Mike Farrar CBE, Chief Executive of West Yorkshire Strategic Health Authority, spoke last night at a lecture hosted by Bevan Brittan LLP on ‘Choice and Deliverability’.  The lecture follows the publication of a new report by Opinion Leader Research (OLR), supported by Bevan Brittan, which suggests that while support for the Government’s radical ‘Choice’ agenda is strong amongst public and private sector alike, a range of complex issues and tensions still need to be resolved before the agenda can move forward to deliver practical benefits.

 ‘Choice’ is clearly at the heart of government policy with Tony Blair mentioning it as many times as Iraq in his conference speech on Tuesday.  Like the Prime Minister, Mike Farrar believes that creating choice for patients gives real power to ordinary families in terms of receiving consistently high quality and speedily accessed health care.  However, in his lecture, Mike Farrar was quick to point out that many of the issues which will determine whether the ‘Choice’ policy can achieve its aims are dependent on careful and intelligent implementation.

Farrar highlighted that for ‘Choice’ to succeed it not only needs a plurality of providers, it also relies on creating an excess of supply over demand and the fundamental question that this begs is affordability.  He is confident that this excess can be achieved by 2008 but warns that the real key to doing so lies in the principled implementation of ‘Payments by Results’. 

He said of this system “On the surface a straightforward mechanism to encourage providers to compete by offering higher quality care within a nationally fixed price tariff.  But, the economics of the NHS providers suggest that the margins of their income are extremely tight, and that only a small shift in business, with  patients choosing to take their business elsewhere or opt for alternative primary care based treatments, might make a service non viable for the provider to offer.  How would that square with our desired policy intention to reduce inequalities if a local service were jeopardised given that the most likely early adopters of ‘Choice’ are likely to be from the middle classes, and the least likely adopters to be those from disadvantaged groups?  We would need to have mechanisms in place to avoid this.”  Farrar stressed that they could be found if the NHS learnt from the experience of other sectors to ensure “that social as well as economic criteria are used as the basis of pricing and that valued services are allowed price protection in order to serve vulnerable groups and communities.”

Farrar also acknowledged that in order for providers to respond to the ‘choice challenge’ effectively, they would need to develop an economically more sophisticated  breakdown of their unit costs and of the profitability of each of the services they offered.  He explained, “To date most NHS providers struggled to attribute their detailed costs and have operated on the basis that increasing the size of their total income equates to success.  In the future however it will increasingly be margin not total income that will count, and that will allow providers the incentives to reduce costs, attract more income and drive up their productivity and profitability, thus providing better value for money for the taxpayer, whilst generating the ‘market response’ that the ‘Choice’ policy requires.  Understanding unit costs and moving all providers onto the Foundation Trust regime, which requires this mentality in the providers from the start, is a must for the NHS if ‘Choice’ is to succeed.”

Throughout the lecture Farrar never lost sight of the human issues, stressing that ‘Choice’ will only work if patients have the information and inclination to allow them to make discerning decisions.  He also asked whether patients will have the assertiveness to make choices or whether they will be governed by the preferences, guidance or prejudices of their GPs.  These thoughts clearly echo findings in the OLR report regarding the provision of information and whether more patient advisors will be required to help prevent the widening of social inequalities.  Both Farrar and OLR suggest that choice may simply fail because of the well meaning but paternalistic culture of the system.  Farrar passionately believes though, that despite the pitfalls, the ‘Choice’ policy will ultimately succeed in tackling health inequalities but he concludes: “If we are to deliver the Government’s objectives for ‘Choice,’ and I believe we must, the NHS, maybe for the first time in many years will need to value thinking as much as doing.”

Click here to read Mike Farrar's speech in full.