Examination of witnesses (Questions 40 - 59)
WEDNESDAY 15 JULY
MR C REEVES,
MR A BARTON
and MR R DOUGLAS
40. The other question I want
to ask about these global figures you raised yourself. You have
made an assumption in your projected figures going forward of
a GDP deflator of 2.5 per cent. On your own figures you have never
had a GDP deflator of 2.5 per cent except in one year which was
1994-95. It has always been over that and in fact you are assuming
for this year 2.9 per cent. Are you assuming 2.5 per cent going
forward because the Treasury told you to? That is my first point.
My second point, which I raised with you last year, is that we
know that Health Service inflation is always far in excess of
the GDP deflator and it comes back to the technological change
which was part of my original question. Do you not feel it would
be more realistic to use a different figure when looking at Health
Service expenditure and suggesting what the real terms increase
is rather than using a figure the Treasury may have plucked out
of the air?
(Mr Reeves) I was actually amazed when I did look
back over the previous set of years to see that the GDP deflator
was very low in 1994-95, a figure of 1.51 per cent. Certainly
those figures in the tables reflect the actual macro-inflation
which occurred in the economy over those years. The figures I
quoted today of 2.5 per cent are the figures based on the Treasury
projections over the next three years. The importance of Table
2.1.1 is to compare in relative terms the resources which come
into the NHS. Our common measure is the GDP deflator. That is
the first point I should like to make. The second point is that
it is important to compare and part of the written evidence looks
at the position in terms of inflation in the economy as a whole
as measured through the GDP deflator and the inflation which affects
the NHS and in particular the hospital and community health services.
In terms of looking at the figures on inflation, I would not want
to project forward, we do not project forward in terms of HCHS
inflation, but certainly in looking over the last five years,
over the period 1993-98, comparing NHS average earnings with the
average earnings in the economy as a whole, which is a high proportion
of the component in inflation, in fact in the NHS round about
75 per cent, the figures are not dissimilar. NHS average earnings
increased by 3.8 per cent. The economy as a whole increased by
3.9 per cent. Sometimes it is a slight concern to us that people
believe that inflation in the NHS and that measurement always
exceed the measurement of the economy as a whole as measured through
the GDP deflator. It is not necessarily the case.
(Mr Douglas) The really important point on this is
that when we talk in terms of real terms growth and real terms
change, real terms change is defined by reference to the GDP deflator
so we can get into a circular discussion if we are not careful
on this. Having had defined for us that real terms growth is measured
by reference to the GDP deflator, we then have to look in addition
at all the other pressures we face in terms of that money, whether
those pressures are demography, technological change or anything
else. There is another equation to look at there of saying here
is the real terms growth, here are the pressures we have to meet
from that real terms growth.
Mr Gunnell
41. Can we turn to a different part of the Hospital
and Community Health Service's expenditure? I want to look at
Section 2, paragraph 12 and also try to compare that with what
we see in Figure 2.2.4. You make a statement which I am very glad
to see at the start of paragraph 12. What you say is, "Although
acute hospital services have been growing, long stay hospital
services have been declining, as care has shifted to the community".
That is obviously what one would like to see happening. Unfortunately
it is hard to see it from the figures you give and the diagram
you give. First of all in the text you do say the total community
expenditure was constant at 15 per cent between 1991-92 and 1995-96.
So total community expenditure is constant and care has shifted
to the community. That does not quite make sense. Even so, if
we look at the diagrams in Figure 2.2.4, what that shows is your
decline in the hospital in-service care given to various categories
but an increase in the spending in acute hospitals in this period
because it goes up from 47.6 per cent to 49.3 per cent. Is it
not therefore more true to say that care has shifted from one
type of hospital provision to another type of hospital provision?
Does it in fact not show that there has been a failure of the
programme to shift care into the community? It is a bit difficult
because we have the diagrams in Figure 2.2.4. We also have Table
2.2.2 but the tables are all at 1996-97 prices which must mean
that the earlier figures for 1991-92 have been inflated by an
inflation factor. If we had the actual figures for 1995-96, then
it might be easier to see what you are referring to but there
does seem to be a discrepancy within that paragraph and that discrepancy
does seem to me to be carried forward into the diagrams we have.
Generally, although what I would welcome is a shift in spending
to the community and spending on care in the community, even though
your paragraph says it has happened, I do not find it justified
by the other information you give us.
