NHS service contracts for independent health providers are increasing faster than their private income, according to health economic analysts.

Annual growth in private health spending slowed by nearly 50% between 2006 and 2011, while annual NHS business for private contractors increased by over 50%.

According to the report from the Institute for Fiscal Studies and the Nuffield Trust, private health spending has suffered worse from the recession than public health spending.

While public spending on healthcare rose in 2008 and 2009, but fell in real terms by 0.7% in 2010 and 1.2% in 2011, private spending fell by 6% from 2008 to 2011.

However, NHS spending on care from non-NHS providers rose from £5.6bn in 2006–7 to £8.7bn in 2011–12, with private sector providers accounting for most of the outsourced care.

The increase in outsourcing of NHS care to the private sector encompassed general and acute care, mental health and community services.

Anita Charlesworth, Chief Economist at the Nuffield Trust and co-author of the report, said: “Reforms under the last government to promote competition and patient choice have also resulted in a rapid increase in NHS spending on private providers. Whether spending on private providers will continue to increase as NHS spending is essentially frozen is less clear.

“There is a need to monitor whether the planned extension of choice into community services leads to an increased involvement of the voluntary sector or whether in response the private sector providers also expand into this area,” Charlesworth added.

Sir David Nicholson will retire from his role as Chief Executive of NHS England, and from the NHS altogether, in March 2014.

The announcement of his retirement will relieve the pressure on him to resign following the Francis report, which implicated him in the Mid Staffordshire tragedy.

It also means that he will not have to deal with growing anger over revelations that the ‘Nicholson challenge’ of cutting £5bn from the NHS budget each year means an absolute cut in the NHS budget.

A former Communist Party member, Nicholson has been a strong supporter of current Conservative health policy: he began implementing the Health and Social Care Act prior to its approval by Parliament.

However, last autumn he warned that “carpet bombing” the NHS with private sector providers would lead to “misery and failure”. NHS reform needed to support clinical decision-making, he argued.

The Francis report into the unnecessary deaths at Stafford Hospital between 2005 and 2009 found that Nicholson, as head of the region’s SHA, had not acted on warnings about the hospital’s high death rate.

While the Francis report blamed inadequate staffing levels and bad management for the tragedy, Nicholson pinned the blame on the Labour Government’s infection control and waiting time targets.

Nicholson has worked in the NHS for 35 years, and was NHS Chief Executive for almost seven years. In April this year he became Chief Executive of NHS England, a role effectively continuous with his previous one.

In a letter to Professor Malcolm Grant, Chair of NHS England, Nicholson declared his continued support for the NHS reform process: “I still passionately believe in what NHS England intends to do. My hope is that by being clear about my intentions now [I] will give the organisation the opportunity to attract candidates of the very highest calibre so they can appoint someone who will be able to see this essential work through to its completion.”

Nicholson’s retirement will quieten the controversy over his role in the NHS reforms of this and the last government, and allow recognition of his lifelong commitment to the NHS.

Steve Turley, Managing Director of Lundbeck, has been re-elected Chair of the European Medicines Group (EMG), the UK voice of pharmaceutical companies based in continental Europe.

Robin Bhattacherjee, General Manager of Actelion, was re-elected vice-Chair of the EMG; and Mike Sumpter, CEO of Servier Laboratories, was elected Treasurer.

Issues highlighted at the EMG’s twelfth AGM included the impact of NHS reform on European-based companies and European perceptions of the UK as a pharmaceutical market and research base.

The EMG’s 15 member companies are Actelion, Almirall, Bayer, Boehringer Ingelheim, Ferring, Lundbeck, Menarini, Merck Serono, Norgine, Novartis, Novo Nordisk, Roche, Sanofi, Servier and UCB.

Steve Turley (pictured) commented: “We have members ranging from the UK’s biggest pharmaceutical companies, through biotechnology specialists to emerging organisations. Yet we all share common challenges and can benefit from being able to view these through a European-focused lens.”

“How the implementation of the NHS reforms affects European-based companies is a key issue this year,” noted Robin Bhattacherjee.

“Upwards of 60% of the medicines our members have introduced in the last decade have not been subject to a NICE health technology appraisal, so... local decision making in the CCGs about the use of these remains a major focus for EMG.”

Mike Sumpter noted: “Globally the UK is viewed as a tough market where innovative new medicines aren’t adopted as readily as similar economies.

“We want to work closely with our NHS stakeholder partners to demonstrate that the UK and the NHS is worth investing in.”

Lundbeck is based in Denmark, Actelion in Switzerland and Servier in France; all three companies have major UK operations.

Nearly half of recently qualified GPs are experiencing rising levels of stress, while over a quarter say they don’t have time to deliver the care patients need.

