GP Indemnity Costs: England

Alex Chalk Excerpts

Wednesday 15th March 2017 Westminster Hall

[Alex Chalk (Cheltenham) (Con)]

I beg to move,

That this House has considered the cost of GP indemnity in England.

May I say at the outset what a pleasure it is to serve under your chairmanship, Mr Turner? I thank hon. Members for attending the debate. It is disappointing that it clashes with an important speech by my right hon. Friend the Chancellor of the Exchequer, but I know that several hon. Members from across the House will be interested in the matters discussed here.

General practitioners are the foundation stone of strong primary care and, in turn, strong primary care underpins a strong NHS. To put it another way, if GPs sneeze, the entire NHS catches a cold. That is because, first, GPs keep the community healthier, with early interventions to prevent conditions from getting out of control and requiring resource-intensive hospitalisation, and, secondly, they divert patients who might otherwise present at an accident and emergency department towards pathways more suitable for them and, indeed, the NHS.

GPs are doing an enormous amount to adjust to the changing health needs of our country. I accept that these are now familiar statistics, but they bear repetition. In our country of just 64 million people, there are now 1 million more people aged over 65 compared with 2010, and there are more than 300,000 people aged over 80. Those are stark statistics. It is fantastic news, of course, but it presents great challenges, and many of those challenges fall on GPs.

I pay tribute to the GPs in my constituency from Yorkleigh surgery, Overton Park surgery, Berkeley Place surgery, St Paul’s medical centre and so many others, who do a brilliant job. Most GPs I meet enjoy their job—indeed, the overwhelming majority do—despite its great demands, but I do feel, and I suspect many of them do, too, that they can be unfairly criticised. I trust that we can all take this opportunity to express our gratitude and admiration for the vital work that GPs do. To put it bluntly, they keep the show on the road. Without their professionalism and good will, the system as a whole would fall over. They are vital.

When I was elected to this place, I was concerned that the proportion of the overall health spend going on primary care appeared to have shrunk. All the evidence suggested to me that that needed to change, so I warmly welcome the 14% increase that the Government have announced in funding for general practice. It is rising from £9.5 billion in 2015-16 to £12 billion by 2020-21, as announced in the “General Practice Forward View”. Of course we all want there to be more money, but that additional funding and the additional £2 billion for social care announced by the Chancellor in the Budget are manifestly steps in the right direction.

Given that background, what is this specific debate all about? I have called the debate because I am concerned about an issue that has the potential to restrict the vital pipeline of new GPs. I am referring to GP indemnity—the insurance premiums that GPs are obliged to pay, from their own pockets, before they are permitted to practise. The bottom line is that those premiums are rising at such a rate that they are discouraging GPs from taking on certain forms of work, including out-of-hours care, and are even discouraging some medical students from entering primary care in the first place.

It is important to understand that GPs are in a special category of medical professionals in this respect, because doctors working for NHS bodies, such as hospital trusts, are covered by the clinical negligence scheme for trusts, which is administered by the NHS Litigation Authority; there are equivalent organisations in Scotland, Northern Ireland and Wales.

This issue does not emerge from a vacuum; it has been brewing for a while. In its 2014 annual report, the Medical Defence Union published data suggesting that indemnity inflation is about 10% per annum. More recently, a survey carried out by NHS England last year as part of the GP indemnity review showed that between 2010 and 2016 there was an increase in the average indemnity payment for in-hours or scheduled care of more than 50%. What does that mean in real terms—in pounds, shillings and pence? The average payment for in-hours or scheduled care cover in 2010 was £5,200. That had risen to £7,900 by 2016—an increase of more than 50%. Ninety-five per cent. of GPs surveyed have experienced a rise in indemnity costs, and 88% pay them from their own pockets.

The inflation for out-of-hours sessions is, according to the review, likely to be higher still. It is thought to be about 20% per annum, although the position on out-of-hours care is harder to establish because of data availability. Of the several thousand GPs surveyed, 72% claimed that the rise in their indemnity costs had deterred them from taking on out-of-hours sessions. Only 21% agreed with the statement

“Indemnity has not deterred me from taking on additional sessions”.

Those are concerning figures.

The review concluded that the rise is expected to continue. We have an historical average rise of about 10% per annum for scheduled care, and the rise is likely to continue. Of course, the review did not take into account the change in the discount rate. Just to remind everyone, the discount rate is used in a calculation to determine lump-sum compensation for claimants who have suffered life-changing injuries. It is being reduced to -0.75% from 2.5%; that will take effect, I think, on 20 March. This is the first time that it has been changed since 2001. It seems inevitable that that will inflate premiums further. We may have thought that we had solved the problem or that most of the problem was behind us, with the historical 10% average price increase, but the chances are that we ain’t seen nothing yet.