(Mr Reeves) Perhaps I might refer to Table 2.2.2.
What we have tried to do in the final two columns is to try to
compare on a real terms basis what has happened over a period
of time. The first column of the final two columns on that table
shows the period 1991-92 to 1995-96 in volume terms, taking out
HCHS inflation. What you can see half way down the page is that
the total hospital expenditure in real terms over that five-year
period has increased by one per cent, whereas on the next page
the total community expenditure over that same five-year period
has increased by 2.4 per cent. So the first point it is important
to make is that there has been a movement from hospital to community
over that five-year period. The second point is that if you look
at the top two rows, you will see that acute inpatient and outpatients
have increased by two per cent and 3.3 per cent respectively.
I am not entirely surprised about that. We did talk previously
of the effects of demography and technology. We have focused a
lot on elective and emergency activity. It does not surprise me
that the figures for acute inpatients and outpatients are as they
are. The third point I would make is that Mr Gunnell quotes the
community expenditure as having remained at 15 per cent for mental
health, learning disability and the elderly. If you compare that
with what has happened in terms of inpatients, the inpatients
in terms of mental health, learning disability and the elderly,
has fallen from 21 per cent to 17 per cent over that same period.
In actual fact we are seeing a change. Maybe I could use one example?
If we are talking about mental health or learning disability or
the elderly, we still come to the same conclusion. There is a
reduction in inpatient and a move towards outpatient and the community.
Just to use an example of mental health which is a third of the
way down on the first page of the table, mental health inpatients
has actually fallen by 4.3 per cent, but that has been offset
by an increase in outpatients of 9.7 per cent and on the next
page, an increase in community of 10.9 per cent. A similar picture
will also appear in terms of learning disabilities. It is difficult
to compare in terms of the elderly unfortunately because the figures
on total community do not specifically come up with a figure for
elderly in terms of community. There is no doubt in my mind that
there has been a clear movement in those three service sectors
from inpatient towards community care. I do think the policies
are working and this tabulation reflects that.
42. All I can say is that it is quite hard to
find the way through your figures and diagrams to see just which
ones you are able to use. I can see something there which sounds
more convincing than the paragraph, together with the diagrams,
reads.
(Mr Reeves) I think Mr Gunnell is right, which is
why we are trying to improve it by bringing in Table 2.2.1, which
is the first time members have seen this table, which is an attempt
to focus very much more on the purchasing side of the equation,
on health authority expenditure, whereas Table 2.2.2, which is
a table you have looked at in the past, deals with health authority
totals but they are disaggregated through trust information. In
future, once we have a time series over the next few years, we
will be able to see much more clearly than Table 2.2.2 what is
happening in the movement from hospital towards community care.
The point is well taken but we are moving in the direction which
Mr Gunnell prefers.
Audrey Wise
43. Looking at your sections on key issues,
where you have gone into detail on certain initiatives, could
you give us a little bit more information still? Where additional
funds have been made available for cancer and paediatric services,
could you clarify from where these were redeployed? For example,
has the £10 million to be made available recurrently for
breast cancer services come from somewhere specific? If so, where?
(Mr Reeves) Yes, using the example of cancer and paediatric
intensive care, these are additional monies which have been discussed
and negotiated with Treasury in the case of breast cancer. In
the case of paediatric intensive care the decision was made, subject
to Ministers' decision, at an executive board in April 1997. That
was after the report on paediatric intensive care was produced.
The executive board members were very concerned to ensure that
there was money to follow through and oil the wheels of the paediatric
intensive care report and indeed the report on nursing as well
which accompanied that report. In all our discussions, we say
this is a ministerial decision based on the advice of the executive
board in terms of paediatric intensive care, very clearly a decision
on breast cancer taken by Ministers, Treasury being aware of both
those decisions.
44. I am not trying to imply any criticism or
hostility. I am all in favour of spending more on breast cancer
and on paediatric intensive care; both of those topics have been
the subject of inquiries by this Committee. However, it does say
in your paragraph 1, have been found "from redeploying existing
resources". I just wonder what the redeployment involved.
It has come from something which was going to be used for something
else is the implication here. What else? What has lost out so
that what we want has gained?
(Mr Reeves) It is very difficult to itemise. You are
absolutely right that both the monies for paediatric intensive
care and cancer came from within the resources already available
to the NHS, even though they were allocated in one case in year.
