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National Health Service History
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This guide provides an insight into the NHS. It was originally written to help overseas visitors
who might not appreciate how 60 years of planning had shaped the NHS in a way
not found in systems more based upon the healthcare market. It could
however be useful for anyone needing a quick account of the service. It relates to
Established in 1948, the object of the NHS was to provide a comprehensive health service to improve the physical and mental health of the people through the prevention, diagnosis and treatment of illness. An introductory booklet [2] said the NHS would "make all the health services available to every man, woman and child in the population, irrespective of their age or where they live, or how much money they have; and to make the total cost of the Service a charge on the national income in the same way as the Defence Services and other national necessities." This has hardly changed in 60 years.
Topics covered
NHS core principals
The NHS Plan
The private sector
National priority areas and NICE
The superstructure of the NHS, its management finance and organization, should ideally be based on clinical matters, though since the start of the NHS political philosophy and the economic health of the country have had a significant impact.
The function of the NHS is to provide medical care and this depends on three factors
the needs of people
the forms of care and treatment that work and are required
the money available
World-wide and in
Rheumatic fever and the resultant rheumatic heart disease have all but disappeared. Drug therapy has reduced tuberculosis to a shadow of its former self and women no longer die in their thousands in childbirth or after a septic abortion. Appendicitis and bleeding stomach and duodenal ulcers are far less common. Medical science led to immunization that has virtually eliminated infections diseases of childhood, so that we have largely forgotten the ravages of polio and measles. Other conditions, such as AIDS have appeared. Yet the deaths from road accidents are much the same over 50 years in spite of the increase in traffic. People are healthier than they were and live longer. As people live longer, the care of chronic disease such as arthritis and the problems of the elderly - cancer and dementia - are more significant. There is debate about how far medicine or social changes have been responsible for this. Probably it is 50 : 50. “Choose your parents well and eat healthily” is undoubtedly good advice. Affluence may have eliminated some conditions such as rickets but it has influenced others such as alcoholism and obesity (which may require new forms of surgery). Ethical issues have always existed, but genetic medicine and fertility treatment have given these a new twist. Air travel aids the spread of disease and sometimes brings in infected food products. Immigration brings other conditions into the country, for example thalassaemia. A significant number of cases of AIDs (particularly of heterosexual origin) in
As the disease pattern has changed, so has the capacity to help. Sometimes a disease, for example diabetes, can more readily be handled outside hospital. Sometimes the movement has been from primary into secondary care. Surgery for arthritis and heart disease made these conditions appropriate for hospital. New forms of treatment spur new activities for the NHS. As treatment becomes easier, as in the case of keyhole surgery, more people come forward for care, increasing costs and activity. Historically, the introduction of anaesthesia in the 19th century trebled the number of operations within a month!
Proponents of new forms of care may argue that in the long run they will save money. This is often a fallacy. We save people from dying cheaply when young and as a result they die more expensively later on, sometimes after several previously lethal conditions have been treated. Something like half of the entire lifetime costs of an individual to the NHS are in the last month or two of life. So the introduction of new drugs, from penicillin to Aricept, has increased costs. Technology in the imaging department (e.g. MRI scanning) and in treatment (e.g. interventional radiology and angioplasty) have increased bills not just immediately but in the future and this is internationally true.
200 years ago when neither the local doctor nor the hospital could do much, the way health care was organized hardly mattered. Once anaesthesia and aseptic surgery were available, hospitals became important and by the early years of the last century the idea of a district hospital providing all usual forms of hospital care for a local population was accepted. The introduction of motor ambulances in the 1914-1918 war encouraged the transfer of serious cases and by the 1920s it was realized that some forms of treatment, for example radiotherapy for cancer, could not be provided everywhere. University and specialist hospitals were the answer. Continually increasing specialisation has accelerated this process. For example general surgeons gave up orthopaedics and uro-genital surgery. Hospitals then needed three surgeons, not one. Cancer was once largely a matter for the surgeon but now it requires the surgeon, radiotherapist, oncologist - and the MacMillan nurse. To provide a service round the clock needs five of each specialty, not one. Patients may have better outcomes and leave hospital sooner but the hospital staff multiplies like rabbits. Our more leisured society also affects this. Doctors, many women with family commitments, are no longer expected to work all hours of the day and night. Indeed European Work regulations embargo long hours, even were tired doctors safe doctors. If the staff is not expanded hospitals will not provide good care.
