David Cameron himself slammed “top-down” reorganisations, before introducing a £3bn reorganisation of his own.
The changes which seem to fragment the system and introduce a number of new elements, such as the purchaser-provider split, Foundation Hospitals, were many changes under New Labour. And they did not cohere, and ultimately led to the Health and Social Care Act (2012). That of course is a massive fear of what Owen Smith MP would do to lay the foundation slabs for a future demonic Conservative government, despite his current poetic words.
This issue is beyond party politics, and not even about Owen Smith’s doomed leadership bid.
Not even about my support of any one Labour leadership candidate, or another.
I was unable to get a word in edgeways on a popular radio show about this last night, but I did get a chance to rebut fully a previous caller, by the name of John Redwood MP, Conservative MP for Wokingham. He claimed that there had been “no secret plan” to privatise the NHS, and that the Conservatives had been vocal critics of “Labour’s PFI”.
The “private finance initiative” was started in 1992 under John Major, and continued with much more force under Tony Blair from 1997 onwards. It was exasperating that this is still barely talked about by followers of New Labour as it was continued by the Coalition under George Osborne in 2010-5.
This ‘off budget accounting’ of PFI under New Labour was brought in at a time to address the poor physical infrastructure of the NHS. The risk was transferred to the public sector, while all the reward went to the finance sector. You can even trade in PFI units in the City.
The effect of this substantial privatisation technique? Firstly, due to the ‘corporate wonga’ nature of the loan repayments for these PFI hospitals money for safe staffing is driven to the bone. It is therefore effectively investing in shiny buildings and the City and disinvesting in people and skills in the NHS.
And back to John Redwood.
And, if there had been no “secret plan”, why was it then that John Redwood and Oliver Letwin in 1988 published a document for the Centre for Policy Studies called, “Britain’s biggest enterprise – ideas for radical reform of the NHS”.
On reflection, I actually agree with John Redwood MP.
This plan was far from secret.
And the conclusion could not be more blatant.
The Conservatives persist with the lie that privatisation is ‘not happening’ and yet boast of how things would be much more ‘efficient’ if the NHS were privatised.
The depth of this deception to the general public is completely laid bare by private companies providing NHS services hiding behind the NHS logo not their own corporate logo.
And you can still buy this from Amazon – authored by now Conservative Peer, Lord David Willetts, from 1993, the ‘golden era’ of John Major PFI.
A Guardian article yet again yesterday outed the lie there had not been any privatisation.
The ‘public face’ of the Conservatives is that they are ashamed of privatisation, whilst propelling it at full force. For Owen Smith MP or any others to argue that they were unaware that they were letting the NHS progress on this privatisation road is either deeply negligent or massively fraudulent, as the facts speak otherwise.
The Conservatives rely on the fact that there’s no ‘big bang’ flotation of the NHS, like the ‘Tell Sid’ campaign of privatising British Telecom in the 1980s.
Of course, the notion of the ‘privatisation of the NHS’ is deeply unpopular. People who are “experts”, like Christine Lagarde, Mark Carney and George Osborne, warning about economic armageddon delivered a #Brexit vote, were utterly rejected in the #EUref, reflecting perhaps the contempt that the City is held by some voters.
This contempt is not superficial – it is an endophenotype of how investment bankers crashed the economy, and yet nurses on their pay freeze or low paid teachers or the disabled are somehow meant ‘to pay for it’.
And then the next trick is to avoid defining what privatisation is. All privatisation is is transferring assets from the public sector to the private sector.
This is completely in keeping with other mutterings elsewhere from the Conservative Party – as described in “Opening the oyster: the NHS reforms in England” by Dr Lucy Reynolds and Prof Martin McKee (Clinical Medicine, Journal of the Royal College of Physicians) April 2012.
“According to a glossy brochure summarising the conference held last October, Britnell told his audience: “GPs will have to aggregate purchasing power and there will be a big opportunity for those companies that can facilitate this process … In future, the NHS will be a state insurance provider, not a state deliverer.” He added: “The NHS will be shown no mercy and the best time to take advantage of this will be in the next couple of years.””
And remember Oliver Letwin MP, John Redwood’s co-author of the pamphlet above?
