"The end of the NHS as we know it"? A guide to the Health and Social Care Act

28 March 2013

On 1st April, the NHS will be "liberated".

The Health and Social Care Act, which will change the way that healthcare is commissioned and provided, has proven to be highly controversial. To some, it's a response to an urgent need to 'reform' the NHS, which is buckling under the strain of rising demand and pressure on its budget. Others argue it's an expensive "re-disorganisation" that's designed to open up the NHS to private providers.

The legislation will overhaul the structure of the NHS. And it has certainly involved massive upheaval - Sir David Nicholson, the Chief Executive of the NHS, said it would be "big enough to be seen from space". However, at the same time the Government emphasises that from the public's point of view nothing will change: "access to NHS services on the basis of need, not ability to pay, will continue".

For those interested in the cold, hard facts behind the political rhetoric, here's an outline of what will happen at the beginning of next month.

According to the Government, the Health and Social Care Act 2012 "puts clinicians at the centre of commissioning, frees up providers to innovate, empowers patients and gives a new focus to public health". This requires some translation.

"Clinicians at the centre of commissioning" = GPs in charge of the majority of the NHS budget

England's 152 Primary Care Trusts (PCTs) are being replaced by 211 Clinical Commissioning Groups (CCGs). PCTs have been in charge of buying and providing healthcare for their local populations, which will now become the task of CCGs. But while PCTs were staffed mainly by administrators, CCGs will be led by GPs. This means that GPs will be in control of the majority of the NHS budget. They'll be joined on each CCG board by a hospital doctor, a nurse and several community representatives.

The idea behind this is that GPs are best placed to know what care their patients need so they will "commission services" on behalf of their patients.

But while we all know GPs have clinical expertise, does this mean they can balance a budget? As it stands, most GP practices effectively operate as small businesses. However certain NHS executives have complained that the set up of CCGs is the equivalent of "letting the local garage take over BP or the local corner shop run Sainsbury's". 

So, you might ask, where's a pathfinder when you need one? You're in luck. The Government has said that the majority of GP practices are already prepared to take on their new responsibilities: 253 "pathfinder" commissioning groups (which account for around 95% of GP practices) have already assumed certain PCT responsibilities. So there has been, to a certain extent, a handover process. 

Furthermore, GPs will be supported in their new role. The NHS Commissioning Board is a new body that will provide advice to CCGs on co-ordinating patient care. And some GPs already have experience of NHS management - between 2005 and 2009 the Labour government encouraged GPs to volunteer to involve themselves in commissioning (so-called "practice-based commissioning").

The Strategic Health Authorities (SHAs) that existed to supervise PCTs are being abolished. Above CCGs, the Care Quality Commission is tasked with ensuring that standards of care are maintained, while Monitor will have the new role of keeping track of how CCGs are managing their budgets. 

"Frees up providers to innovate" = managed competition within the NHS

CCGs will now be responsible for deciding which provider offers the best patient care and paying the bill. This is part of the Government's plan to offer "increased patient choice".  

However, at a time of constrained budgets, there's been concern as to what extent a CCG might be able to make its decisions about patient care based on price.

We pay for the NHS through our National Insurance contributions and our taxes. But the founding principle of the NHS is that care is free at the point of use. In reality, most of us as patients will never know the price tag attached to the care we receive. This means we have no idea how much it costs the NHS to keep someone with diabetes healthy, to replace someone's hip or to provide an abortion. 

The NHS tariff system puts a price on different types of treatment. This is how much a GP practice or a hospital will be paid for a particular episode of care. When the Health and Social Care Bill was being debated, the Government looked set to make the NHS tariff a "maximum" - in other words, it would be possible for other providers to charge less than the standard charge levied by an NHS provider. 

Although private providers have been offering their services to NHS patients since 2006 (and the Labour party had established a Cooperation and Competition Panel in 2009), the Health and Social Care Act makes the relationship between the public and the private sector a more formal one. In other words, it underwrites it in statute. 

This led to fears that a major company, and not necessarily one with any experience in health, could offer to treat patients much more cheaply and, via a "loss-leading" contract of this type, muscle in on more lucrative areas of the healthcare market. (In a similar way supermarkets sell milk at prices where they can't make a profit, but while you're looking for the dairy aisle, you pick up a whole basket of other items that they do make money on.)

The Government diluted its proposals for price-based competition in response to fears of 'bargain basement' healthcare. It has now clarified that competition must be on the basis of quality, not price. 

The Coalition is adamant that competition will improve the quality of care for patients. From now on an NHS foundation trust will be able to source up to 50% of its income from private patients. And it's not just private providers offering their services to CCGs - charities and voluntary groups will also become NHS competitors.

Monitor, the NHS Foundation Trust regulator, will now also "regulate prices for NHS services through a national tariff". The Government is adamant that Monitor will "safeguard against cherry picking" - in other words, it will prevent private companies from making a profit offering simple treatments while the NHS picks up the bill for chronic diseases and complicated emergency procedures. It's not yet clear how Monitor will achieve this.

Furthermore, even if other providers are not competing on price, it's likely that in a more crowded market some NHS services will not survive in their current form. Again, it is up to CCGs.

Last month, however, there was new anxiety about the regulations concerning Section 75 of the Health and Social Care Act. In essence, the regulations specified that CCGs would be obliged to "treat providers equally and in a non-discriminatory way". It also included the provision that "a relevant body must not engage in anti-competitive behaviour". The Daily Mirror was not alone in declaring that this amounted to a free-for-all for the private sector.

In response to Labour tabling a motion that opposed the provisions, the Government agreed to redraft the regulations.

The Government, which has denied accusations that it's intent on privatising the NHS, said the new language would make it clear that CCGs wouldn't be forced to put all services out to tender and that they would have oversight of when and how competition should be introduced. The new regulations have not yet been published.

The future

The Coalition has struggled to explain to the electorate why this re-organisation (the introduction of GP-led commissioning and the increased role of competition) is vital to secure the future of the NHS. The Government will be hoping that by the time of the 2015 election, there will be less talk of process and more talk of what the results of the policy have been.

Then the electorate will judge whether the Government has correctly diagnosed the problems faced by the NHS and whether it has found the best cure. 


UPDATE as of

02 April 2013: In the first version of this article at one point we referred to Monitor as 'a new body', contradicting an earlier sentence in the piece where we correctly identified that Monitor is an existing body that has adopted new responsibilities under the Health and Social Care Act 2012.

We have also included the following sentence, which includes a link to one of our previous factchecks: "From now on an NHS foundation trust will be able to source up to 50% of its income from private patients." 

Full Fact fights bad information

Bad information ruins lives. It promotes hate, damages people’s health, and hurts democracy. You deserve better.