Labour's manifesto hints at the shape of things to come

Published: 21/04/2005, Volume II5, No. 5952 Page 12 13 14 15

Last week, the Labour Party manifesto announced plans to 'streamline' the NHS in order to release£250m a year to the front line by 2007.

The manifesto did not say what propor tion of cuts would come from central bureaucracy and what from NHS management. It simply said the NHS must 'change the way it organises services as quickly as possible'. HSJ understands that more specific references to numbers of strategic health authorities and primary care trusts were removed from earlier drafts.

A month earlier, NHS chief executive Sir Nigel Crisp published a document which explicitly stated that the future shape of the NHS will mean fewer PCTs and SHAs, but did not dictate how this would be achieved.

Many managers were relieved at his approach, which they saw as suggesting an 'organic' route to structural change in the NHS, allowing organisations to reform themselves, rather than follow diktats.

But does the political announcement of a two-year timeframe by which change must be delivered - with savings attached - put paid to the notion of organic devolution?

Over the next four pages, Laura Donnelly explores what the structure of the NHS might look like under a third Labour term.

Strategic health authorities - 'Someone has to wade in and do the dirty work'

South Yorkshire strategic health authority chief executive Mike Farrar takes a relaxed approach to the suggestion that SHAs are on their way out, not to mention the point that the rest of the NHS might wish them good riddance.

This may be because among England's 28 SHAs, South Yorkshire has a pretty good reputation as a 'foundation community'. All of its acute trusts have either won foundation status or the required three stars - and that means the SHA may not be long for this world.

Mr Farrar will not comment specifically on rumours that - if Labour wins a third term - Yorkshire is likely to be one of the earliest health communities to see the creation of 'super-SHAs' via mergers.

But he agrees the logic behind the proposed new direction is clear, given the shrinking performance management role of SHAs in communities where foundation status is the norm. This, combined with practice-based commissioning and a data-based inspection regime, would mean a very different looking NHS with far fewer primary care trusts and SHAs, even if the government stays the same.

'It is very clear that form needs to follow function, ' says Mr Farrar.

'Timescales will vary in different parts of the country depending on the pace of reform.' He describes the role of SHAs as shifting from that of performance management to 'market management' under a new era of choice and contestability. This means a less hands-on role.

'At the point when You have got foundation trusts, practice-based commissioning, robust commissioning arrangements and local authority agreements, you can afford to stand back.

'Some parts of the country will be there sooner rather than later.' And Mr Farrar welcomes the government's apparently 'flexible' approach to restructuring. 'It is about systems change, not just SHAs. That gives us quite a lot of flexibility.' In Greater Manchester, SHA chief executive Neil Goodwin seems equally relaxed. He believes the current government has set the NHS in the right direction.

'It is obvious that as PCTs' capacity and capability improves and there are more foundation trusts the role of SHAs will change and diminish. I would be comfortable with fewer SHAs in a new intermediate tier.' Mr Goodwin is glad the Labour manifesto put a timescale on change: 'Very often it makes sense to have a kind of time frame otherwise people drift, organisations atrophy, and the organisation can become a shadow of its former self.' That said, he warns that too short a time frame can create other risks, of trying to move too quickly when pieces of the jigsaw are not in place.

'Two to three years' seems about right, he says. Nobody expected SHAs to last forever.

'If you look at the history of the NHS - particularly the intermediate tier - then the shelf life tends to be about five years, before they metamorphose into something else.' But many other SHA chief executives are not happy to talk publicly. The majority contacted by HSJ say it is 'just too sensitive'.

Privately they say a plan is emerging. SHA chief executives expect to see their 28 bodies replaced by about nine organisations - probably aligned with regional government offices (see maps, right).

They anticipate this to operate over a 'differentiated timescale' - with successful economies going first, some of them by the end of this calendar year. They also expect an 'opportunistic' approach to be taken, with unfilled vacancies increasing the chances of merger, or takeover, of less successful economies.

London is expected to see the first mergers, with immediate movement after the election. Health minister John Hutton has already said the structure should be changed to correspond to the mayor's office and give the NHS a 'voice' for the capital.

But some factors remain unknown. Chief among them is whether the rest of the service will be allowed to take an 'organic route' towards organisational changes in tune with the logic of current drivers; or whether Labour will want to be seen to take control of the issue and announce a national timetable for mergers.

