The birth of the new, deregulated NHS came only days before the death of the politician whose career made it possible. Pf looks back on the legacy of the Thatcher era for healthcare in the UK.

When Margaret Thatcher died on the 8th April, they were still removing the last shreds of bubble wrap from the new NHS structure. The blueprint of the Health and Social Care Act (2012) is a monument to Thatcherism. It transforms the NHS from a nationally owned, publicly funded healthcare system to one driven by competition and governed by business law – a system designed for rapid, continuous change under the influence of market forces.

The architect of these reforms, Andrew Lansley, is a politician very much in the Thatcher mould: autocratic, forceful, not worried about consensus. His statement that the Government’s ‘listening exercise’ was only necessary because the doctors had to have the reforms explained to them was straight out of the Iron Lady handbook.

In order to assess the impact of Thatcher’s legacy on healthcare, it’s essential to appreciate that NHS market reforms began on her watch. Even the relatively minor step of outsourcing hospital cleaning was casting a shadow over hospital care decades later.

And the fundamental reforms outlined in 1989 – the NHS internal market and the purchaser/provider split – laid the foundations of the market reforms that followed under the governments of Major, Blair, Brown and Cameron. As historian Charles Webster has observed, the 1980s and 1990s saw “continuous revolution” for the NHS.

It’s become a cliché of retrospectives on Thatcher to say that the Iron Lady ‘left the NHS alone’. It’s true that her government had other fish to fry, notably the onslaught on the manufacturing industries and their trade unions that culminated in the miners’ strike.

Thatcher noted in her memoirs that in most respects, the NHS provided “high quality care at reasonably modest unit cost” and commanded public “affection”. She was in no hurry to privatise it – but that did not mean she left it alone.

Iron rations

However, the Thatcher government’s first health policy initiative was one of deliberate inaction. The Black Report into health inequalities, published in 1980 after a failed Conservative attempt to block its publication, noted that health inequalities in the UK were linked to socio-economic factors such as income, housing and conditions of work. The Government rejected the report’s findings and recommendations.

The 1980s were not an easy decade for the NHS. Major developments in drug therapies and surgery increased healthcare expectations and costs, while a massive increase in unemployment accentuated public health needs. The main theme of Thatcher’s health policy was cost control, building on the public spending restraints of the Callaghan government. The phrase ‘death by a thousand cuts’ became endemic in health journalism.

Diabetes patient Richard Grimes recalls the austerity climate of the NHS at that time: “My memories of that clinic were peeling paint on the outside and a filled waiting room on the inside. The most bitter memory was the battle the British Diabetic Association had with the government over disposable needles. I was expected to inject twice a day with re-usable needles. These got blunt quickly, but I was expected to use them for months. As a result I developed scar tissue in my injection sites. Finally the Thatcher government relented and I got sharp needles.”

Two significant policies of the early Thatcher years increased the role of the private sector in healthcare. In 1980, NHS consultants’ contracts were changed to allow all to do private work with no detriment to their NHS income (previously those also doing private work were paid about 18% less). As a result, it became the norm for consultants to divide their time between the public and private sectors.

In 1983, the government legislated to make hospitals put their cleaning services out to competitive tender. This meant that the job of cleaning wards went to the lowest bidder – often to companies that used casual, untrained sta. supplied by job centres. The contrast between the high quality of surgical treatment and the dirtiness of wards became notorious. The level of hospital-acquired infections grew steadily, until in 2005 the Lancet noted that the UK had “one of the highest rates of MRSA in the world”.

Thatcher wanted to introduce more radical changes – such as a shift to an insurance based healthcare model, with ‘health stamps’ for the poor – but in a busy decade, her battles with trade unions and left-wing Labour councils took priority.

The great divide

The third Thatcher term saw a crisis of hospital capacity, provoking a review of the NHS that aimed to address its financial problems through competition. The 1989 White Paper Working for Patients gave rise to the NHS and Community Care Act (1990), engineered by the ambitious Health Secretary Kenneth Clarke within the Major government. It introduced two important reform policies.

