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Anthony Woodhead 1

A Critical Evaluation of the English

National Health Service. January 2010.
This essay will evaluate the current English NHS from the bottom up; discussing
its establishment, looking at the role played by GP’s who refer on to secondary
care, analysing the environment surrounding cutting edge practices in tertiary
centres before turning to issues of governance. Its focus will be on analysing the
emergent system, arguing any critique will ultimately depend on an individual’s
perspective with regard to its aims. It intends to show that supply induces
demand; highlighting how healthcare professionals may attempt maintain the
status quo and discuss ways of addressing principal-agent problems thus helping
obtaining technical and allocative efficiency. This is of particularly relevance in
the current economic climate where the NHS has been tasked to reduce costs by
as much as £20bn by 2014. (HSJ, 2009)

A Brief History
President Truman said “the only thing new under the sun is the history we do not
know”, (as cited in Miller 1974 p.26). I believe this argument holds within the
NHS, and many current issues are historical ones manifesting in new contexts.
There was an initial aim for equality; though the NHS was established in 1948
but as Aneurin Bevan’s widow reminds us its roots lay much deeper:

Many of us have associations with the between-the-wars health service; a

great patchwork, a good deal of good intentions, a great deal of
inadequacies. (Lee, 1968 p. 1)

Its founding coincided with the recent invention of Penicillin. Along with this and
other medical advancements, the NHS helped facilitate the virtual irradiation of
communicable disease in the UK (Bud, 2007). This was not without consequence:

We’re all glad now that it works, but then you’ve got the reverse side of
the medal, because I’m now accused of being partly responsible for the
population explosion which is one of the most devastating things that the
world has got to face for the rest of this century. (Florey, as cited in
Ligon, 2004 p. 3)

Different ideologies debated the best ways to gain efficiency; initial support for a
service free at the point of need was divided; not in the least amongst medical
professionals. In order to help get agreement from the GMC and then parliament
GP ‘gatekeepers’ were employed as independent businessmen and “capitation
was the defence against the perils of state servitude.” (Pater, 1981 p. 142)
Research has also strived to establish the best methods; when Winston Churchill

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was returned to power in 1951 he caved to demands, commissioning Claude

Guillebaud to look at how effective this tax-based health system was. To the
chagrin of many in his party it concluded the NHS was very effective and needed
more money if anything. He increased funding, as did his successors, and
there’s. (Rivette, 2009) The NHS has grown to be Europe’s largest organisation,
employing around 1.4 million people. By 2006/7 NHS budget was about £104bn,
roughly 8 % GDP. (Wellards, 2008 p. 1)

Primary Care
At the frontline of the service is primary care; this was traditionally provided by
subcontracting through the GMS contract. However since 1977 37% of GP’s have
signed up to PMS schemes, which allow payment through salaries. (Wellards,
2008 p.10) This has helped extend care to areas where traditional GP practices
had sometimes opted not operate, particularly in the deprived inner cities; and a
large strength of the system is that strives to provide universal coverage. (DH,

Marketization and the purchaser/provider split (see appendix fig 1)

The notion of primary care as the gatekeeper has altered, following the
demonstration of some success in GP fundholding in the 1990’s (Dusenko et al.,
2006) practice based commissioning was rolled out in 2005, resulting in the
purchaser provider split. This was marketed as a way of giving patients more
choice, aiming to increase productivity through quasi competitive market forces,
termed the politically softer contestability. (Warwick, 2007) Government gives
primary care 75% of revenue hoping to use purchasing power to obtain cost
efficiency savings whilst enabling response to differential local demand, however
in practice the market is seldom allowed to fail. (Maynard, 2005) Trusts get
bailed out and savings have been limited, particularly to rural areas, where there
is little real choice and benefits from marketization must also be weighed against
opportunity costs imposed by continual change. (Mannion, 2005; Warwick, 2007)

Principal / Agent Problems

Many efforts to improve efficiency have addressed principal agent problems

(Mannion & Goddard, 2002), in Primary Care a recent attempt establishing goal
congruence has been through pay for performance via the QAF (Maynard &
Bloor, 2003). This is important since 70% of NHS expenditure is on salaries;
however efficacy has been minimal. (Doran et al., 2008; Gravelle et al., 2007;
Wellards, 2008)

Technical and Allocative Efficiency

A topical area, leading on from the QAF in its ‘real world’ application is that of
nurse substitution (Lankshear et al., 2005) and there has been a Cochrane
review into this subject:

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Findings suggest that appropriately trained nurses can produce as high

quality care as primary care doctors and achieve as good health outcomes
for patients. However, this conclusion should be viewed with caution given
that only one study was powered to assess equivalence of care...
substitution has the potential to reduce doctors’ workload and direct
healthcare costs, achieving such reductions depends on the particular
context of care. Doctors’ workload may remain unchanged either because
nurses are deployed to meet previously unmet patient need or because
nurses generate demand for care where previously there was none.
(Laurant et al., 2004 p.2)

Nurses form the backbone of the NHS (see appendix fig 2). This review is
significant because it fundamentally questions the NHS’s application of this
resource to basic primary care. There is an opportunity cost to this which I
believe the NHS wastes.

