NHS Reform - How Will The Money Work?

Keep your eye fixed firmly on the money

Tyler has now read Lansley's white paper, Equity and excellence: Liberating the NHS. An ambitious title, but then again, Health Secretaries have never been lacking in the ambitious titles department.

To start with the positive, there's lots of good stuff about putting patients first, more choice, better information, clinicians in charge, and an end to politically driven micromanagement. All problems we have blogged to death, and all problems we are glad to see Lansley promising to tackle.

In fact, we'll go further. Lansley has surprised us by just how radical he is apparently prepared to be. Abolishing the wasteful bureaucratic PCTs and focusing authority in the hands of practising clinicians is a big step, beyond anything we'd expected. He's also going to encourage more private providers into what is clearly the basis of a real market system - all good. Even more encouraging, judging by his punchy appearance on yesterday's Newsnight, Lansley suddenly looks like a man reborn and spoiling for the fight.

But as always, the key question for BOM is how will the money work? And there, the white paper is worryingly vague.

Let's start by reminding ourselves how the money works in the grocery market.

You the punter have the money, and you choose whether to go to Tesco, Sainsburys, Asda, or whoever. You are very keen on getting good products at good prices, because, hell, it's your hard-earned money. Which doesn't mean you cross-check products and prices every week - life's too short. But all the supermarkets know that if they start taking the piss, sooner or later you'll rumble them and you'll start shopping somewhere else.

Now, the supermarket doesn't produce the goods itself. It commissions suppliers to produce all its msg potato wedges and trans-fat pizzas, and it screws those suppliers hard on price and quality. Both are determined by head-to-head negotiation. You the customer don't get involved in any of that, both because you haven't got time, and also because you know absolutely naff all about producing pizzas let alone pricing them. You trust Sir Terry Tesco to make those calls for you. And Sir Terry only survives if he gets those calls right enough for you to go on giving him your custom.

So how does the Lansley NHS model compare?

To start with, you won't have the money. The money will still come from the big black pot up in Whitehall (see Lansley's wiring diagram above). Which straightaway weakens your role in the entire process.

Yes, Lansley does talk about giving we punters "personal healthcare budgets", but in truth, that's never going to work universally and he admits it (no, you can't have that critical second operation because you've already used up your personal budget).

Instead, the "money will follow the patient". How? Lansley is not yet sure:

"... the Department will start designing and implementing a more comprehensive, transparent and sustainable structure of payment for performance so that money follows the patient and reflects quality. Payments and the ‘currencies’ they are based on will be structured in the way that is most relevant to the service being provided, and will be conditional on achieving quality goals."

Hmm. Talk of "currencies" rings a rather loud alarm bell. We already have a perfectly good currency, and it's called the pound sterling. It's simple, clear, and relates directly to the real world outside the NHS. You can bet Sir Terry insists on the real thing, and so should Lansley. The last thing the NHS needs is an outbreak of Funny Money.

And also, how much money will follow the patient? Apparently it won't be the same for all patients:

"Our principle is that funding should follow the registered patient, on a weighted capitation model, adjusted for quality. We will incentivise ways of improving access to primary care in disadvantaged areas."

"A weighted capitation model, adjusted for quality". Riiiight. WTF does that actually mean for the average punter? And who decides what the relative weights are for different types of punter? Will someone with Tyler's chronic conditions get more capitation than an A1 specimen? And if not, what's to stop a profit maximising GP refusing to take Tyler, should he move to Eastbourne? There are an awful lot of dots still to join up.

Then there's the issue of pricing. Whereas Sir Tel sorts out prices mano a mano with his suppliers, in Lansley's reformed NHS, prices for specialist treatments will still be mandated by the same old Commissars in Whitehall. The only difference is that prices will now be set on the basis of "excellent care", rather than bog-standard care:

"We will rapidly accelerate the development of best-practice tariffs, introducing an increasing number each year, so that providers are paid according to the costs of excellent care, rather than average price."

In Tescos, their excellent care range is called "Extra Special" and it's more expensive than the standard range. So does excellence mean the NHS tariffs will be increasing? Or does the word "excellent" actually mean excellently cheap? Again, there are an awful lot of dots still to join up.

But look, let's not carp. Lansley has made a reasonable start, and he is sounding a lot more radical than we'd ever expected. He seems intent on creating a market-based system, intent on broadening the range of providers - including private for-profit providers - and intent on getting those in the NHS to learn the new skills and responsibilities they will need outside the Stalinist world of state monopoly healthcare.

Let's give the man a chance.

Oh, and let's hope Cam gives him the time he needs to implement his plan. The NHS has had more than enough revolving door political masters.

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