What we did—I can speak directly because I was very much
involved in paediatric intensive care—was to rely on an
overcommitment in our central budgets and the £5 million
found in 1997-98 was found by overcommitting our central budgets.
Although it would be difficult to earmark precisely how it was
eventually funded, there was ultimately some slippage in one of
the levies, the non-medical education and training levy. Effectively,
though with a caveat that it is very difficult to say precisely
how we fund paediatric intensive care, as a broad comment, the
slippage on non-medical education and training helped to fund
the initiative on paediatric intensive care, at least in 1997-98.
45. Do you mean you accidentally spent less
on those things, so when you counted up you had a bit of money
in hand which you then spent on breast care or paediatric intensive
care?
(Mr Reeves) Yes, and the word is absolutely correct.
It is "accidentally". There was no intention when the
decision to fund paediatric intensive care was made, to try to
reduce the expenditure on non-medical education and training.
The last thing we would want to do would be that. But there was
natural slippage on that budget.
46. That is interesting because this is recurrent
funds. Where will it come from in the future? While this Committee
wants the money on breast cancer and on the paediatrics, we are
also very keen on training.
(Mr Reeves) In paediatric intensive care both the
monies made available in 1997-98 and 1998-99 the £5 million
and £10 million respectively are non-recurrent.
47. Yes, but the breast cancer is recurrent.
Are you hoping that there will be accidents or will it come from
somebody's new money?
(Mr Reeves) No, the breast cancer monies are now built
into the recurrent baseline. There is no danger of the money not
being there in subsequent years to fund the breast cancer initiative.
(Mr Douglas) What we do every year is look at the
total quantum of the demands on all our central budgets. It is
reassessed every year and we would not be in a position of saying
we have actually cut something else back to pay for that. What
will happen is that we will look at how much of the total pressure
is on central budgets, whether it is on educational levies or
on this type of area, and how much needs to go into general allocations
to health authorities. We will just try to balance the two things.
It is not really possible to say it has come from a particular
pot in subsequent years. It has come from the total money available.
If we had not spent it on this, we would clearly have found something
else useful to spend it on.
48. That confirms me in my view that when governments
want to do something they find the money is there. Can you give
us a little more information about the monitoring process? It
is clear that you are going to monitor whether this money produces
better outcomes and you have paragraphs on monitoring and audit
and impact, from which I rather gather that there are internal
reports available about this.
(Mr Reeves) Is this on breast cancer?
49. This is on breast cancer. In a way both.
There are matching paragraphs. There are paragraphs 3 and 4, monitoring
and audit and impact. Then there are the matching paragraphs related
to paediatric intensive care on the following page. For instance
paragraph 8 says, "A questionnaire issued earlier this year
on nurse staffing shows welcome increases in qualified staff and
feedback from the regions indicate that they are making good progress
to fully implementing the recommendations of the reports".
I am interested in that. That means that there are reports available
against which these are being measured. Who will see those reports?
(Mr Reeves) In general terms without a doubt—and
this will be shown up with the comprehensive spending review—there
will be much more focus on outcomes than previously. To ensure
that we can measure outcomes sensibly and sensitively, there will
be much more focus on monitoring. What we are seeing here with
breast cancer and paediatric intensive care, will be reflected
very clearly in our future approach to programme budgets. That
is the first general point. Specifically in terms of breast cancer,
yes, in January 1998 we did have some interim monitoring, interim
reports being produced by health authorities showing how they
were spending this £10 million on breast cancer services.
A report will be produced in the autumn which will show over the
previous 12 months how that money was utilised, with a view to
looking at the best practice coming out of those health authority
reports which can be disseminated throughout the NHS. In terms
of who would receive those reports, certainly the NHS Executive
board would see those reports and I would imagine would also,
after making some proposals and recommendations, put those to
Ministers, who would also receive those reports as well.
50. I am very interested in outcomes. I very
much welcome a greater emphasis on outcomes. It has been a recurring
plea over the years in fact. There is no denying it is quite a
hard task and that is why I am interested in what kind of outcome
measures will be used. For instance, on breast cancer, some of
this money will be used for more breast cancer nurses, breast
care nurses. Our previous inquiry showed that patients uniformly,
enthusiastically, welcomed the help they got from breast care
nurses. That may show up in helping people psychologically, which
may show up in the actual mortality outcomes. On the other hand,
perhaps it will just show up in them being more comfortable, or
actually be impossible to trace through. What measures of outcomes
will there be? There is the hard outcome of mortality. If people
can live instead of dying that is obviously a great improvement.
