In this lecture, based on
the book The Plot Against the NHS, co-author Colin Leys attempts to set the
record straight on plans for a new healthcare market. He argues that the
healthcare reforms proposed by the Coalition are not as radical as they seem, but
are part of a plot to dismantle the NHS born under Blair.
This lecture, given at Goldsmiths College
The common view of the
changes proposed in the government’s Health and Social Care Bill is that they
would be the most radical changes ever made to the NHS. In one way this is
correct: the changes do mean replacing a comprehensive, universal system of
care with a US-style healthcare market, consisting of providers, all governed
by the bottom line. There will be a limited, ‘basic’ package of services for
everybody, funded by the state; and better-quality treatments, on payment of a
fee or co-payment, for those who can afford to pay.
But in another way the
common view is wrong: the changes that were made under New Labour were more
radical. A simple consideration makes this clear. If Mr Lansley had taken
office last year facing an NHS as it still was in 2000 his project would be
unthinkable. In 2000 there were no foundation trusts; no payment by results
forhospital treatments; no private health companies already providing NHS acute
care and GP services; no independent regulator of a healthcare market
(Monitor). Without all these changes, and many others, what Lansley’s Bill now
proposes would be unthinkable.
All of these changes were
major. Yet most people were largely unaware of them, and certainly unaware of
where they were leading – and that includes many MPs and even many clinicians.
And not just because the NHS is complex, and organisational changes don’t make
sexy headlines. It is above all because the changes were made covertly, using
government powers that did not require primary legislation. The true purpose of
a series of so-called reforms was deliberately concealed. It is because of this
that what has happened deserves to be called a plot.
The story begins for me in
July 2000. Alan Milburn was Secretary of State for Health and was in the middle
of negotiating a so-called concordat with the Independent Healthcare
Association. The concordat said that from now on the NHS would take advantage
of private sector healthcare providers on a regular basis, not just
exceptionally, as for example in the annual winter beds crisis. The Independent
Healthcare Association’s chief negotiator was Dr Tim Evans. I interviewed Tim
Evans at the time. He told me that his vision was that the NHS would be just ‘a
kitemark attached to the institutions and activities of a system of purely
private providers’.
In my innocence, I
dismissed this as a far-right fantasy. What I didn’t realise was that his
vision was shared, to a greater or lesser extent, by a small number of people
at the heart of government, especially Blair’s senior health policy adviser,
Simon Stevens, Milburn’s adviser Paul Corrigan, and a significant number of
senior staff in the Department of Health including, critically, its young
director of strategy and planning, Dr Penny Dash, and Milburn himself. They all
thought that to make the NHS efficient it should be reformed into a kind of
healthcare market.
The NHS Plan, which was
published in the same month, July 2000, was written by a team that included
Stevens, Dash, Corrigan and Milburn. It mentioned the main elements of the
shift to a market, but it disguised them as mere improvements in the existing
system.
Three major changes in the
NHS were required. First, the taboo on private provision of NHS clinical
services had to be overcome, and a bridgehead created for the private sector in
the NHS. Second, NHS organisations had
to be converted into real businesses, not the make-believe businesses of the
so-called internal market. Third, the ties between the NHS workforce and the
NHS had to be weakened, so that enough NHS staff would be ready to transfer to
private sector employment as private providers took over more and more NHS
work. Milburn initiated all three of these changes.
Creating a bridgehead for
the private sector
Creating significant
openings for the private sector in acute or hospital care faced a basic
problem: the NHS was highly efficient, while the existing UK District
General Hospital
The real aim of the programme
was to put pressure on the existing British private health companies – chiefly
BMI, Nuffield Hospitals South Africa
and Capio from Sweden England
The official aim of the
ISTC programme was to add to the NHS’s capacity to do elective surgery, and so
reduce waiting times, which in 2002 were still very long. Since then there has
been a dramatic reduction in waiting times, but it owes nothing to the ISTCs.
They have never done more than 2 per cent of NHS elective surgery, and that has
only been achieved by allowing them to use a growing proportion of NHS
consultants and other staff – in other words they didn’t bring additional
capacity. A good case can be made for saying that their extremely generous
financial terms took capacity away from the NHS.
But by 2007 the ISTC
programme had morphed into a wider system of private providers. As the
incumbent companies adapted, they joined the ISTCs in a so-called Extended
Choice Network of – at the last count - 149 private hospitals and clinics that
are eligible to treat NHS patients and can theoretically do so profitably at
NHS prices – at least for the lower-risk, least complicated procedures.