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The need for evaluation

Laurent et al.’s findings are also synonymous with similar reviews in that they
highlight gaps in our current knowledge base. A large criticism of health systems
in general is that they operate without proper evaluation of either clinical let
alone managerial practice (Maynard, 2005). A 2007 analysis of 1016 systematic
reviews from all 50 Cochrane Collaboration Review Groups found that “44% of
the reviews concluded that the intervention was ‘likely to be beneficial’, 7%
concluded that the intervention was ‘likely to be harmful’, and 49% concluded
that evidence ‘did not support either benefit or harm’. 96% recommended
further research.” (El Dib et al., 2007 p.689)

This problem is compounded by the fact that it’s hard to address efficiency in
any context without collecting relevant data to base evaluation upon. PROMS
data has only begun to be collected in NHS hospitals from April 2009 (DoH,
2008). This has not been done since the time of Florence Nightingale and the
Lunacy act of 1845 (Maynard 2005). Primary care lags even further behind in this
respect, there is data but it is limited to a practice level; large numerical studies
of individual GP activity are generally based on prescribing data and there is no
national collection system. (Hippsley-Cox et al., 2007; Maynard 2005)

Ideas for the future

The NHS must continue investigation and optimization of chronic disease

management from a national perspective; continuing to asses cost efficiency
through nurse substitution for example. The socialist in me believes there should
be more salaried GP’s to help contain costs whilst current pay for performance
measures remain unproven. (Maynard & Bloor 2003) Integration could make it
easier to collect data require for further evaluation however the evidence base
generally upholds the use of networks as opposed to mergers to facilitate this.
(Walshe & Rundall, 2001) A key skill of a GP is to know when to refer patients on
to secondary care; then manage co-morbidities safely and efficiently when they
come back; I feel the NHS needs to provide better guidance for the latter.

Secondary Care
Much secondary care revolves around procedures and many attempts to address
technical and allocative efficiency, thus containing costs have been through
industrialisation; borrowing ideas from other sectors to reduce variance and
move away from a “craft like model of production.”(Walshe & Smith, 2006 p.6)
The medical profession has resisted this approach to ‘cook book’ medicine,
claiming the context is different and highlighting problems in managing co-
morbidities (Buse, 2005), however Variance is a real issue, for example the
activity rates of the top 25% of surgeons are 60 to 85% higher than the bottom
25% (Bloor et al., 2004) and there are relevant comparators:

We suggested mail processing for ideas about exception handling; repair

shops for ideas about diagnosis; universities for ideas about evaluation;
science laboratories for ideas about interprofessional collaboration; courts

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for ideas about accommodating friends and family; and the organised
religions for ideas about the provision of comfort. (Morton & Cornwell,
2009 p. 429)

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Hard v’s Soft Approaches

Recently industrialisation has been attempted through applying quality

approaches, such as LEAN and Sigma Six. There have even been efforts to
combine them and exploit synergies and both have resulted in real
improvement. (Boden, 2008; Linderman et al., 2003)

Six Sigma relies on scientific, statistical methods for strategic process

improvement in reducing derivation from the mean and has resulted in
significant, though generally localised improvements (Linderman et al., 2003).
Like in primary care the data such ‘hard’ approaches are based on is limited;
however hospitals are is now collecting PROMS data (DH, 2008) and
interventions are also being assessed using QALY’s; which quantify disease
burden, placing a value on differential care, allowing for direct comparison
between different treatments. (McCabe et al., 2008).

However measuring may be impractical, having too great an opportunity cost; if

not impossible, say due to large time lags of interventional effects. Subsequently
the NHS has adopt ‘softer’ tactics; such as creating high levels of trust, re-
emphasising the power of internal intrinsic motivators and control through
shared goals and values rather than incentives and fault finding. (Davies &
Mannion, 2000) Hence Lean seeks to weave on-going improvement into an
organisations culture hoping for more systemic effects than with harder scientific
strategies applied to reduce variance. (Jimmerson et al., 2005; Liker, 2004)

