Annex A > Chapter 2 - A Historical Background to the NHS > Main events, 1984-1996
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Main events, 1984-1996
46 The chapters that follow develop particular features of the structure that has been outlined, and deal with it in some detail from 1984 onward.
47 However, it may be helpful to identify briefly some of the main events affecting the structure of the NHS after 1984, until just after the end of 1995, so as to provide a reference point for much of the evidence later set out in this Annex.
48 The period was dominated by the development and introduction of the `Working for Patients' reforms announced by the Government in 1989. [33] This process of reform began when in January 1988, following extremely high levels of expressed concern about health service funding and its inadequacies in the late 1980s, the Prime Minister announced a fundamental review of the NHS. The review took place quickly. The reviewing team were members of a Cabinet Committee. They worked without the public consultation and participation that had characterised, for instance, previous Royal Commissions. This exclusion of the professional and public interest groups was one of the reasons why the changes proposed attracted unprecedented levels of denunciation when they were announced.
49 In January 1989 the work of the Committee was published in the form of the White Paper, `Working for Patients'. [34] It rejected models of privately funded healthcare. Instead, it proposed an `internal market' in the NHS by separating `purchasers' from `providers'. Health authorities would purchase services from independent NHS trusts, after assessing local needs and developing a strategic assessment of, or plan for, those needs. They would also monitor the delivery of the services that they had agreed to commission. GPs also would be offered the option of becoming `fundholders', able to purchase most services on behalf of their patients. Such a system of funding would, it was said, create an incentive towards the more efficient use of resources, with more attention paid to the services that patients, or `consumers', wanted.
50 The details of the new system proposed were further developed in a series of `Working Papers' published by the DoH. These covered topics such as fundholding, the structure and responsibilities of NHS trusts, and medical audit. The Working Paper No 6, `Medical Audit', [35] established as a government policy the principle that all clinicians should participate in review and audit of their practices. A professionally led Audit Advisory Committee should support medical audit at a regional level. By April 1991, each district should also have established a District Medical Advisory Committee to plan and monitor a comprehensive programme of medical audit. But such audit programmes should be medically led, by an advisory committee chaired by a senior clinician. [36]
51 The concept of NHS trusts was further explained in Working Paper No 1. [37] Each would be a self-governing trust, headed by a trust board whose chairman was appointed by the Secretary of State. The board was responsible for the management of the hospital. Specifically, it was required to submit an annual report to the Secretary of State; to ensure that revenue matched outgoings, and to achieve the financial objectives that might, from time to time, be set by the Secretary of State. [38] Ultimately, the Secretary of State remained in control, at least in so far as he was able to remove trust officers from post in specified circumstances. The trust, a provider of services, would derive its income from contracts with purchasers, notably local health authorities and general practitioner fundholders. Further, consultants' contracts would in the future be held directly by such trusts, rather than by RHAs, and there would be discretion to make local financial settlements or introduce non-standard terms of employment.
52 Although the Working Papers clarified some aspects of the changes that the Government sought to introduce, many aspects of the new system remained unclear. Further, following the passage through Parliament of the National Health Service and Community Care Act 1990 (1990 Act), the reforms were to take effect on 1 April 1991: a demanding timetable for change. Thus, as the reforms were introduced, local health authority staff, hospital managers and clinicians were required to exercise discretion in deciding how they should take effect at a local level. [39]
53 Funding for some specialised, supra regional services remained centralised. The work of the Supra Regional Services Advisory Group (SRSAG) continued. Thus, until early 1994 the purchaser-provider split did not affect the funding of paediatric cardiac surgery for the under-1s. [40]
54 In May 1989 the NHS Policy Board was created in the place of the old Health Service Supervisory Board, with the Secretary of State as the Chairman. The NHS Management Executive (the NHSME) was also created in the place of the former NHS Management Board. [41] It was chaired by the Chief Executive of the NHS. The intention was to sharpen and focus the split between responsibilities for policy, on the one hand, and management or implementation on the other. The distinction was symbolised by the move (in 1992/93) of the NHSME from London to Leeds. [42]
55 During 1990 the NHSME set up seven regional `outposts' to assist in establishing the NHS trusts and monitoring their performance. [43] One such outpost was set up in Bristol, in a separate location from the RHA. [44]
56 The nature of the accountability and scrutiny arrangements for trusts which developed can be seen in an account of such arrangements written by the NHS Executive in 1994:
`Trusts will remain primarily accountable to purchasers for the delivery of care through NHS contracts. They will be held to account by the provider arm of the NHS Executive regional office for meeting their statutory financial duties ... Monitoring of Trusts' financial duties and approval of annual and strategic business plans will be undertaken by the provider arm of regional offices following the approach developed by the former outposts ...' [45]
57 On 1 April 1991 the 1990 Act came into effect. The `first wave' of 57 NHS trusts and 306 GP fundholders was launched. The structure of the NHS from 1991 to 1996 is set out in the following table:
58 The United Bristol Healthcare (NHS) Trust (UBHT) and Weston Area NHS Trust, which had existed in `shadow' form from 21 December 1990, were formally established on 1 April 1991. Property rights and liabilities, including contracts of employment, were transferred to these trusts.