C
The passing of the National Health Service Act 1946 provided the legislation for the NHS which came into being on July 5th 1948. The current framework in
The UK has always prided itself on the strength of its primary care, seeing it as a guarantee that people will receive a good service wherever they live, believing that a measure of continuity of care is beneficial, and that it is cost effective to deliver care in the community whenever possible. Attempts are made to achieve equity in the distribution of practitioners.
Primary care services are provided by general practitioner practices, dentists, pharmacists and opticians. The majority of these providers are independent contractors. There are something like 32,000 GPs in
Most GP practices are paid to carry out specified duties under a national contract for General Medical Services. The contract is between the primary care trusts and practices that may be individual GPs, or more commonly partnerships or companies that include GPs. A contract introduced in 2004 allows practices to transfer responsibility for providing some services – including out-of-hours care – to their Primary Care Trust (PCT). A second contract is used by about half the GPs. The NHS (Primary Care) Act 1997 allowed for the establishment of Personal Medical Services (PMS). This provides more flexibility for practices to work in different ways and develop specific services for local needs. An increasing number of general practitioners work for a salary rather than, as in years past, as a self-employed partner.
The NHS inherited a disparate collection of hospitals and over 60 years these have been brought into a system based on an early decision to aim for district general hospitals serving natural areas of population, supported by university and specialist hospitals at a greater distance. The Hospital Plan of 1962 was explicit about this, and subsequent plans have taken account of the changing distribution of the population, and developments in medical science. this is quite unlike the situation in countries such as the USA where hospital development is driven more by the market than by planning based on health care needs.
Most people reach hospital by GP referral, though accident and emergency departments, or NHS Direct (a phone and web based helpline). Hospital services are provided by NHS trusts, a pattern of management created in 1991 under the Conservative NHS reforms to manage and provide hospital care, mental health care and ambulance and special services. Trusts are self-governing bodies with their own board of directors. They work within a legal framework that lays down certain financial, quality and partnership requirements. There may be more than one hospital in an NHS trust. Some trusts also act as regional or national centres of expertise for more specialised care, while some are attached to universities and help to train professionals. Trusts can also provide services in the community – for example through health centres, clinics or in peoples’ homes.
NHS foundation trusts were first established in 2004 and each is approved by an independent regulator, Monitor. They differ primarily by having a Board of Governors as well as a Board of Directors, the former having the function of representing the interests of the community and of local partnership organizations. They have financial freedoms, earned by a record of financial probity
They are not allowed to sell off or mortgage NHS property and resources needed to provide key NHS services. Each Foundation Trust has an individual constitution designed to meet its own circumstances. There is no single formal model and it is government policy to encourage all trusts to become foundation trusts.
NHS foundation trusts are freer from central government control, manage their own budgets and shape the health care services they provide to reflect local needs and priorities. They are inspected by the Care Quality Commission to the same standards as other NHS trusts and have freedom to develop new solutions to long-standing problems. They deliver care for their population, purchased by locally based primary care trusts.
Underpinning the NHS is a set of core principles. In 1952 Bevan wrote "The essence of a satisfactory health service is that the rich and the poor are treated alike, that poverty is not a disability, and wealth is not advantaged." (In Place of Fear, a collection of essays).
Some things have been modified over the years, for example in 1948 the NHS owned almost all the capital stock from which hospital services (but not GP services) were provided. Now it is considered less important to provide the services by purely NHS owned facilities. The Department recently expressed the core values as
A universal service for all based on clinical need, not ability to pay.