Several SHA chief executives have heard rumours that a timetable could emerge in June.

What does this say about the organisations? Does this mean they have failed? Those working in them insist not. They point out that SHAs, which came to life three years ago, were always envisaged as having a temporary role, acting as the midwives of a newly devolved NHS.

Several managers working in acute trusts disagree, disparaging the efforts of their local SHAs. One observer in London says he will not miss them at all.

'There will be no tears shed. They have proved to be a hindrance. They are not big enough to take a strategic view.' He compares them unfavourably with the regional offices they replaced, which 'had some clout'.

'The regions offered some cloud cover from the most dangerous rays of the sun - they used to filter it.

This lot? They just are not big enough to say 'get stuffed' to the Department of Health, and sometimes they should.' NHS Alliance chief executive Michael Sobanja is also keen to see a cut in SHA numbers. 'There are far too many and their role is unclear.

For the short term I would like to see nine, going along with government offices. In the long term I am not sure there is a role for that tier at all.' Asked to give a verdict on their performance in the last three years, he paints a mixed picture: 'I think one of the good things is they have been there at a time of significant change in the health service and the good ones have brought guidance and support. At their worst they have been dictatorial, unhelpful and inhibited the development of PCTs.'

John Rostill, chief executive of Worcester Acute Hospitals trust and NHS Employers chair, takes a similar line: 'Some SHAs have made quite a difference... with others, you wonder what they have been doing.' He too believes eight or nine regional bodies is about the right number. But he stresses that the bodies need to take their 'strategic' remit seriously - and not end up performance-managing from a distance.

Mr Rostill suggests the NHS needs to break out of its old patterns and that it can afford to, given the increasing role of inspection bodies in scrutinising NHS data.

As he puts it: 'We do not need every tier of the NHS performancemanaging each other.' But SHA chief executives believe it is very unlikely that their regional replacements would not retain an element of performance management.

Nonetheless, at University Hospital Birmingham foundation trust, chair John Charlton hopes he has seen the future. He argues the removal of performance management from the relationship between foundation trusts and SHAs creates a far more effective relationship.

He believes foundation status - achieved by the trust last July - changed its relationship with Birmingham and the Black Country SHA 'overnight'.

'I think what we are doing now is much better than in the past.' Mr Charlton describes a 'mutually beneficial, collaborative relationship' between the trust and the SHA. He says the trust has been surprised in two ways. First, in the way the relationship has matured, and second, in the fact that the actual amount of interaction between the organisations has remained fairly constant.

'It is much more a case of working together to solve the problem. It is collaboration not command and control.' He says SHAs' dual role of strategy and performance management leaves them hamstrung. 'When they have both roles, they tend to do the performance management, not the strategy.' South Yorkshire SHA chief executive Mike Farrar says it has tried to work collaboratively with the organisations in its patch. But he feels SHAs should be judged by the achievements of their health economy, not by their popularity.

'Intermediate tiers are always unpopular. Someone has to wade in and do the dirty work. It is especially difficult if you are saying to organisations 'why are not you doing what you should be?', or indeed saying to individuals 'why are not you doing what you should be?'' 'We have tried to be as accountable to our organisations as they have been to us, rather than shouting at them from great heights. But I think the objective test is not whether people like SHAs or not - it is whether or not we have consistently hit targets.' .

Primary care trusts - 'If we lose the emphasis on local population we will have lost the plot'

Does the move to a larger number of primary care contractors suggest the NHS pendulum is swinging back once more?

Milton Keynes primary care trust chief executive Barbara Kennedy hopes not. And she says it is down to people like her to ensure that the latest shift in devolution means the NHS gains from wide-scale efficiencies while retaining the benefits of local engagement, instead of just reverting to the health authorities it abolished in 2002.

She poses a question: 'Moving back into health authorities risks losing some of the good things we have created... but is there a way to get good localised relationships while getting some of the benefits of efficiencies?

And she admits: 'I think there is a tension between those two and we have to work that out.' She believes structural change is necessary, in order to reflect a number of policy drivers influencing the NHS; chief among them the move to practice-based commissioning, leaving PCTs with a shrinking commissioning role, alongside government plans to achieve foundation status for every acute trust by 2008.

