By Colin Leys and Stewart Player
“It’s been twenty years in the planning. I think they’ll do it.”
The words are those of Eamonn Butler, director of the free market think tank, The Adam Smith Institute.
The question he was answering was whether, after the UK coalition government’s Health and Social Care Bill, the NHS would become a franchise. Not a public health service anymore, but a badge denoting that competing providers had met minimum care standards.
Butler’s words provide inadvertent confirmation of the authors’ contention of a plot against the NHS. Conservative and Labour governments have through step by step measures brought it closer and closer to privatisation, to a collection of competing, separate businesses.
Now the wrapping has been peeled away.
Privatisation itself is not a plot. What constitutes a plot is the attempt to achieve under the cover of lulling phrases like “modernisation” and “a patient-led NHS”.
“Since 2000, if not earlier, successive governments have been pursuing a policy for the NHS that the electorate hasn’t voted for and doesn’t want,” the authors say.
Here is one of the authors speaking:
Now with the government’s promised changes to their health bill, the Adam Smith Institute doesn’t want it either. It has disowned the changes The government has also been attacked from the Right by the former Labour Health minister, Alan Milburn, who claims their plans mean the largest nationalisation since the NHS was created in 1948
In such circumstances, it’s advisable to take a step back and look at what is happening in a historical perspective. Here, very roughly, is the story of the last 20 years.
Before 1991 the NHS was funded through block of funding through district health authorities. Hospitals received an annual lump sum on the basis of an assessment of their residents’ health needs. GPs referred patients to the NHS hospitals and consultants they judged medically appropriate.
This, significantly, is the system that, post-devolution, Scotland and Wales have reverted to. They are like ghosts from the past and create an fascinating, real-life controlled experiment. But more on that later.
In 1991, under John Major’s Conservative government, came the internal market. For the first time health care was “bought” by purchasers (health authorities at that time) from suppliers (such as hospitals). Although the private sector wasn’t involved yet, theoretically, contracts could be placed with anybody.
But it wasn’t yet a real market. Contracts were not legally binding and hospitals would not be allowed to go bust. “The needs of patients could still be seen as more important than the bottom line,” Leys and Player say. “This had to change.”
In 1997 Labour was elected. After 2000 there was a huge, one third, increase in NHS funding. There were large salary rises for GPs and consultants. But alongside all that, was a deliberate, concerted effort to get private companies to deliver NHS treatment. Regardless of the results on patients, which were not assessed, or the cost, which was a lot more expensive.
A “Commercial Directorate” was established in the Department of Health, under a Texan businessman, to get private companies to do NHS work. Prices were established for every treatment.
Private surgical centres, called Independent Sector Treatment Centres, were established for low risk operations like cataract surgery. They were paid significantly higher prices than NHS treatment centres received, and paid for the number of treatments contracted for, not whether they were carried out or not. Conveniently, the Department of Health did not collect data on the result of their operations on NHS patients.
The justification was the private centres provided additional capacity for a stretched NHS. But after a while they were allowed to use NHS staff, which made nonsense of the original reason.
Hospitals had to become Foundation Trusts. This meant they could go bust. Their contracts became legally enforceable. Although non-profit, they resembled private corporations under a chief executive and board. They had to be financially self-sustaining and make a surplus.
Under a new type of contract, corporations employing doctors on a salary took over some GP practices. For example Atlos Origin Healthcare, which is employed by the government to tell the sick they are fit for work, took over a GP practice in East London. Though running it proved too much of a strain.
“Polyclinics”, aimed at bringing together GPs and non-life threatening work from A&E, were created. Of the first 140, one third were run by private companies or joint ventures with private companies.
By 2009 there were 149 private hospitals, ‘treatment centres’ and clinics treating NHS patients and using the NHS logo.
This was the state of play when the Tory/Lib Dem health and social care bill, was published. At that point, the authors say, the plan to privatise the NHS no longer had to be concealed.
The result will be a market for specialist, hospital care, with public-funded foundation trust hospitals competing for patients with private companies.
Commissioners, now clinical commissioning groups, will have to offer patients a choice of providers, and fix a price at a level large enough for companies can make a profit.
Even if price competition is ruled out, hospitals will close because they will be financially undermined by private companies.
Private providers cannot do anything but “cherry pick” the easiest and cheapest to perform services because they don’t have the infrastructure to provide expensive but essential services like A&E.
As the authors show, under the price system introduced by the last government, hospitals cross-subsidise difficult and expensive services, such as intensive care, with the money they make from easier and cheaper procedures.
If private companies take the easier services, like knee replacements, because they are the only procedures they are able to do, public hospitals will be financially crippled as a vital source of income is taken away. But it will be tragic and predictable consequence of the twenty year plan to introduce a market into health care.
English NHS hospitals now – foundation trusts – have to be financially self-sustaining. If they can’t make a surplus, they will have to close. Or be taken over, very possibly by a private company.
The NHS will become a “low-risk playground for healthcare corporations”.
What is almost comically ironic is when the coalition government insists they have no choice but to cut £200 billion from public spending in four years they are pursuing a health policy that will vastly increase costs to the taxpayer.
As the Adam Smith Institute says every pound spent on bureaucracy is a pound less for patient care. But, contrary to propaganda, the private sector is the greatest creator of bureaucracy.
The paradox we will look at in part two, is that the NHS, a system where nobody knew the cost of anything, is far less expensive than a market system where the price of everything is measured.