Website of the Department of Health

Introduction

6.1 This plan outlines a new delivery system for the NHS. It is a system based around the NHS as a 'high trust' organisation. It offers standards and clinical frameworks set nationally. A leaner and more focused centre with the Secretary of State devolving powers. And the chance for health professionals to innovate locally earning greater autonomy the better they perform. With support to spread best practice and pressure to raise consistently poor standards.

6.2 The 1948 settlement assumed central accountability for the NHS. The sound of every dropped bedpan was to reverberate around Whitehall, in Nye Bevan's immortal phrase. But this accountability was more apparent than actual. The reality is that a million patients every day rely on the skills and judgement of highly trained frontline professionals, so the NHS cannot be run from Whitehall.

6.3 The last Government's 'internal market' attempted to address this problem. But by fragmenting the NHS, standards remained variable and best practice was not shared. Competition between hospitals was a weak lever for improvement, because most areas were only served by one or two local general hospitals. Other methods of raising standards were ignored. The market ethos undermined teamwork between professionals and organisations vital to patient-centred care. And it hampered planning across the NHS as a whole, leading to cuts in nurse training and a stalled hospital building programme.

6.4 Our aim is to redesign the system around the patient. That means not repeating the mistakes of the past. The top down government model failed to provide the local innovation, and the responsiveness to deliver sustained improvements in patient care. The internal market imposed a false market on the health service. The result was not better incentives but more fragmentation, a lottery in provision and excess bureaucracy.

A new delivery model

A new delivery model

The Plan proposes a new relationship between centre, region and locality.

6.5 It is a model of healthcare that protects and strengthens what is  unique about the NHS: the dedication of the staff. The public service ethic that most private companies envy. The NHS is an organisation glued together by a bond of trust between staff and patient or, what some have called, principled motivation. Out aim is to renew that for todays world, not throwing away those values to market mechanisms, but harnessing them to drive up performance. That is why we believe the principles set out at the beginning of this plan, and signed up to by key NHS organisations, are central to the type of NHS we want to create.

6.6 Because we trust people on the frontline, the centre will do only what  it needs to do; then there will be maximum devolution of power to local doctors and other health professionals. The principle of subsidarity will apply. So the  centre will: set standards, monitor performance, put in place a proper system of inspection, provide back up to assist modernisation of the service and, where necessary, correct failure. Intervention will be in inverse proportion to success; a system of earned autonomy. The centre will not try and take every last decision.  There will be progressively less central control and progressively more devolution as standards improve and modernisation takes hold.

6.7 Moving from the internal market to this new approach has had to be done in stages to ensure that the NHS avoided wholesale disruption. The first stage was set out in the Governments White Paper, the New NHS published in 1997 and the Health Act 1999. They gave responsibility for shaping and commissioning care to local groups of doctors and nurses working together.Primary care groups (PCGs) are now up and running in every area and controlling over £20 billion two thirds of the local NHS budgets. And as from April the first 17 primary care trusts (PCTs) have been in operation giving local health professionals more freedom to develop new services by bringing together in a single organisation primary and community care services. At the same  time NHS trusts were maintained but competition was replaced with co-operation. New systems were established to set and monitor national standards. Now we are taking the new model for the NHS a stage further.

6.8 In future the Department of Healths role will involve championing the  interests of patients by applying both pressure and support. It will do this by:

Setting priorities and developing standards

6.9 This National Plan sets out the main national priorities. Being clear about the key national priorities creates the space to tackle local priorities.

6.10 Patients should have fair access and high standards of care wherever they live. So at national level the Department of Health will, with the help of  leading clinicians, managers and staff, set national standards in the priority areas. These standards will take three forms:

Support to redesign care around patients

6.11 Over the past few years the NHS has started to redesign the way health services work - in the outpatient clinic, the casualty department and the GP surgery. The work has been led by staff from across the health service and involves:

6.12 Where this has been done the impact has been dramatic. It has resulted in improved services for patients. It has also resulted in improved productivity, made the task of caring for patients easier for staff and in many cases it has released resources to spend on other services.

6.13 Those places blazing the trail for this revolution in patient care demonstrate that the NHS can deliver modern, high quality, convenient services. Spreading best practice in the NHS however is often slow and ad hoc. Too many NHS organisations have been left to sink or swim, without external support to spread service redesign techniques.

Modernisation Agency

Modernisation Agency

6.14 We will now take forward this service redesign approach. Rapid, effective service improvement requires targeted expert support to spread best practice and stimulate change locally. It mirrors the change management approach taken in much of the private sector.

