MORE 'BUREAUCRACY'
Here I'm relying on the House of Commons Briefing Paper (cbp 05607, 23rd September 2016) NHS Commissioning before April 2013 by David Turner and Thomas Powell.
They begin with an account of NHS financing from the early days:
'Contractual terms for independent practitioners were determined nationally, but their contracts were with Executive Councils (ECs), local NHS bodies which were directly answerable to the Minister of Health ... they received set fees according to the number of registered patients for whom care was to be delivered ... The fact that funding for primary care services was open-ended (being driven entirely by levels of demand from patients) proved to be a major source of NHS cost inflation. This was particularly so in respect of the budget for drugs prescribed by GPs, especially as the “pharmaceutical revolution” which gathered pace in the 1950s saw the introduction of a wide range of new (and effective) drugs.'
With regard to hospitals:
'Many of the hospitals taken over by the NHS were small “cottage hospitals”, run by GPs in smaller towns and rural areas. At first, capital expenditure was negligible, with services being provided in the (often already very aged) estate to which the NHS had become heir in 1948.
'The 1962 Hospital Plan envisaged District General Hospital (DGHs), housing a range of specialisms, as the mainstay of a comprehensive national network of modern hospitals, fully integrated with the other parts of the NHS ...
'At first, hospitals submitted claims for funding and were paid on a basis that has been described as “what you got last year, plus an allowance for growth, plus an allowance for scandals” [sic - PB] (with new facilities funded according to average costs) ...
'Financial planning and control in the NHS (in relation to those services with fixed budgets, ie hospital and LHA services) initially took place in the context of the “estimates” system. Under this arrangement, government departments were required to submit annual estimates of their likely cash expenditure in the coming financial year, which were then voted on by Parliament.
'From 1961, spending plans were required to cover a five-year period. And they were expressed in constant price terms – meaning that, in the event of price inflation and/or pay increases, additional cash would be made available so that the planned volume of expenditure could still be delivered.'
We have seen something of the reforms introduced to the system in 1974 and 1984.
'In 1990 the constitutions of both District Health Authorities and Regional Health Authorities were changed significantly. They now had substantially fewer members and the principle was introduced of “executive” (ie senior staff) and “non-executive” (ie lay) members sitting together. The Authorities came thereby to resemble (in this respect at least) the Boards of commercial companies. There was no longer, as there had been, a “separation of powers” between professional managers (the “executive”) and a lay Board (the “legislature”) which made policy and held the managers to account.
'In RHAs non-executive members were appointed by the Secretary of State. In DHAs the Chairman was appointed by the Secretary of State and other non-executive members by the RHA. There was now no provision for the involvement of local authorities or the representatives of healthcare professions, NHS staff and trade unions in RHAs and DHAs.'
[...]
'A new GP contract, introduced in 1990, placed fresh demands on General Medical Services, with payment being more related to performance in meeting targets. At the same time, the budget for GP practice staff and premises was made cash-limited (the first application of cash limits to any part of the primary care budget).
'Following the introduction of the contract, it became increasingly common for GPs to join practices on a salaried basis rather than as partners. '
The Briefing Paper covers fields I haven't been discussing such as dental services and opticians. We may note in passing that the days of entitlement to free spectacles ended in 1988.