Providing a comprehensive range of service
Shaping its services around the needs and preferences of individual patients their families and their carers
Responding to different needs of different populations
Working continuously to improve quality services and to minimise errors
Supporting and valuing its staff
Public funds for healthcare will be devoted solely to NHS patients
Working together with others to ensure a seamless service for patients
Helping to keep people healthy and working to reduce health inequalities
Respecting the confidentiality of individual patients and providing open access to information about services, treatment and performance
In July 2000 the Labour Party published a ten year plan to reshape the NHS in England. Based on consultation, its aims were
more power and information for patients
more hospitals, beds, doctors and nurses
shorter waiting times for hospital and doctor appointments
cleaner wards, better food and facilities in hospitals
improved care for older people
The plan was soon followed by the largest increase in spending that the NHS had seen in 50 years. Much has been accomplished. The growth rate rose to over 7% a year but this period is over. Sadly the increased money was spent several times over leading to a financial crisis.
The NHS Plan was about increasing capacity and “modernization”, for example altering the skill mix of the workforce so skilled nurses might take over the duties previously undertaken by junior doctors, and radiographers do some things previously done by radiologists. Modernisation also implied gains in efficiency, ensuring that patients get all their tests done at one visit and do not travel without reason, and improving the experience of patients by looking at “clinical pathways” so the right thing is done at the right time, all the time.
The NHS has always looked at what it is doing and what the demands upon it are. Historically there is a raft of statements about service improvement, for example in the 1960s mental illness and mental handicap services received much attention. (These designations are now out-dated). The major causes of avoidable ill-health and premature death, cancer, coronary heart disease and stroke, and mental health were listed as priorities both in The Health of the Nation (1992) [5] and in the white paper ‘Saving Lives: Our Healthier Nation’ of 1999. Stress is also being placed on smoking cessation, obesity and sexual health.
As new providers have emerged and patients have been encouraged to exercise choice, it has become essential to ensure that national standards are observed. A range of measures to raise quality and decrease variations in service were introduced in 1998 by the White Paper A First Class Service [6]. These included National Service Frameworks (NSFs), evidence-based programmes spelling out what patients can expect to receive from the health service in a major area or disease group. They are implemented as part of trusts local delivery plans.
NICE is a national body set up in 1999 as a special health authority to promote high quality of treatment and technology and the effective use of available resources in the NHS. It is the independent organisation providing national guidance on the use of specified medicines and treatments and the care and treatment of NHS patients with specified diseases. NICE tries to avoid treatment being dependent on where you live.
Currently NICE produces three types of guidance:
whether a particular medicine or treatment is recommended for use within the NHS in
the appropriate treatment and care of patients with certain specified diseases and conditions within the NHS in
Whether interventional procedures used for diagnosis or treatment are safe enough and work well enough for routine use – Interventional Procedures Guidance.
The organizational structure, always hierarchical, has changed repeatedly over the last 60 years, sometimes seeming to come full circle. Internationally a good health services can be organized on many principles, for example insurance, central taxation, local authority management and private sector involvement. All countries try to deliver that Holy Grail, comprehensive, good, accessible health care at a cost that society can and is prepared to afford.
This section explains key players, their relationships and lines of accountability; how the NHS is financed; how it is planned – the priorities and targets; and commissioning. A major change in the last 15 years has been the separation, within the NHS, of those whose function is to purchase or commission health care, and those whose function is to provide it. This purchaser/provider split has been characteristic of NHS organization recently, and has opened the door for new providers, some in the private sector.
The Parliament in
There has always been, and currently is, active debate about how far the NHS could be “freed from political interference”. However ultimately the NHS is funded by the taxpayer. This means it is accountable to parliament. So, currently with the exception of NHS foundation trusts it is managed by the Department of Health which is directly responsible to the Secretary of State for Health. Some political parties would consider changing this.
The Secretary of State for Health is a member of the Cabinet and has overall responsibility for the work of the Department of Health. He/she works together with a group of ministers for health and the Permanent Secretary and NHS Chief Executive.
The Department of Health’s purpose is to support the Government to improve the health and well being of the population. It is responsible for modernising the NHS as well as improving standards of public health.
Its role is:
setting overall direction and leading transformation of the NHS and social care
setting national standards
securing resources and making major investment decisions to ensure that the NHS and social care have the capacity to deliver
working with key partners to ensure quality of service such as the strategic health authorities and the Care Quality commission (CQC).