59 Several other local changes occurred. The B&WDHA was abolished with effect from 1 October 1991. In its place, Bristol & Weston, Frenchay and Southmead DHAs merged to form a new Bristol and District Health Authority (B&DHA), serving about 840, 000 people. The B&DHA became responsible for strategic health policy and planning, and for the purchase of services from NHS trusts using service agreements. [47] In addition, it retained direct managerial responsibility for those hospitals or units that had not opted for self-governing status as at 1 April 1991.
60 The regions were also remodelled, by being given boards of executive and non-executive directors. The chairman of the board and the five non-executive members (who included a chairman of a family health service authority (FHSA) and a person connected to the local medical school) were appointed by the Secretary of State. The strategic role of the region, in setting performance criteria and ensuring that plans were being achieved, was further emphasised. They were also expected to take a lead in ensuring that the changes set out in the 1990 Act were successfully implemented.
61 DHAs were now required to place contracts with local NHS trusts for the purchase of services required by the resident population. These contracts were not legally binding; [48] they might better have been described as `service agreements'. `Extra-contractual' referrals catered for those patients who needed a particular treatment, operation or package of care not already provided for in a contract between their DHA, and the institution to which they were to be referred. Such additional costs had to be met by the DHAs on an individual basis.
62 Prior to placing contracts, however, the DHA was expected to assess what local health needs were, and to develop, with the assistance of its public health team, a strategy for meeting them. But:
`In practice, the impact and influence of the needs assessment process on the priorities and purchasing decisions of districts was limited, for a number of reasons. First, districts were under enormous time pressure to complete their annual contracting rounds. Many public health departments lagged behind because it takes time to carry out properly informed needs assessments. Second, health authorities had problems with the lack of epidemiological and medical information required to do proper needs assessments ... Third, it was necessary to reconcile results of needs assessments with spending budgets to produce a set of actual purchasing priorities. Although a needs assessment may reveal a "need" for medical care and treatment, it does not (and cannot) reveal anything about whether and how one particular need should be met in preference to another.' [49]
63 The `internal market' was slow to develop. Initially, achieving a `steady-state' rather than risking disruption of existing services was considered to be particularly important. The health authorities' first year's contracts were therefore based upon the existing referral patterns to trusts. Further change was slow or limited, for a number of reasons. First, the information needed to compare services and their costs often did not exist. If it did, it tended to lie in the hands of the providers rather than the purchasers. Second, many services were not readily amenable to `competition' from alternative providers. When factors such as access (or travel costs) by the local population were taken into account, many local trusts were natural monopoly providers of many services. Block contracts for services tended to be used, sometimes differing little from the global budget allocations they had replaced. Patients might then follow contracts, rather than vice versa. Thus, limited progress was made towards developing an internal market, and co-operation and partnership in service development between purchasers and large local providers was a common approach. [50]
64 In October 1991 the Patient's Charter [51] was published as part of a national policy initiative to define standards of service within public services. It set out a list of rights or guarantees of service for patients, but these standards were not legally enforceable. Purchasers, however, did use them to monitor the quality of care or levels of service being provided under the contracts with their providers. For example, the guarantee that patients should wait no longer than two years for an operation was one of the waiting list indicators that was scrutinised.
