The NHS needs reform, but are Lansley’s the way to do it?

I am in two minds about Andrew Lansley’s proposed reforms of the National Health Service, the cornerstone of which is the transfer of commissioning responsibility from Primary Care Trusts to GP-consortia. On the one hand, the NHS desperately needs radical reform. On the other hand, I’m not sure these are the right reforms, and I’m not sure they are sufficiently radical to deliver a real difference to patients.

Let’s start with why the NHS needs reform. Firstly, it is eye-wateringly expensive at 8.1 percent of 2010 GDP, or £120bn a year. Costs have skyrocketed since 1999, doubling in real terms in the 10 years to 2009. Over that same period, productivity fell. We are spending more and more, and getting less for our money.

The latest research from the Adam Smith Institute, which analyzes World Health Organization data, suggests that the NHS fails to distinguish itself on either health outcomes or value for money – when ranked against similar countries, the UK is in the lower half of both league tables. Even more depressing are the findings of the annual Euro-Canada Health Consumer Index, which ranks the UK 15th out of 18 Western European countries in terms of healthcare performance from the perspective of the consumer. Such findings surely make it hard to keep insisting that the NHS is ‘the envy of the world’.

So yes, the NHS needs reform. But are Lansley’s proposals the right ones? Here the picture is more mixed. It is true that as well as reducing bureaucracy, the reforms should create a more bottom-up health service and encourage innovation. Moreover, previous attempts at GP fundholding suggest that it is likely to improve productivity and help to deliver better services at less cost.

That sounds quite positive, and if we were operating in a vacuum I’d say go for it. But politics being what it is, these things need to be handled very carefully. Any NHS reforms will encounter fierce resistance and drain political capital, and every subsequent failing of the health service (and there will continue to be lots of problems) will be attributed, fairly or unfairly, to those reforms. The danger is that if the benefits are not sufficiently noticeable, the very idea of public service reform will be discredited as a result.

And the trouble is, I just can’t see Lansley’s proposals delivering big, noticeable benefits. They might help a little here and there, they might be an improvement on the status quo, but they are probably not going to prove worth the effort. To put it bluntly, they don’t go far enough. They won’t help cost control in any meaningful way, because they don’t allow competition on price or abolish collective pay bargaining. They won’t do much to encourage choice or innovation, because they leave the public sector dominant and perpetuate onerous, central regulation. And crucially, they fail to put the patient in charge of their own care in any meaningful way, which is surely the key to delivering a tangible change in the patient experience.

Rather than pushing through half-baked reforms, we ought to be looking seriously at our European neighbours’ healthcare regimes, assessing what works and what doesn’t, and combining the best features of various systems to fundamentally overhaul the NHS. If such an exercise were conducted honestly, it would surely yield ideas rather different from, and infinitely more transformative than, those currently on the table. The highly successful Dutch model, with its competing insurers, private hospitals, and strictly limited role for government, provides a good starting point for discussion.    

Tom Clougherty is Executive Director of the Adam Smith Institute