“Oliver Letwin has reportedly told a private meeting that the “NHS will not exist” within five years of a Conservative election victory. The Shadow Chancellor said that the health service would instead be a “funding stream handing out money to pay people where they want to go for their healthcare”, according to a member of the audience. The remarks, which have been furiously denied by Mr Letwin, were last night seized on by Labour pecks evidence of the Tories’ true intentions towards the NHS. It is not disputed that Mr Letwin met a gathering of construction industry representatives in his constituency of Dorset West on 14 May. During the meeting he urged the group of around six local businessmen to work together to win contracts for a new PFI hospital to be built in Dorchester. Mr Letwin then astonished his audience, however, by saying that within five years of a Conservative election victory “the NHS will not exist anymore”, according to one of those who were present.”
It is simply up to the Conservatives and New Labour to defend this blatant policy, rather than lying to the public about it.
I’ve mentioned one technique which has delivered poor value for the taxpayer (the poor value for money to subsidise shareholder profit is an onrunning Conservative and New Labour theme; it is no accident that the privatisation of the NHS was conceptualised by Andrew Lansley like the privatisation of the utilities).
But there are many other techniques – and they’ve all been attempted/completed.
For example, the privatisation of auxiliary services – e.g. chemists, cleaners, lab staff.
Or, the selling off of NHS property (including buildings and land).
Or, the rampant outsourcing of NHS services/contracts to private sector (Health and Social Care Act 2012, section 75).
The components of the NHS privatisation jigsaw have been put in place by Tony Blair’s re-introduction of the internal market, and the introduction of the purchaser-provider split. (Tony Blair had originally won a mandate to get rid of the internal market, which had been advanced in statutory instruments such as the NHS and Community Care Act, but actually in the end ended up amplifying it. It is argued that Frank Dobson tried to stem the advance of the private market, but his work was thwarted in this respect by Alan Milburn)
And we know from New Labour’s watch, that the rush for Foundation Trust status, including financial competitive autonomy, means that some clinical services went down the pan. New Labour don’t like talking about Mid Staffs much for good reason.
There is no evidence that the private sector in producing clinical services is any more efficient.
In fact, there’s substantial evidence that there’s massive reduplication of unnecessary work, as that can cause repeated billing.
And it was a farcical situation when under a previous Government a merger could not take place which would have been for the benefit for providing better quality clinical services, as it breached competition law.
And the mere act of funnelling everything through private contracts, consequent to 2012 (and laid in place from the New Labour NHS Act 2007 and Public Contracts Regulations 2006), has seen a massive amount of extra paid work for corporate lawyers in litigation and other dispute work.
What is even more incredible is that a ‘serious’ Labour leadership candidate could have been unaware of this.
If the Right of the Labour Party want to throw their toys out of the pram, and split, and not support democracy or the vast majority of the membership of the Labour Party, they’re welcome to leave.
But – parliament is ultimately about sending delegates who represent the public’s feelings, not representatives of a big slick corporate marketing machine.
And look what happened to the SDP in the 1980s.
It is necessary to refer to the Adam Smith document by Pirie and Butler (entitled “The health of the nations – solutions to the problem of finance in the health care sector”) which charted all of this – in 1988.
Phase I 1988 – 1997 Thatcher/Major Abolition of District Health Authorities
“Perhaps a better candidate for abolition or reform, however, would be the tier ofDistrict Health Authorities”
“There must be more of an internal market within the NHS — that those units and districts with excess capacity or with some particular expertise should be more able to market their services to others who need them.”
“With a direct charging mechanism, with hospitals as cost centres, and with the use of management budgeting techniques by which each service provided by a hospital can be properly costed, such an I internal market could be vibrant.”
“Private hospitals, undertaking 400,000 operations per year, have a number of special strengths: they are particularly experienced at hip replacements, for example, because many older people who have saved to make their retirement comfortable happily spend the money on going private rather than waiting for two years or more in the public sector. Buying in such operations from the private sector — with NHS patients going to private hospitals for their treatment, but continuing to receive it free of charge — could be a cost effective way of clearing the waiting lists.”
PFI It is of course remarkable that in an article called “Private equity pioneer”, the impact of Michael Queen is laid bare. The timing of this is particularly noteworthy, predating the Blair government commencing 1997.
“CEO of 3i Michael Queen on his accountancy roots and how private equity can help develop world infrastructure. As chief executive of 3i, a FTSE 100 company and one of the world’s leading international private equity groups, Michael Queen is one of the most influential business people in Britain. In his 23 years with the firm, Queen has notched up many successes. Working his way through a variety of roles including finance director, he led the firm’s growth capital business and founded its infrastructure investment arm. In the mid-1990s, he found time to pioneer the NHS private finance initiative (PFI) which kick-started hospital building in the UK for the first time in decades. Recently, as CEO, he’s turned a £2bn debt in 2009 into £350m currently, built some £2bn in cash reserves and led a restructure of the group’s private equity business. And he’s just won the ICAEW’s Outstanding Achievement in Corporate Finance Award for his major contribution to UK business, entrepreneurship and the economy. But none of these are the moments that have defined his career. That was getting a position as an accountancy trainee with Coopers & Lybrand.”