The NHS internal market separated the functions of purchasers (health authorities) and providers (hospitals and other organisations). The latter competed for service contracts within a business framework. Hospitals became trusts: independent, self-managed bodies. By 1997 almost all NHS hospitals were trusts. One effect of this change was that administration costs doubled from 6% to 12% of the NHS budget.

GP fundholding was an attempt to develop a similar framework for primary care. Family doctors were encouraged to join a scheme whereby they received budgets to buy non-emergency care services from NHS providers, instead of relying on those purchased in bulk by their health authority.

Fundholding doctors were often able to obtain services more quickly than those outside the scheme. By 1997 about 50% of GPs were fundholders. The scheme cooled the professional relationship between primary and secondary care, and many patients saw it as a ‘two-tier’ healthcare model.

The internal market and GP fundholding can be seen as a dry run for the current NHS reforms, which embody the same principles but strengthen them by reshaping the health system around them.

Dragon’s Den

‘Save the NHS’ was a key slogan for Labour in the 1997 election: its campaign played on the unpopularity of the internal market and GP fundholding. Blair’s first Health Secretary, Frank Dobson, proudly announced the abolition of both policies. But as Peter Mandelson has said, New Labour’s programme was continuous with . atcherism – and soon, Dobson and his beard were forgotten and Alan Milburn was turning the NHS into a Dragon’s Den for private providers. Webster notes that Blair did far more than Thatcher to bring the private sector into the NHS.

Facing the challenges of growing demand and innovative therapies, especially in cancer and mental health care, Milburn’s NHS Plan (2000) ushered in a new world of NHS ‘modernisation’: Private Finance Initiatives, Practice Based Commissioning, Payment by Results, Foundation Trusts (which were self-funding), and the new mantra of NHS reform: ‘patient choice’.

Under Brown’s leadership, however, the Mid Staffordshire tragedy knocked the wheels off the reform agenda. Alan Johnson, the Health Secretary left to clear up after the worst ever failure in NHS care, slowed down the transition of acute trusts to Foundation Trust status. His successor, Andy Burnham, reacted to problems with Independent Sector Treatment Centres – who withheld their performance data as ‘commercially confidential’ – by stating the NHS to be the ‘preferred provider’ of elective surgery. With language like that, you’d think he was in the Labour Party.

Here comes the son

In opposition, Conservative activists published a policy book called Direct Democracy (2005). It claimed the NHS was “no longer relevant”, and proposed a system whereby patients were funded “either through the tax system or by way of universal insurance, to purchase health care from the provider of their choice” – with the poor having their contributions “supplemented or paid for by the state”. The authors included future Health Secretary Jeremy Hunt.

In its 2010 election manifesto, the Conservatives promised an end to the relentless NHS reforms of the previous government: it would inflict no major structural changes on the NHS. Once in power, with no sense of irony, Lansley introduced his reform programme as the first major NHS reform since 1948.

However, the Cameron government learned an important lesson from the Thatcher years. The Iron Lady’s confrontational style rallied supporters, but also gave opposition a clear point of attack.

In selling the NHS reforms to the public, Cameron kept repeating two points: the NHS budget would remain ring-fenced, and NHS services would remain free. We now know that the £20bn saved under the ‘Nicholson challenge’ is going straight back to the Treasury; and Malcolm Grant has warned us that after 2015, charges for NHS services are on the cards.

So, in bringing off a health policy revolution that Thatcher would have been proud of, Cameron utilised a spin technique that carried Blair’s fingerprints: Don’t show your hand.

New regulations for NHS procurement laid before Parliament will force CCGs to put virtually all services out to competitive tender.

The new rules, which will become law by default unless actively opposed, undo changes to the primary legislation agreed during the ‘listening exercise’.

Monitor will have powers to impose competitive tendering on any NHS contract where commissioners have maintained an existing contract or made a decision based on clinical rather than business criteria.

In February 2012, Health Secretary Andrew Lansley told the developing CCGs: “It is a fundamental principle of the Bill that you as commissioners, not the Secretary of State and not regulators, should decide when and how competition should be used to serve your patients’ interests. The healthcare regulator, Monitor, would not have the power to force you to put services out to competition.”

The new regulations make it clear that CCGs are legally obliged to put all services out to tender, and Monitor has the power to enforce that.

