The NHS in the simulator

Simulation feels real

The essence of a simulation is that you assemble all the players in a system and ask them to respond to a given set of circumstances by negotiating with each other as if for real. People play something close to the roles they have in real life and have to follow the usual legal, organisational, and professional rules. The circumstances reflect reality and are drawn up after consultation with well informed insiders. After the “game,” the players reflect on what happened and the lessons learnt.

We participated in the simulation, and we wrote our first draft of this article 16 hours after staggering out of the event with our heads reeling. But you won’t be reading this until after the results of the simulation are published in December with lessons for all stakeholders.1 The published results will, we are sure, achieve greater clarity than we are able to do, but there may be something extra to learn from a rough and raw account—rather as letters from soldiers in the trenches of the first world war add to the accounts of historians. It’s also probably true that the biggest benefit from a simulation comes from being part of it rather than reading a cleansed account. We hope to transmit some of the energy and pain that came from being participants.

The scientifically minded might be sceptical of simulations of whole systems, but one form of validation is that it felt stunningly real to those involved. One participant said: “It felt like my whole year crunched into a few hours, with all the usual stress and pain.” Somebody else noted: “Everything happened as it usually does. Within minutes turf wars broke out, patients were completely forgotten, everybody started talking about mergers, and there were far too many players on the pitch.” Other forms of validation are that some of what the simulation predicted in July is already happening and that past exercises have been important in developing policy.2 3

The players and the task

Before the simulation we were presented with the results of the recent analysis by the King’s Fund and the Institute of Fiscal Studies of what may happen to NHS funding.4 In a nutshell, it’s likely to be bad or very bad, requiring cuts year after year and perhaps never quite returning in real terms to the levels recently reached.

In the first round of the simulation, the mythical Heartshire primary care trust (PCT) is required to make savings of £60m-£80m (€67m-€89m; $100-$135m) every year for three years on an annual budget of just over a £1bn.

The PCT was rightly at the centre of the simulation, but those unfamiliar with the complexity of the NHS might be amazed by the number of players. There was the Department of Health, the strategic health authority, two acute hospital foundation trusts (one with a medical school), a mental health foundation trust, a GP provider organisation, community health care (running community care and services in six community hospitals), three private companies offering primary care, hospital services and technology, and social care, the county council, the local involvement network (patients), Monitor (which regulates foundation trusts), the Care Quality Commission, and the media (represented by one experienced journalist who sniffed around trying to work out what was happening and published sensationalist stories in the local newspaper). Most organisations were represented by several people, and the PCT, for example, had five.

This is actually a slimmed down version of all the players in the real world. Missing, for example, were the British Medical Association, the Royal College of Nursing, the medical royal colleges, the General Medical Council, the deaneries, specialist associations, and a dozen other organisations.

It’s the complexity of the system that makes simulation one of the best ways to understand what will happen to the NHS in response to new circumstances. The system is not a machine but a network of often competing organisations that, like all human organisations, will not behave in easily predicted ways.

Each team began the simulation by thinking about what it hoped to achieve and which other teams it would need to negotiate with. The PCT, as the funders of the system, owned the central problem, but both acute hospital trusts had considerable problems.

The hospital with the medical school was far too big and needed to increase its income by 6% a year to meet its payments on its private finance initiative contract. It hoped to achieve this through an increase in activity and the tariff, the nationally agreed amount it is paid for each activity. Neither seems likely.

The other acute trust included two hospitals, one an outdated, expensive, and failing but much loved smaller hospital. The community health services were thought by all to be hopelessly inefficient, the mental health service was underperforming, and social services were overwhelmed. The GPs in their provider organisation were performing well, but the quality of general practice in the two thirds of the community not covered by the provider organisation was highly variable.

The first round begins

One of us (MMcS) was a member of the PCT team. It determined to protect quality and access, secure clinical commitment, and make it clear that no one would be exempt from the pain. There would be a pooled fund for continuing care with social care, and it would establish joint commissioning with the local authority. The PCT would seek solutions from providers—first collaborating with them and, if that didn’t work, then using competition.

The other (RS) was part of a private company that worked with GPs to develop new services and provide business support but which also ran two practices. The company debated whether there were likely to be business opportunities in a cash strapped NHS or whether it should pull out. After deciding there were still opportunities, it decided its best bet was to partner the GP provider organisation. It’s tough to go it alone within the jungle of the NHS, and other partners were not attractive: the acute trust with the medical school had got terrible financial problems; community services are a nightmare to manage; and the PCT couldn’t offer the company anything.

