Downing Street Years - Margaret Thatcher [381]
Ken Clarke now revived the idea which the Policy Unit had been urging: that GPs should be given budgets. In Ken’s version GPs would hold budgets to buy from hospitals ‘elective acute services’ — surgery for non-life-threatening conditions such as hip replacements and cataract operations. These were the services for which the patient had (in theory at least) some choice as to timing, location and consultant and for which GPs could advise between competing providers in the public and private sector. This approach had a number of advantages. It would bring the choice of services nearer to patients and make GPs more responsive to their wishes. It would maintain the traditional freedom of GPs to decide to which hospitals and consultants they wanted to refer their patients. It also improved the prospects for hospitals which had opted to leave DHA control and become self-governing: otherwise it was all too likely that if District Health Authorities were the only buyers they would discriminate against any of their own hospitals which opted out.
Giving GPs budgets of their own also promised to make it possible for the first time to put reasonable limits on their spending — provided we could find ways of having some limit to the number of GPs within the NHS and to how much they spent on drugs, although there was always provision for emergencies. Nevertheless, the Treasury objected to practice budgets, foreseeing the creation of a powerful new lobby for extra health spending, and argued for a more direct way of cash limiting GPs. They also doubted whether all GPs would be able to manage their affairs with sufficient competence and whether many practices would be big enough to cope financially with the unpredictabilities of patient needs. If there were such problems, the patient would suffer.
I myself had initially been cautious and wanted more detail. However, the more closely we examined the concept of having GPs shop around for the best quality and value treatment for their patients, the more fruitful the idea seemed. We decided in the end to proceed again by an ‘opting out’ mechanism, limiting the option to the larger GP practices but extending the services covered by budgets beyond what Ken had originally proposed to include ‘out-patient’ services. We also gave opted-out practices an additional budget to cover the cost of prescriptions.
By the autumn of 1988 it was clear to me that the moves to self-governing hospitals and GPs’ budgets, the buyer/provider distinction with the DHA as buyer, and money following the patient were the pillars on which the NHS could be transformed in the future. They were the means to provide better and more cost-effective treatment.
A good deal of work had by now been done on the self-governing hospitals. As with our education reforms, we wanted all hospitals to have greater responsibility for their affairs but the self-governing hospitals to be virtually independent within the NHS. I wanted to see the simplest possible procedure for hospitals to change their status and become independent — what I preferred to call ‘trust’ — hospitals. They should also own their assets, though I agreed with the Treasury that there should be some overall limits on borrowing. It was also important that the system should be got under way soon and that we had a significant number of trust hospitals by the time of the next election. By December we were in the position to start commenting on the first draft of the white paper which would set out our proposals. In January 1989 we discussed proposals for giving a proper management structure to the NHS. Then at the end of the month — after the twenty-fourth ministerial meeting I had chaired on the subject — the white paper was finally published.
Henceforth the provision and financing of health care were to be separated, with money following the