For as long as I can remember it has been an axiom of British political culture that the Conservative Party considers itself to be the natural party of business and, in particular, the one true political friend of the small businessman, a view that I strongly suspect has its origins in the observations of the father of modern economics, Adam Smith:

“To found a great empire for the sole purpose of raising up a people of customers, may at first sight, appear a project fit only for a nation of shopkeepers. It is, however, a project altogether unfit for a nation of shopkeepers, but extremely fit for a nation whose government is influenced by shopkeepers. ”

Wealth of Nations – 1776

This connection is, and has been, such a feature in conservative political philosophy and Conservative Party policy for so long that one half suspects that even were Tories to begin to systematically abandon every last principle they’ve ever stood for then their support of small businesses would be just about the last thing to go, all of which makes wonder why Iain Dale is quite so keen to dump on one particular group of small businessmen (and women) …

…Doctors.

I begrudge no one a fair return for their work, but a 60 per cent rise in pay for seeing 40 per cent fewer patients is not something that is defensible. This applies to GP partners, some of whom now earn £250k per annum. Salaried GPs are on £74k, while the average for partner GPs is £113,000.

Iain’s comments have, of course, been prompted by the National Audit Office’s report on pay modernisation in the NHS (i.e. GP contracts) which notes that:

Today’s report found that, in the first two years of the contract, productivity has fallen by an average of 2.5 per cent per year. GPs are working on average seven hours less per week than in 1992, partly because of the removal of the responsibility for out of hours care. While the number of consultations with patients has increased, these are not in proportion with the increase in costs. Primary Care Trusts’ spending on GP services has however now started to level off.

The largest overspend of the contract was due to an underestimation of the amount that GPs would earn from the pay for performance scheme, the Quality Outcomes Framework (QOF). While there is evidence that the QOF has improved consistency in the quality of care, it is too early to say if overall patients’ health has improved as a result.

NAO Press Notice – 28th February 2008

Before going on to deliver what Iain seems to think is the ‘killer’ statement:

In 2005-06 the annual average pay of a GP partner was £113,614, an increase of 58 per cent since 2002-03. GPs report, however, that over the last year their pay has stayed the same or decreased. GP partners have taken more profit from the practice as pay while the average salary for GPs they employ increased by only three per cent in the first two years.

All of which leads Iain to the conclusion that:

The problem is not that people begrudge GPs a high level of pay, it is that they see the service they are getting deteriorate, with surgeries closing more often in the evenings and weekends.

Now, having read the NAO report it does seems that there may be a few issues with the construction of the GP practice contract that require a bit of fine-tuning, but as for what these are and how best to go about them, those are matters on which I prefer to keep my powder dry until I here what Dr Crippen and other medical bloggers have to say on the subject, because the one thing I am clear about is that this is far from being the ‘black and white’ issue that is being presented in the media and by the likes of Iain Dale.

Should the good doctor put in an appearance I will declare my one significant personal interest in this – I am one of those awkward punters who, due to work commitments, would appreciate a little more GP provision in the evenings, so that I can more easily get any routine stuff dealt with without having to take time off work but otherwise I’m reasonably agnostic on exactly how we might go about putting that into practice. Living in an urban area, a surgery that open one or two evenings a week in a location I can get to fairly easily will do for me – it doesn’t actually have to my own GP surgery as anything serious enough to require a trip to see my own GP will invariable be serious enough to require my to take a day or two off work anyway.

But that’s a little by the by as what I have issues with here is not that I think certain services could be made a little more convenient than they are now but the manner in which the whole issue of GP’s pay is being addressed by the media and used, rather undeservedly, as a political football, particularly on the Tory side of the fence where GPs are being castigated for doing nothing more than running a successful small business, something that I’ve always thought that Tories were absolutely in favour of.

To some extent, the one good thing about this issue is that, when its reported properly, it does serve to dispel one of the great misapprehensions about the nature of the NHS – the idea that because it publicly funded, just about everyone who works in it is a public sector employee.