As Andrew Sparrow outlined in an article last year in the Guardian,
“George Osborne, the chancellor, is pressing ahead with private finance initiative (PFI) projects on a multibillion-pound scale despite having dismissed the infrastructure funding mechanism as “discredited” when he was in opposition, research has revealed. A report on Channel 4 News shows 61 PFI projects, worth a total of £6.9bn, have been taken forward since the general election. This is despite claims that private sector borrowing costs currently make PFI particularly poor value for money.”
The Health of Nations had provided:
“The private sector may also be able to help in terms of raising capital for new facilities. In areas where medical treatments have been contracted out, one of the first actions of the private sector providers is commonly to scrap existing buildings and equipment and start afresh with facilities that are less costly to maintain and more pleasant to work in. Sale and leaseback arrangements might well be a good way of raising capital for the public hospital and simultaneously contracting out certain forms of care, such as long-stay care, which the private and charitable sectors might be better able to provide anyway. Contracts with private consortia to design, build, and operate complete hospital units on behalf of the Service would seem to be a logical extension of present practices. In addition, they could provide aninteresting source of new approaches to medical care.”
Phase III – Cameron/Clegg (2010 – present day) Formation of the NHS National Commissioning Board
“Making the Service less political may help to solve some of these problems. At national level, it might be better to run the NHS through a board which, like other nationalized industries, does not include the direct involvement of government ministers and does not allow their day-to-day involvement in the running of the industry, but is ultimately responsible to them.”
“With the management of the NHS switched over to HMUs instead of Regional and District Health Authorities, national supervision of the HMUs will be necessary. A ministerial body will license each HMU and specify the standards which they are required to attain. It will also have the responsibility of ensuring that the levels of service reach those required. It will publish the criteria and compare the performance of HMUs across the country. If the HMUs make use of sub-contractors for certain aspects of health care, these, too, will be required to attain what are deemed to be the appropriate standards.”
“Perhaps one of the most exciting new ideas, however, is the concept of management by contract, which works well abroad and is just now being tried out within the NHS.” “contracts can be of any duration, though five years is a workable minimum” “In this new version, however, it is the managers who are under contract, rather than the front-end service workers. The skills needed to run each function come not from in-house managers but from outside experts, hired under a contract of finite duration. They must achieve whatever targets are negotiated and agreed at the beginning of the contract, or risk losing their work to a competitor.”
“Contracting out the management of an entire hospital, including the medical services, could lead to greater opposition, but on, the other hand it might be seen as a lifeline to units that are threatened with closure because of demographic changes, smallness or obsolescence.”
Choose and Book (“AQP”) with CCGs funded by PHBs (“vouchers”)
“In more radical versions of the idea, however, patients are given a wider choice about the NHS doctor and hospital they want to treat them, and the average per caput health expenditure represented in the voucher actually follows them when they choose.”
Introduction to CCGs (Clinical Commissioning Groups) funded by PHBs Abroad, in the Netherlands, “unintended consequences” of PHBs have now been described. The “Health of Nations “provides:
“Fundamentally, HMOs offer a complete health care delivery service to groups of individuals in return for a fixed and prepaid annual premium. A group, such as a group of employees contracted into the HMO by a company, pays a premium on joining the scheme, and for that the HMO guarantees to provide each member with all the GP and hospital care that may be needed in each case. The scheme managers will in turn contract with the doctors and hospitals they need in order to provide this whole-care service.”
The CCGs use the PHBs to contract with GPs of CCG member practices & purchase hospital and other secondary care through competitive tendering or through Choose and Book (“AQP”)
“For example, we might break down the NHS delivery system in a particular city or area, transforming it into a series of competing whole-care delivery plans on the HMO model, whose budgets were allocated on a per-patient basis rather than from a DHA grant, and who contracted with their own doctors and bought in the necessary hospital treatment from the private or public sectors.”
The insurance risks for CCGs are highlighted
“However, difficulties remain. There are still no obvious structures presently in existence within the NHS which would provide the nucleus around which new HMO-style systems could be grown. Some group — managers or doctors — have to accept the risk that they can deliver a complete health care service within the per caput budget, and neither group currently working inside the NHS is likely to accept that new challenge with much pleasure. In fact, staff at all levels would be worriedby the prospect of their service being divided into competing units.”