Addressing Resistance

Industrialisation efforts often operate in direct opposition to organizational

cultures and the NHS can be resistant to change. (Scott et al., 2003) As
exemplified with nurse substitution, supply could induce demand and healthcare
professionals have vested interests in maintaining the status quo. From an
economic perspective, classic principal-agent problems will result in moral
hazard leading to rent seeking behaviour. (Krueger, 1974; Maynard, 2005; Smith,
1776; Tullock, 1967)

The external environment is having an effect here with scandals, widely

publicised in the media, helping creating a more open culture. The Bristol
enquiry in particular may have wide ranging effect in this respect. (Smith, 1998)
There are also signs that the NHS’s culture is slowly changing through the
generations ; with newer professionals are being trained to work more in
multidisciplinary teams for example. (Carter et al., 2003) The establishment of
networks within healthcare organisations has tried to instil trust, minimise
transaction costs and exploit efficiency savings. Indeed, the process by which
patient care pathways are drawn up and then implemented is example of this
approach in action. There is large potential here, especially as pathways can
cascade best practice down to primary care. (Burgers et al., 2009; Goodwin et
al., 2004) It could be hoped the NHS reaches at a tipping point and starts to

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become proactive but cultural change takes a long time. (Gladwell, 2000; Scott
et al., 2003)

Ideas for the future

I believe secondary care generally lends itself more readily to measuring and
subsequently industrialisation. Further moves towards performance related pay;
as opposed to current payment by results; which Street & Maynard (2007)
believe to be essentially an activity based tariff, could theoretically have more
potential benefit here if outcomes are measured more effectively, yet to date
PbR has largely focused on the primary sector (Maynard & Bloor, 2003).

Softer strategies will also need to be adopted to help instil a more open culture.
Financial constraints in the coming years will mean more will have to be done
with less; however if medicine continues along its flat of the curve trajectory,
rationing will increasingly become an issue, if it wasn’t already (Beaglehole &
Bonita, 2004). This will undoubtedly have implications throughout the NHS,
possibly effecting tertiary care most of all.

Tertiary Care and the role of Arm’s Length Bodies

Cutting edge medicine is indeed a marvel. I have been lucky enough to witness
the benefits a new MS drug has had on my cousin. Campath® (Alemtuzumab);
currently undergoing phase three trials, reduces relapses by 78% over and
above that achieved with interferon therapies (Coles & Compston, 2008). It arose
through collaborative work between Cambridge University and the NHS hospital
Addenbrookes, the same hospital where the first ‘test-tube’ baby was born
(Rivette, 2009). Another credit to a service strong at helping develop new health
technologies, though often slow at rolling them out (Liddell et al., 2008).

Research and Rationing

Continued research is important and can have significant impact; however unlike
with treating communicable disease many new treatments of chronic disease
have incremental benefit, for significant outlay (Lee et al., 2002; Bud, 2007).
Again the NHS needs to spend its money wiser and again it doesn’t know all that
much about how to best apply technologies we already have let alone new ones
(Lankshear et al., 2005). This need for improved evaluation and efficient
implementation of both clinical and managerial resources caused the
Government to commission a large review to build agreement on the best
institutional arrangements for a new single fund for health research. There were
many good recommendations, including:

Formal arrangements be established between the NHS HTA Programme,

NHS SDO Programme and NICE in order to Implement NICE
recommendations (Cooksey, 2006 p. 104)

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Rationing problems has always been there; penicillin’s first human recipient
dying after initial improvement because there was simple not enough to give him
(Bud 2007). My issue is not of rationing itself; rather that NHS still does so
relatively badly. (Maynard, 2005):

Rationing should be based needs to be co-ordinated nationally to stem

duplication, confusion and inefficiency... (with) no public accountability
rationing will continue to look like government subterfuge to cut resources
and indeed is more likely to become so. (Sheldon & Maynard, 1993 p. 12)

Arms-length bodies are very important in helping facilitate evidence based

practice. (Maynard, 2005). NICE was established in 1999 and its role in particular
is often criticised in the media however its pathways are potentially very useful
tool for implementing rationing efficiently throughout the service. (Walker et al.,
2007) Again the evidence on which they are based can be weak and there is a
need for organizational buy in from the bottom up. Poor rationing would be my
biggest criticism of the service but things are improving, slowly especially as the
service is being pushed to control costs (Burges 2009; Crisp 2009)

Ideas for the future

As we have seen, healthcare will generate need and unless we are prepared to
continually pay more for it, these have to be controlled. (Maynard, 2005) The
argument thrown against socially governed medicine is that market forces are
both more inclined to and more efficient at catering for need and allowing for
choice particularly of an individual. The UK’s health is affected by wider issues
which are essentially political; being about the sort of society we want, about
levels of investment in research, and education as these are likely to have
greater impact on public health in the long term. (Crisp, 2009)

Governance, a matter of perspective?


