System reform and good management are the only ways to deliver the NHS's values in the modern world, the prime minister tells Nick Edwards in an exclusive interview

'How long will it take?' It is a question the prime minister keeps returning to as he meets and greets patients at the new eye clinic at Frimley Park Hospital foundation trust. He wants to know how fast they are getting the treatment ? and he likes the answers (the Surrey trust quotes cataract waiting lists down from two years to eight weeks).

But in fact it is a question that defines Tony Blair's focus on the NHS as he enters the last stage of his premiership: how long before the huge extra investment and package of reforms results in unambiguous and permanent performance improvement?

He has a simple and stark message for the NHS ? efficiency is not just compatible with NHS values; inefficiency is an active attack on those values. Managers therefore have both the means and the duty to deliver in what he calls a crunch year.

This means that what may look like the smothering embrace of multiple reforms is, in his mind, the fuel that will kickstart real change. He believes the best chief executives are using that fuel to turn dusty plans quickly into action.

HSJ research with managers at all levels suggests that although active support for reform remains strong, there are real concerns that the public sector principles they signed up to are changing, and with too little clarity about what they now represent. In other words, they agree with Mr Blair about 'breaking the myth' that efficiency and equity are incompatible, but they want to know what will replace it.

Talking to HSJ last week, Mr Blair said: 'We have got to escape from this philosophy that good NHS management isn't part of good NHS values ? good NHS management is the only way of delivering those values.

'The most important thing to get back to is the principle of the National Health Service, that you provide the best-quality healthcare irrespective of people's wealth. That is the principle the NHS was founded on and the principle it still has today.

'As the times change, treatment changes and people want care that is more accessible and more convenient and where they don't have to wait long periods of time. In as far as the health service falls short in delivering that, it falls short in its values. Therefore the question then becomes what are the changes necessary to make sure that we can deliver that high-quality, accessible healthcare.

'That's why I see reform and change not as antithetical or contradictory to health service values but the essential way of implementing them in the modern world.'

He is attempting to separate the why from the how, the ends from the means. In this way he can argue that far from eroding the principles of the NHS, greater value for money, productivity and better performance safeguard it in the form of results.

'Value for money is not a value, it's a means to an end ? better care for the patient. If you are using money ineffectively, whichever government is in power and however much money you put in, you're going to be wasting some of that money. Every pound that you waste, that isn't spent on better patient care, is not spent on the values of the health service.

'I think the health service does a great job, the NHS Confederation does a great job and our role has got to be to give all the backing and support we can to managers in making those difficult decisions and adjusting to what I accept is a revolution in the health service over the past few years and will continue for the next.'

He told HSJ: 'By the end of next year the system is, if not in place, very substantially so. We are learning all the time as you do in a revolution and you have to adjust as you go ? there are issues with the payment by results system and the tariff, as you would expect.'

But there are indications that the prime minister sees an end point to that revolution, a fabled land beyond the repeated restructuring that saps the spirit of managers and clinicians. There was good news in an unscripted section of his speech on public sector reform last week. 'Once certain structures are in place in the NHS and in schools, I think there is less of a need to go into further structural change dealing with certain problems.'

However, he added an important proviso ? that a halt on structural change could only work in a fast-moving world if the structures could learn fast and flex by their own volition.

In other words, to avoid being changed every few years you have to change every day.

That takes courage and confidence ? to take those 'difficult decisions'. What is clear is that political support depends not just on taking the decisions, but taking them properly. There is concern that the NHS too easily brushes aside the supposedly irrational affection the public have invested in buildings rather than taking the trouble to prove the case. The feeling inside Downing Street is it would be a huge mistake to do that.

Tough decisions are not always straightforward. Although reconfiguration may make sense for the old Surrey and Sussex strategic health authority as a whole, Frimley Park is a high-performing trust that might actually lose out as a result. It is a subject that comes up when Mr Blair chats with staff. Now he points out to HSJ the paradox whereby 'you have an excellent facility here which is quite rightly saying that they are on the borders of primary care trusts with a lot of financial difficulties'. That tension 'has got to be resolved'.

Being decisive also means being steadfast in uncovering weakness. This is particularly true of deficits, most particularly when involving trusts which have hitherto been seen as very successful. Mr Blair says: 'We have got to have the confidence.NHS deficits are difficult, but it is better to expose them and deal with them and take difficult decisions ? for example, on reconfiguring services rather than postpone those decisions and find you are back to the days of rationing by waiting lists.'

Mr Blair spoke to HSJ on the day that his health secretary announced in Parliament both a large deficit and good performance on access. There was the inevitable focus on the former, despite the fact that waiting lists had fallen by 25 per cent since 2000.

The question is whether the finances can be tackled while the waiting-list momentum is maintained. The 18-week target for the end of 2008 has Mr Blair's name on it ? it is a legacy issue.

As he told a conference on public service reform last week: 'I know that if having put in this extra money, we can't show clearly, demonstrably that the service has got radically better, then the consent from the public for investment is in jeopardy.'