6.15 We will create a new Modernisation Agency to help local clinicians and managers redesign local services around the needs and convenience of patients. It will encompass the existing National Patients Action Team, the Primary Care Development Team, the Collaborative Programmes and the clinical governance support unit. The NHS Leadership Centre will also become the responsibility of the new Modernisation Agency, as will the Beacon Programme and the NHS annual awards programmes. The Agency will work with all Trusts to support continuous service improvement.

6.16 The Agencys staff will mostly be drawn from the NHS on secondment. The Agencys own regional teams will be based within the Regional Offices, with membership drawn from the NHS and elsewhere. They will work closely with Regional Office staff. Every trust will be expected to set up teams to implement this new patient centred approach in their own organisation. In this way, the Modernisation Agency will embed a personalised care at the heart of the service.

6.17 In addition to existing work the Agency as its initial work programme will:

Information on performance standards

6.18 New arrangements for monitoring and reporting the performance of local health services will be established. Already a Performance Assessment Framework (PAF) has been introduced that covers the six key areas of NHS performance: health improvement; fair access to services; effective and appropriate delivery of health care; outcomes from health care; efficient use of resources; high quality experience for patients and carers. Each year tables are published showing how each health authority has performed against the measures in each category.

6.19 As a result of the NHS Plan five changes are being made to the way performance standards are set and information is collected and published:

Inspection

6.20 The NHS, like other public services, needs to be subject to independent scrutiny. Local people have the right to know how effective their local health services are. In addition inspection helps identify all that is good about an organisation as well as highlighting problems that need to be addressed. But until the Government set up the Commission for Health Improvement the NHS lacked any independent inspectorate. Commission for Health Improvement will quality-assure the care of NHS hospitals as well as community and primary care services.

6.21 The Commission for Health Improvement, with the support of the Audi Commission, will inspect every NHS organisation every four years. In addition, organisations rated as 'red' under the Government's system of 'earned autonomy' will be subject to more frequent, two-yearly Commission for Health Improvement inspection. To support this expanded role for the Commission for Health Improvement, its current size is set to double over the next few years.

6.22 The Commission for Health Improvement has just started its rolling programme of inspections. It is expecting to complete 25 inspections this year and a further 100 every year after that. The Commission will discuss with the Medical Royal Colleges how their respective visits programmes can be co-ordinated and possibly integrated.

6.23 The Government will also continue to use its powers to send the Commission into those trusts where there are serious and urgent concerns about clinical practice or patient safety.

6.24 As well as carrying out a series of local inspections the Commission for Health Improvement and the Audit Commission will undertake a complementary series of national studies and inspections.

New incentives and 'earned autonomy'

6.25 Performance improvement in the new NHS will be underpinned from April2001 by a new system of incentives which will support the delivery of better services for patients. The incentives will offer both financial recognition and non-financial reward to organisations and frontline staff for overall excellence and improved performance.

6.26 Depending on their performance against the Performance Assessment Framework, all NHS organisations (health authorities, NHS trusts, primary care groups, primary care trusts, and health action zones) will for the first time annually and publicly be classified as 'green', 'yellow' or 'red'. Criteria will be set nationally but assessment will be by Regional Offices with independent verification by the Commission for Health Improvement.

6.27 Red organisations will be those who are failing to meet a number of the core national targets. Green organisations will be meeting all core national targets and will score in the top 25% of organisations on the Performance Assessment Framework, taking account of 'value added'. Yellow organisations will be meeting all or most national core targets, but will not be in the top 25% of  Performance Assessment Framework performance. So red status will result from poor absolute standards of performance, triggering action (set out below) to ensure a 'floor' level of acceptable performance is achieved throughout the NHS. Green status reflects both outstanding absolute performance against core national targets and relative performance against the wider Performance Assessment Framework measures, serving as an incentive for continuous improvement on the part of all organisations. The 25% threshold for green status will be reviewed periodically.

6.28 Measuring performance across a whole health authority will often mask significant internal variations within it - particularly as health authorities evolve to cover larger populations. So the traffic light status will be accorded to individual NHS organisations. As many aspects of performance span organisations across a health community, the criteria for traffic lights will explicitly include how well they work in partnership with others and how well the local 'health economy' as a whole is performing on key shared  objectives.

6.29 The green-light NHS organisations will be rewarded with greater autonomy and national recognition, which within the framework of the local Health Improvement Programme will take the following forms:

6.30 In addition, green health authorities will be 'licensed' to take over delegated Regional Office performance management functions in relation to the local NHS including NHS trusts. Over time, within a national framework, this would allow the progressive devolution of performance management and strategic development from the Department of Health, and a streamlining of the 'intermediate' tier.