The NHS in England is directed by the Secretary of State who is the head of the
Department of Health and holds a cabinet post. He is aided by junior ministers
and civil servants. The government collects progressive direct income tax and
national insurance, redistributing funds to individual departments. Indirect
regressive taxes are also placed on items deemed bad for health, especially
cigarettes and alcohol; unfortunately no attempt is made at hypothecation of
either type. (Wellards, 2008)


Till the 1970’s redistribution was incremental, budgets being adjusted up or

down each year, with no real link to relative need or any regression. (Carr-Hill,
1988) Historically this favoured healthcare centres such as London and had a
large southern weighting (Rivette, 2009) The current, RAWP formulae uses

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sophisticated statistical techniques to create a weighted population formula with

an age, needs and relative cost adjustment. (Carr-Hill, 1988) This equitable
regressive distribution is applied to hospital and community services but not
primary care, though there is a potential to link it to practice base
commissioning. Whilst ‘postcode lotteries’ do persist, a strength of the system is
that is strives for equality. (DH, 2006)


However taxed based public systems are certainly not the only option available
and should equity even be the main aim?

The Libertarian-Conservative-Republican camp believes freedom to be the

supreme goal for society. The Egalitarian – Socialist – Democratic
perspective focuses principally on creating and sustaining equality of
opportunity. (Maynard, 2005 p. 299)

My views on the strengths of a public health service stem from a belief, informed
by my interpretation of current evidence, that it is more efficient relative to
private insurance at providing care for the most at least cost. I would argue the
Americans spend 16% of their GDP on healthcare for marginal additional benefit,
compounded with the many problems of private insurance including
administrative costs and coverage in particular (24% v’s 16% in the UK).
(Enthoven & Fuchs, 2006; Reinhart 2005).

This view could be contrasted with one of a public system being limited in its
ability to adapt and respond to provide what is really valued by an individual. In
a sense private systems are more optimistic, catering for life as opposed
focusing on preventing mortality. We are not born equal, genetic and
behavioural factors are likely to have more influence on a person’s quality of life,
why strive for equality? (Maynard, 2005).

Maynard (2005) believes inherent problems and possible solutions are not
necessarily mutually exclusive, that we should accept this and where possible we
should seek to bridge the divide, implementing what is shown to work. Certainly
the right sentiment but results are open to interpretation and as we have seen in
this essay evidence based healthcare can be difficult to assess let alone
implement and change in the NHS is slow.

We saw that the NHS began in an environment of conflicting ideologies and this
state endures. Supply induces demand, yet resources in the NHS are finite. In
primary care we looked at attempts at cost containment through marketization
and at improving efficiency via pay for performance. With secondary care we
discussed difficulties in using hard and soft approaches to exploit efficiency
savings through industrialisation. In tertiary care we looked at rationing, seeing
that there will be and discussed how arm’s length bodies play an important role
in evidence based practice. Finally with governance we touched on ideological

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Anthony Woodhead 10

concepts, postulating that a critique of the NHS will be dependent on an

individual’s point of view regarding how to best cater for need.

Whilst the context has changed with time the fundamental philosophy of the NHS
being free at the point of need remains very relevant. It should not be forgotten
that many people still choose to work within the NHS out of a desire to help
others as well as for self-interest. Aneurin Bevan said “no society can
legitimately call itself civilised if a sick person is denied medical aid because of
lack of means.” (1951, p. 100) Whilst the NHS is difficult to manage and change
happens slowly, I believe its greatest strength is that upholds an egalitarian point
of view.

Fig 1. NHS Structure in the UK (, n.d., 2009)

The above structure highlights the purchaser / provider split, here Tertiary Care
is combined into Secondary Care and arms-length bodies such as N.I.C.E. come
under the umbrella, reporting into all sectors.

Fig 2. Staff Groupings in NHS 2006 (Adapted from Wellards, 2008 p.17)

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Support to ST & T Support to

Staff Ambulance Staff
4% 1%
Hotel, Propertyand
Central Estates
Functions 5%
Support to Doctors Managers
& Nurses 3%

All Doctors
GP Practice Staff 9%

Theraputic Ambulance Staff
& Technical 1%

Qualified Nurses Staff

(inc. Practice 10%


DoH Department of Health

GDP Gross Domestic Product
GMS General Medical Services
GP General Practitioner
HTA Health Technologies Assessment
NHS National Health Service
NICE National Institute for Clinical
PMS Personal Medical Services
PbR Payment by Results
PROM Patient Related Outcome
S Measure
QAF Quality and Assessment’s
QALY Quality Adjusted Life Year
RAWP Resource Allocation Working
SDO Service Delivery and

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