Then some of the other outcomes are also important but harder
to measure. How will this be tackled?
(Mr Reeves) In general terms we are developing the
national performance framework as part of the NHS White Paper
reforms and that indeed is looking at a number of areas to try
to focus in when a particular initiative is undertaken on how
it can be measured. One of the measures is indeed outcomes. Mrs
Wise is absolutely right. Something like mortality is a very clear
measure of outcome. What we are trying to do is to focus much
more and perhaps I could use an example, Our Healthier Nation,
where we are again focusing on outcomes and some recent work we
have done on coronary heart disease where we have looked at the
various themes in terms of the national performance framework,
one of which is outcomes, and we have looked at things like survival
rates. As you quite rightly say, the focus is very much on mortality.
What we are trying to do through the medium of groups such as
the National Institute of Clinical Effectiveness and other associated
groups is to try to work out more sensitive measures besides mortality.
I often think of this in terms of what we did in capitation, where
we used to have solely focus on morbidity and use mortality as
a very poor proxy for morbidity. We now use socio-economic and
health variables which reflect morbidity to a greater extent.
I should like to see the same sort of movement taking place in
clinical outcomes as well which is one of the major reasons why
Ministers decided through the White Paper to set up institutes
like the National Institute of Clinical Effectiveness.
(Mr Douglas) The monitoring and the audit of these
projects is not just based on trying to see some very clear end
outcomes. It is actually looking at whether individual projects
are achieving clearly defined benefits. An example we have had
was in Bromley health authority where one third of the women were
having to wait up to five weeks for surgery. We would aim there
to get that down to two weeks and the measuring and the monitoring
will be on whether we are achieving that two weeks. That is what
we have put the money in there for. It is looking at some of the
hard process areas as well as the end outcome.
51. What about the satisfaction, the psychological,
the breast care nurse kind of thing?
(Mr Reeves) Absolutely. Again one of the reasons for
setting up the national patient survey is to try to get some indication
about how the patient feels in terms of the treatment they have
received. This is a good example of how it can be used in this
particular area.
52. I notice that the allocation of the current
extra £10 million on breast cancer is being allocated on
an indicative weighted capitation basis to reflect the age 30
to 80 female population. That seems quite understandable and logical.
Paediatric services. The allocation was to regional offices in
line with health authority initial general allocations. At first
glance, one can easily wonder why not on the basis of the numbers
of the child population just as you have done it on the numbers
of the female population. Could you give us some more idea about
that?
(Mr Reeves) The difference is probably because breast
cancer is allocated recurrently and therefore we should like those
monies to be reflected in terms of our overall capitation approach
which applies in terms of current monies. In terms of paediatric
intensive care, the two tranches of money in 1997-98 and 1998-99
were non-recurrent and the feeling was, particularly in discussion
with the regional offices and the regional coordinators on paediatric
intensive care, that it was important to build up the service
as quickly as we could and the best way to do that was to focus
on certain specific areas and specific initiatives. The three
areas were increasing the number of medical and nursing staff
both in the lead centres and in the general hospitals, providing
24-hour retrieval services and building up the capacity of the
lead centres. Those three initiatives were really the focus of
the £5 million in 1997-98 and although we have not fully
allocated the £10 million for this year, it would be similarly
reflected in those three major areas. It is obviously wrong for
me today to predict what might happen in the future, but it could
well be that if, like breast cancer, the monies were to be provided
on a recurrent basis for paediatric intensive care, then it is
very possible that we would move to a capitation-based approach,
partly linked to the child population, also to the socio-economic
and health needs of the child population as well. At the moment
the monies for paediatric intensive care were very much focused
on the short-term to build up the service in response to these
two reports.
53. I am not advocating one or other and I certainly
take the socio-economic point. If I look at the priorities for
funding, the third one, "increase the number of medical and
nursing staff within lead centres trained in specialist PIC skills
... and staff in general hospitals skilled in stabilising critically
ill children prior to transfer" what that seems to say to
me is that there will be more highly trained and appropriately
trained staff. I do not understand how that can be done without
recurrent expenditure. You pay for the training but then they
will all be higher graded so they will get higher wages. Where
is that coming from if there is no extra recurrent funding?