Similarly, Health Minister Earl Howe reassured the Lords in 2012: “Clinicians will be free to commission services in the way they consider best. We intend to make it clear that commissioners will have a full range of options and that they will be under no legal obligation to create new markets, particularly where competition would not be effective in driving high standards and value for patients.” This also appears to have been untrue.

Labour Lord Philip Hunt commented on the new legislation: “Whatever was said in Parliament, it seems that the Department of Health and Monitor have just carried on as if nothing has changed. By hook or by crook, a market is being introduced.

“There is very little international evidence that a market in healthcare leads to better or more cost-effective service, in fact most suggests the opposite,” he added. “Post-Francis report, the key consideration should be quality of care.”

The Department of Health (DH) has abandoned plans to use the Payment by Results tariff to stop private health providers ‘cherry-picking’ the easiest cases.

The decision breaks with a DH commitment made in November 2011 in response to the Government’s ‘listening exercise’.

However, the decision to deal with cherry-picking by “strengthening guidance” to providers has been positively greeted by the BMA and the King’s Fund.

Concern over private health companies contracted to provide NHS services selecting only the most profitable cases dates from the previous Government’s Independent Sector Treatment Programme.

It was a key concern among critics of this Government’s NHS reforms, leading NHS Deputy Chief Executive David Flory (pictured) to promise that using the tariff to discourage such behaviour would ensure “transparency and fairness.”

However, Flory recently informed NHS managers that the DH no longer planned to use tariff payments for this purpose.

“After extensive consultation and advice by the experts we believe that strengthening guidance around Payment by Results is a more effective way of preventing cherry picking,” said a DH spokesperson.

The BMA commented that using the tariff might not have solved the problem and “could have been interpreted as opening the door to price competition”. The “underlying problem” was “market reforms”, it said.

Nigel Edwards, Senior Fellow at the King’s Fund, said the tariff plan had been naive: “Pricing isn’t subtle enough to take into account all the complications of risk.” He argued that retrospective price adjustments might be more effective.

Maxine Vaccine casts a sceptical eye over the media strategy of the new DH and asks: is this new openness just another phase of a closing door?

There’s something about the new Department of Health team I can’t quite put my finger on, not that I would want to. Something airbrushed. Like a pop group just past its sell-by date. Jeremy Hunt exudes boyish sales exec glamour, Anna Soubry has the kind of sculptured fringe Kate Winslet would die for, Dan Poulter’s chest muscles are breaking through his silk shirt, and even Norman Lamb – the token oldster – has hair so reminiscent of Lembit Opik it makes you wonder whether the Lib Dem HQ gives its MPs haircuts as well as packed lunches and updates on their current beliefs.

Along with this faux-youthful rebranding of the DH goes a charm offensive so deliberate you can smell the cologne even on Twitter. It’s all about openness. Norman Lamb openly admits that he had issues with the way the original Health and Social Care Bill tried to force rapid changes on GPs. He even threatened to resign his post as chief political advisor to Nick Clegg if the Bill went through unchanged. But, he says, the ‘listening exercise’ fully addressed his concerns. That may be news to the GPs.

And now, Anna Soubry does a ‘private’ Q&A with the press to talk about what went wrong with the reform legislation. Asked to comment on how the DH had dealt with medical professionals and Royal Colleges, she says: “We screwed up.”

That is superb. For a start, it’s a tidy euphemism that won’t cause trouble in the press or get the likes of us shut out of our own website by the firewall. The phrase suggests literally screwing up a piece of paper – though it would have taken the entire duration of the ‘listening exercise’ to do that to the Health and Social Care Bill – but it has a darkly emotive undertone: after all, screwing means ****ing.

Later, Soubry explained: “We could have done more when the plans were set out initially to explain the benefits for patients, and encourage the support of health professionals. That is exactly why we took the rare step last year of pausing the legislation and holding a listening exercise. We ensured we took on people’s concerns and improved our plans.”

My, that’s good. It aligns with Norman Lamb’s praise for the ‘listening exercise’ and positions the DH neatly as people who sing the same words as before, but have improved the tune to appeal to a mass audience.

