Monitoring of PbR needs greater independence

Payment by Results (PbR) is a key government policy, and along with patient choice, foundation trusts, and pleurality of provision, is designed to create a supplier market into the English NHS.

According to the FT’s Nick Timmins (who’s also the visiting professor in public management at King’s College), PbR is the mechanism which “makes everything else possible” in NHS market reforms.

Considering the controversy and costs (14% of total NHS budget versus 6% prior to the purchaser provider split) involved in creating a market within the NHS, it is clearly in the public interest that NHS reforms like PbR are independently and properly scrutinised.

We should therefore be grateful that the Audit Commission has been charged with this duty. The commission website describes its values and principles in its corporate governance framework as follows:

Values: three essential values lie at the heart of all of the work of the Audit Commission: to be an independent voice in the public interest; to maximise the commission’s impact on the improvement of public services and to ensure that public funds are protected and well spent.

Principles: in its governance, the Audit Commission and commissioners will at all times observe the highest standards of propriety involving impartiality, integrity and objectivity in relation to the stewardship of public funds…

It has a particular remit from the health secretary to look at PbR. The commission’s remit on PbR policy is as follows: “The introduction of PbR represents a major change to financial management in the NHS. PbR offers both significant benefits and challenges. We have made it a focus of our audit work and national studies programme.

“In July 2004 we published a report which examined the introduction of PbR. We later followed this up with our second national report on PbR which reviewed the experiences of the system so far. We are currently scoping a third national study, which will examine how the NHS is responding to the financial management challenges of the impact of PbR and the configuration of services.”

Everything appears to be in hand, but who’s hands? It turns out that the managing director for health at the Audit Commission is a chap called Andy McKeon. He was formerly the director of policy at the Department of Health and played a central role in the development of a number of White Papers. In an article about NHS financial problems in Public Finance in 2006 he made the following statement: “In my previous job as a senior official in the Department of Health I was closely involved in developing PbR along with foundation trusts, patient choice, the introduction of more private sector providers and other elements of the package known in the NHS as ’system reform’. Indeed, some would say I was the main architect and therefore a chief suspect in my own right.”

I’m sure Andy works to the highest ethical standards, but I still find it quite remarkable that one of the chief architects of PbR is now in charge of auditing its outcomes, when the commission is supposed to be an “independent voice in the public interest”.

Since PbR is the mechanism that makes “everything else possible” in NHS reform, including involving greater private sector involvement, it is concerning that a FOI request by Private Eye suggests that Andy McKeon was entertained on 70 separate occasions over two and a half years, largely by consultants, private health companies and industry-funded think tanks.

Nothing surprises me anymore. I feel there’s a disturbing culture at the heart of politics, dominated by corporate lobbyists, self-interested politicians, external advisors and the management consultancy industry. And it’s not being helped by the disintegration of the civil service.

Tags: PBR