What has devolution meant for the NHS in Scotland and England?

Matthew Dunnigan | September 10, 2014 | Blog

MatthewDunniganPhotoThe devolution of healthcare to Scotland (together with Wales and Northern Ireland) created a case-control study in which a public sector model of healthcare, based on integration and cooperation among its component parts, can be compared with an increasingly neoliberal public sector health model based on competition between healthcare providers, increased choice for consumers (patients) and increased opportunities for private sector providers to compete for NHS funding.

There have however been few detailed analyses of the relative effectiveness of the Scottish and English systems in meeting the rising demand for both emergency and elective healthcare.

In 2010 the Nuffield Trust produced a report comparing the relative performance of NHS Scotland and England between 1996-97 and 2006-07. The authors interpreted more rapid increases in inpatient and day case hospitalisation rates and in outpatient attendance rates in NHS England, compared with NHS Scotland, as evidence of significantly increased English productivity driven by market-oriented reforms.

But more detailed subsequent analysis and deconstruction of these trends by the author between 1998-99 and 2010-11 showed that the differences were more apparent than real. Some resulted from the perverse incentives introduced by Payment by Results (PBR) to NHS England in 2004, with increased recording of inpatient, day case and new outpatient activity. In NHS Scotland, contrary trends had resulted in more rapid transfers of inpatients to day-case settings, of elective day case to outpatient settings, and of a rapid increase in nurse-led clinics for many routine endoscopic procedures [1. http://www.nhsca.org.uk/docs/newsletters/june2011.pdf (pp19-21), http://www.nhsca.org.uk/docs/newsletters/jun2012.pdf (pp17-19),http://www.nhsca.org.uk/docs/newsletters/sept2013.pdf (pp13-15) and http://www.nhsca.org.uk/docs/newsletters/jun2014.pdf (pp7-8)]

In other respects, comparisons of a wide range of performance indicators showed similar rapid improvement in both NHS Scotland and England between 1998-99 and 2010-11, with comparable improvements in public approval ratings of NHS performance. These striking improvements have been recently confirmed by a revised Nuffield Trust report, issued in April 2014.

In the last decade, debate about the organisation of NHS England has been mainly focused on the neoliberal policies introduced by New Labour under the guise of ‘modernisation’, abetted by the increasing infiltration of the Department of Health by the large management consultancies. This prepared the ground for the more radical conversion of NHS England into a franchise open to ‘any qualified provider’ if the legislation embedded in the Health & Social Care Act is fully implemented.

One disadvantage of this focus on organisational change has been to underrate the crucial role of the huge increase in capital and revenue expenditure by the previous Labour administration in transforming the performance of the NHS. Between 1998-99 and 2010-11, per capita health expenditure in NHS England and Scotland increased by 98% and 78% respectively in real terms. This financed large increases in medical and nurse staffing and initiatives to reduce waiting times and lists. Large increases in capital expenditure permitted an extensive programme of new hospital building, albeit mainly through the wasteful Private Finance Initiative.

Tragically, this period of rapid improvement in NHS performance came to an end following the 2008 financial crash, the subsequent election of the Coalition administration in 2010 and the initiation of an unprecedented period of austerity, in which health spending has remained constant in real terms for four years. This constitutes a reduction in expenditure since NHS inflation is invariably significantly higher than general inflation.

Even between 1990-91 and 1998-99, when as noted earlier NHS performance was clearly inadequate, expenditure increased in NHS England and Scotland by 30% and 24% per capita in real terms, from a much lower baseline than in the following decade. Since 2010 the result has been deteriorating performance indicators and widespread predictions that the NHS is unsustainable within the financial straightjacket that has been imposed in order to reduce a public sector deficit resulting from the folly of the international banking system.

This raises the question of whether the neoliberal market model of NHS care being implemented in NHS England in the face of austerity is more or less resilient than the public sector model operating in Scotland. In 2010-11, despite having only 8% more health spending per capita than NHS England (£2,089 vs. £1,932), NHS Scotland employed 19% more doctors, 27% more GPs and 31% more qualified nurses per capita than NHS England. In that year Scotland had 48% more acute staffed beds and 81% more staffed beds in all specialties per capita than NHS England. This suggests that NHS Scotland may have distributed its NHS revenue more judiciously than NHS England, and obtained better value for money.

It is also becoming apparent that the model of financially independent hospital trusts, which derive up to 60% of their income from a complex Payment by Results tariff, is fragile and unstable in the face of falling income. A substantial number of trusts are at risk of being broken up and recombined on purely financial grounds, as was proposed for Lewisham in South London. In contrast, since the abolition of the internal market and any further privatisation of clinical services NHS Scotland has been distinguished by organisational stability. There are no ‘failing’ hospitals, since all hospitals are state funded from a Resource Allocation Formula which includes Area Board hospital caseloads only as one indicator of relative need.

A key component of NHS Scotland’s post-devolution healthcare model has been the concept of Managed Clinical Networks. This has preserved the viability of Scotland’s district general hospitals, particularly smaller hospitals in remote areas which can readily refer patients for further treatment and investigation to other secondary and tertiary care facilities. With rapid advances in medical science, this has facilitated improved care for many cancers, cardiovascular, cerebrovascular and neurological disease and severe trauma cases requiring specialised orthopaedic care.

These networks have also been widely introduced in NHS England but are now at risk from competing providers anxious to maintain their incomes. The precedent set by the decision of a clinical commissioning group in Staffordshire to transfer cancer services to inexperienced private providers may accelerate the threat to the optimal care that has been made possible by the evolution of Clinical Networks in England.

The Scottish independence referendum will be held on September 18th. The result should have little effect on the organisation of healthcare in NHS Scotland since this has been devolved since 1998-99. Whatever the result, it remains important to continue to compare the performance and resilience of the Scottish public sector healthcare model (and those of Wales and Northern Ireland) with the neoliberal English equivalent in the face of increasing austerity, taking full advantage of the empirical evidence which the case-control experiment created by devolution has made available.


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