'With practice-based commissioning and the performance management of trusts being devolved, if you do not change the way you deal with that, the management arrangements wouldn't be fit for purpose.' Ms Kennedy is among a dozen managers using the same phrase to describe the way she believes and hopes change is being implemented - this time.

'It is form following function. It feels more appropriate than the other way around, which has happened in the past.' But she is concerned that there is one key risk in the agenda ahead.

'If we lose the emphasis on local population and clinical engagement then we will have lost the plot. I think there is a lot of work to be done and the devil is in the detail.

But it is our job to make sure we do not let the pendulum swing back and forth.' PCT chief executives who are feeling less optimistic prefer not to make their comments public. One questions whether the Labour manifesto's emphasis on management cost-savings is the right way to go forward. She is not convinced structural change often saves the money inevitably promised.

Edna Robinson, national lead for the Department of Health's primary care networks, is happy with the general direction set by Sir Nigel's document last month.

'It makes sense for PCTs to become more strategic in terms of purchasing and their direction.

'That will mean replacing some of the work strategic health authorities are doing. I think That is right because PCTs have the resources and therefore they have the power.' But she outlines two serious risks to the agenda ahead. One is the people it relies on.

'The risks are to the individuals who become preoccupied with their own personal futures and distracted from improving patient care. That is very natural, but if people are looking at the impact of changes on their job rather than the job they are doing that day, that is a concern.' The other is 'losing the momentum that has genuinely been gained by government'.

Ms Robinson echoes Barbara Kennedy in urging the NHS to ensure that organisations do not become too big to have local impact.

In particular, she singles out public health as needing attention.

'The main risk is to the public health agenda - by focusing on health at a macro level, there is a risk of distancing too far from joint working going on locally etc. That will have an impact on nonexecutive leadership; there may be some disenchantment from clinical leaders.' Speculation about how many PCTs the NHS will be left with varies wildly. Most people hedge their bets on the service having 100-200 PCTs in three years. Sources closest to the centre hover around the higher end of that figure.

And rumours abound that the government might 'encourage' PCTs to go for an approach that makes them coterminous with local authorities, as far as possible. A ratio of 1:1 would work in metropolitan areas, suggests one source, while shire counties might see PCT numbers falling by about two-thirds.

The National Association for Primary Care considers itself one of the architects of practice-based commissioning. Chair Dr James Kingsland suggests that PCTs with fewer than 25-30 practices will become unviable, because they will need to release resources into the community in terms of both cash and people.

He describes the 'inevitable' move to larger PCTs as a 'service redesign' rather than a 'management restructure' - and believes the current government is right to show a clear direction.

'Practice-based commissioning should be self determined and it is for PCTs to devolve [power] themselves. That said, there is the case that It is a bit like turkeys voting for Christmas. Are we going to have three PCT chief executives sitting down and deciding that two of them shouldn't have a job?' 'I think That is why there needs to be a steer on it, which makes it clear we are looking to a different structure. But PCTs are evolving - hopefully they will pre-empt this [forced restructuring].' NHS Alliance chief executive Michael Sobanja wishes people would stop talking about numbers.

He believes PCTs may find themselves taking on a harder role commissioning for the health needs of the total population, while subcontracting the commissioning of hospital care via their practices.

'That said, we will see fewer PCTs, though it doesn't seem very helpful to agree a number. This debate that I hear - about 60 PCTs or 100 PCTs or whatever - is pretty unhelpful.' Mr Sobanja hopes Labour will resist the temptation to join the other parties in committing to this sort of top-down approach. He points to a recent report prepared for the alliance by Birmingham University's Health Services Management Centre which showed the variety of approaches currently being taken to collaborative working.

'It doesn't have to mean mergers... there is more than one way of skinning a cat.' .

For an in-depth look at the Conservatives' policies see pages 18-19, 7 April, and pages 8-9, 24 February. For more coverage of the Liberal Democrats' policies see this week's news section (pages 5-10) and the Paul Burstow interview, pages 18-19.

THE VIEW FROM THE IVORY TOWER

'MERGERS do not SAVE MONEY'

Last month Birmingham University Health Services Management Centre director Professor Edward Peck co-authored a report for the NHS Alliance looking at primary care trust reconfigurations.

It described the Department of Health as currently working in 'permissive mode, allowing several flowers to bloom'. And it highlighted nine different management models currently in operation in primary care.

