CHOICE Farrar claims lack of spare capacity could undermine contestability policy

Published: 06/10/2005 Volume 115 No. 5976 Page 11

The government's threat to close failing hospitals is a 'red herring' because all current capacity will be required for patient choice to work, according to West Yorkshire strategic health authority chief executive Mike Farrar.

Speaking last week at the launch of a report into the choice agenda by consultancy Opinion Leader Research, Mr Farrar said he accepted that even a small minority of patients deserting a hospital or general practice could make it unviable, despite its services being demanded by the majority.

But he said excess supply over demand was crucial to choice. He predicted that politicians would replace management teams rather than close failing hospitals or practices.

The OLR report highlights the fear of managers and policy experts that 'despite government protestations to the contrary, there is simply not enough spare capacity'.

Mr Farrar said: 'The economics of the NHS providers suggest that the margins of their income are extremely tight, and that only a small shift in business, with patients choosing to take their business elsewhere or opt for alternative primary care-based treatments, might make a service unviable.' Health secretary Patricia Hewitt has supported her predecessor John Reid in suggesting that failing hospitals could be shut if people are not choosing them. But Mr Farrar called this a 'red herring'.

'If choice requires excess supply over demand, then all current capacity will be required, ' he said. 'The failure of a provider is therefore about its management not the necessity of its capacity.

'I predict that, just as in other sectors, politicians will opt to mainatain capacity but change management if services 'fail'.' Mr Farrar, who is leading work on developing models of care for the provision of community services, said he believed 'passionately' in using choice to tackle health inequalities.

But he added that social as well as economic criteria had to be taken into account in the pricing process to protect important services.

'Valued services may need price protection in order to serve vulnerable groups and communities. If the NHS can learn this, it can positively discriminate by using these incentives to place premiums on the price of services provided to hard-to-reach or disadvantaged communities and establish a direct platform to address social injustice and health inequality.' Mr Farrar also said patients would have to be assertive in making choices and not 'be governed by the guidance or prejudice of GPs'.

GPs needed to accept that patients might choose providers, not just on their advice about clinical outcomes but 'on the basis of their food, their car parking or their customer care'.

He added: 'The danger is that patient choice will fail because the well-meaning but paternalistic culture of the system might protect the status quo and drive out the incentives and the very competition that the choice policy seeks to induce.'

Could choice increase health inequalities?

The potential for choice to make inequality worse is 'considerable', according to the Opinion Leader Research report (see story, left).

It warns that choice could backfire on the government if the public expectations it raises are not met adequately or fast enough.

The Choice Agenda:

thought leadership for the new dynamic focuses on choice across the public sector. It was compiled with the help of public sector managers, public policy experts and senior representatives of private sector companies.

OLR is currently carrying out the public consultation on the future of primary care services that is set to cost£1m (news, page 7, 29 September).

The report says providing the same standard of information to all citizens has always been difficult, and if not addressed could threaten equality.

Commissioned by law firm Bevan Brittan, the report also identifies a tension between the government's championing of choice and tendency to exercise control from the centre - for example, through target-setting.

To encourage high standards, 'good, intelligent, financial incentive and penalty systems need to be built into contracts where the private sector is providing a service, ' the report states. In the public sector, foundation hospital status and government testing are the primary 'carrot and stick' mechanisms.

Concerns were also raised about potential financial costs of implementing choice - the tension between providing the spare capacity necessary and achieving the improved efficiency demanded by the government.

'It will take good policy design, good regulation and, in some areas, further investment, ' said OLR joint chief executive Viki Cooke.

'But despite significant concerns, there is real and genuine optimism that the agenda can deliver, ' she added.

www. opinionleader. co. uk

See news analysis, pages 14-15.