Can this be the same ‘listening exercise’ that Andrew Lansley said in April had not led to any substantive changes in the NHS reform legislation? Its purpose, he said, had been only to explain the Bill and “give further reassurance” to those GPs who had either “not read it” or “not really understood it”. That was a calculated insult to the BMA, who swiftly rose to the bait.

Could it be that bad hair is not the only reason why Lansley has been moved off the page in time for his replacement to defuse the medical profession’s anger? While Hunt is certainly no less right-wing than Lansley, he’s unlikely to lash out in that way at people whose support – or at least acquiescence – he needs to implement the reforms.

The former DH was in the Thatcher mould: dogmatic, bold, impatient with dissent. The new DH is in the Blair mould: open, feeling your pain, anxious to share… but underneath that, just as determined to set the agenda and keep to it.

As any sales professional knows, sometimes a door is opened just so it can be slammed in your face.

Maxine’s views are not necessarily those of Pharmaceutical Field.

New Health Minister Anna Soubry has said the Government failed to “encourage the support of health professionals” for the NHS reforms.

Asked during a private Q&A about how the Government had communicated its ideas to health professionals, Soubry declared: “We screwed up.”

The listening exercise had taken the “rare step” of amending legislation in response to public concerns, she said.

Soubry, a Conservative MP, was Parliamentary Private Secretary to Health Minister Simon Burns at the time of the original Health and Social Care Bill.

Following widespread reporting of her “We screwed up” admission, Soubry clarified that she had always supported the Bill.

However, she said, “We could have done more when the plans were set out initially to explain the benefits for patients, and encourage the support of health professionals.

“That is exactly why we took the rare step last year of pausing the legislation and holding a listening exercise. We ensured we took on people’s concerns and improved our plans.”

This account of the ‘listening exercise’ contrasts with former Health Secretary Andrew Lansley’s statement in April that the exercise had not changed the Health Bill.

Its purpose was to explain the Bill and “give further reassurance” to clinicians who had “not read it” or had “not really understood it”, he said.

Shadow Health Minister Jamie Reed rejected the new DH narrative, saying the Government “is completely out of touch if they think the only problem with their NHS plans is one of presentation.”

The draft mandate for the NHS Commissioning Board (NHSCB) will require the Board to make CCG autonomy and patient choice its major priorities.

While drawing on the NHS Outcomes Framework, the draft mandate avoids setting objectives for specific clinical conditions, saying that CCGs should have the flexibility to identify local clinical priorities.

Clinical senates and clinical networks are identified as “sources of advice” for CCGs, who will be able to decide for themselves and source other advice providers.

The primary task of the NHSCB remains the authorisation of “as many CCGs as are willing and able” by April 2013.

Our NHS Care Objectives: A Draft Mandate to the NHS Commissioning Board outlines 22 objectives for the NHSCB for the two years from April 2013, as well as ‘ambitions’ for the decade following.

Launching the draft document, Health Secretary Andrew Lansley said: “Today we will be laying the foundations of the new, more independent NHS” – meaning an NHS “free from constant political interference” and “tasked with continuously improving the care that patients receive”.

The document confirms the Quality Premium incentive scheme, a bonus payment rewarding CCGs who achieve a surplus on their annual budget. This incentive was heavily criticised by GPs during the ‘listening exercise’.

However, one objective that reflects feedback from GPs is to ensure that NHS commissioning supports the integration of care.

Objectives focused on patient choice include the availability of personal health budgets and the right of patients to choose another provider after waiting 18 weeks for elective treatment.

The final mandate will be published in the autumn.

Health Secretary Andrew Lansley has said the amendments made to the Health and Social Care Bill in its passage through Parliament made no fundamental difference.

The purpose of the ‘listening exercise’ was primarily to help clinicians understand the Bill better, Lansley told the journal GP Business.

A British Medical Association spokesperson said the Health Secretary’s statement was “not a remote surprise” to its members.

In an interview, Lansley claimed the main reason for opposition to the Health Bill was that critics had not read the White Paper Liberating the NHS – “or even if they had read it they had not really understood it or engaged with it”.

However, he expressed regret that the ‘listening exercise’ had not taken place “three or four months earlier”.