That’s just not true, and in the case of general practitioners its never been true. Right from the creation on the NHS, back in the 1940s, the vast majority of general practitioners have not been NHS employees but rather self-employed sub-contractors (and more recently as practices has grown in size, fully fledged small businesses).

Those GPs who run their own practices individually or as part of a partnership or even a limited company these days, don’t receive a wage or salary from the NHS, they recieve payments for the delivery of services under contract and provided that they deliver those services to the required standards, how they go about delivering them, who they employ to do certain bits of it and what they pay their employees is entirely up to them, just as it is in any other small business, give or take things like the national minimum wage. And that is simple because GP practices are small private sectors businesses which provide public services under contract to the NHS.

What this means, ultimately, is that like the proprietor(s) of any other small business, what they get to pay themselves at the end of the month is entirely contingent on how well, and particularly how efficiently, they run their business all of which makes it more than just a little unfair for the press, politicians and bloggers to lay into doctors just because their salaries have risen oven the last few years, because in many if not most cases, at least part of the reason for that increase will have come from doctors reducing their running costs by operating their practices more efficiently – something which I’ve always assumed that Tories would be absolutely 100% in favour of.

As the NAO’s press statement notes, one of the significant factors in all this has been the introduction of contract payments based on performance, specifically those linked to what called the Quality Outcomes Framework and its this that resulted in the largest single overspend on the new contracts for the simple reason that the government appears to have massively underestimated the extent to which GPs would successfully respond to these new performance incentives.

So its the government’s fault, then.

Well, yes… and no.

You see the thing about performance related pay is that it only works well under very specific conditions, i.e. where there is both a clear, direct and quantifiable link between the productivity and performance of employees and the income and profitability of the employer where, crucially, business activity takes place in an open competitive market.

This is why it makes sense to pay at least part of a sales rep’s salary in commission on the sales they generate. The commission they receive is linked directly to the income they bring in to the business – i.e. the more the rep earns, the more the business earns- while the market allows the business increase the size of the pool of income from which it pays commission to its reps by increasing its either it share of the market increasing the size of the market through the efforts its sales reps to bring in new business. All other things being equal, a sales rep can never earn so much commission that their employer cannot sustain the costs of paying them because they will always bring more income into the business than they take out in salary/commission.

The big problem with paying performance incentives to GPs is that they do not operate in an open market. Increasing GP productivity brings no new income into the healthcare economy, because there is no direct charge for their services, nor does it increase the overall size of the economy and amount of resources into from which these incentive payments are drawn, because the size of the NHS health economy is fixed by the government and funded from general taxation.

In one sense this whole situation is the fault of the current Labour government – they did, after all, negotiate and introduce these contracts. However, before any Tories looking in get the idea that they can give the government a kicking over this and get away scot free its worth pointing out that their party is a much at fault here as Labour because the systemic faults in the NHS which have actually created this situation were introduced, initially, by the Thatcher government back in the 1980s.

The real problem here is that we have had, over the last 25-30 years, a succession of government all of which have mistaken thought that they can ‘have their cake and eat it’ when it comes to the NHS, that they can somehow create a hybridised healthcare economy that is part public service and part open market, and just about everything that is wrong about the NHS today is a consequence of that utterly flawed and mistaken belief.

There are only one of two ways that you can run an efficient and effective universal healthcare system – you either run the whole shebang as a public service or you create an open healthcare market. What you cannot do is precisely what successive governments over the last 30 years have tried to do, create a healthcare system which operates as a public service but which attempts to use ‘market forces’ to drive productivity and efficiency – it doesn’t work and the reason it doesn’t work is because far from getting the ‘best of both worlds’, which is what politicians seem to believe, you actually get the worst and, more to the point, you get the worst of both system plus whole shitload of unnecessary bureaucracy on top in order to try and the whole bastardised system hang together.

