Speech to Monitor’s Thrive or Survive Conference, Park Plaza Hotel, London. 12th March 2009.

It’s a privilege to be with you today.  It’s a particular pleasure to be with Bill.  And there aren’t many politicians – still less Department of Health personnel – who can say that with any conviction.  I can because I think he’s done a difficult job incredibly well.  Making change happen isn’t a popularity contest – that’s probably just as well in Bill’s case – it’s usually a battle.  But the fact that in such a short space of time so many people in the NHS have come to think of Monitor in the way that schools think of OFSTED - with a mixture of fear and respect - is testimony to how it really puts trusts through their paces in order to improve their performance.

So congratulations are due to Bill and to Monitor.  And they are due to the 115 NHS Trusts who have achieved Foundation status.  I feel a bit like any parent does – proud of my offspring, of course, for who they are but also for what they do.  Because becoming an NHS Foundation Trust was never intended to be an end in itself – at least not from my point of view.  It was a means to an end.  To change healthcare in our country for good.

And in assessing where you have got to it is worth recalling where you came from.  In no small part the idea of Foundations came from you – the NHS and particularly the group of what were then the three star trusts. As Health Secretary I had got sick to death of hearing from the best performing NHS organisations how resources were being diverted to bail out the bad organisations rather than being used to reward the good ones.  So I decided to do a simple thing: to ask high performing NHS trusts what they wanted.  Their reply was simple: they wanted more freedom to get on with the job of improving services for patients. 

That request matched by own recognition - borne from experience - that the NHS simply could not be run from the top down.  If it was to become more responsive to patients then it had to be run from the bottom up.  Since day in day out patients put their trust - indeed their lives - in the hands of frontline NHS staff it was surely right that the Government placed its trust in the self-same people by moving power from the top to the bottom.

Out of this idea – that if the people in charge of delivering local healthcare were put in charge of controlling local healthcare then local services could only improve – was borne the Foundation notion.  So improving the quality of patient care was one of the two drivers that led to the creation of NHS Foundation Trusts.

The other driver was to address the democratic deficit that lay at the heart of the NHS – the fact that while services were delivered locally, in practice they were controlled nationally.   And the consequence of upwards accountability to people in Whitehall rather than downwards to people in the locality was an historic failure on the part of the NHS to recognise that different communities have different needs.  Uniformity of provision had not guaranteed equality of outcome.  Health inequalities had widened not narrowed.  Too often the poorest services were in the poorest areas. 

The creation of NHS Foundation Trusts provided an opportunity to fundamentally shift the balance of power from the centre to the local.  Contrary to those who argued - some of them on my side of politics - that Foundations would mean privatisation I always saw them as a means to strengthen public ownership since they would be owned and controlled by the public locally. The controversy that surrounded the creation of Foundation Trusts has given way to a concensus that accountability, as the Prime Minister puts it in this week’s White Paper on public services must “respond not simply to the hand of government, but to the voice of local people.”

So against these twin objectives – the desire to improve patient care and the desire to strengthen public engagement – how have NHS Foundation Trusts performed?
Against the first objective – improving care – I think you have met and maybe even exceeded expectations.  Foundations outperform non-Foundations both on quality of services and use of resources.  Indeed it is very striking that in the most recent annual healthcheck of the 42 Trusts scoring an excellent rating on both indicators 38 were NHS Foundation Trusts.  And I know that many Foundations are using their financial surpluses to invest wisely in improved patient care.  There is a simple principle here.  You have made those surpluses.  So you should keep those surpluses.  They belong to you and no-one else and you should be able to use them for the benefit of the local NHS patients that you serve.

Against the second objective, engaging the public, there is more of a mixed story.  Of course it is no mean achievement to have recruited 1.2 million Foundation members.  In just a few years NHS Foundation Trust membership is bigger than all three main political parties put together. But while some Trusts have a membership of tens of thousands others have barely a few thousand.  Some approach the task of public engagement with relish.  Others with weary resignation.  Some view their governors as an annoying nuisance.  Others see them as a vital necessity.  Although some have been truly innovative in grasping the nettle of community engagement, few have as yet either embedded their local communities inside their organisations or pro-actively engaged with individual citizens to bring about improvements in public health.  It is here that I believe you need to up your game.