What is the impact on the ground? According to a practice manager at St Catherine’s surgery, a busy practice in the centre of Cheltenham, the problem is acute and having an effect on GP recruitment. When that practice wanted to appoint a new salaried GP, it was unable to attract anyone—notwithstanding the fact that Cheltenham is an extremely desirable place to practise, as I am sure everyone here would acknowledge and appreciate—without including paid indemnity as part of the salary package. That has added £7,500 to the cost of the doctor’s employment, and the surgery has to bear that, but this is plainly an unsustainable model.

I should add for completeness that this is not just about GPs in primary care. Modern surgeries are very sophisticated in the types of practitioner they employ. They employ advanced nurse practitioners and nurse practitioners with prescribing rights, but their indemnity payments are rising, too. An advanced nurse practitioner must pay about £3,000 per annum and a nurse practitioner about £1,200, and those figures are also increasing.

Why is all this happening? We need to slay two myths right from the start. First, it has nothing to do with GP performance dipping. Statistics show that the medical defence organisations have increased the proportion of cases closed with no payment made to the claimant from 70% to 80%. The quality and safety of care have never been higher. GPs continue to be very professional and very precise in the treatment that they administer. Secondly, the current situation is not down to profiteering by the medical defence organisations. The three main ones, which include the Medical Protection Society and the Medical Defence Union, are mutual organisations and not profit making. The 2016 review did not find evidence that market inefficiency is a cause of rising indemnity premiums.

The reason for the rises appears to be a blend of two principal factors. The first is workload. GPs are seeing more patients than ever before; I refer back to my remarks about the number of people in our country aged over 65 and 80. The second factor is compensation inflation. It is not unusual nowadays for insurers to pay a claim for more than £5 million. The review also alluded to a more litigious culture. There is a concern that patients are not simply being informed of avenues of redress, but are actually being encouraged to bring cases. It is a delicate issue, and there is a balance to be struck, but that does seem to me to be a concerning observation. That culture exists alongside an increasing number of claims companies. The number is said to be proportionally higher in England than elsewhere in Europe.

How do we respond? I have studied this issue in some detail: it is clear to me that Ministers and the Government in general are alive to it and working hard to react to it. As I said, back in May 2016 NHS England and the Department of Health established a GP indemnity review group to address the matter. That reported back in July last year and led to two important measures. The first was a winter scheme, originally scheduled to end on 31 March this year, to reimburse doctors who were willing to work more out-of-hours sessions to deal with winter pressures—I should remind Members that there is that 20% per annum rise in out-of-hours premiums. The second element was a new GP indemnity support scheme, which would run for two years.

The first of those—the winter scheme—has now been extended and will run until the end of April, which is welcome. As for the GP indemnity support scheme, it is excellent; it is direct financial support—hard cash—in the region of approximately £33 million per annum. The first payment will be in April 2017 to address inflation experienced in 2016-17, and a corresponding payment will be made in April 2018. I am grateful to the Government for those important steps, which will make a big difference.

However, we need a long-term solution, and I urge the Government that in considering the long-term options they leave nothing off the table. This does have to be handled carefully, but some options that I respectfully suggest merit further consideration are as follows. First, on legal reform, there is an argument for specifically fixing the amounts that can be recovered in costs by legal firms in certain cases. I am a lawyer by background, and should probably declare an interest—I even practised in clinical negligence law for a while. Clinical negligence claims can be highly complex. It is important that access to justice for wronged claimants is preserved, but that should not preclude any examination of the costs issue.

Secondly, even if it would be unaffordable for the NHS LA to cover all GP costs, we should look again at whether indemnity fees for certain areas of work, such as out-of-hours or minor surgery work, could be covered centrally. That would go a considerable way to easing the burdens on GPs and improving the attractiveness of the profession. I understand that the DOH is committed to exploring the potential of national clinical negligence schemes.

Thirdly, the Government could consider altering the mechanism through which awards are made, and base them on NHS costs rather than private costs. At the moment, payouts are quantified on the basis that care will be provided in the independent sector. Ought we to look at whether the law should be changed so that medical defence organisations and the NHS LA could purchase NHS and local authority care packages for those who have suffered from medical negligence?

I would be grateful for an update on the Government’s thinking on this important issue. Specifically, the review last year reported that further work would be carried out in 2016 to establish the best method for providing additional support in respect of out-of-hours care, so can we have an update on that?

I will end by saying that this may seem like a dry subject to anyone who is watching on TV or reading the report of this debate, but unless this problem is tackled in a fundamental way it risks undermining the excellent work that is otherwise being done to bolster primary care. It risks narrowing the pipeline of GPs—a pipeline we need to widen. The sums that GPs are now paying risk demoralising existing GPs and disincentivising the next generation. A long-term solution must be found.

--- Later in debate ---

[David Mowat]

I will not be dragged into the issue of community pharmacists other than to say they are extremely valued and have a major part to play as we integrate them with the clinical pharmacists working in GP practices. I will simply say, since the hon. Lady has raised it, the Government are committed to getting community pharmacists to move into a much more service-oriented way of working. We will not do that by overpaying for prescribing or by acknowledging or encouraging clustering, which is what the reforms we have talked about will address.

