post-Brexit trade deals might require us to keep many rules the same anyway.

This piece specifically deals with potential reforms under a Conservative government: The danger of huge disruption and several of the knotty problems would also apply under Labour’s proposed repeal of the Health Act 2012.