There are a number of special health authorities and other bodies which are either part of the NHS or closely associated with it. They include the National Institute for Clinical Excellence (NICE), the Health Protection Agency (HPA) and Prescription Pricing Authority. These organisations are either accountable to the Secretary of State, or have formal agreements with the Department of Health. In general they provide national services.
There are 10 strategic health authorities in
PCTs are responsible for planning and securing health services and for improving the health of the local population. They are the main route for the funding of primary and secondary care and directly control most of the NHS budget. They have an inappropriate name for while they provide and commission primary care, they also commission secondary care and are progressively losing any provider role. There are some 150 PCTs across the country and on average they cover a population size of a quarter of a million. Often they are roughly coterminous with local authority boundaries, a good thing because the same person often needs services from both. PCTs have responsibility for assessing local health needs and providing a wide range of health care services. They must make sure there are enough GPs to provide care for their population and that primary care services are accessible to patients. They are responsible for the provision by commissioning of other health services including hospitals, dentists, mental health care, Walk-in Centres, NHS Direct, patient transport (including accident and emergency), population screening, pharmacies and opticians and for integrating health and social care so the two systems work together for patients. They are usually responsible for out of hours GP services.
The chief executive is responsible for ensuring that the PCT carries out its functions in such a way as to ensure the proper stewardship of public money and assets. This includes responsibility for:
The propriety and regularity of the PCT’s finances
The keeping of proper accounts prudent and economical administration
Avoidance of waste and extravagance, and the efficient and effective use of all resources.
When the NHS began there was an uneven distribution of money spent on health care with the south receiving far more than the north, and cities than the country. GPs were poorly distributed. There were some over doctored areas and other under doctored ones. Much effort has gone into the correction of this, but there is still a disparity in the number, quality and accommodation of GPs in different areas. Conurbations generally do worst. Similarly there was a disparity in hospital services – here the large cities did best in terms of the number and quality of hospitals. Equity being a corner stone of the NHS – we are all tax payers - many mechanisms have been used to improve this. In the 1970s, under Labour, the Resource Allocation Working Party [7] started the process of moving money to the north. Most new medical schools have been placed in areas with deficient services for doctors tend to practice in the area in which they have trained.
The quality of NHS premises has long lagged behind those of other western countries. In recognition of this a major building programme started with Enoch Powell’s Hospital Plan (1962) [8] and has been accelerated in recent years. It affects both the hospitals and primary health care. Latterly it has been largely financed not directly by the Treasury, but by the Private Finance Initiative (PFI), or public-private partnership. This has meant that NHS building costs do not fall on the normal government balance sheet, but that the NHS is essentially leasing buildings that are designed, built and operated by the private sector. While there are some advantages in using the experience of the private sector in getting hospitals built rapidly, the ultimate cost can be high and it may be difficult to change buildings as requirements change. Many trusts will be financially challenged by PFI contracts over the coming years.
The NHS is a massive employer with some 1.3 million staff in the
Because the NHS is virtually a monopoly employer, and because the state pays much of the cost of educating doctors and nurses, government has always been involved in deciding the numbers in training, attempting to match training places to the likely requirements of the NHS. Only too often it has got the numbers wrong because it takes about 15 years to train a consultant and 4 years or more a nurse. Demands change over this period and require changing staff skills. Modernising Medical Careers – improving the way doctors are trained to become specialists or GPs - is the latest of many attempts to match training to new clinical requirements. It has run into substantial difficulties. For nursing, the Department of Health and the Nursing and Midwifery Council are both consulting on modernizing nurse education – a follow-up to Project 2000 a decade ago. A major new pay system, Agenda for Change, covers almost all staff other than doctors and dentists. It is designed to ensure equal pay for work of equal value, to facilitate service re-design and to support recruitment and retention.
NHS Foundation Trusts generally have powers to agree such pay, terms and conditions, as they think fit for their staff. In practice, the majority of their staff are employed on terms and conditions negotiated at national level between the Department of Health, trades unions and NHS employer representatives. The Department of Health has devolved future much responsibility for such negotiations to an NHS employers’ body. Consultants’ pay is still determined by an independent review body.