I say that because meeting the challenge that health care faces in the future will require a very different relationship between the citizen and the service. A decade ago the most pressing health challenge was to rescue and reform the NHS and in particular to cut what were then the appallingly long waits that patients had for treatment.  A decade on and that old bugbear of the NHS, long waiting times, has more or less been beaten through a mix of extra resources and top-down reforms.  The challenge today is different and altogether more complex.  It is to absorb a demand for services that is simultaneously both rising and changing against a dwindling supply of resources.  The NHS not only needs to cope with the usual pressures of an ageing society and advancing technology.  It now has to focus on how to improve health, for example by beating obesity and tackling alcohol abuse.  It now has to work out how to help the growing numbers of patients with a chronic condition to manage their diabetes or their arthritis.  It now has to find ways not just of providing collective care but of shifting individual behaviour.  The problem today is different and so must be the solution.  I believe it lies in converting patients from being passive recipients of care in a system that denies them both power and responsibility to being in charge and more responsible for their own health. 

That entails a wholesale change in NHS culture.  NHS Foundation Trusts are uniquely well-placed to lead it.  You lead on service innovation.  You lead on community involvement.  But across the NHS as a whole there is a long way to go.  For all the huge improvements of recent years too many patients still too often feel they are treated like numbers not individuals.  The accent is still on tackling illness not on improving health.  And too many elderly or disabled people still find themselves unable to get the seamless service they want from health and social care. 

I think this is because the NHS today is in transition between a twentieth century model characterized by state control, monopoly provision and a provider-dominated culture – and a twenty first century one where the citizen is in control and there is a mixed economy of provision and a user-led culture.

The issue now is whether the journey is completed or truncated.  A fudge will not work either in the interests of the public who use the services or those who provide them.  The progress that has been made in the last decade provides the foundation for a new ambition for the next : the creation of a new paradigm for healthcare in which power moves irreversibly and irrevocably to patients.  Tentative change cannot deliver that.  It relies instead on radical reform getting a second wind.  Such reform is on the government’s agenda.  But it now needs to be driven forward with clarity, courage and consistency. 

The necessity for such reform is being driven not just by changes in public expectancy – with a growing public desire for greater control over their health and care.  Nor is it driven solely by changes in malady – with a rising tide of chronic disease making what patients do as key to managing their conditions as what clinicians do.  It is also driven most immediately by considerations to do with money.

This conference has as its backdrop the near collapse of the world’s financial markets, a painful global recession and around the world governments contemplating how they can spend less on services like health care in the future than they have spent in the recent past.  In our country health spending has trebled in the last decade.  We have lived through the good times and they are coming to an end.  The next decade will see a lower rate of spending growth than we have seen in the last decade.  The problem is that resources might slow but pressures won’t.  So the focus will be ever more on getting more out for what the taxpayer puts in.  And if they are sensible governments will be looking to NHS Foundation Trusts to lead in bringing about further improvements in productivity and value for money.  One way of so doing so will be through securing better engagement with patients so that they are able to take greater responsibility for their own health.  Interestingly evaluations from both the US and the UK show that policies which give patients greater control over health care decisions manage to combine higher levels of personal satisfaction with lower levels of public spending than traditional forms of service delivery. 

I believe that together these fundamental drivers for change argue for a single-minded purpose for the next generation of NHS reform – the empowerment of the individual citizen. 

How can that be made to happen? 

First, power should move ever more from the centre to the local.  Of course the Government should continue to be a key player in health - in setting strategic direction, creating capacity for improvement and raising and distributing resources.  But the centre itself should be running less not more.  So proposals like that for a national NHS Board should be rejected. They take us in completely the wrong direction.  Towards a policy of nationalisation not devolution. 

It is time to recognise that a centrally driven improvement programme yields ever decreasing results and that making improvement self-sustaining needs a new reform dynamic, where accountability is bottom up - to citizens and communities - not top down.  So Whitehall should not just be re-organised but should be capped in its scale and scope.  And there should be a new guiding principle: subsidiarity, in which power is passed to the lowest possible level consistent with the wider public good.  That not only means, as the public service white paper argues, for accelerating the drive to make Foundation Trusts universal across the whole NHS.  It also means putting renewed energy - and probably new management - into laggard Trusts rather than accepting that some may never make the Foundation grade.  It also means giving every NHS Foundation Trust greater independence so that we have an NHS where provider organisations are autonomous but operate to common standards and incentives.  And on the commissioning side it would mean moving responsibility from primary care trusts which are not elected to the best local councils which are.  So that for the first time there would be single local organisation to guarantee integration between health, social, housing and other care services. 