Negotiation began. The PCT, which appropriately was placed in the middle of the room, came under intense pressure from virtually all parties. All the other organisations had maybe two to three parties they needed to manage, but the PCT had at least 20 different vested interests to manage. Providers and unions wanted to talk, as did the practice based commissioning team, the local authority, and the patient group. Monitor, in contrast, ignored the PCT. The Department of Health and Care Quality Commission were distantly interested. The strategic health authority was demanding and clear about the consequences of failure (warning the PCT that if it didn’t get its reputation and finance under control it was finished). The media issued repeated negative and morale sapping stories.

The PCT felt as if there was a clear desire to prove that it had failed as a commissioner so that other parties could be given the job. The pressure was intense. The private company approached the GP provider organisation, which was keen to talk. The idea was that together they would take the full health budget for the 200 000 patients at 97.5% of the total budget, immediately giving the PCT a 2.5% saving. They would effectively form a health maintenance organisation, contracting with the hospital and the mental heath trust. They might take also over the community services but decided it would be better to establish their own services, letting the community services “wither on the vine.” The GPs were attracted by the concept because the private company would do the management and contracting, bring in high level data analysis, and bear at least some of the risk. They had more confidence in the private company than the PCT.

After about two hours everybody stops negotiating, and we reflected on what had happened.

Round two: the war against recession

The second round of the simulation took place after the next election, when Britain’s public finances were admitted to be in a dire state, the country’s credit rating had been downgraded, the stock market had crashed, unemployment was very high, and the prime minister had declared a coalition government to “fight a war against recession.”

The secretary of state for health addressed the players and told them that “no holds barred,” fundamental reform was needed that had to be locally led. Anything could be considered, including seeking solutions beyond the health system. But he wanted to see a plan that would tackle the deep financial problems, preserve quality, be workable, and command local consensus. The PCT had to present the plan to him within six months after negotiation with all parties. This was the “chance of a lifetime” for the NHS to be radically improved “bottom up rather than top down.”

Bold initial positions

Before negotiations began the PCT announced its plans to be radical. It would create Quality and Innovation in Commissioning, a joint commissioning body with the local authority with clinical and public membership. The body would be charged with agreeing:

• Minimum quality standards in pathways

• Thresholds for referral

• What would not be commissioned

• Freeze on pay for “very senior managers” with no bonuses

• Freeze on Agenda for Change increments (the agreement with health unions that has built in 1-2% annual increases over and above any annual pay award)

• Suspension of tariff for long term conditions and emergency services

• Risk sharing as a principle for all contracts

• Use of levers in the system that are not being used—for example, “prior authorisation”

• “Franchising” emergency care to an integrated model

• Abolition of the strategic health authority and Monitor

• Replacing practice based commissioning with practice based provision and integration with community and social care, encouraged through incentives

(The strategic health authority later observed dryly that having achieved little in the first round, the PCT had now gone into strategic overdrive, which would possibly achieve no more.)

Monitor announced that it would become an “economic regulator” and cut the tariff by 2.5% straight away, immediately saving the government £5bn a year. It would also encourage competition among trusts on price and would promote specialisation, telling hospitals that it was inefficient (and probably less effective) for everybody to be doing everything. Finally, Monitor reminded organisations they would have to lose people to make the savings necessary.

The private company decided to pursue the same strategy as before, joining the GP provider organisation straight away. Together they debated how to make big savings. GPs would have to accept a 10% cut in their contracts, but both parties thought hospital costs could be cut substantially through improving clinical pathways and insisting that GPs followed them, introducing referral management, reducing inappropriate emergency admissions through coordinating better care of elderly people with complex chronic disease, elective services in the community, and putting GPs into emergency departments. Plus they would pay the hospitals below tariff and replace community services.

The foundation trusts were not against this, although the “devil would be in the detail.” One consequence would be that much of the medical school teaching would have to be done in the community, something the GPs liked.

The strategic health authority asked the GP provider organisation and the private company if they would take on the budget for the entire community, effectively emasculating the PCT. The GP provider organisation and the private company were instinctively against developing a monopoly: it would be much better to have three competing organisations. Plus taking on everybody would include the weaker, less committed general practices, and the model only really worked with full commitment. Others said that the GP provider organisation and the private company taking on the entire community would probably be illegal.

The big picture

In the second simulation, faced with a desperate set of circumstances, the NHS regrouped. The main development was that all the major providers—the two acute trusts, the mental health trust, and the community services—agreed to come together, using staff and assets much more efficiently. The private company that supplied hospital services and technology also joined this giant provider. This new partnership thought that it could save £110m over three years.