NHS work now accounts for
about 25 per cent of the private sector’s total revenues (for some firms the
proportion is much higher). But this still accounts for only about 2 per cent
of total NHS spending on acute or hospital care. It might seem that Tim Evans’
dream of a healthcare system consisting only of private providers is still a
distant fantasy. But that would be to underestimate the potential for
transforming NHS trusts into businesses, which was the second change initiated
by Alan Milburn – foundation trusts.
Corporatizing the NHS
The model for foundation
trusts was the so-called health foundations – fundaciones sanitarias - set up
by the People’s Party in Spain
But Milburn liked the idea
and decided to implement a version of it in England
But the central point
about foundation trusts is that the contracts they make are legally
enforceable, and if they run up unsustainable debts they won’t be bailed out by
the Department of Health. This means that they become fully exposed to the risk
of bankruptcy. The independent regulator, Monitor, can step in and impose new
management on a foundation trust that is heading for bankruptcy, or let it
close and get its work taken over by other providers. This means that the crux
of all policy decisions in the hospital becomes financial. Foundation trusts
don’t have to pay dividends to shareholders but in all other respects they have
to behave like private companies. Milburn’s aim was that all NHS trusts should
become foundation trusts by 2008.
But they couldn’t behave
like companies unless their income was related to their performance. So Milburn
also introduced payment by results. Each completed treatment was to be
accounted and paid for individually. This involved putting a price on every
procedure, a price that varies according to the different level of cost and
risk posed by each category of patient. These prices were fixed. For the time
being competition was to be on quality alone. But once a system of payment
based on price per treatment was in place, price competition could then be
quite easily introduced.
The target date of 2008
was too soon, but the job is now being completed by Mr Lansley. All NHS trusts
are now required to become foundation trusts, or merge with a foundation trust,
by 2014, and all community health staff have to be part of a foundation trust
or a social enterprise by this coming April. By 2014 all NHS services – acute
hospitals, mental health hospitals and clinics, ambulance services, community
health services and, of course, GP practices – will be run as independent
businesses competing for patient income in a healthcare market.
All this makes Tim Evans’
dream look a lot less distant. There will be great scope for the private sector
to pick off weak NHS foundation trusts once the new market is fully
operational. Two years ago the Department of Health was already expecting up to
90 trusts to disappear over the next 20 years.
Detaching the clinical
workforce from the NHS
But for this to happen
smoothly, a good part of the NHS clinical workforce also had to be made
available to the private sector. Accordingly, the NHS Plan of 2000 called for
new contracts of employment for NHS consultants and GPs, and new contracts were
signed and came into force in 2003 and 2004.
On the face of it the new
contracts gave consultants and GPs large increases in pay for very little if
any additional work. But their real significance was different.
In the case of the
consultants, a show was made of trying to make them accept much closer
supervision by hospital managers, and cut back on their private work. But it
soon came to seem that the real aim of doing this was to make them feel more
disenchanted with working as salaried NHS employees and readier to go into
business – to form doctors chambers, on the model of barristers, or other kinds
of business, and sell their services to any employer, public or private, that
offered them the best terms. A significant number began to plan to do so and
some have begun to. And as the cuts begin to bite there will be unemployment
among hospital doctors. As you will have read, consultants are among those
scheduled to be laid off by St
George’s
In the case of GPs, the
new contract gave most GPs a huge pay rise; it also allowed them to give up out
of hours provision for a very modest cut in income. It is not clear how far the
size of the pay rise was intended, but almost as soon as it was introduced GPs
started to be vilified as overpaid and lazy; and they had also lost their
monopoly of primary care. Private companies were invited not just to take over
out of hours care, but also to set up a large number of new GP practices,
employing GPs on salary. By mid-2010 227 GP practices were being run by
for-profit companies and all GP practices are now increasingly based on
fixed-term contracts, which have to be competed for again at the end of each
contract.
That left the third main
component of the NHS workforce in England
The last major change
initiated by the marketizers was the attempt from 2007 onwards to set up some
500 polyclinics, or GP-led health centres, throughout England. The official aim
was to achieve more ‘integrated care’ – meaning, especially, dissolving the
boundary between primary and secondary care. The idea was to shift non-urgent
work out of hospitals into more numerous, smaller organisations, with at most
day surgery facilities and few if any inpatient beds, but offering relatively
sophisticated diagnostics and other treatment services. Care would be provided
by specialists as well as GPs, especially for the growing population of older
patients with long term chronic conditions, but most GP practices would be
expected to relocate into the new centres.