That brings me to my second change: completing the transition from public sector to public services.  It is now accepted that private and voluntary sector organisations have a role to play alongside public sector ones in delivering NHS services to NHS patients.  Of course competition by itself cannot bring about improvement in what are complex services delivering multiple outcomes to their users.  And there are services where competition is inappropriate or impossible – hospital A&E services are a case in point.  But where it can be applied, managed competition gives organisations a sharp reason to focus on delivering better services to users and greater efficiency to taxpayers.  That is why it should be extended not retracted.  But in the public services markets don’t just happen.  They have to be made.   So new assumptions should guide policy.  Services should be subject to a level playing field where public, private and voluntary sectors are able to compete to be providers.  Community health services, currently dominated by NHS providers, are a key candidate for just such external competition.  Across the board commissioning and providing should, wherever possible, be separate functions.  And services which fail to meet a minimum standard of provision – such as GPs who fail to tackle health inequalities or hospitals that fail to deliver good health outcomes – should automatically be subject to external competition. The destination should be a genuine mixed economy of provision in which the public sector no longer controls but partners providers from other sectors.

Third, the governing model in the health service should move from one that is driven from the centre by standards and targets to one driven from below by incentives and users.  The system of payment by results is a step in that direction.  It needs to be refined and extended as part of a more general move away from assessing inputs and activity rates towards measures that assess outcomes and experiences. Incentives between NHS providers and NHS staff – doctors especially – are not yet properly aligned.  So the next phase of pay reform should unify the interests of the individual clinician with that of the organisation for which they work.  And to ensure the focus is on improving the quality of the user experience, the payment of providers should in part depend, as Ara Darzi’s review rightly concluded, on how users themselves assess how local services are performing.  And these disciplines should apply in community, primary and mental health services just as they should in acute care. 

Fourth, reform should move beyond merely giving individual patients choice to giving them control.  NHS patients have more choices than they have ever had.  But being able to choose which hospital you go to must be just the start.  The next stage is to give patients a greater say and choice over their treatment.  So I strongly support the notion of many more patients – those with a long term chronic condition especially - being able to opt for their own individual NHS budgets so that rather than having to choose from a pre-ordained menu of services citizens can formulate their own menu.  Handing power and control to patients in this way will in turn create new services and new markets – such as more respite care for those with disabled dependents and more physiotherapy for those living with chronic pain. That is why I want the Government to accelerate the drive to make it happen. 

What these four key areas for future reform add up is a very different healthcare system in our country.  One in which prevention is as important as treatment. And one in which patients have far more power.  I do not believe we can make the first happen without the second.  Change in the future relies on the public being insiders not outsiders – being part of the decision-making process rather than a by-stander to it.  So just as Thatcherite reforms – most notably the great privatisations – moved power from the State to the market; and New Labour reforms of this new century – most notably the creation of new institutions like an independent Bank of England, City Academies and NHS Foundation Trusts – moved power from the State to new service providers; so the new policy challenge is to move power from the State to the individual and the community. 

NHS Foundation Trusts – owned as they are by local communities and run as they are by those accountable to local people – can play a leading role in meeting that challenge.  Doing so means making engaging with communities and citizens as central to what you do as raising standards and driving efficiencies.  You have the means to do that – an accountability structure that looks outwards to local people not upwards to national government.  You have got the means.  It is time to use them. 

In the last decade we have built a new NHS architecture.  National standards.  Local commissioning.  Diverse provision.  Community ownership.  And these reforms – once highly controversial but now a matter of broad concensus – are helping NHS staff deliver improved services to NHS patients. The issue now is whether we can build a new reform agenda that has an even more fundamental purpose – shifting the balance of power towards the individual  patient.   For me at least one thing is certain.  The forces that are driving change in health care call for a new form of accountability.  Not to politicians.  Not to providers. Not even to professionals.  But to patients.  In the end it is their health not ours.  It is time to fundamentally change the distribution of power in health care – to put the patient in control.