Published: 30/01/2003, Volume II3, No. 5840 Page 18

As the NHS nervously focuses on the twin challenges of financial balance and performance targets for this year and 2003-04, the policy debate is all about capacity.

With some primary care trusts rumoured to have no capacity to finance national service frameworks in 2003-04 due to the rising cost of meeting waiting-time targets and the enormity of the nine and sixmonth access targets for 2004 and 2005 beginning to dawn, there is great anxiety throughout the service.What can be done?

At national level, there are numerous 'initiatives'. Reference cost pricing for a small group of elective procedures will reward those hospitals that increase activity.Newspaper reports indicate that these incentives will be enhanced by fee-for-service payments to consultants in general surgery and anaesthetics, making national what is already evident in local deals. Such incentives may activate those hospitals where capacity is underutilised due to poor performance management.However, it will require careful administration of a quantitative nature.

1Recent calls for bids for fiveyear contracts to provide diagnostic and treatment centres demonstrate the hope that capacity can be created swiftly by contracting with the private sector.

2Progress since the 'concordat' in 2001 has been quite slow. The private sector seems reluctant to exhibit the characteristics of entrepreneurial zeal sometimes attributed to it.

This is a product of its own immaturity as much as the lack of clarity from government about the nature of contracts that will be available.

The private sector legitimately wants an assured rate of return that short-term NHS contracts do not offer. Consequently, before it invests in DTCs it wants assurances of NHS business for a payback period of at least 10 years.

These assurances have been slow to emerge from Whitehall.Why?

One reason is that there will be assertions from the left that these policies are disguised privatisation of provider capacity.

In principle it is possible to continue with an NHS, free at the point of consumption, that is provided by private institutions in primary and secondary care.

However, any experimentation with such a solution should be evaluated with care as regulation to achieve cost control and quality development would be complex and expensive.

For example, what evidence is there that private owners of hospitals have been more efficient at performancemanaging staff than the NHS?

Rodney Ledward, the wayward gynaecological surgeon, damaged patients in the public and private sectors, although there is some evidence that the latter (eg BUPA) has moved to improve consumer protection more swiftly than the NHS.

3If the private sector expands, how will it recruit doctors and nurses? Again there is a capacity constraint: DTC recruitment will take staff from existing NHS organisations.Will the DTCs be able to raise salaries to attract staff or will they, like foundation hospitals, be restricted in their 'predatory' behaviour?

As with much government policy, there are sharp contradictions.One faction is advocating greater use of market mechanisms, another is restricting market incentives and ensuring that private entrepreneurs remain confused and reluctant to invest. The market always has to be regulated, but Whitehall seems to be dithering and uncertain about whether to follow the Blair market line or the Dobson public sector line.Whenever questioned, both sides generate further ambiguity and delay, which threatens the achievement of NHS targets.

This policy process is characteristic of all the actions of the government.Whether it is income redistribution, child poverty or the NHS, the government moves crab-like and ambiguously, disguising its redistribute and service goals.

This is not novel and reflects a fear that clarity will create opposition and vote losses from the middle classes and the trade unions.

Meanwhile, the NHS capacity challenge looms more and more sharply.The funding increases and the service developments it is financing (often at high cost) will create considerable future expenditure inflation - for example, in keeping 30 per cent more doctors in employment.

Privatisation of provision may be followed by privatisation of NHS finance leaving the Conservatives, if they ever return to power, with the problems of their nirvana.


1Bloor K, Maynard, A. Consultants: managing them means measuring them. Health Service J 2002,112(5836).

2www. doh. gov. uk/growingcapacity 3Vallance-Owen A, Cubbin S.

Monitoring national clinical outcomes: a challenging programme.

British J of Health Care Management, 2002. 8,11,412-17.

Alan Maynard is professor of health economics at York University.