Of 368 GPs surveyed by the BMA who qualified in 2006 (from a cohort of 435), 40% said their morale had deteriorated in the last 12 months.

The respondents identified the current NHS structural reforms – claimed by the Government to be ‘empowering’ GPs – as a major reason for this decline in the professional experience of primary care.

However, 92% said that interactions with patients improved their morale – showing that patients being more unwell or more demanding was not a major issue.

The 2012 survey found that 44% of respondents said their stress levels had worsened over 2012, 20% reported ‘unacceptable’ levels of stress at work, and 28% said they did not have time to deliver the care that patients needed.

In addition, more than half (54%) identified understaffing as a major problem in their practices, while more than three quarters (79%) said work-related administration duties negatively affected their time outside work.

The BMA said the survey's evidence of declining patient access to NHS primary care of adequate quality was “troubling”.

The rapid pace of NHS reform means that the pharmaceutical industry needs new strategies for joint working to create and sustain commercial opportunities. Diana Vegh, NHS Partnership Manager at the ABPI, describes how the Association is working to develop a joined-up partnership strategy across the new NHS landscape.

The NHS has been going through one of the largest reorganisations since its inception – Sir David Nicholson famously describing it as “so big, you can see it from space” – and the implications for the pharmaceutical industry, particularly regarding the joint working agenda, are significant. So much so that the ABPI has established an NHS Partnerships Team, led by Kevin Blakemore, with one senior manager covering each of the four NHS England regional offices. The concept has been driven by Stephen Whitehead, our CEO, and was piloted several years ago as the ABPI Outreach Team – which made constructive inroads in the South-West, a challenging health economy to work in.

I am one of those regional managers, ex-NHS and industry, based in Devon, and covering a territory that stretches from Penzance to Margate. The population is 13.4 million, with a budget of £21.1 billion and 110 NHS organisations. There are 1,873 GP practices, 34 local authorities (with three unitaries), four clinical senates, five Academic Health Science Networks, seven Area Teams, three specialised commissioning hubs and 51 CCGs. And it’s a 14-hour return journey from one end to the other. Plus we’re a trade association, with limited resources. With such a large number of potential customers and new organisations, how do we make the best use of our time?

RIGS strike oil

Each of us has produced a regional business plan, aligned to member company priorities, broadly supporting our themes of value and partnership, and clustered around 11 core corporate objectives. These have all been discussed and agreed by our Board of Management, which is made up of member company executives. The most important objective for my team is improving the environment for access and uptake of innovative medicines. We’ve segmented our rapidly evolving customer base and developed stakeholder maps for engagement. But pivotal to helping us navigate this complex structure has been the establishment of our Regional Industry Groups or RIGs, one per region, which meet monthly. General managers of our member companies have nominated senior representatives to sit on these groups, and we are adding associates who will join us virtually, i.e. online, via WebEx and telephone conferencing.

My RIG is chaired by Lisa Rosewarne from MSD, and our deputy Chair is James Steed from Pfizer. We have agreed our Terms of Reference and work plan for 2013, with a series of five workstreams and virtual task and finish groups led by RIG members, focusing on industry-wide issues from medicines optimisation to the Formularies Good Practice Guide. We often have external speakers who may not meet with single companies but are happy to talk to a group – such as Steve Sparks from NICE, who manages the field-based Implementation Team, and who recently gave an excellent presentation at one of our meetings. We also connect our RIG to the national policy work we do, and communicate across the other ABPI teams.

We’ve had a number of ‘bids’ from the NHS and healthcare companies who are interested in working with the pharmaceutical that there is a need for external organisations to understand better what joint working truly means in terms of the ‘Moving Beyond Sponsorship’ work done by the ABPI and the Department of Health in 2010. Our key tool for this has been the Joint Working Guide, and in particular the sections on pages 7 and 8. One of our RIG workstreams is to use these guidelines to engage with potential partners in order to share constructive feedback and highlight examples of best practice that we are collecting from member companies.

We showcased this at a conference with the NHS Confederation in February this year, in London. We have a Memorandum of Understanding with the NHS Confederation and the ABHI to work on the Innovation, Health and Wealth agenda collectively; and this national policy work is essentially what we’re putting into practice in our regions.

Rules of engagement

In my day-to-day job and in my meetings with NHS stakeholders, I work to promote the whole pharmaceutical industry and a more mature working relationship with us. The majority of my discussions have been very positive, with a clear desire to move away from the old models of promotional metrics and explore a new way of working. Some CCGs, such as Torbay and South Devon, are striving to be ahead of the curve. Others are more conservative and prefer to agree a new policy on joint working first, and we’re trying to encourage the use of our toolkit and case studies.