Public confidence in NHS reform is defined by a small number of key issues and he believes the 2008 target is one of them. From 18 months to 18 weeks (and more impressively, as the total treatment process) under a Labour government would be an enduring symbol of Mr Blair's achievement.

Asked for examples of how he would know managers were actually taking the tough decisions which he says he will support, it is the 18-week target he cites. 'With the NHS it is very easy to measure the outcomes. The 18-week door-to-door target can't happen without reform ? that's a very simple way of knowing you are improving the service; are we getting the waiting lists down?'

HSJ's surveys of chief executives suggests that many, and not just those hit by big deficits, say they will make little or no progress on the target this year ? they will focus on financial stability instead. It does not help that most, and in turn the centre, do not know just how far away they are from achieving it, because of invisible diagnostic waits.

But Mr Blair insists: 'I think you will find that most people are still, even with all the financial issues, succeeding in keeping waiting lists coming down on outpatients and inpatients. It's possible, and many hospitals are still making improvements.'

Last week he hosted a meeting of representatives from foundation hospitals to launch a mentoring initiative led by the Foundation Trust Network.

It was 'a meeting much criticised in certain quarters. But my point is: a hospital is not a business but parts of what it does is the same as any business does. It buys things, it has people working effectively or not. In those circumstances there is something we can learn in getting better management techniques'.

Senior FTSE100 types do not pay much regard to government stage-managing, and after warm words from Monitor and the FTN there was almost immediate criticism from some of the companies during the event.

They argued that foundations were fooling themselves if they thought they were 'free' ? compared to the private sector they were still hidebound by the centre and tied down by paperwork, lack of basic activity data and disempowered managers.

Richard Lapthorne, chair of Cable and Wireless, said the PM would be better off giving foundations more freedom than asking his advice.

Mr Blair told HSJ: 'As I said to the chief executive here [Andrew Morris] I think it's important that we learn lessons from Monitor and the foundation trusts so we are adapting to what they need to do.'

He prefers to highlight a more positive aspect of the meeting ? the fact that companies thought 'there were things they could learn from the public sector in terms of commitment of the people who work for them, which most private sector companies would love to emulate'. Coincidentally this was a point made by Frimley Park chief executive Mr Morris at the Downing Street reception.

At the same meeting, Mark Britnell, outgoing chief executive of University Hospital Birmingham foundation trust, asked the prime minister if he would back the kind of innovation that would mean basing consultants' pay progression on patient satisfaction levels. At the time, Mr Blair was circumspect ? when HSJ puts the point to him again, a little less so. Foundation freedoms raise 'very difficult questions and we should take it step by step'.

'But I think definitely, where hospitals are innovating and improving service as a result, we should be backing them.'

In terms of learning from companies, he is clear that there needs to be an improvement in core business processes. 'Procurement is a great example ' you can spend well, you can spend badly and it doesn't matter whether you are the NHS or IBM. And it was interesting to hear about some of the things the hospitals had learned from just-in-time [manufacturing] in the business world.'

Although the meeting concentrated on informal relationships, more formal links had originally been considered, even going as far as providing places on foundation boards for FTSE people. At the meeting, Mr Blair himself floated the idea of secondments from companies to the NHS ' certainly the belief is that companies would be happier with more structured institutional links, particularly if they could be used as a way to fast-track the development of their own high flyers.

At the Tuesday meeting he posed a rhetorical question: 'Without the profit spur, how do you get people to innovate naturally?' In other words, how do you create the culture of self-sustaining improvement that NHS acting chief executive Sir Ian Carruthers talks about.

Mr Blair's answer to that question now is to rely on the incentives in the system. 'By doing what we are doing with payment by results, practice-based commissioning, patient choice, it means that the better people do, the better the organisation does financially. That is the spur to greater efficiency and you have got to support that process by, for example, showing how you can cut down on bed days and operate A&E more effectively.'

The problem with autonomy is that, according to foundation regulator Monitor, too few trusts can handle it. According to its latest estimate, only half of acute and mental health trusts are capable of making the 2008 deadline, when the government's target was that 100 per cent should make the grade.

It has become clear that it took an outsider like Monitor chair Bill Moyes to take a cold hard look at apparently high performers and find many were wanting ? more than ministers originally thought.

Does Mr Blair accept Monitor's prognosis? 'I don't think it is a given, but I think it's important that, all the way, the quality threshold is maintained. And actually it's a fantastic thing that we have got as many foundation hospitals as we have, and more next year.

Three years ago when we first looked at the concept of foundation hospitals, people were saying it's the end of the NHS. My own backbenchers would say it was a disaster, the hospitals would go bust, no-one will want to be a member, it's all terrible. Now foundations are at the cutting edge of the NHS.'

The 100 per cent 2008 deadline still holds, he insists. The belief is that the Monitor report is just a diagnosis ? the crucial thing will be the cure. And curing poor financial controls and inefficient configurations would be needed with or without foundations.

'You can't compromise quality, but we are still confident, especially as we are getting the deficit sorted this year, about getting the foundation hospitals through.'