(Mr Reeves) The specialist nurse training, which is
about training children's nurses to become specialist intensive
care nurses, is normally done through a six-month post-registration
course, which in itself is non-recurrent expenditure. I do take
your point. Once they are qualified there is a likelihood of requiring
additional salary and remuneration in future years and that is
something the hospitals would have to take on board. What I cannot
say at this stage is that so far we have dealt with this initiative
in terms of last year and this year. Ministers have yet to make
a decision about the years after 1998-99 and it could well be
that they would want to take account recurrently of the issues
you have raised. I am afraid I cannot predict what decisions they
might make in this area.
54. When it says "build up the capacity
and capability of `lead' PIC centres", does "build up
the capacity" mean increasing the number of beds?
(Mr Reeves) It means two major things and out of the
£5 million we spent £1.1 million in this area. One area
is to increase the number of staff, including teaching posts to
train the additional staff. Second, yes, additional equipment
for extra beds.
55. I understand quite well why the concentration
is on the lead centres. This Committee was well persuaded of the
undesirability of scattering these beds around. They need to be
concentrated. I understand that. I wondered whether it meant actually
as well that there have been figures showing the specific need
for specific numbers of extra beds. I wondered whether "build
up the capacity" was an indirect way of saying that was what
they were going to do. I must say I would have appreciated it
more if it had said "increase the number of beds from X to
Y in the `lead' PIC centres". Then we all know where we are.
"Build up the capacity" is really a very vague term
for financial information, is it not?
(Mr Reeves) Yes. We can provide some breakdown of
this figure, which is £1.1 million in 1997-98. I am happy
to provide the Committee with that information if they so wish.
Without prejudging what it says, it will break down into those
two broad areas I have mentioned: one is expenditure on staff
and the other is expenditure on equipment for extra beds. I am
afraid I do not have the information available today in terms
of the number of additional beds.
56. I should quite like to know the breakdown
and then we can compare it with what the Committee felt in its
inquiry would be a suitable thing, to see whether there is still
a shortfall on what we wanted or whether this meets the Committee's
recommendations.
(Mr Reeves) We will provide that.
Ann Keen
57. May I take you to the winter pressures money
and in particular the press release which came out in October
which announced the winter pressures funding. It did state that
£30 million of the extra £300 million would come from
efficiency savings. Does that mean that only £270 million
was new money and that £30 million would be redeployed as
a result of greater efficiency? What did that actually mean?
(Mr Reeves) May I do the analysis of the breakdown?
The original £300 million was for the UK. What we did was
to provide £31 million to Wales and Scotland which then left
a figure of £269 million. Our discussions with Treasury took
place and one of the Chancellor's conditions attached to the extra
monies was that the Treasury would provide £239 million of
new money as long as the Department of Health would find the additional
£30 million of savings through its own programmes. I am please
to say that we have found that extra £30 million and we focused
on six initiatives to find those savings. I can happily give you
some more details of those six initiatives but we have found the
£30 million. It is fair to say, yes, £270 million was
very much new money. The £30 million was not necessarily
a redistribution of existing monies, it was that it might not
have occurred but for the fact that we did put additional emphasis
on the NHS coming up with these additional efficiency savings.
Chairman
58. May I pursue the winter pressures issue?
Could you comment on the apparent discrepancy between the policy
intention to "target poor performance and provide support
for areas with special problems", and its implementation
which allocated resources according to health authority general
allocations? Can you tell me what was meant by targeting poor
performance in the context of this initiative?
(Mr Reeves) Is this in terms of the recent allocation?
59. Over the last winter, the figure you were
talking about a minute ago in answer to Ann Keen.
(Mr Reeves) What we have done, to come back to the
point about the breakdown between the £239 funded from Treasury
and the £30 million of efficiency savings, was to subdivide
the remaining £239 million into two areas. We needed £80
million to respond to various primary care pressures and we also
allocated £159 million once we were satisfied, or at least
the regional offices were satisfied, that health bodies had proper
plans in place to implement these initiatives. All of that money
was allocated, which is a slightly different approach to the one
we adopted for the allocation of the waiting list monies in March.
At this stage we did allocate in 1997-98 the whole of the £159
million. We did not keep back a contingency. We still have to
see the figures coming through from the health authorities on
how that money was spent. That is very important because we want
to know again in terms of best practice what we can glean from
individual health authorities to provide better guidance in the
future. No contingency was held back from those monies.
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