The weakness with the giant provider, apart from it being a monopoly, was that it had not made arrangements with general practices to prevent patients entering hospital or with social care to look after patients afterwards. Indeed, the whole provider development may have been more for the benefit of the threatened organisations than the system as a whole or the patients. There were also questions about the management of such a behemoth. Would the acute trust managers lord it over the others? Probably.

Importantly, competition and choice were promptly abandoned. Patients were consulted, but largely after decisions were made.

The new giant provider expected to negotiate with the PCT eventually—but presumably from a position of strength where the PCT would have little option but to accept its proposal. Most other organisations—the strategic health authority, the regulators, the GP provider organisation, and the county council—tried to go round the PCT. This was the other major development. Was it because people doubted the capability of the PCT, because roles and responsibilities were too ambiguous, or because the PCT threatens the vested interest of the others?

Further statement from the secretary of state

During the game the secretary of state made a statement to the House of Commons. Pay in the NHS would be frozen indefinitely. Pensions would be based not on final salary but on career average and would move to being based on defined contributions. NHS staff would be encouraged to take career breaks, and to lead the way with staff reductions the Department of Health would be cutting staff by 50%.

Reporting to the secretary of state

At the end of negotiations the PCT had to present its action plan to the secretary of state and his advisers. The PCT reported that it believed it had had some successes with improving working relationships, consulting patients, preparing a plan that was clinically led, and working with the local authority. (In fact the local authority had just leaked to the press its lack of confidence in the PCT.) The PCT knew that the providers were preparing an ambitious plan. However, the PCT also reported failures: the strategic health authority had been plotting against it, and the Department of Health had been unhelpfully raising expectations.

The secretary of state was not impressed, saying that the report had lots of process but he was unclear what was actually going to happen to make savings. He also regretted the turf battles and asked whether all players supported the plan. Perhaps two of around 50 put up their hands.

The private social care company described how it had a clear plan for saving £30m but hadn’t been able to get anybody to pay attention. Response to it had “bordered on the rude.”

The “giant provider” presented its plan but observed that it felt as if it was working in a “parallel universe” and that there was no overall plan. The secretary of state and his advisers were impressed that the providers had collaborated but worried about the collaboration’s manageability and the abandonment of choice. They also worried that the GP provider organisation offered little choice.

The overall conclusion was that there was no evidence of the system moving coherently and that “the tail [the providers] was wagging the dog [the system].”

Lessons from the simulation

The simulation put the system under intense pressure and, perhaps unsurprisingly, flushed out weaknesses and inconsistencies culminating in failure. It suggested that the NHS would not cope well with having to make substantial savings and making fundamental changes in the way it worked. But the whole idea of a simulation is that you learn and do better in the real world.

So at the end of the simulation the players stepped out of role to reflect on lessons for stakeholders, particularly politicians. An initial thought was that PCTs were not fit for purpose and ought in some way to be reformed, perhaps through mergers. But everybody agreed that for the NHS to fall victim to its traditional “occupational disease” of restructuring would be completely wrong at a time of crisis. Instead, the Department of Health should insist that organisations didn’t spend their time trying to go round the PCTs but worked with and supported them. PCTs needed to be strengthened, and the roles and responsibilities of the myriad organisations needed to be clarified.

On reflection, the PCT thought it should have concentrated on a declaration of principles and areas of focus with clear measures for delivery. It should set outcomes and price and then leave providers to innovate within those, focus on established pathways and secure thresholds and effective care, and should prioritise and secure public and professional support to stop doing things that are ineffective or lifestyle choices—for example, homoeopathy and assisted reproduction.

A key issue for the PCT was how to bring new providers into play within a system that severely punishes risk taking and where politics and vested interests are aggressively stacked against new entrants. And new entrants can create change that will not come from existing players: British Airways didn’t invent low cost air travel, and BT didn’t transform the mobile telephone market.

There was agreement that real reform would have to come from local organisations. It could not all be done from the centre, but the centre did have a responsibility to define the “rules of the game” clearly.

There was no agreement on competition and choice. Some thought that they would have to stay as one of the few mechanisms available for simultaneously raising quality and reducing cost. Others thought them expendable in a time of crisis, arguing that choice was often irrelevant—because of geography or with emergency care.

It will be ever more important to think about health and social care together. As the health service increasingly treats elderly people with complex chronic disease it comes closer to social care, and maybe we will reach a tipping point where true collaboration will arise.

Everybody agreed that one essential was to be straight with the public about public finances and the strain on the NHS. An approaching election unfortunately is an unlikely time for such straight talking.