Select Committee on Health Minutes of Evidence



Examination of Witnesses (Questions 100-119)

THE RT HON ALAN MILBURN, MP, MR ANDY MCKEON, MR RICHARD DOUGLAS AND MR ANDREW FOSTER

WEDNESDAY 12 JUNE 2002

  100. Nevertheless, if hospitals will be able to compete to get extra work at full regional prices, is there not a problem that you are re-creating the incentives for hospitals to compete against each other, because they know that if they can fit in the extra 20, 40, 50 cases, that is enough money to start paying for the next piece of equipment and therefore if they have a good new technique, there is an incentive for them not to share that with their next door trust. How are you going to be sure that the new system does not replace collaboration with division and competition again?
  (Mr Douglas) This is not building competition into the system really. What it is building in is a driver for efficiency for people. So we are not talking about competition here, we are talking about the driver to efficiency. In terms of the ability or the requirement to share, the requirement to work in collaboration with people, we are not in a business which is purely driven by price, we have other levers in the system and one of them is the star rating system, one of them is the regulator's role.

  101. But it was not a particular price of an operation which made one hospital want to compete with another, it was the fact that if they could pick up another 10, 20, 30 operations, they could make a considerable sum of money which would make a really big difference to an individual specialty's budget in any one year. By doing this, are you not replacing those incentives with the same incentives?
  (Mr Douglas) No. One of the first things which is important with this is that we are saying to the hospital which wants to attract additional patients that they will first of all have to deliver the targets which have been set for them. So they will not be taking on patients without having delivered the targets at the agreed price we have set for them. If they then can deliver additional activity which will meet the overall targets we have set, and they will benefit from that, that is good, because that is really what we want. We are making sure that the capacity we have overall is used to best effect.

  102. So every trust's starting point in the year will be to break even and this is only very much at the margins of things where people are very much exceeding their waiting times.
  (Mr Douglas) To actually benefit from additional money under the choice pilots, where we will have money going with the choice of the patient, people will have had to have delivered their own targets first before they have an ability to benefit from that. They must deliver the base targets themselves.

  103. At the starting point every trust will be breaking even if they achieve their waiting list targets with their local hospital.
  (Mr Douglas) They will not be breaking even when the full system is in on an HIG basis necessarily, because if their prices are higher or if their costs are actually higher than the set tariff they will not be breaking even at the start, but they will have an incentive to drive down costs and improve efficiency.

  104. Are you saying some people are hampered because they might be in a very expensive capital building or inefficient capital building which might have small wards and that is hard to nurse? Those people necessarily will have to work harder just to stay still.
  (Mr Douglas) They will. What we are trying to do initially is —

  105. Is that right?
  (Mr Douglas) It may be right in the short term for people.

  106. It will not feel right to them, will it?
  (Mr Douglas) I am sorry, I thought you meant factually correct rather than right in principle. I just misunderstood, I am sorry. That is why we are trying to give a transitional period for this and that is why we are saying that we will not introduce the full system until we have worked through that transitional path of two, three, four, five years, depending on how long we need for that. If there are special circumstances we can identify for the modelling, then we shall make adjustments to prices to reflect those.
  (Mr Milburn) There may well be; there may well be within the same region, however we choose to define it—and your point about new versus old is an obvious example. There will also be, and we know this already, however crude reference costs are as an indicator of price or efficiency, some pretty inexplicable variations in cost. There are some which are explicable, but there are some which are inexplicable. It just is not fair in the end in a system which has a certain amount of money, if you are not using that pot of money to maximum effect. It is not fair. Somebody is gaining and somebody is losing under the system as it is. What we have to try to do is drive out the realisable efficiencies.

  107. Where they are realisable.
  (Mr Milburn) Exactly.

  108. There is obviously still a lot of work to be done.
  (Mr Milburn) There is. Richard's key point is to get the transition right. If you try to do it just like that, it will not happen. We have to migrate there over time.

Sandra Gidley

  109 I should like to touch on the subject of choice briefly. Everybody would agree that it is a laudable aim, but at the moment what you have is a choice between waiting 15 months for your hip replacement in one hospital compared with waiting 15 months in the hospital next door. It really is not very much of a choice. There is an acknowledgement in Delivering the NHS Plan that in order to provide choice you need to increase capacity. That has been acknowledged. How long in reality do you think it will be before the average patient is routinely able to exercise a choice?
  (Mr Milburn) There is again going to be a transition. You are quite right. Your starting point is obviously right that in a capacity constrained system you have obvious problems. However, what I do not think is quite right is when you say that everybody is roughly the same. They are not. In Dorset nobody is waiting six months for a hospital operation. In my patch I do not think anybody is waiting 12 months at the moment. That is not true everywhere.

  110. We are all waiting 15 months in Hampshire.
  (Mr Milburn) There you are. They might prefer in Hampshire to have the choice of not waiting 15 months.

  111. I am sure.
  (Mr Milburn) In the end what most people want is the choice of being treated locally, that is what all of the international evidence suggests, even in those countries which have long enjoyed choice, like Denmark or Sweden. All of the evidence suggests that most people, even with a better choice objectively on offer, choose subjectively to stay local, even if it means a slightly longer wait. That is fine, but for some people, people who want to have the choice of moving hospital in order to get quicker treatment—and the truth about the NHS again is that there is capacity; there is capacity shortage but in some places there is capacity surplus—the problem is that the current system of incentives means that the incentive for the provider is not to use the maximum capacity available because the commissioner will only contract for a certain volume of cases. Once that volume of cases has been exhausted, that is the end of the matter. It does not matter if in my hospital the eye surgeons could do more eye operations. So what? Unless there is advice for paying them to do more, it cannot be done. There are two things here: there are the choices which individual patients can exercise and necessarily they will be limited in a capacity constrained system; second, as part of the same process, there is how you make a better link between supply and demand, between the demand patients have, the shorter waiting times, and the fact that there is some supply out there. In London there are differential waiting times.

