Paul Corrigan: Hospitals must be allowed to fail for NHS to succeed

However the real problem that patients should worry about is that their hospitals won’t change sufficiently fast to provide the best service that they can.

The promise that most of our local NHS hospitals have made to their local public is that every hospital will all provide every health service that everybody needs.

This is a promise that nearly all hospitals cannot keep. As medicine quickly advances, finding new ways to save more lives and relieve more pain and distress, it is not possible for all hospitals to safely carry out the variety of possible procedures. And if every hospital tries to do everything, many of them do carry out some procedures at a sub-optimal level.

Modern medicine is similar to most other activities in our modern world. The more often that a doctor or nurse carries out a procedure the better they get at their work. That is why a hospital that carries a lot of procedures will, all things being equal, be better than one that only carries out a few. And in every locality there is not enough need for the specialist care to be carried out in that area.

In many other areas of our life, most people recognise that they have to be prepared to travel to get what they want. The same is true for some work of our hospitals.

This is an issue of safety but it is also an issue of economies. If every hospital tries to do everything, the numbers of each procedure that they carry are too small to be economic. But somehow we expect the NHS to rise above the normal economics that applies everywhere else.

The NHS cannot. And if all hospitals try and do everything for everybody, some of them will not be economically viable. Last week we published a pamphlet that argued that many hospitals had to convert themselves into a much more sustainable set of business models. The financial pressure facing the NHS is unprecedented.

It must deliver £20bn of efficiency savings during this Parliament. With 50 per cent of the health budget spent in hospitals, NHS hospital trusts are having to drive this. Cutting costs means that services need to be transformed, with fewer beds, smaller wards and, in some instances, complete conversions of the way in which they work.

The financial pressures on hospitals are not a short-term problem. Some have been facing difficulties for years, often associated with the delivery of poor quality care, and a growing number will become financially unviable. As many as 40 hospitals may have to change radically or close.

Currently, hospital failure is averted by granting a variety of forms of bailouts. Yet, if the Government is to continue to protect all of England’s hospitals from closure or conversions, then this “inefficient hospital fund” could grow to £8bn. This would mean that the Chancellor would have to find an extra £5bn to bailout the NHS by 2013.

To survive, hospitals need to change their business models. They should become either “solution shops”, which focus on diagnosing patients, or organise treatment efficiently and safely in a “factory” mode of production that delivers “valued added processes” for patients.

To some extent, these modern organisations already exist in the NHS and across the world.

But if the NHS is to deliver outcomes that are among the best in the world and remain affordable, all hospitals will have to change the services they offer to patients.

Prescription to improve healthcare

No bailout for the NHS: For hospitals to change they cannot believe the Government will bail them out to avoid a hospital closure.

Better commissioning: commissioners should disinvest in expensive and poor quality acute services and instead invest in primary and community care, forcing hospitals to change what they provide or go out of business.

Grant more patient choice: this will create real incentives for NHS hospitals and other service providers to deliver better services at a lower cost.

Failure regime: the Government must set out a clear, transparent and enforceable failure regime for hospitals. This will empower other organisation to intervene and turn around failed institutions.