Professor Peck tells HSJ: 'I think so far the government has shown remarkable restraint and I really welcome that.

The creativity from PCTs has been a bit slow coming, but they have started now.' He cautions the next government to resist the temptation to be too prescriptive: 'What we know about mergers is they do not save money, they waste about 18 months, rarely achieve their objectives and cause real dips in morale. You have to really want to do it for it to be worth it.' Professor Kieran Walshe, director of the centre for public policy and management at Manchester business school agrees.

He says simply: 'I do not think the case has been articulated for these kinds of changes.

There are substantial risks attached.' He adds: 'I would like to see some evidence that where we have had reorganisations that it has actually been of benefit. PCTs are getting increasingly good at working together, commissioning together and so on. History is scattered with failures - and it is a history of reorganisations being done to the NHS not by and with the NHS.

'The idea that we might get - in 2005 - another nationally derived template for change fills me with dismay.'

www. hsmc. bham. ac. uk

WHAT OBSERVERS SAY

'WE MAYNEED EVEN MORE MANAGERIALEXPERTISE'

One seasoned observer says that when health authorities were abolished in 2002, he put a sealed envelope away predicting the shape of the NHS by the end of this year.

His gamble? 'That we would be back where we were in 1995.' Although he reckons his timing was premature, he claims that within two years the NHS will find itself back in the past - with 100 primary care bodies, eight or nine 'regional outposts' and business as usual for providers.

As someone who works closely with the NHS, he is not prepared to speak publicly. But other commentators are expressing their fears about the signals sent out by Labour's manifesto.

King's Fund chief executive Niall Dickson says: 'We are concerned about today's new commitment to 'streamline' the NHS and release£250m a year for frontline services by 2007. While we agree there is likely to be further scope for savings, this is the wrong time to impose structural change.' He argues managers will have a demanding enough agenda without upheaval - in particular given the risks attached to a market-based health economy.

Mr Dickson says: 'In this new market we may need even more managerial expertise - not less - to oversee the system and ensure patients have access to a comprehensive range of services.' NHS Confederation chief executive Dr Gill Morgan sees the manifesto more positively, although she says it paves the way for 'substantial change'.

She thinks the fact that it doesn't spell out future PCT and SHA numbers can be seen as evidence that a future Labour government might be prepared to 'go with the grain'.

'We are pleased that they have resisted the siren voices tempting them into being specific about numbers.' Dr Morgan adds that the timescale laid out allows a little breathing space: '2007 is good, it could have been sooner.' But without knowing the detail within the cost savings outlined by Labour - and specifically whether the£250m savings include changes to the civil service and regulatory bodies - she says it is impossible to guess how tough the road ahead might feel.

'It is a substantial change. Exactly how it rolls out is hard to see yet, we need to see more of the details.'

TIMELINE 31 YEARS OF NHS REORGANISATION

1974 NHS reorganisation creates 14 regional health authorities, 90 area health authorities, 90 family practitioner committees, and more than 200 district management teams.

1982 Abolition of area health authorities and creation of 192 district health authorities.

1983 Report by Sir Roy Griffiths recommends a general management structure.

1989 Government unveils white paper setting out the internal market.

Creation of NHS management executive.

1990 Family practitioner committees abolished. Family health services authorities created.

1991 Introduction of internal market: 57 self-governing acute trusts and 306 GP fundholders are launched.

1994 Number of regional HAs cut from 14 to eight.

1995 All hospitals, ambulance and community health services become trusts.

1996 Family health services authorities merged with district HAs.

Regional HAs abolished and replaced by eight regional NHS executive offices.

1997 White paper calls for move from internal market to localised integrated care 1999 Health Act introduces primary care groups.

2000 Primary care trusts introduced.

2001 Shifting the Balance consultation on structural change.

2002 Abolition of 100 health authorities: creation of 28 strategic health authorities. Four directorates of health and social care introduced, abolished a year later.

March 2005 NHS chief executive Sir Nigel Crisp calls for a reduction in PCTs and SHAs.

April 2005 Election manifestos launched: Conservatives reaffirm earlier promises to axe SHAs and halve the number of PCTs; Lib Dems also vow to abolish SHAs, and to hand commissioning to local authorities.

Labour promises£250m savings from 'streamlining' organisations.