Financial incentives

Financial incentives

6.31 From April 2001 the Government will introduce a National Health Performance Fund building up to £500m a year by 2003/04. The fund, which will be held and distributed regionally, will allow incentives worth on average £5 million for each Health Authority area to be available to reward progress against annually agreed objectives. The intention is to encourage year-on-year improvements regardless of differing local starting points.

6.32 Green organisations will have access to their share of the National Performance Fund as of right.

6.33 Yellow health authorities, NHS trusts and primary care groups/trusts will be required to agree plans, signed off by the regional office, setting out how they will use their share of the fund to improve their services and contribute to national objectives and local priorities.

6.34 Red organisations will have their share of the Performance Fund held by the new Modernisation Agency. They will get their fair share of extra funds but it will come with strings attached. Spending will be overseen by the Modernisation Agency.

6.35 The Performance Fund will include rewards for staff and organisations that reduce waiting times and introduce booked admissions, redesign waiting out of the system and improve the quality of care, including the adoption of  local referral protocols based on national clinical guidelines.

6.36 For primary care groups and trusts one of the criteria for access to the funds will be the development and use of incentive schemes that ensure referrals to hospital are appropriate and will help achieve shorter waiting times. Incentives will also be developed for joint working between primary care groups, NHS Trusts and social services to achieve improvements in rehabilitation facilities for older people.

6.37 The Performance Fund will enable NHS trusts and primary care trusts to offer greater incentives to staff in clinical teams and primary health care teams linked to their contribution to service objectives. The reward could take the form of:

6.38 As part of these new arrangements we intend to pilot the use of team bonuses in a number of NHS trusts from next year. The results of the pilots will inform our decisions on the further development of team rewards.

Intervention

6.39 Primary care groups and primary care trusts already have the right to begin either providing appropriate services in-house, or to transfer funding and services to alternative providers, where they have serious and persistent concerns about the quality of local hospital services. However this will often be difficult in practice either because of the destabilising consequences for other services within the provider trust (such as the accident and emergency department) or because of the distance that patients would have to travel to alternative providers. By itself, the threat of switching work is, therefore, often a weak lever to drive improvement in a local NHS trust, as was shown by the failures of the internal market.

6.40 For this reason, there need to be new mechanisms directly to intervene to turn round the performance of a seriously failing organisation, in those rare cases where other approaches have not succeeded. Failing organisations will therefore be subject to a rising scale of intervention reflecting the seriousness and persistence of their problems. 'Red' organisations - those whose performance calls for 'special measures' - will receive expert external advice, support and, where necessary, intervention.

6.41 'Red' organisations on special measures will be legally directed to produce a detailed recovery plan, which includes milestones and measures to put right concerns reported by the Commission for Health Improvement. The recovery plan will have to be agreed with, and will be overseen by, regional offices.

6.42 'Red' organisations will receive intensive support from regional offices and the new Modernisation Agency. The share of the National Health Performance Fund that relates to 'red' organisations will be held by the new Modernisation Agency to use for targeted external assistance to help turn around their performance.

6.43 In the case of persistent clinical failure in a 'red light' organisation, NHS trusts will be able to draw on the limited number of medical consultants that the Modernisation Agency will employ on a retainer basis in each region. They  will be geographically mobile, and will be seconded in to provide clinical leadership and where appropriate direct patient care in trusts with enduring performance problems.

6.44 As a last resort, those 'red' organisations that exceptionally fail to respond to special measures and meet their recovery plan will be put under the control of a new replacement senior executive, non-executive, and clinical team.  Clinicians and managers from 'green' organisations could be deployed for this purpose. Alternatively, expressions of interest could be invited from elsewhere, and subject to a tender from an approved list. Trusts could be merged, or large trusts split up into smaller or different clinical configurations where appropriate.

6.45 Where persistent failure is identified in a primary care group or primary care trust, responsibility for leading primary care in the area affected could be transferred to a neighbouring primary care group or primary care trust on either a temporary or permanent basis.

A new role for Government

6.46 To deliver the new relationships between the Government and the NHS, there will need to be new, more inclusive national and local structures.

6.47 A Modernisation Board will be established to advise the Secretary of State on, and help oversee implementation of the NHS Plan. It will also publish an independent annual report on progress in implementing the NHS Plan. Its membership will include key stakeholders committed to the modernisation of a sustainable tax-funded NHS. They will be health professionals, patient and citizen representatives, and frontline managers drawn from 'green light' NHS organisations.