65 On 1 April 1992 a second wave of NHS trusts and GP fundholders began operation.
66 The 1992 White Paper, `The Health of the Nation', [52] adopted a wide public-health approach to securing a `continuing improvement in the general health of the community'. The paper recognised that health was the product of a wide range of factors, including lifestyle and the environment; achieving good health required more, therefore, than managing a service which aimed to cure illness or disease. All government action should be co-ordinated to assist in the aims of producing a healthy environment, healthy homes and healthy workplaces. These general aims were also more closely focused in 25 specific targets; for example, securing a reduction in the number of deaths from coronary heart disease, or in the percentage of the population that was overweight. There was, in other words, a new interest from the government in tackling the causes of disease and premature death.
67 Also in 1992 the Clinical Outcomes Group was established to promote a multi-professional approach to clinical audit. No longer would doctors, nurses and other professional groups conduct audit separately. The group placed an emphasis on linking clinical audit to other programmes such as resource or risk management, quality assurance, research, development and education. [53]
68 In April 1993, 139 new NHS trusts came into being, making a total for England of 289. By 1 April 1994, there were a total of 419 NHS trusts and 96 per cent of hospital and community health funding was spent on services provided by trusts. Further, some 9, 000 GPs had become fundholders, representing over half of all eligible practices and serving approximately 36 per cent of the population. [54]
69 The implementation of the changes first outlined in 1989 provoked further examination of the structure of the NHS and whether its shape was apt to manage the reorganised system. In October 1993, in `Managing the New NHS, ' the Government announced plans for a further restructuring exercise. Its ultimate aim was to abolish the regional health authorities and to reorganise the existing NHS Management Executive so as to create eight regional offices, each headed by a regional director, which would replace the RHAs and the existing NHSME outposts. However, new legislation would be required to abolish the RHAs. In the interim, the Secretary of State proposed that, from 1 April 1994, RHAs should be reduced in number from fourteen to eight, thus creating common boundaries with the NHSME's new regional offices. The Government commented that, as a result of the reforms:
`RHAs no longer have the wide-ranging planning and line management responsibilities that they had in the previous hierarchical system. In recent years they have played a key role in implementing the NHS reforms, but that role is diminishing as purchasers build up their skills and experience. Monitoring of Trusts, which will make up the vast majority of service providers by April 1994, is the responsibility of seven NHSME outposts. RHAs have already reduced in size.' [55]
70 The reforms announced also aimed to support the developing liaison between DHAs and FHSAs, in order to strengthen local purchasing arrangements. Mergers of these two bodies would not only be permitted for the first time, but encouraged by the creation of integrated DHAs/FHSAs, in the shape of new area health authorities, to enable integration of purchasing across primary and secondary care boundaries.
71 Accordingly, the boundaries of the fourteen RHAs in England were altered on 1 April 1994 to reduce their numbers to eight. The SWRHA and Wessex RHA were re-formed into the South & West RHA (S&WRHA). On the same date, NHS Executive regional offices were established, sharing common boundaries with the remaining regional health authorities.
72 The Health Authorities Act 1995 (1995 Act) gave the necessary statutory authority to the abolition of the RHAs and to mergers of DHAs and FHSAs. B&DHA and Avon FHSA anticipated these developments by making arrangements to meet jointly, under the name of the Avon Health Commission, in order to conduct business. Formal meetings of the two authorities ratified the Commission's decisions immediately afterwards. [56]
73 When on 1 April 1996 the 1995 Act came into force, the S&WRHA, the B&DHA and the Avon FHSA were abolished. The South and West Regional Office of the NHS Executive inherited most of the functions and responsibilities of the former SWRHA. [57] The Avon Health Authority (Avon HA) was established, serving a population of some 982, 000 in the areas of the new unitary local authorities of Bath & North and East Somerset, City of Bristol, North Somerset and South Gloucestershire. [58] The Avon HA continued the tasks of planning, and purchasing or commissioning, services that had been the function of the B&DHA since 1991, but with additional responsibility for people residing in the Bath area.