The many amendments to the Health Bill conceded by the Government at the House of Lords stage were needed to compensate for the slow engagement of NHS professionals with the reform process, Lansley asserted.

“Although we made further amendments in the Lords, in truth, a lot of those amendments were practical things in order to give further reassurance,” he said. “They did not really fundamentally change the principles at all.”

The BMA, which opposed the Health Bill after what it considered the failure of the ‘listening exercise’ to deal with the concerns of doctors, responded angrily.

“The majority of the health profession is aware the Bill’s fundamental principles look pretty similar to its original draft – it is not a remote surprise,” said Dr Laurence Buckman, Chair of the British Medical Association’s GP Committee.

“Furthermore, the amendments made to the Bill have certainly not offered the profession any reassurance and in fact some of the reform’s implementation plans have been made less attractive by the changes made to the legislation.”

The Coalition Government has proposed a number of modifications to its Health and Social Care Bill in response to the NHS Future Forum’s recent report. The proposals address concerns within both the NHS and the Coalition about aspects of the original legislation. Significant changes are proposed to key aspects of the Bill, including clinical involvement in commissioning and the role of private healthcare providers in the NHS.

Andrew Lansley

Listening and responding

To see what is new in the revisions, it’s important to consider their drivers. David Cameron, presenting the Government’s revised plans for NHS reform, said that “the fundamentals” have not changed: what has changed is “the detail of how we’re going to make all this work.” Broadly speaking, the new proposals have kept those features of the Bill that were welcomed by the medical profession and revised those features that were strongly criticised by it.

Since the Health Bill placed emphasis on giving control over decision-making to GPs, the criticisms made by the BMA have impacted strongly on the Government – and in particular, on the Liberal Democrats. The BMA welcomed the White Paper’s emphasis on empowering clinicians and patients, integrating health and social care, and focusing on health outcomes rather than processes. However, as the Health Bill worked its way through Parliament, the BMA became more forceful in its criticisms of what it said would be a fragmentation of the NHS into competing bodies, with private healthcare providers poised to take over when NHS hospitals failed. It recommended a model of ‘integrated’ care, with hospital specialists and nurses working alongside GPs to provide consistent care nationwide, without making NHS providers compete with each other and with the private sector for franchise-style contracts.

The Government’s eight-week ‘listening exercise’ paid close attention to those stakeholders – primarily GPs – on whom the success of the reforms would depend. The result is a significant drawing back of the proposals on provider competition, alongside a more nuanced plan for devolving responsibility from PCTs to clinician groups, with more time and resources being committed to ensuring continuity of services during and after the transition.

Less invasive surgery

The proposed changes to the Health Bill come under six headings, all of which relate to concerns raised by the BMA and other clinician bodies:

• Overall accountability for the NHS. The DH will have a duty “to promote a comprehensive health service” (but not, as in previous legislation, to provide it). All NHS organisations will promote the “core principles and values” of the NHS, including the 18-week limit on waiting times (which Andrew Lansley abolished in 2010).

• Clinical advice and leadership. The Government commits to a “more ambitious” plan whereby GP consortia, now termed “clinical commissioning groups” (CCGs), will have governing bodies with at least one nurse and one specialist doctor. They will be supported by national specialist “clinical networks” and regional non-specialist “clinical senates”.

• Public accountability and patient involvement. There will be clearer duties across the NHS to involve “the public, patients and carers”, including representation in the governing bodies of CCGs and a stronger role for health and wellbeing boards in local councils.

• Choice and competition. The new proposals rein back the role of competition in the provision of NHS services, accepting the BMA’s view that competition should widen choice but not be “an end in itself”. Monitor will now have a core duty to “protect and promote the interests of patients” rather than to promote competition. The Government promises “new safeguards against price competition, cherry picking and privatisation”. Significantly for industry, there are positive commitments: CCGs will have “stronger duties” to promote “care that is integrated around the needs of users”, while the new NHS Commissioning Board “will promote innovative ways to integrate care for patients”.

• Developing the healthcare workforce. More detailed plans are presented to ensure continuity of staffing and expertise levels during and after the transition period, including “retaining the best talent from PCTs and SHAs”.