But one thing I’m very clear to emphasise is that my team isn’t ‘the’ route into pharmaceutical companies. If an NHS organisation wishes to work directly with a company, of course it can. We are not competing with market access teams – we are enablers and facilitators – and the ABPI Code of Practice gives the NHS assurances about governance and conduct. But some organisations remain difficult to reach. I’m using good examples of joint working elsewhere in the NHS, or pragmatic discussions in other parts of the organisation, to overcome those barriers.

After all, partnership isn’t about pretending that everything’s fine and there aren’t any problems. But it is about moving to a place where you can agree to disagree, and solve your problems together even if you have differences. . e table above shows the framework I base my work on.

On the whole, projects seem to fall into three categories. The first category is disease specific projects, which often relate to long-term conditions such as COPD, diabetes or vascular health. Some of these can be quite broad, while others can be about specific service redesign projects in a particular health economy and relate to implementing new national guidance. The second category is projects that relate to an NHS priority, such as reducing inequalities, where industry expertise in social marketing and media has been put to excellent use. The final category, and the one expanding most rapidly, is where we have shared aims: improving patient safety, reducing medicines wastage, better adherence, realising the benefits of treatments – i.e. the medicines optimisation agenda.

Moving the goalposts

Those of you with a lot of experience may be reading this with a sceptical eye. Hasn’t this all been done before? Talked about before?

Yes. But this time, there are some key differences. The clinical voice is louder, and often in a leadership position. Attention is far more on quality than in the past, and the sanctions are greater. And while our austere financial climate is squeezing medicines spending, increasingly senior people are seeing that it is disingenuous to look at medicines solely as a cost pressure, and far more beneficial to see them as a means of improving health outcomes – on which the NHS is now being more tightly measured. New organisations also have a legal duty to innovate, which is now in primary legislation as part of the Health and Social Care Act. The new Academic Health Science Networks have been set up as companies, and though many focus on the earlier part of the medicines life cycle they will all be looking for new partnerships.

Pharmaceutical companies are also changing. We’ve gone from Share of Voice to Key Account Management, and the skills and competency mix of pharmaceutical field teams is very different from how it was a few years ago. When I’m out and about I’m meeting people with new roles, such as service development managers, NHS business managers and strategic account managers. And there have been a lot of redundancies in the NHS which have seen knowledge and skills move into the pharmaceutical industry. Today I had an email from a CCG asking me how they could second someone into an ABPI member company.

We are in a ‘perfect storm’ of policy, and the organisational turbulence we’ve all experienced is bringing some very forward-thinking and creative people into senior positions. Let’s make the most of that, and work together to get better outcomes for the populations that we live in and for the organisations that employ us.

Several leading charities, including Marie Curie Cancer Care, have said the new provider competition rules will prevent their having a role in NHS care.

The requirement to open up services to competition will make it more difficult for specialist non-profit care providers to be involved, the charities warned.

The voluntary sector statement, made in a briefing paper to peers, precedes a House of Lords debate on the hew NHS competition regulations.

The regulations, already described by a London GP as a blueprint for “lawyer-led commissioning”, will make it possible for private health providers to challenge any commissioning decision that does not follow UK competition law.

Charities including Sue Ryder, Marie Curie Cancer Care, the health and social care coalition National Voices and a number of hospice charities have said they are not able to compete with commercial providers.

One particular concern is that, in order to keep the administration of tendering manageable, CCGs will need to ‘bundle’ related services, shutting out specialist providers such as many charities.

The briefing paper said: “Wholesale competition... could lead to a diminishing of voluntary sector participation. We fear this will lead to a loss of specialist services and skills that will ultimately lead to poorer care for patients and their families.”

The reaction from the voluntary sector follows demands from the BMA and the Royal College of General Practitioners to scrap the competition regulations, which form section 75 of the Health and Social Care Act.

The NHS cost-cutting policy known as the ‘Nicholson challenge’ will be extended indefinitely beyond 2015, according to NHS England.

The Government does not expect any improvement in the economy beyond 2015, so has put in place plans to extend the QIPP agenda on a long-term basis.

The statement by NHS England’s Policy Director, Bill McCarthy, refutes Government claims that the NHS budget is ‘ring-fenced’.

However, McCarthy emphasised that the incremental cost-cutting measures that have so far been used to achieve QIPP savings will not be either adequate to the challenge or possible to keep repeating.

Instead, NHS England – through its Local Area Teams – would look at “ambitious and radical” service changes.

The LATs will need to ensure that the decisions of individual CCGs do not conflict with this national service redesign agenda, he said – further qualifying the supposed ‘autonomy’ of CCGs.

Instead of closely monitoring QIPP savings at the local level, as the DH had done before, NHS England will rate the savings plan of each CCG as ‘red’, ‘amber’ or ‘green’ based on whether it can be and is being realised.