Back in the 1970s, the NHS used to spend around 5% of its annual budget on management and administration. Today is spends something of the order of 12-15% on management and administration and much of that increase is the direct consequence of the introduction of ‘market forces’ into the NHS healthcare economy, and that’s because the one that the introduction of ‘so-called’ market forces hasn’t is create markets that are driven by market forces, its created pseudo-markets that are driven by bureaucracy.

And, of course, the current furore over GP contracts and payments to GPs is just the latest manifestation of a long line of monumental fuck-ups that all stem from the same source – politicians who lack the convictions and courage to make a clear decision on how best to deliver healthcare one way or another, either as a public service or via an open market.

Okay, rant over, let’s get back to GP contracts and explain exactly why it is that GPs appear to make making more money for providing, on paper, what appears to be a lower level of service.

The reason for this is actually simple and stupidly obvious providing you take a look at what’s actually in the Quality Outcomes Framework in terms of targets because a significant number of the performance targets for which GP practices get additional payments don’t seem to have a hell of a lot to do with the actual business of ‘doctoring’. Now that’s not to say that GP’s are getting paid for nothing here, but rather that a lot of the targets in the QOF seem to relate either to delivering administrative efficiencies – getting patients referred promptly into specialist services when they need them – or engaging in preventative medicine, much of which is fairly routine, involves the giving of advice to patients on way of improving their general health and much more a matter of ‘nursifying’ than ‘doctoring’, all of which explains why the NAO goes on to say:

The report found that nurses are delivering more practice work leaving GPs to spend more time with more complex cases. The proportion of consultations undertaken by practice nurses increased from 21 per cent to 34 per cent between 1995 and 2006. GPs now spend more time with each patient, an average of around 12 minutes compared to 8 minutes in 2002-03.

So GPs are may well be seeing fewer patients but only because they’re spending a bit more time on the one’s who are actually sick instead of giving pep talks on smoking cessation, which is surely what we actually want – a better quality of service.

And of course the upshot of all this is that when you come down to brass tacks, its cheaper to employ nurses to do most of the routine stuff that it is to employ doctors to do it, which is where practices will have found some of the cost savings that have been translated into improvements GP’s pay.

Equally interesting is what comes next in the NAO’s press release:

Money for new local services has not led to improvements such as increased opening hours and some of the most deprived areas remain under-doctored.

What that last statement, about deprived areas being ‘under-doctored’ actually tells us is that in some areas the increases that we’ve seen in GPs pay have not actually been big enough, not to attract more GPs into working in areas of high deprivation where they is a much higher ratio of genuinely sick people to people who just need a bit of a check-up and some advice, i.e. areas in which the workload on GPs will be proportionately the greatest.

As is invariably the case, the actual situation here, when you look at it, is far more complex than the rhetoric of politicians and ‘meejah’ folk suggests and while there are certainly issues with GP contracts that need to be looked at, the mere fact that GPs pay has increased in recent years because most have made a success of running their businesses in no way justifies the kind of campaign of vilification that’s been directed toward doctors of late.

What is, I think, more of a pertinent issue here, and one that appears to have been universally missed by just about everyone so far is contained in the NAO’s recommendation main recommendation and the comments of Tim Burr, the head of the NAO, which are appended to the end of the press release.

The NAO recommends that the Department develop a strategy for yearly negotiations on the QOF and the QOF should be based more on health outcomes. Primary Care Trusts should provide more services based on local need and review the number and skills of staff employed to commission and performance manage GP services with the aim of improving local commissioning.

Tim Burr, head of the National Audit Office, said today:

“There is no doubt that a new GP contract was needed and there are now 4,000 more GPs than five years ago. But in return for higher pay, we have yet to see real increases in productivity. The extra money flowing into practices has largely benefited GP partners rather than rewarding other important members of the practice team. Primary Care Trusts now need to deliver to patients the benefits that were expected in return for GPs increase in pay.”

So the solution to GPs earning ‘too much’ money out of these contracts, according to the NAO, is for PCTs to hire more pen-pushers and GPs to pay the one’s they’ve already got more money?

And they think GPs are screwing the system?