The NHS is funded largely through taxes levied by the Government. The total cost in
The way in which resources are allocated is constantly being refined. PCTs are allocated funds directly from the Department of Health. Revenue funding is allocated on the basis of the relative needs of their populations. A weighted capitation formula is used to determine each PCT’s target share of available resources, to enable them to commission similar levels of health services for populations in similar need. The current formula has the following components:
Hospital and community health services
HIV/AIDS
GP practice infrastructure, e.g. practice staff wages, premises and equipment
general practice prescribing
GP remuneration.
The components of the formula are used to adjust each primary care trust’s “crude” population according to their relative need (age and additional need) for health care and the unavoidable geographical differences in the cost of providing healthcare (market forces factor).
The weighted capitation formula is regularly reviewed. The majority of a PCT’s funding is on the basis of a recurring allocation made at the start of the financial year. Most of the revenue funding is channelled to the front line via unified allocations. These are cash limited. The rest of the funding is for family health services and is non-cash limited
Capital funding systems are changing to one of interest bearing debt and Trusts will have a borrowing limit. Operational capital is allocated to all NHS trusts and PCTs. The funding is provided to maintain and enhance existing capital stock and fund small to medium sized developments. The allocation of operational capital to PCTs and NHS trusts is based on their level of depreciation.
The health service is staff intensive and more than half the NHS More than 50% of the money is spent on acute services – medical and surgical care in hospital. 12% is spent on mental health services, 10% on services for the elderly, 5% on people with learning disabilities and 5% on maternity services. Health care for people over 65 years old accounts for around 40% of the total expenditure.
NHS trusts get most or their income from PCTs on the basis of the care they provide. A small percentage of their income is from private health care. They also receive funding to provide training for health professionals and benefit from income-generating schemes such as shops and car parking. NHS trusts have to break even. If a trust fails to do this it may agree a recovery plan with the strategic health authority or in the case of foundation trusts with Monitor.
Recently there have been changes to NHS ‘financial flows’ with trusts being paid a standard national tariff for the activity they undertake in a given year on a cost per case basis. Trusts whose costs are above national averages need to make efficiencies to enable them to break-even. This system is known as payment by results (PbR) though in fact it is payment by activity. Practice based commissioning, in which contracts are set by groupings of general practitioners, is having an increasing effect as all PCTs are expected to have schemes in place but this initiative is not seen as a major success. Patient Choice is increasingly enabling the patient to choose the provider at the time of referral. All these changes impact on the way funds flow around the NHS and the financial wellbeing of hospitals.
Planning occurs at several levels, in the Department of Health, the Strategic Health Authorities, the PCTs and within Trusts. Planning has been improved by better financial information and Trusts should now know how money is allocated to each specialty and whether it is in profit of deficit on specific specialty activities.
PCTs as the lead planners are responsible for creating local plans that describe health and service improvements in their area. These are developed using clinicians’ knowledge as well as patients’ and the public’s contributions. They incorporate the national priorities
each NHS trust is responsible for creating its own plan which shows how it will deploy its resources to deliver on both national and local priorities and fit within the plan of its PCT commissioners
The SHA's create the workforce plan as part of the local delivery plan
Strategic health authorities bring together the PCT plans into a comprehensive local delivery plan for their area
Local delivery plans identify expected progress or milestones for each priority area over the three-year period. They identify quarterly or annual milestones and in a small number of critical deliverables they may show planned progress on a month by month basis. Local delivery plans are supported by a financial strategy and plan that takes account of the changes to the financial system during the three year period and shows how resources are to be deployed and value for money achieved. The local delivery plan covers a whole strategic health authority area but is based on PCT level plans. It is a “live” document that is amended with, for example, corrective action taken if delivery goes off course and any new initiatives which are taken when the opportunities arise.
Commissioning involves identifying the health needs of the target population and working with providers of health services to develop a service to meet those needs. The majority of commissioning decisions are undertaken by PCTs. Contracts can range from large contracts for acute care from hospitals to small contracts with voluntary sector providers. Joint commissioning brings together the PCTs and social care services in the strategic planning and development of services. It uses resources for commissioning collaboratively to get the best outcomes for local people.