There was and is a lot to
be said for the polyclinic model. But the key idea underlying it in 2006 was to
use it to solve the persisting difficulty of building up a private healthcare
industry. The Department of Health Health estimated that about 60 per cent of
hospital work – all outpatient clinics, much diagnostics, most minor surgery –
could be unbundled from the rest of hospital activity and shifted to these new
centres, which would be built and operated by the private sector. This aspect
was not mentioned by ministers in public. The official view was that the shift
was aimed at improving patient care. But in private meetings held with the
private sector every six weeks throughout 2007 and 2008 it was made clear that
the new centres were to be an opportunity for private investors.
The front man chosen for
the public exercise was Sir Ara Darzi, who was often pictured in his operating
theatre scrubs, lending the project an aura of high-tech professional
dedication. No one of any consequence was impolite enough to ask what
qualifications a specialist in minimally invasive surgery had for making health
policy. In reality his three reports all followed closely a script prepared for
the Department by a team under the leadership of the same Dr Penny Dash who had
been director of strategy in the Department of Health at the time of the NHS
Plan, and who was by now a partner in the London office of McKinsey and
Company.
Towards the end of 2007
all 152 PCTs in England were ordered to have a one GP-led centre up and running
by April 2009. In practice, by the end of last year 140 had been opened. About
a third are run by corporations, such as Virgin Assura, but many more are run
by GP-owned businesses.
But this way of expanding
the role for the private sector in NHS-funded health care has not gone
according to plan. One reason why it didn’t was the financial crisis, which
meant that private investors couldn’t borrow the necessary funds. A more
important one – especially for Lansley, given that his market project hinges on
GP commissioning – was that GPs were reluctant to move into the new centres. By
the end of last year several centres had closed and more were facing closure
for lack of business. None of them was a centre of integrated care, with high
tech diagnostics and facilities for day surgery, involving specialists as well
as GPs, in the way Lord Darzi had envisaged.
Last month Mr Lansley
quietly shelved the whole initiative.
The shift to an unmanaged
market
In my opinion this
decision is very significant. Under New Labour, the marketizers envisaged a
managed market. The private sector would have a growing share of it – but in
structures prescribed by the government. The next major advance for the private
sector was to be into Darzi centres.
But the private sector
didn’t rush to do it, and not only because of lack of credit. It was even more
because it wasn’t clear how much money there would be in it. Too many aspects
of it were unknown: such as, for example, how easy it would be to get hospital
consultants to come and work in the centres in places outside London. And there
were many unknown unknowns, as Donald Rumsfeld would say. They were also
waiting for the election.
The point here, which I
think Lansley understands, and few Labour ministers did, is that businessmen
want to work out their own opportunities, where they can calculate the risks
and the returns. Opportunities selected by the government are only interesting
to them if the government assumes all the risk, as it did with the ISTCs – and
that is too expensive for governments to repeat very often. And this is what is
really new about Lansley’s Bill: it promises an unmanaged healthcare market, in
which how health care is delivered will be decided by what businesses see as
profitable, controlled only by minimum health quality standards (set by the
Care Quality Commission) and Monitor, the regulator.
How the market will be
regulated is something the experts are still trying to work out, so I am not
going to attempt it here. Huge discretion is being handed to the independent
regulator, Monitor, to decide what is ‘appropriate’ or ‘necessary’, as those
who have drafted the Bill put it.
But I think a few things
are clear. Over half of all NHS-funded activity - everything that is not paid
for on the basis of the fixed-price tariff – is already subject to price
competition. We are already seeing it in the way contracts for GP practices and
community health services are now being awarded (for example Camden PCT awarded
GP practices to UnitedHealth purely on the basis of cost, and replaced the
physio services of the Royal Free by those the Newcastle-based company Connect
Physical Health). And the interim chief executive of Monitor, David Bennett,
has made it clear that price competition will gradually replace the fixed
tariff for other activities, including hospital treatments.
Once this starts to happen
corporate bidders will undercut NHS hospitals for various bundles of hospital
work, using loss-leading pricing if necessary to get started as they already
have in primary and community care. The NHS hospital services affected will
close, and clinical staff will move to where the work then is, either as
employees of the new corporate providers, or as members of doctors chambers or
social enterprises under contract to them.