NHS England recently published a business plan indicating that it was drawing up a framework for “major service reconfiguration”.

Malcolm Grant, Chairman of NHS England, stated recently that the next government would consider the option of charging for NHS services.

The combined statements by Grant and McCarthy suggest that a radical reduction in the availability of free NHS services is planned beyond 2005.

Like a patient in acute care, public satisfaction with the NHS is now in a stable condition after a severe fall.

According to a King’s Fund report based on the annual British Social Attitudes survey, 61% of the public are ‘satisfied’ with NHS services, compared with 58% in 2011.

These figures are statistically equivalent, but follow a steep fall from 70% in 2010 – though 58% represents only a return to the 2008 level.

Satisfaction with social services in 2012 was at a much lower level (30%) than satisfaction with the NHS, suggesting that social care is the ‘poor relation’ in the family of integrated care.

The figures are based on interviews with over 1,000 randomly selected adults, with the data being weighted to match the overall adult population.

Public satisfaction with the NHS rose consistently from 40% in 2003 to 70% in 2010, but dropped by 12% in the first year of ‘austerity’ measures.

The 2012 figures show a 5% improvement in satisfaction with A&E services relative to 2011, and no significant changes in satisfaction with GP, inpatient or outpatient care.

John Appleby, Chief Economist at The King’s Fund, commented: “With no real change in satisfaction with the NHS in 2012, this suggests the record fall in 2011 was not a blip and that the ground lost may take some time to recover.”

However, the King’s Fund report also notes that the 2011 figures may reflect anxiety about NHS reform, while the 2012 may reflect a better experience of consistency in NHS services than many people had feared.

In support of this conclusion, the think tank notes that “key measures of performance likely to have been noticed by the public”, including waiting times and hospital infection levels, did not change between 2011 and 2012.

The new NHS structure came into force on 1 April, with local commissioning now entrusted to clinical commissioning groups (CCGs) that combine business and clinical expertise.

The CCGs are managed by NHS England (formerly the NHS Commissioning Board) and governed by new laws that enforce a ‘level playing field’ for provider competition.

The 152 Primary Care Trusts are now abolished, and all NHS hospital trusts are required to qualify for Foundation Trust status within the next year.

NICE, renamed the National Institute for Health and Care Excellence, will set standards for both health and social care services, promoting integrated care.

The statutory role of CCGs in facilitating competition between providers of NHS services has polarised opinion, with only a third of GPs in a Pulse survey saying they felt empowered by the new system.

According to private health analysts Laing and Buisson, the NHS in England spent 11% more on services from private providers in 2012 than in 2011 – a clear sign that the provider base is already shifting.

Professor David Haslam, the new Chairman of NICE, commented: “It is a time of huge risk. We know in medical care in hospital that the greatest risk is when patients are being handed over from one person to another. It is a risky time for the system, so it is important that the big players work together.”

Mike Farrar (pictured), Chief Executive of the NHS Confederation and a long-time champion of community-based healthcare, warned that trying to improve patient safety while reducing costs would place great pressure on the new NHS.

“We need to recognise the huge challenges facing the health service,” he said. “New structures alone won’t enable us to tackle these challenges, and we should not see them as a silver bullet.”

NHS Chief Executive Sir David Nicholson has told the Health Select Committee he does not intend to resign over the Mid Staffs enquiry.

Nicholson, who led the Mid Staffordshire Foundation Trust for 10 months during the period when neglect and abuse of patients caused over 400 deaths, has blamed the Labour government for the abandonment of care.

With the endorsement of PM David Cameron, Nicholson also claimed he is what the NHS needs to see it through the critical period of reform.

An early day motion signed by 40 MPs has called on Nicholson to resign after the Francis report made it clear that he had failed to intervene in the regime at Stafford General Hospital when Chief Executive of the regional trust.

The Francis report made it clear that the trust’s focus on qualifying for Foundation trust status by slashing budgets and cutting staffing levels was the underlying reason for the Stafford General Hospital tragedy.

However, Nicholson – who started driving through Lansley’s NHS reforms on the ground long before the Health Act became law – avoided saying anything to the Health Select Committee that might lead them to doubt the safety of the reforms.

Instead, he placed the blame for the disaster on two policies that were specific to the Labour government: treatment access targets and infection control targets.

“There were a whole set of changes going on and a whole set of things we were being held accountable for from the centre, which created an environment where the leadership of the NHS lost its focus,” he argued.

Furthermore, he claimed, the NHS “is at maximum risk over the next few days”, when the old structures are dissolved and the new ones become fully operational, and he is the only person able to manage those risks.

Critics may suspect that Nicholson has won Cameron’s support by placing the blame on the Labour government and distracting attention from the threats to patient safety that are intrinsic to the current NHS reforms.