6.48 Within the Department of Health, the increasingly unhelpful split between public health functions, the NHS, and social services will be overcome by combining responsibility for them in a single chief executive post at permanent secretary level with more autonomy and operational control. The Chief Executive will account to the Modernisation Board for delivery against the Plan.

6.49 Below the Chief Executive and supporting conventional line management arrangements, the Department will establish a small number of Taskforces to drive forward implementation of this Plan. The taskforces are likely to include waiting, heart disease, cancer, mental health, older people, children, inequalities and public health, the workforce, quality, and the capital and information systems infrastructure. Each taskforce will include members from relevant national and local NHS organisations, as well as the national clinical 'czars' and key departmental officials. A member of the Modernisation Board will also serve on each taskforce.

6.50 There will be new written performance agreements between regional offices of the Department and the Chief Executive specifying their contribution to quantifiable deliverables. The Regional Director will be personally accountable for delivery of the agreed performance targets.

6.51 Personal, as well as organisational accountability will be strengthened by giving regional directors a formal role in counter-signing the annual performance reports, personal development plans and performance pay of NHS chief executives.

6.52 National arrangements, modified as appropriate, will be mirrored by regional and local modernisation boards and delivery taskforces. The local Modernisation Boards will be the forum in which local stakeholders, including hospital consultants and patients groups, contribute to the health improvement programme.

6.53 As a consequence of these new arrangements, the Government will devolve and place at arms length powers and responsibilities that do not relate to its core functions. Already responsibility for advising on the take-up and use of drugs and treatments has been placed in the hands of the National Institute for Clinical Excellence. An independent Commission for Health Improvement has been established to inspect every part of the health service. Under the NHS Plan further functions will be devolved from the Secretary of State to other bodies.

6.54 The appointment of non-executive directors of trusts and health authorities will pass to a new arms-length body. For the last decade the power to appoint all 3,000 non-executive directors of NHS trusts and health authorities has rested with the Secretary of State. In future all appointments to these NHS boards will be undertaken by a new NHS Appointments Commission, not Ministers. The Secretary of State will publish guidance for the Appointments Commission on job requirements for non-executives, including support for the core principles of the NHS, and targets for diversity. The Appointments Commission will report annually to Parliament on its performance and progress.

6.55 The Commission will be made up of a chair and eight commissioners, each with a regional role not just in appointing but in on-going support and development of non executives. They will replace the current posts of regional Chairs. Appointments to the Commission will be made on merit by the Secretary of State, following open competition and in strict accordance with Nolan rules.

6.56 Decisions on the outcome of major health service reorganisations will in future be based on the recommendations of an independent panel. The current system, under which the Secretary of State makes decisions on contested proposals, is insensitive, opaque and not sufficiently independent. Too little attention is paid to the impact on the total health care system - including the effect on social services.

6.57 From next year there will be a new National Independent Panel to advise on contested major changes. It will be comprised of around one third doctors, nurses and other health professionals, one third patients' and citizens' representatives, and one third managers of the 'green light' health authorities and trusts in the country. The independent panel will make recommendations to the Secretary of State, assessing proposed changes against clear criteria, including quality of care, community health needs, accessibility, resourcing and the findings of the National Beds Inquiry. It will explicitly take account of the rigour of the local consultation process. The Panel will operate openly, publish its recommendations, the reasons for its conclusions and the evidence it considered.

6.58 The hearing of consultants' appeals against dismissals will in future be dealt with locally rather than by the Secretary of State, bringing the situation in line with normal employment practice.

6.59 The number of directives issued by the Department of Health will be slashed dramatically. Historically up to ten circulars per week are sent to hospitals and primary care organisations. In future that will generally be cut to no more than one shorter communication a week.

Conclusion

6.60 By 2004 there will be a new relationship between the Government and the NHS. Earned autonomy will be working. Devolution will have taken hold.

6.61 To symbolise the new relationship, the Government will ensure that more money goes into frontline services rather than into bureaucracy. Good management is central to delivering patient-centred care. We are already committed, within this first full Parliament, to save £1 billion as a consequence of abolishing the internal market.

6.62 By 2004 the share of NHS spend on management costs will be cut so that a higher share of every pound spent goes into frontline patient care.

6.63 The new model of earned autonomy symbolises the trust that the public and government alike have in frontline NHS staff. But making the new system work to deliver patient-centred care will require changes from those staff  too.