Download PDF

OBSERVATIONS
Body Politic Nigel Hawkes
Shaky foundations: compromising the NHS
The recent compromise over top-up payments may turn out to be yet another hobble on the
ability of NHS foundation trusts to take financial initiative
Say what you like about the NHS, but
it’s certainly a rich source of ethical
disputes. Some are reminiscent of
religious scholars arguing over how
many angels can dance on the point of
a needle, but others really cut deep to
people’s core values about how society
should be organised. In the absence
of religion, the NHS provides a belief
system to which adherents cling with a
truly admirable tenacity.
The recent argument over top-up
payments was a good example, solved
(for the time being) by a masterly
fudge by Mike Richards, the national
cancer director, that simultaneously
allows top-up payments while stoutly
denying that they are allowed (BMJ
2008;337:a2418). It is the NHS
equivalent of the Concordat of Worms
in 1122, in which Henry V, the holy
Roman emperor, agreed to appoint
bishops only “by lance” but not “by ring
and staff,” thereby bringing an end to
the battle between sacred and secular
authority. By such dexterous word
juggling are compromises reached.
Unfortunately all compromises
eventually come apart if the underlying
disagreement is unresolved. So it is
today with NHS foundation trusts,
whose creation was meant to throw
open the door to freedom and initiative.
Thanks to a compromise reached in
House of Commons, trusts that have
achieved foundation status are now,
paradoxically, less free in important
respects than those that have not.
Labour MPs of the non-Blairite
persuasion were reluctant to allow
foundation trusts to be created at
all and were persuaded to vote for
the 2003 health bill only by the key
concession that the new trusts would
not be allowed to increase their
income from private patients beyond
the proportion earned in 2002-3. This
“income cap” was meant to ensure that
foundation trusts stayed where they
were, under the heel of the Department
of Health, and could not use their
freedoms to create viable business
models by increasing their private
508
income. So the act provided freedom
while denying it.
For a while all was well, as the
regulator of foundation trusts, Monitor,
interpreted the legislation permissively.
It ruled that foundation trusts could set
up joint ventures or make investments
and that income from them would
fall outside the income cap. But the
guardians of the flame—in this case
the public sector union Unison—were
not asleep but merely resting. Unison
challenged Monitor’s ruling, and
despite buying time through a public
consultation the regulator was forced
to give ground, granting that its rules
had been too permissive. Despite this
concession, Unison still intends to
pursue a judicial review to impose the
cap, and legal opinion is that the union
has a strong case.
The paradox is that trusts that aren’t
foundation trusts are not bound by
the cap, and some have increased
their private income significantly
since 2002-3. These include mental
health trusts that have set up “back
to work” programmes in partnership
with external contractors. Foundation
trusts cannot do this, because their
private income cap is essentially
zero—“something of an absurdity,” as
Stephen Firn, chief executive of Oxleas
NHS Foundation Trust, described it in
evidence to the House of Commons
select committee on health.
And what about Professor Richards’s
compromise on top-ups? This involves
private patients being allowed to pay for
drugs that haven’t been recommended
by the National Institute for Health and
Clinical Excellence (NICE) so long as
they are administered in another part of
the hospital—“by lance” but not “by ring
and staff,” so to speak. If this income
counts against the cap, as it presumably
does, foundation trusts that are already
close to a breach will not be able to
implement the top-up policy at all. The
NHS Confederation, which represents
most NHS organisations, says this
applies to many trusts.
Yet another anomaly is the position
“
Thanks to a
compromise
reached on the
floor of the House
of Commons, trusts
that have achieved
foundation
status are now,
paradoxically, less
free in important
respects than
those that have not
”
of specialist hospitals such as the Great
Ormond Street Hospital for Children.
Its worldwide reputation means that
it carries out a lot of private treatment,
often on children sent from abroad
and paid for by their own governments
because they lack similar services
at home. If Great Ormond Street had
applied for foundation trust status, it
would have had to turn away some of
these patients. The hospital sought a
solution through a charity specifically
set up to handle such income but
cannot proceed because this, too, is
in breach of the rules over the income
cap. The base year for the calculation
is 2002-3, since when Great Ormond
Street has significantly increased its
private income (or, putting it another
way, saved the lives of a lot more foreign
babies), which it could not have done as
a foundation status. Its application for
this status is, unsurprisingly, on hold.
In any case, it seems likely that the
Charity Commission would have ruled
such a charity uncharitable, as it did in
the case of Odstock Private Care Ltd, a
company limited by guarantee set up
by Salisbury NHS Foundation Trust and
funded by means of a loan. Odstock
would have delivered private care using
surplus NHS facilities. The commission
ruled that such a body could not be a
charity because it would charge fees;
this is an odd ruling, as there are plenty
of existing charities that do charge fees,
such as private schools.
The private income cap raises issues
that to NHS purists matter a lot but that
to others are simply pettifogging. Is it
impossible for a public body to have a
private arm without being corrupted?
Enough Labour MPs thought so to
ensure that the reform was hobbled
from the start. Molly Meacher, the
life peer who chairs East London
NHS Foundation Trust, has tabled an
amendment in Parliament that would
give foundation trusts the freedom they
seek. Will it prosper? It seems unlikely.
Nigel Hawkes is a freelance journalist
[email protected]
Cite this as: BMJ 2009;338:b789
BMJ | 28 FEBRUARY 2009 | Volume 338