GP Indemnity Costs: England

Steve Baker Excerpts

Wednesday 15th March 2017 Westminster Hall

[Mr Steve Baker (Wycombe) (Con)]

It is a pleasure to serve under your chairmanship, Mr Turner. I congratulate my hon. Friend the Member for Cheltenham (Alex Chalk) on his excellent speech and on securing this debate, and very much concur with what he said.

Before I go any further I should say that my wife is a general practitioner, a former Royal Air Force senior medical officer who now works as a locum for the Ministry of Defence. I should also say that any errors or omissions in my remarks are entirely my own; I only spotted this debate this morning so I have not had a chance to discuss the issues with my wife. The scale of indemnity fees and the rate of price inflation in them has been an occasional—possibly frequent—topic of dinner table conversation. It is quite clear that something is going on when we see such steep rises to such high levels.

I want to pick up on a few of my hon. Friend’s points. He made the point about GPs being the foundation; we cannot overstate that, particularly in the context of ever-increasing specialisation in secondary care. The point I wish to make to my hon. Friend the Minister is that it seems that, as secondary care becomes more specialist, the burden of diagnosis will increasingly fall on general practitioners. I have heard accounts, which I may relay imperfectly, of a thoracic problem, for example, being referred to secondary care; the consultant might exclude a heart problem, but then it has to be referred again to exclude a lung problem, and again for whatever it may be. My sense from listening to my wife and other GPs is that increasing specialisation in secondary care sometimes shifts the burden of diagnosis on to primary care.

It seems to me, if I may say so from the perspective of an aerospace engineer, that diagnosing people is a slightly less exact science than diagnosing machinery. That is partly because it relies on what people say about their own condition, and partly because it relies on their coming forward at the right moment in the development of their illness or condition. I wonder whether specialisation has led to a transfer of risk, which is material to premiums. I put that point to the Government; I appreciate that they might not be able to answer it today.

My other point is about the status of partnerships, which is both relevant to the future of general practice and tied into this subject. I have recently had occasion to discuss with a senior partner how it has become financially less attractive over recent years to be a senior partner. I have mixed feelings about that. One of the little discussed realities of the NHS is that general practice was never nationalised, so partnerships have always had this special status where they are private businesses tightly coupled to a state-funded and run NHS.

It seems that the problem of steeply rising indemnities is material to problems that partners face in continuing in business, often in ageing premises that they are locked into through mortgage conditions. If the Government intend for the partnership model to continue indefinitely, and if there is cross-party agreement on that, the cost of indemnity needs to be considered, along with a range of other factors in relation to that model.

My hon. Friend the Member for Cheltenham mentioned that he sees GPs as having a special status, and I think he is absolutely right on a number of levels. They are special in the sense of the GP’s place in the hearts of the public; special in the sense that, as specialism increases, so does the burden of diagnosis on them; and special in terms of the status they have as businesses operating within the NHS. More than that, as clinical commissioners, general practitioners now have the great burden of determining what care will be deployed where in the NHS.

It is proper that I restate that I have an interest in this, but I observe that the support being given in relation to GP indemnities is not being extended to the MOD’s locums at this stage. Armed forces personnel need healthcare too, and because of how armed forces medicine operates, the armed forces often need locums. I ask the Minister to consider the general point that the MOD might need the same support in relation to indemnity fees that general practice would enjoy everywhere else.

Finally, I do not think that this is a confrontational debate. We live in times when medicine has changed, people’s attitudes to risk have changed and the role of the GP is changing. We are all united—at least on this side of the Chamber, but I hope across it—in recognising that the Government are seeking to rise to all those challenges, and I look forward to hearing what my hon. Friend the Minister has to say.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Health (David Mowat)]

It is a pleasure to serve under your chairmanship, Mr Turner, and I congratulate my hon. Friend the Member for Cheltenham (Alex Chalk) on bringing this really important subject to Westminster Hall this afternoon. The NHS spends between £1.5 billion and £2 billion a year on legal and indemnity costs. If we could find a way to spend that massive slug of money better, that would be better for patients and our constituents, and all that goes with that.

I will start where my hon. Friend started in his really lucid speech. We need to emphasise how much we value GPs, as all Members did who have spoken today. In a speech that I gave recently to GPs, I used a sentence from the foreword by Simon Stevens to the “General Practice Forward View”, and I will use it again now:

“There is no more important job”

in the country

“than that of the family doctor.”

I think that is very good—everybody is nodding, so I think we all agree. There is no harm in our reminding any family doctor who may be listening to this debate of the esteem in which they are held.

My hon. Friend the Member for Cheltenham made some interesting points about the potential for legal reform. We are consulting on that and I will say a bit more about what we are doing. I will give the House one statistic that stuck in my mind as I was preparing for this debate: for legal cases with awards of £10,000 or less, the average costs are three to four times higher than the actual amount paid to the patient. That is indicative of a broken system that we need to fix. He made a point about using the central scheme, which applies to hospital doctors, for GPs. That is an option, but as he also said, the three insurance organisations are non-profit-making, so it is not absolutely clear how it would help.

Another thing I was surprised about was an interesting point that my hon. Friend and, I think, the hon. Member for Burnley (Julie Cooper) made about the way in which costs are estimated for difficult and complex cases. We would all concede that it is right that we properly recompense people who have been damaged through negligence and so on, but one of the things that that is based on is private health insurance rates, not the NHS doing the work. I have discovered the reason for that: it is what was set out in the National Health Service Act 1948, which set up the NHS. We are looking at options around that, but the history of how that evolved and why it became the case is interesting.