  112. To come back to the original question, when do you envisage that patients will be routinely able to exercise a choice?
  (Mr Milburn) I would imagine probably by the end of 2005. What we are going to do in July is start with heart patients, people who have been waiting over six months. They will be contacted by their local hospital. Their likely waiting time will be explained to them by a patient care adviser, usually a nurse, they will be offered the choice of either staying local—and most people may well opt to do that—or travelling elsewhere to get a quicker waiting time, in which case, if they travel, the NHS will look after them and make sure it is clinically safe. What we will do over time then is pilot further choice initiatives in different specialties such that we can get to a position by the back end of 2005 when we have IT and other capacity growth in place, such that where you the ordinary NHS patient go into your GP's surgery you will have some choice over where you are treated. Obviously it is rather like anything, you do not get unfettered choice in any walk of life. The product has to be available to exercise choice in the supermarket, the capacity has to be available to exercise choice in a hospital. We think that by the end of 2005 that is realisable.

  113. So in future when primary care trusts are commissioning and they have arrangements with the local hospital, will they be forced to pay extra so that a patient can exercise choice?
  (Mr Milburn) No.

  114. Who picks up the bill?
  (Mr Milburn) What we are not going to do is repeat the mistakes of the internal market where competition took place on price. The whole point about having HRGs is that there will be no competition on the basis of price. The choices patients will make will not be about price. Price will have nothing to do with it because you will basically have a common tariff adjusted for precisely the regional variations which Julia was talking about. The choices that patients exercise will be based on how long they are going to have to wait at different hospitals for treatment and what the quality and outcomes of care are that they are likely to receive.

  115. Would you envisage choice being extended to other areas of the health service? I was thinking in particular of NHS dentistry. The target in the NHS Plan was that by September 2001 everyone would have access to an NHS dentist. I am not sure what that means, because certainly you cannot register with an NHS dentist locally, although I suspect the Government will have some means of saying it is available because there are emergency dentists. That is not what people want, they want to register with a dentist of their own choice. How are you going to make sure that people have a real choice of being able to register with an NHS dentist if they want to.
  (Mr Milburn) I personally am not convinced that registration is the issue which is uppermost in people's minds.

  116 They like a regular relationship with one dentist.
  (Mr Milburn) What they want is treatment.

  117. No, no, they like a regular relationship with a particular dentist. Dentists are horrible people. I am sorry if I offend anybody. You put quite a lot of trust in a dentist and once you have a relationship with that dentist you want to keep it. I think the people out there do want that and they want to be able to register with somebody and know that they will have an ongoing relationship with somebody they trust and that is not there at the moment. When will it be?
  (Mr Milburn) I am clearly outnumbered on this. I think people want treatment and they probably want to have a relationship as well; crucially they want to have treatment and registration does not necessarily equal treatment. However, your question was: how can we apply choice across the piece? There is quite a large measure of choice already in the NHS, although it is not always dressed up as that. You have a choice about where to register with a GP, for example.

  118. Not if you want to change.
  (Mr Milburn) You do. It is true that it is more difficult to change, but you have a choice about where to register and there are usually not the same registration problems with GPs as you described with dentists. On choice, the scheme we have been talking about here is a scheme which importantly applies to elective surgery, to hospital operations. One of the big mistakes in the market was the idea that you could have the same discipline applying to elective surgery, mental health services, emergency care, when they are quite different services. As an emergency patient you do not really care, you just want the treatment. If you are waiting for a hernia operation, the choice between six months and three months is quite a profound choice which you might actually want to exercise because it is pretty painful waiting for it. We have to get to a position where as you expand the capacity you can make choices more widely available, including for NHS dentistry. There is money going into NHS dentistry, there are more NHS dentists now than ever before. It is the case now that through NHS Direct you can get in touch with a NHS dentist. The NHS Direct service will assign an NHS dentist to you. It might not be just around the corner, maybe there is no dentist just around the corner, maybe it is a mile away but you are getting access to a NHS dentist. What we have to do is continue growing the capacity. It is back to this transition point that in a capacity constrained system, which was your opening point, you can only enshrine choice across the piece when you have sufficient capacity and at the moment we do not, but we are growing it.

  119. May I come back to the dentist being only a mile away? They are certainly further away than that. I am sorry to stray slightly off choice. How far do you think it is realistic to travel to access an NHS dentist? That brings me back to the definition of "having access". How do you define that? Ten miles? Is that realistic? Somewhere that is not on a bus route.
  (Mr Milburn) It would probably depend on local circumstances. In Swindon there are probably still quite big problems; I do not know what the position is. We have probably put different schemes in there in order to ensure wider availability at one time. There were problems about getting access to a NHS dentist in Swindon at all. Now that has changed. You have to pick off these problems. It is picking off the problems. The position in your part of the world may be very different from the position in Julia's part of the world, in which case we have to apply some localised solutions rather than saying what we are going to do is bring an enormous big national club along and thump it down on the heads of everybody in an undifferentiated way and expect that will get the result.

 


 
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