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Footnotes
[33] Other developments included the split of the DHSS, in July 1988, into separate departments covering Health (DoH) and Social Security (DSS); and efficiency initiatives such as the income generation programme launched in 1988 to discover ways in which health authorities could generate additional funds by means such as placing retail outlets in hospital premises. On the former, see also Chapter 6
[34] DoH, `Working for Patients' (1989), London: HMSO (Cm 555)
[36] For further details, see Chapter 18
[37] `Self-Governing Hospitals'; HOME 0003 0028
[38] See the NHS and Community Care Act 1990, which established the legal framework of hospital trusts, especially Section 10, and also regulations made under this Act, especially the `NHS Trusts (Membership and Procedure) Regulations 1990', SI 1990/2024 (amended by SI 1990/2160). These regulations set the maximum number of directors at 11. Two were to be appointed by the RHA. The Secretary of State appointed the remainder. The tenure was not to exceed four years, but reappointment was allowed. The regulations set out circumstances in which disqualification would occur (e.g. bankruptcy, sentences of imprisonment, loss of independence as a result of Trade Union office or membership of a health service body. The executive directors of the trust were to include the chief officer, the finance officer, a medical practitioner and a registered nurse or midwife. A committee composed of the chairman and non-executive directors of the trust appointed the chief officer. Once appointed, the chief officer joined that committee in order to appoint the other executive directors of the trust. Standards were generally clarified when in April 1994, the Secretary of State issued a Code of Conduct addressing issues of accountability, probity and openness: DoH `Code of Conduct, Code of Accountability'(1994); circulated with EL(94)40, DoH, London
[39] `The DoH was able to issue only general guidance on the implementation of the 1990 Act; it was left to NHS managers to work out the details. This gave them even more power than they had assumed under Griffiths, but exacerbated tensions between them and their clinical colleagues despite the increased opportunities for doctors themselves to be become involved in managerial decision-making.' Levitt R, Wall A, Appleby J. `The Reorganised National Health Service' p. 20 (6th edition, 1999), Stanley Thornes (Publishers) Ltd. See also Ham C. `Health Policy in Britain' p. 42 (4th edition, 1999), Macmillan Limited
[40] This topic is dealt with in further detail at Chapter 7
[43] See Chapter 5 for further details of the functions of the regional outposts
[44] Until 1994, when it was resited within the RHA's premises
[45] `Managing the New NHS: Functions and Responsibilities in the New NHS' (1994), NHSE. The paragraph continued: `There will be limited direct monitoring by regional offices of certain non-financial aspects of Trusts' performance which cannot be pursued through NHS contracts, including national policy initiatives such as Opportunity 2000 and junior doctors' hours.' See also paras 68-73 below for the structural changes proposed and implemented in 1993-1996
[46] Ham C. `Health Policy in Britain' (4th edition, 1999), Macmillan Limited. Illustrations reproduced with the kind permission of Macmillan Limited
[47] WIT 0038 0007 Ms Charlwood
[48] Where purchaser and provider were in dispute, the region was expected to act as arbitrator
[49] Levitt R, Wall A, Appleby J. `The Reorganised National Health Service', p. 42 (6th edition, 1999), Stanley Thornes (Publishers) Ltd
[50] `Whatever the preferred approach, the outcome was the same: the internal market became a managed market in which competition and planning went hand in hand.' Ham C. `Health Policy in Britain', p. 43 (4th edition, 1999), Macmillan Limited
[52] DoH (1992), London: HMSO (Cm 1986)
[53] See Chapter 18 for a more detailed account of aspects of audit during this period
[54] The process had been assisted by periodic reductions in the number of patients required to be on a GP's practice list before the practice became eligible for fundholding status, and by the development of different models of fundholding
[55] `Managing the New NHS: a Consultation Document', NHSME, 1 November 1993, para 2.3
[56] WIT 0038 0007 Ms Charlwood
[57] WIT 0038 0008 Ms Charlwood. See also `Managing the New NHS: a Consultation Document' (NHSME, 1 November 1993), and `Managing the New NHS: Functions and Responsibilities in the New NHS' (NHMSE, 1994). These documents noted that the regional offices would take over the functions of the RHAs; would develop the purchasing function in the NHS; and would take over the monitoring of NHS trusts from the NHSME outposts. They would not be involved in detailed operational management and would be smaller than the old regional health authorities
[58] WIT 0038 0008 Ms Charlwood