Is it me that’s mad?

2015 has seen some remarkable developments in the NHS.  It has also heard some remarkable statements from politicians.  I am, frankly, amazed that the reaction to some of these has been so muted because in the round they prove to me a fundamental truth.  The problem is that no-one else appears to see it.  Which makes me wonder whether they are all mad, or if I am.

Let us start at the beginning, which is a very good place to start.  Not least because the song begins with “Doh”, which is what I feel like saying in a Simpsonic way rather than a Maria one.  Consider each of my propositions carefully and then let me know when you have found an explanation for the paradoxes and oxymorons I describe.  Remember – it only takes one fact out of place to bring down the whole hypothesis.

Proposition 1. The NHS is not fixable

The NHS was started in 1948.  It has always struggled to balance clinical need and cost.  It has gone through numerous re-organisations.  None of these have fixed the problems.  Some of the best minds in the country, indeed in the world, have addressed the issues over decades.  The owners of those minds have come from within the medical and nursing professions, from business, academic economics  and politics.  None has succeeded.  The problems are still there.  Indeed they have multiplied.  Therefore the NHS is beyond fixing.

Proposition 2.  Doctors have a limited capacity to be constructive

Note that I have not said “ability”.  Many government ministers (and some newspapers, most recently “The Times”) have criticised doctors for not offering constructive suggestions.  Assuming this is true, they should ask why.  It has occurred to none of them that doctors might have got tired of doing this.  They have also failed to understand the principle of the null hypothesis.  Take a proposal, any will do, and list the potential benefits.  That’s all well and good, but if you do not work through the potential pitfalls something will trip you up.  We doctors are scientifically trained and the concept of disproving a null hypothesis is integral to our work.  So we look for faults and then expose them.  It may seem negative, but it is rational.

I am confirmed in this negative view by the numerous occasions on which I listened to a plan only to realise that it had been tried before.  Doctors are in post for decades; hospital managers and politicians for mere years (or sometimes months).  So they have no institutional memory.  Doctors are often constructive, but either they are nibbling the edges of a problem or their constructivism falls down because their proposals cost too much.

One constructive proposal (given Proposition 1) is to abolish the whole caboodle and start again from scratch.

Proposition 3.  Doctors are the fall guys

Recently the Health Secretary has taken hospital consultants to task because they refuse to embrace a seven day working week.  It is necessary, he says, for them to do this because there is a 16% excess of deaths at weekends.  Ergo, because senior doctors don’t work shifts based on 7 days this must be their fault.

The list of mistakes in this paragraph is almost as long as the number of words in it.  The paper “proving” an excess of weekend deaths has palpable flaws, as Margaret McCartney argued in the BMJ (see  Consultants have not refused to work a 7 day week; they already do.  Thus the conclusion is false because (a) the premise is false and (b) its proposed cause is not true.  The reason there may be weekend problems is nothing to do with doctors’ numbers at a senior level, but because the hospital’s support services don’t work a 7 day week.  Also you might argue that the less sick don’t turn up in emergency departments at weekends.   If you are going to run a 7 day week you need to run full operating theatre sessions, pathology labs and imaging services, the cost of which is enormous.  Where will the necessary funds come from?  This year 75% of hospital trusts report they will be in deficit.  75% of hospital costs are in staff.  You have to increase these to run a 7 day service so cannot take the traditional route of reducing them.  So, if you need to save 6% of a hospital’s budget to fix the deficit, you will have to make a saving not of £6 in every £100, but £6 in £25 – or actually more, as the staff costs will go up.

However…  if consultants are not to blame, then as commissioning of services is now run by doctors through CCGs it must be their fault.  As all that doctors ever do is bring up flaws and problems, it’s their fault.  When doctors flag poor practice they are ignored (I have been) or threatened if they don’t shut up (as I have been) or both, so they stop doing it and then when something terrible blows up everyone rounds on them and asks why they didn’t.

It’s time folk realised that the circle cannot be squared.  It’s no-one’s fault.  It’s just impossible (see proposition 1).

Proposition 4.  Rationalising procurement will add to costs in the end

I have lost count of the number of attempts I have seen to reduce hospital, or hospital group costs by going to one supplier.  My first involvement was in 1984.  Of course it makes sense to choose the cheapest supplier – in basic money terms.  Of course there are economies of scale if everyone uses the same supplier.  But… fixing on one supplier creates a monopoly.  The corollary of that is that the supplier can now increase costs at will.  There is no competition to drive costs down.  And creating a single-supplier situation is exactly contrary to the principle of opening the NHS up to competition, which is an avowed aim of government.  Furthermore, cheapest is not necessarily best.  One hospital I worked in changed its contract for surgical gloves to a cheaper make, only to find that so many burst when they were put on that the costs went up.  Simple economics, really; if you have something at half the unit price but you have to use three times as many of them…

Ok, so you can change suppliers if something isn’t right.  That’s why we ended up with seven sets of holes in washrooms because the first thing the new towel and soap company would do was change the dispensers.

Corollary: Short-term contracts promote instability, uncertainty and short-termism.  If you develop a system in which contracts are re-tendered every five years there is no incentive for anyone to make plans longer than that.  Patients may have diseases for a lifetime and you need to develop, or evolve services over that lifetime.  It’s bad enough for them when their doctors retire after 30 years, but it will be hopeless if they have to start all over again with a new consultant after just five.  And if the “new” service simply re-employs all the original doctors then what’s the point of doing it anyway, not least if it costs more because the private provider is making a profit to pass on to its shareholders (and thus the money leaves the NHS for no direct benefit – see proposition 5).

