Although the plan will mean the Government courting the controversy of hospital closures, it was welcomed by NHS managers who see it as nothing less than their last chance to save and then rebuild a service under intolerable pressure.
The key to the Dobson plan is demolishing the "Berlin Wall" separating health and social care, so that health and local authorities work together to reorganise services, exploiting advances in medicine to meet modern needs. That, Mr Dobson said, meant less emphasis on hospitals and more on consultants working in cheap surgeries and nurses dispensing drugs.
Philip Hunt, director of the NHS Confederation said the idea of local action zones was of "enormous significance": the NHS was in "the last- chance saloon" and if it was to continue providing a full range of treatments it would have to grasp the opportunity for change.
"The history of the NHS is littered with failed attempts to re-configure services,'' he said. ``What we are talking about here is an attempt to pull everyone together and in a locality and get them committed to making radical changes. We have got to get on with it because unless we do I don't see any ways of squaring the resource circle."
Addressing an audience of NHS managers for the second time in a month, Mr Dobson told them that "health action zones" would be identified where health, social voluntary and business groups would be brought together to agree changes, defusing opposition to hospital closures and easing the process of reorganisation.
Mr Dobson said: "We have got to have an NHS fit for the 21st century and that cannot be achieved by the NHS alone."
Despite the political risks of shutting hospitals, he has been forced to accept that slimming down the service to produce a leaner fitter NHS is the only way it can survive - as The Independent reported on 24 March, in a story heavily denied by Labour at the time.
In many parts of the country small hospitals duplicate services better provided by bigger neighbouring institutions, and are both uneconomic to run and tie up capital.
NHS managers have been pressing for a closure programme and this month the British Medical Association conceded that services could be improved with fewer hospitals.
Up to 10 action zones, which could be focused on a large authority such as Birmingham or several smaller ones, are expected to be set up. Details will be announced in a White Paper in the autumn. No new funds will be available, but officials said some cash could come via local authorities from the environment department regeneration programme which is providing pounds 3.4bn for schemes in deprived areas over the next three years.
Money to fund capital investments, such as new hospitals, would have to be raised under the private finance initiative.
A discussion paper circulating among senior NHS manager, obtained by Health Services Journal, suggests each action zone might save between pounds 5m and pounds 30m, potentially realising up to pounds 1.2bn nationally.
In Birmingham, where the NHS Confederation is based, there has been no new investment in hospitals for 30 years because there was no consensus on which should be provided. "The local authority have not supported what the NHS wanted to do, there have been splits between hospitals and disagreements amongst consultants. We need to get our act together and get people signed up to it," Mr Hunt said.
Mr Dobson, speaking at the confederation conference in Brighton, said: "Change will not be accepted unless we recognise the powerful appeal of the familiar, allow for it in our plans and explain without jargon how specific changes can improve standards of care."
Speaking later, he said the case for closing hospitals was now widely accepted by NHS professionals. "I am pretty clear there are too many and every one in the NHS thinks there are too many. We are going with the tide of opinion. There would be no blueprint for closures and it would be up to local communities to decide what services they needed. "
The present division between health and social care provoked irresponsibility because each agency looked after its own interest. An elderly widow with 'flu might be taken in to hospital at a cost of pounds 1,000 week or equally well cared for at home for pounds 50 a week, Mr Dobson said.
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