So what are the Government doing? First and foremost, we need to continue the drive to improve standards and quality in the NHS. I made the point earlier that accidents happen and negligence takes place. When it happens, we need to learn from it and ensure that there is a duty of candour within the service. Doctors and nurses need to do what they can to make sure that the systems failure or breakdown that occurred does not happen again. To use a rather trite management consultancy-type phrase, the NHS needs to become a learning culture. It is true, however, that people need to learn from errors and continually try to improve standards. We need to avoid errors as much as possible, but at the same time we cannot have the medical profession being overly defensive, because that is not the right answer either.

My hon. Friend the Member for Cheltenham discussed what we have done so far in the “General Practice Forward View” to protect GPs from the rising costs of indemnity. Some £30 million a year is being paid out for the year just gone. There is a clear commitment in the forward view. The increases in indemnity costs, which are not a consequence of GP actions or failures or whatever, will be indemnified by the Government. I repeat that again today. I have already made the point about specialist nurses and pharmacists.

We are trying to make progress on the law and address the level of costs awarded in some cases. The 12-week consultation on fixed recoverable costs began on 30 January this year. In the case of smaller claims, proposals include a cap on solicitors’ fees and on the hourly rate for expert witnesses and locums. It is also proposed that both sides share a single joint expert witness, because it is not always sensible to have two expert witnesses arguing with each other: it is possible to do that in a more effective way. The direct aim of the consultation is to reduce the ratio of the amount of money that the patient gets to the amount of money that the lawyer gets, particularly in the lower-value cases. The Government look forward to the results of the consultation and we hope we can move forward.

Another aim—this applies less to GPs, but is also very important—is to do what we can to keep cases out of court altogether by means of the rapid resolution and redress scheme. I have talked a little about maternity cases, but because of the level of the costs and the complexity of the case it can take many years for payments to start being made. That is not right because, from a justice point of view, the baby or the baby’s family needs the money more quickly. It can sometimes takes nine, 10 or 11 years until the legal side is sorted out, and that is not just.

We began a consultation on the rapid resolution and redress scheme in October last year. The scheme tries to keep the whole thing out of court by attempting through mediation and working together to come up with a sensible and fair solution much quicker so that the 11 and 10-year court cases are avoided. We will try and make progress on that. We have not talked about tort reform. The Government are not currently working on that in respect of indemnity, although that was implied in some of the remarks that my hon. Friend the Member for Cheltenham made.

I will finish where I began. Indemnity is a very important area for the NHS. We are spending towards £2 billion a year. That cost is accelerating and will potentially undermine the level of care that we can give. We need to do what we can to moderate costs.

[Alex Chalk]

I am encouraged to hear that some important initiatives and measures are being considered. Can my hon. Friend give us any idea of the timescale as to when an overall final outcome and settlement, or solution, is likely to be presented?

[David Mowat]

The two consultations will take 12 weeks. In a sense, my hon. Friend’s question is false. I do not think there will ever be a final solution because we are trying to reconcile two powerful forces: the need for access to justice and equity for people damaged through negligence and the need to be fair to our NHS. There will always be issues that evolve. The discount rate, for example, which we have talked about during the debate, will vary depending on where interest rates move in the months ahead.

We are talking about something that will always have to be kept under review. There will not be a final solution, but the two consultations that I mentioned will make a material difference and I am keen that we should make progress on them as soon as we are able to.

--- Later in debate ---

[Alex Chalk]

I thank all hon. Members who have taken part in the debate. I think that four things have emerged. First, there is an overwhelming and unified view that GPs are an enormously valuable part of the health service; it is important to underscore that point at every opportunity. To be blunt, I think that GPs sometimes feel got at—in the media and even in this place, I dare say. The message that needs to ring out from this Parliament is that we see GPs as the foundation stone of the NHS. What is good for them is good for patients, and what is good for patients is, of course, good for the country.

Secondly, there was a frank acknowledgement of the scale of the problem. My hon. Friend the Member for South Cambridgeshire (Heidi Allen) made the point that, notwithstanding the increases that we face, the present burden is itself demoralising GPs, and acting as a disincentive to becoming a GP. I take on board, however, the Minister’s point about the record number of applicants.

Thirdly, I am grateful that the Government are clearly taking the issue seriously, with the winter scheme, which has been referred to several times, and the £33 million per annum being invested to cover the cost of the increased indemnity. That is extremely welcome.

I shall close on the fourth point. GPs need to hear that the short-term solutions will translate into a long-term one. I was encouraged by the Minister’s comment that the commitment being made at the moment with respect to the increased indemnity, of £30 million a year, will go into the future. In the not-too-distant future, we need the message to go out that the matter is being addressed, whether through that scheme or another one. It needs to be addressed coherently, sustainably and clearly, sending GPs—whether locums or permanent—the most straightforward message possible: that they are welcome and valued, that their finances are understood, and that we want a system that works for them as well as for patients.

Question put and agreed to.

Resolved,

That this House has considered the cost of GP indemnity in England.