Better results are usually obtained for rarer conditions if the patients are concentrated in centres with particular expertise. Not every district general hospital can have an ENT or an ophthalmic service, let alone cardiac surgery and radiotherapy. Such specialised services are generally of high cost services, but with low volume use. For example services for rare cancers, are provided from a small number of centres and commissioned by PCTs working together.
Out of area treatment arrangements cover those situations where an individual is admitted to a hospital away from home, usually as an emergency where there is no pre-arranged service level agreement in place. Funding for these ad hoc cases is built into the host PCT’s service agreement with their local hospital(s).
The more that freedom is granted to local management, the more it is desirable to have an inspection and regulation system, particularly when one wishes there to be a measure of equity across the system as a whole.
The arrangements for monitoring and performance management in the NHS are that:
each organisation has its own system for monitoring service delivery and trusts certify compliance to the Healthcare Commission
PCTs hold provider organisations to account for the delivery of services which they have commissioned
Strategic health authorities routinely collect data from the NHS trusts and PCTs in their sector on their performance against key Government targets. The strategic health authority tracks the trusts’ performance and monitors any lapses. For example, the number of patients who wait more than they should for an outpatient appointment; the percentage of patients who are not seen within four hours in A&E; the number of patients who are able to access a GP within 24 hours. The strategic health authority works with NHS trusts and PCTs that are not meeting the targets to improve their performance.
The Care Quality Commission was established in 2009 as a successor to the Healthcare Commission (established in 2002) and other bodies concerned with social services. It is an independent registration and inspection body of the NHS. It monitors how standards that are set by the Government, through its health policies, National Service Frameworks, and clinical guidance provided by the National Institute of Clinical Excellence (NICE), are being met. It:
registers all providers of health and social services
It reviews health care organisations in the NHS every three or four years (clinical governance reviews)
investigates serious service failures
reports on key issues, such as coronary heart disease and national service frameworks
assesses and reports on performance in the NHS
publishes data on staff and patient surveys
jointly inspects with other bodies
manages the clinical audit programme.
register and inspect private healthcare provision
conducts NHS value for money studies
validates and publish performance assessment information and statistics on the NHS, including waiting list information
publishes performance ratings for all NHS organisations
publishes reports on the performance of NHS organisations both locally and nationally
independently scrutinise patient complaints, and
publishes an annual report to Parliament on national progress on healthcare and how resources have been used.
inspects NHS foundation trusts and report its findings to the independent regulator, recommending special measures where it has serious concerns about the quality of services provided.
The Audit Commission is an independent body responsible for ensuring that public money is used economically, efficiently, and effectively. Its function is the audit of local authority and NHS bodies. It is responsible for appointing external auditors to audit financial statements and to carry out reviews of governance arrangements and performance in all local authorities, strategic health authorities, trusts and other public bodies such as the police and fire authorities. In the course of producing its national studies it may send out questionnaires to collect data and visit a sample of NHS trusts. The Audit Commission may act as auditor for Foundation Trusts.
Unlike many other countries, private health care makes only a minimal though growing contribution to care in the UK. Competing with a health service that is good, free and increasingly efficient is difficult. Private organisations provide virtually no emergency services, little primary care, and are mostly concentrated on outpatient consultations, elective surgery and some forms of mental health care. Most specialists seeing patients privately spend the bulk of their time on the NHS.
However the NHS has changed from being the provider of all NHS services to commissioning, funding, defining and monitoring some that are provided by outside organizations. There is hardly an activity within the NHS that is not now provided in some places by the private sector. Hospitals built under the private finance initiative are operated by private consortia. Independent treatment centres offer day surgery under contract to the NHS. NHS Logistics that moves NHS supplies about is now operated by a private company. Many GPs, of course, have always been independent contractors. Even the function of commissioning services may be undertaken by selected firms on behalf of PCTs.
1 From Cradle to Grave, 50 years of the NHS. Rivett G.C. 1998,
2 The National Health Service. 1948.
3 A Framework for Action. Lord Darzi. 2007. Healthcare for
4 The NHS Plan, A plan for investment, A plan for reform 2000, London HMSO
5 The Health of the Nation. A strategy for health in
6 A First Class Service – Quality in the new NHS. Green Paper, 1998,
7 Sharing Resources for Health in
8 National Health Service. A hospital plan for