Proposition 5.  The purchaser- provider split in the NHS is Mickey Mouse economics

The NHS market is not a market at all.  Money is given out by government to so-called commissioners who buy services from so-called providers.  Each side of this transaction is then supposed to make a profit.  One might ask why.  The NHS provides healthcare to the nation, at the nation’s expense.  So it has, quite simply, a cost and any statement or analysis of profit or loss is merely an exercise to confuse.

But anyway, how can both sides make a profit?  If the commissioners do, then the allocation they are getting is too much for the services they commission – in other words, their budget is too big.  If the providers do the same applies.  If both make a profit something really funny is going on.  If, however, both make a loss, then it’s simply because government isn’t putting enough money into the system to begin with.  Because all the money, give or take a tiny percentage wrung out of private patients treated within the NHS, comes from government.  So the NHS cannot make a profit or loss except by accounting sleight-of-hand and trickery.  If services are contracted out to an external provider it must make a profit for its shareholders.  By definition that means that any such provider receives more money for its provision than the provision costs.

Making a profit in any organisation that is already bankrupt (in other words, is carrying an unsupportable historical debt) is impossible.  However good a manager might be, he cannot rescue a completely failed organisation.  Reorganising it, or incorporating it into another, simply transfers the debt burden and may result in a stable, financially balanced organisation collapsing under the weight of the new debt.  That is why many companies fail, and are shut down.  However under NHS economics failed businesses are not allowed to close.  So the one action that can re-balance the system is not available.

And the absurdity of this underpins the illogicality of on the one hand of diverting profit outside the NHS (by effective overcharging in a competitive market) and on the other insisting on a monopoly procurement system.   Competition drives down cost, shrieks the government, but monopoly procurement drives down costs, it shouts simultaneously.  How can it have it both ways?  Anyway, as I have pointed out it only takes one fallacy, or fact, to demolish the entire rationale for either.  And don’t start me on PFI again, where interest payments are fixed at high levels for 30-35 years and it costs £100 to change a lightbulb and £3000 to put up a set of shelves.

There is some curious Mickey Mousery practised by finance departments that is mysterious to say the least.  Consider my old rehab unit, put up with funding under a PFI and costing about £1.2m.  I was suddenly told that it was financially non-viable.  When I asked for the figures on which this assertion was based I was sent a sheet indicating that the annual PFI repayment allocated to the unit was £650,000.  Note I said annual.  The PFI contract had some 25 years to run at this stage.  I pointed out that a capital cost of £1.2m would incur a repayment of around £80,000 annually, so wished to know where the remainder of the £650,000 was being spent.  After repeated enquiries I was told that the issue had been “sorted out” and I didn’t need to worry my little head about it any more.  The delays in not being given an answer were compounded by frequent changes of finance director, and “no record of my enquiry”.  One of the finance directors, brought in to troubleshoot, appeared to be having his salary (substantial) paid to his own company so he didn’t pay income tax at 45% but only corporation tax at 20%.  He also failed to submit a tender from our physiotherapy department, so that (highly competitive) bid was not considered by the procurement panel.  Perhaps this is more Dick Dastardly than Mickey Mouse…

So-called “efficiency savings” are not usually either efficient or savings, and cannot be applied infinitely or the organisation will eventually vanish up its own backside.  I cannot remember a single year in my 28 years as a consultant when there was not a requirement to make them.  In hospitals we called them cuts.  However, when the chips were down and it was simply not possible to squeeze the lemon any more, the government would usually step in and provide an under-the-counter top-up rescue payment.

There’s another bit of Mickey Mouse stuff as well.  Let’s suppose a commissioner asks a provider to do a certain amount of work in a particular area, say replacing hip joints.  The provider does this, but falls foul of a centrally imposed waiting time target because the numbers of patients needing new hips is greater than the contract, and the hospital cannot do work for which it won’t be paid.  So it is threatened with a fine for breaching the target.  So it goes back to the purchaser and says “Look, actually we have been referred 20% more hip replacements than you budgeted for.  Please increase your funding”.  But the purchaser hasn’t the money, so refuses (unless it robs Peter to pay Paul, and shifts the problem to another area).  The hospital then has to decide how it can do 20% work more than it’s paid for, or be fined for not doing what it’s referred.  This is commonly known as a lose-lose situation.  If you did this in business you would be considered mad.  It is not the fault of the surgeons, or the managers, or even the cash-strapped purchasers, but of the system.

Proposition 6.  Financial balance and clinical excellence are incompatible

If you want to balance the financial books in the NHS you have to make savings.  Making savings means reducing staff without reducing throughput (see above – staff are 75% of the bill, but income comes from activity, except when there’s too much activity and purchasers won’t pay up).  Less staff and more throughput means more pressure, and more mistakes.  Mistakes are costly because patients (or their relatives) sue.  I might add that on the whole it’s cheaper to settle for a small sum than go to court and incur all the legal expenses, and as people are aware of this they are effectively encouraged to sue.  Also new treatments cost lots and keep people alive longer in a state of expensive medical dependency (for example, post-transplant immunotherapy, chronic lung disease and arthritis management, dementia care etc).  Keeping up with advances means buying more expensive drugs, nursing care and intensive care facilities.  So clinical excellence costs money.  Financial balance requires the saving of money.  Never the twain shall meet.

Proposition 7.  We need to abandon the NHS and start again from scratch

Of course my simple solution for the NHS, having said I wouldn’t start on PFI again, is to refinance the whole lot.  I estimate that reducing the interest burden by between 4 and 10% (some PFIs are apparently paying 12%) would reduce costs by some £20-30bn.  Which is roughly the current deficit.  After all, we have bailed out the Greeks…


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s