[Mr Baker]

I am grateful for the opportunity to recommend an excellent book: “Working-Class Patients and the Medical Establishment”, by David G. Green, who now runs Civitas. It tells that history, and there are a great many similar examples where we might look at how we can reconnect the whole system with the patient.

[David Mowat]

I thank my hon. Friend for that intervention and for the interesting comments he made. He talked about the transfer of risk due to specialisation, which is an interesting concept. I will push back a little on that, however. Of the £50 billion of reserve that the NHS needs to hold for legal cases and compensation payments into the future, the vast majority is around maternity, because the money tends to be focused on babies who are injured and have to be supported throughout their life. I am not absolutely sure he is right about that concept.

My hon. Friend made a point about the status of partners in GP practices. Partners have unlimited liability unless they have indemnity, which potentially makes it less attractive to be a partner than a salaried GP. We are seeing that trend. There is a double edge to that, and I will not go into other aspects of how GP practices are structured, but increasingly—I do not know whether this applies to my hon. Friend’s wife—we are finding that things are working better with GP practices being put into hubs of 35,000 to 40,000 people. They are able to employ pharmacists and physios and do more things at scale than they could as a single GP practice or as a practice of two or three GPs, which has historically been the norm.

We are migrating over time from a position where we have 7,500 GP practices to one with something more like 1,500 super-hubs, but it is true to say that the contract position has not caught up with that, and it is a long road. Tomorrow, I am going to visit a hub in Dudley. Super-practices are emerging, which have tens and possibly hundreds of GPs who can provide services across much wider areas. That is a different model, and there is some evidence that such hubs can provide more career structure for GPs and the opportunity to specialise in a way that they have not been able to in the past.

[Mr Baker]

I must admit that I missed the Government’s plans to move to super-hubs. It sounds quite suitable for Wycombe. Without wishing to make this debate about my wife, she is with the Ministry of Defence. At the moment, the MOD is providing healthcare to units or stations, or whatever bases they may be. How would the super-hub proposal work with the armed forces?

[David Mowat]

I had forgotten to talk about MOD locums. My hon. Friend raised that issue, and I do not know the answer, but I will write to him and give him the information he needs, and he can talk to his wife about that. I was surprised by that example. I am sure that between the various parts of the Government, we can get an answer.

In the hour available to me, I will discuss in more detail the environment in which the NHS finds itself, the impact and the Government actions we are taking, but I will start with this: we all want access to justice. That is a fundamental of our country, and we should do or say nothing that causes people who have been badly treated to lose out. Lawyers have to be part of how they get access to justice, and that is right, but we also need to protect the viability of our NHS.

We are spending towards £2 billion a year in this area. That is £2 billion a year that we are not spending on nurses, doctors and the improvements we would all like to see. We often have debates about the level of NHS spend compared with other countries in Europe and different parts of the world, but one area in which we can say we are a leader in Europe is the amount of money we spend on litigation and all that goes with that. That is not because our NHS is less safe than other systems; it is to do with some of the points that were made earlier about the litigation culture that has built up. To an extent, that has been encouraged to build up because of our treatment of costs and some of those things. That spend of £1.5 billion to £2 billion has been increasing by something like 20% a year in the past three or four years. We cannot afford to continue to spend money in that way.

GPs are not the most expensive part of the system, but as my hon. Friend the Member for Cheltenham said, GPs typically have to spend £7,900 out of their own pocket on indemnity. That figure is increasing by 10% a year. Indemnity costs for GPs who do out-of-hours work are increasing by 20% a year, which has knock-on effects for the attractiveness of that work. As we discussed earlier, it also impacts on people in other ways, such as propensity not to become partners in GP practices.

What has made the acceleration in legal costs evident is not so much the major claims that everyone would agree need to be sorted out and dealt with—for example, babies who are damaged at birth and need to be looked after for their entire life—but the significant increase in the number of minor claims, which tend to have a higher proportion of associated legal costs. As I said, claims of around £10,000 would typically have legal costs in excess of three times the amount that the patient would receive. My hon. Friend the Member for Cheltenham said that many claims are successfully defended, and the fact is that 99% of all claims are settled out of court. There can be a tendency to settle minor claims for relatively small amounts—claims under £100,000—just because of the volume that are coming in and because it is cheaper to settle than fight to the end. All of that takes money out of our NHS.

We have talked a little bit about why this is happening. The life expectancy of people with complex needs is increasing, so if someone is damaged at birth, typically the awards they need go on for much longer than in the past. That is a good thing in terms of life expectancy, but it drives cost. There is a view that the best-quality care becomes more expensive. Technology is a part of that. We also have an environment in which, for whatever reason, there has been an explosion in small claims against the NHS, which particularly affects GPs, and there is a legal environment in which even unsuccessful claims or claims without merit can sometimes be rewarded. All of that is made worse, as we have heard, by the change to the discount rate made by the Lord Chancellor, which will come into effect next week on 20 March.

The time value of money essentially was 2.5% and is now going to be -0.75%. That will have a significant impact on all insurers in the private and public sectors. It particularly affects the health sector. The £59 billion reserve that the NHS has for central litigation costs will increase because of the change that has been made by something in excess of £5 billion or £6 billion. Those are significant and serious sums of money in the public purse. The Government’s position is that doctors will not have to pay as a consequence of the technical change in discount rate. We are working through how that will work in the central litigation authority and the three insurance companies that my hon. Friend the Member for Cheltenham mentioned. Nevertheless, the cost is significant in the context of all the other pressures on the health system.

A couple of Members talked about the fact that the issue affects not only doctors in primary care but pharmacists. Increasingly, clinical or prescribing pharmacists are working in primary care and they need indemnity, as do nurse practitioners. We need to remember that that is all part of the picture.