Many entire hospitals will
close, especially in London and other big cities. When a hospital cannot be
allowed to close Monitor will move in and franchise its management to corporate
management teams. This has already happened to the Hinchingbrooke Hospital near
Cambridge (Circle Health), and experts expect it to happen to 20-30 more in the next few years.
Prices will rise. On the
one hand, the cross-subsidisation that is practised inside NHS hospitals will
come to an end as the less costly activities are taken out of them, forcing
them to charge more for what remains. On the other hand, Monitor will have to
ensure that prices are set so that all providers make a profit. To keep the NHS
budget down, what is covered by the NHS will decrease. More and more treatments
will be ‘decommissioned’ and will become ‘extras’, which you can have if pay
for them. This is already happening in one particular way, thanks to another
New Labour measure – personal budgets, or lump sums given to patients with
chronic illnesses to buy their own care with. If you want more care than the
lump sum will cover you can pay for more, if you can afford it. Inequality in
health care will be restored.
And while prices rise, quality
will fall, because quality is hard to measure, and costly to police (the Care
Quality Commission is only really mandated to detect cases of gross neglect or
abuse, and is grossly under resourced). In other words the NHS will consist of
a limited set of treatments of basic quality – and a kitemark.
How was it done?
This very condensed
account omits several major issues that are covered in the book Stewart Player
and I have been working on. Among other things it omits the way the shift to a
market has already been anticipated by the Department of Health, in dozens of
initiatives and ‘pilots’. It omits the development of the private health
industry, which is now on the verge of a dramatic expansion at the expense of
the NHS budget. It omits fraud, which is so much part of the history of many of
the companies involved, and which seems bound to become as endemic here as it
is in the US and other healthcare markets.
But one question can't be
entirely omitted from even this brief account: how could the NHS be abolished
as a public service without a debate and without the public knowing? The answer
is really the story of what has become of democracy in the neoliberal age,
condensed into a single case. Spin, of
course, has played a big part – secrecy, misrepresentation, manipulation of
statistics, lies and the suppression of criticism. But even more important has
been a radical change in the nature of government: in effect, the state itself
has been privatised.
First, in terms of
personnel, the boundary between the Department of Health and the health
industry has become so permeable as to be almost non-existent. By 2006 only one
career higher civil servant was left in the Department’s senior management
team. The rest came chiefly from backgrounds in NHS management or the private
sector. In addition, senior positions in the department were filled with
personnel recruited directly from the private sector, while former department
personnel (including two Secretaries of State) moved out to firms in the private
sector. The revolving door has revolved faster in the Department of Health than
in any other part of government except perhaps the Department of Defence.
Conflict of interest has become so routine as to be almost unremarked. The idea
of a boundary between the public and private sectors, which civil servants and
ministers police in the public interest, has gone out of fashion.
Second, policy-making has
been outsourced. This is an oversimplification, but not much. A so-called
health policy community developed, structured especially around two main think
tanks, the Kings Fund and the Nuffield Trust. The current Chief Executive of
the Kings Fund was formerly director of strategy at the Department of Health,
and so was the current vice chair of the board. Their governing bodies also
have strong private sector representation and their seminars and conferences
are where the market plans have been developed and disseminated. And this has
been done partly at public expense, as these and many other think tanks, some of
them militantly neoliberal, are charities, and so tax-funded.
Third, and particularly
important in the run-up to the 2010 election, is the health industry lobby.
Tamasin Cave and David Miller at Spinwatch have made a remarkable short film on
the health lobby, called ‘The Health Industry Lobbying Tour’ which you can
watch online at Spinwatch.org. When you have seen it you understand a lot more
about Andrew Lansley and where his ideas are coming from.
I’ll leave it there. But
just in case you are not convinced of the design behind this, and don’t think
it is fair to call it a plot, let me add just one more item. In January there
was a discussion on Radio 4 between Matthew Taylor, who was once Blair’s chief
of staff, and Eamonn Butler, the Director of the Adam Smith Institute, where
Tim Evans also works – same Tim Evans who negotiated the concordat with Milburn
and looked forward to the NHS becoming just a kitemark. They were asked if they
thought the NHS was really going to become ‘a mere franchise’. Butler replied,
quite casually, ‘It’s been 20 years in the planning. I think they’ll do it.’
https://www.opendemocracy.net/ourkingdom/colin-leys/plot-against-nhs