• The timetable for change. The new CCGs must be established by April 2013, but they will not have to take on commissioning responsibilities until they are “ready and willing” to do so. Until that point, the NHS Commissioning Board will commission on their behalf. The transition will be managed to “avoid instability”.

Work in progress

The positive Liberal Democrat response to the revisions suggests that the new Health and Social Care Bill has better prospects of becoming legislation. However, the BMA has voted to call for further changes, saying that the proposed revisions do not “satisfactorily address” their concerns over competition and the need to maintain a comprehensive service.

As the details of the new Bill are worked out over the coming months, medtech suppliers should pay close attention to further changes – particularly in relation to its new focus on “integrated care” and the role of innovation in achieving that ideal.

David Cameron has outlined a number of amendments to the Health and Social Care Bill following the Government’s ‘listening exercise’.

Hospital doctors and nurses will now be involved in commissioning services, health regulator Monitor will have a duty to promote integration of care, and the creation of ‘clinical senates’ are amongst the changes.

The BMA welcomed the changes to the Bill and says it is a “significant step in the right direction”.

The announced changes come after the Prime Minister pledged five ‘guarantees’ for the NHS to ease any worries over the controversial reforms.

In a speech to NHS staff in London, Mr Cameron said that the Government had listened and acted on the concerns from critics and introduced a number of important changes to the Bill.

Consortia – now to be made up of GPs alongside doctors and nurses – will only take over commissioning responsibilities when they are in a position to do so, and not by April 2013 as was first proposed.

The new ‘clinical senates’, which will consist of experienced medical professionals, will oversee the integration of NHS services across local areas. Monitor, the NHS economic regulator, will also have a duty to promote the integration of care across local areas. Also, greater competition of services will only be introduced when it benefits patient care and choice.

“We have listened and engaged and not just heard what people have said but we are going to reflect it in what we are going to do,” the Prime Minister said. “There are real changes being made to these health reforms to reflect the concerns of patients, doctors and nurses so we get that right.”

Hamish Meldrum, BMA Council Chairman, says it is encouraging the worries over the proposed reforms are been addressed by the Government.

“The Prime Minister’s speech suggests he is committed to integrated NHS services, and the involvement of a wider range of staff in their design,” he said. “However, he also spoke in glowing terms about the benefits of competition, and we would point to the many damaging effects its application in the NHS has had so far.”

“As always, it will be the reality of the changes that is important.”

David Cameron has made five ‘guarantees’ for the NHS in an attempt to ease worries over the health reforms.

The Prime Minister has guaranteed the NHS will remain a universal service, that reforms will improve care, hospital waiting times will be “kept low”, spending will increase, and that competition will benefit patients.

But Labour leader Ed Miliband dismissed the pledges insisting that the PM has “mismanaged the NHS” and the reforms have brought “chaos, confusion and damage to patient care”.

In a series of speeches aimed at reassuring the public over the controversial shake up to the NHS, the Prime Minister is expected to say that ministers have “learnt a lot” about how to make the plans better during the ‘listening exercise’ and following the conclusion of the NHS Future Forum.

He will again restate the case for modernising the NHS adding that, if no action is taken, the health service may “buckle under the pressure” of the challenges it faces in the future with an ageing population and rising healthcare prices.

“We will modernise the NHS – because changing the NHS today is the only way to protect the NHS for tomorrow,” Mr Cameron will say.

“We will stick by our core principle of an NHS that is more efficient, more transparent and more diverse... But I will make sure at all times that any of the changes we make to the NHS will always be consistent with upholding these five guarantees.”

“There can be no compromise on this. It is what patients expect. It is what doctors and nurses want. And it is what this Government will deliver.”

However, Ed Miliband insists that Mr Cameron has already broken two of the pledges meant to assure the public over the future of the NHS and wasted huge sums in the process of reform.

“David Cameron is the first Prime Minister in history to be forced to set out five pledges to protect the NHS from his own policies,” he said. “Yet, he has already broken two of those pledges. The number of people waiting 18 weeks for treatment has gone up and he has not protected the health service budget.

“Hundreds of millions of pounds, which should have been used for patient care, are being wasted on handing redundancy notices to staff from primary care trusts who may now have to be rehired.”