Patient choice will not extend to consultation over exchanging universal tax-funded NHS coverage for an insurance-based healthcare
“Even if a new structural arrangement could be devised, there would be the problem of how to allocate residents to each of the new plans. A free individual decision to stay with the present structure or opt for the new plan might be dangerous in the initial stages at least, because those in most need of treatment might self-select. Thus, it would be a case of compulsorily transferring patients from the existing structure into the new plans, which again might not be a popular proposal. Any move to explore the possibilities of how best to do this, however, would undoubtedly meet loud objections against using NHS patients as guinea-pigs for some new organizational theory.“
Phase IV Cameron/Clegg (2012-5) Abolition of SHA & PCT management superstructure
“The key to reform of the NHS, as in education, lies in reorganization of its management structure. In place of the Regional Health Authorities and the District Health Authorities there should be management bodies which have every incentive to spend resources in ways which are cost effective and attractive to patients. These bodies should be funded from taxation and should have the responsibility of proving a full health care service for patients. They should distribute resources to general practitioners at the primary level, and to hospitals and consultants at the top. They will be, in effect, Health Management units (HMUs).”
CCGs as statutory health insurance? The idea of CCGs as “insurance schemes” has been previously mooted. The ‘pooling of risk’ is explicitly referred to in the Department of Health’s Health and Social Care Bill (2011) impact assessment thus:
“CCG Size: There is no consensus on a minimum size to handle the financial risk.2 5 Inter-GP relations and peer review are strong forces and can counter the effects of higher statistical risk in smaller CCGs for many services. However, while some high risk services are best covered at a more regional level, risks could be shared by CCGs grouping together to form their own risk pools.”
Meanwhile, the “Health of Nations” provided,
“The public sector HMUs, taking responsibility for total health care of NHS patients, are not too far removed in structure from private insurance and management bodies. The funds for premiums are publicly provided, but the same competition and incentives operate, and the same choices are made available.”
PHBs as the basis of calculation of the funding allocated to CCGs
“The HMUs themselves will have to provide total health care on the basis of an average annual allocation per patient. They will have the incentive to make sure they get value for money from the GPs who subscribe to them, and for the hospital and consultancy work they obtain for their patients.”
Performance management of GPs and hospitals by CCGs
“They will have the incentive to make sure they get value for money from the GPs who subscribe to them, and for the hospital and consultancy work they obtain for their patients.”
Situation of GPs once CCGs are authorised
“The HMUs will be licensed non-profit bodies responsible for the total health care ofthe patients registered with their doctors. They will be management bodies, drawingupon the existing skills of health managers.” (p.32) “The HMUs will be required to buy hospital and specialist services for their patients as required” “The payment and monitoring of their GPs will be part of the task of HMUs, and will be performed in ways which ensure value for money. Cost details of GP work will be compared, and action taken where necessary to improve efficiency. HMUs will be vigilant in the selection of specialist and hospital services for their patients. They will be concerned to provide these on the most cost-effective basis they can, because the less they pay for each service, the more services they ‘will be able to offer to patients’ and the more attractive will be the rewards they can offer to personnel. The HMUs will not operate on a simple least-cost basis, but on a most cost-effective basis. Patients and their GPs will have the choice to move to an HMU whose services are more attractive, and will take with them the state’s allocation per patient. It will be very much in the interest of the Health Management Units to lower the cost per patient by timely preventive work and early diagnosis by regular check-ups. The move to HMUs will have a dramatic effect on the costs and the efficiency of hospital treatment. As hospitals go to independent management they will have to cost each service and will need to be aware of precise cost information. They will be very much more flexible in their management and method of operation. Pay scales will be more flexible and will be negotiated on a local basis instead of the rigid system of national scales and procedures. It is doubtful if restrictive practices in operation at present in the NHS will survive the changeover. There will be an incentive towards efficiency and flexibility, as well as to specialization. In some areas it is quite possible that HMUs will send their patients to the private sector for some categories of service and treatment. Where private clinics offer better value than state hospitals, there will be every incentive for them to do so. What certain hospitals do in particularly effective ways they will be able to sell widely, leading to the expansion of what each does well. The result will be for a new partnership of private and public medicine, with the services of each available to NHS patients on the basis of their comparative efficiency. An early result of the switch to HMUs will be the development of specialist low-cost treatments. Existing NHS hospitals and new intermediate facilities will have every incentive to develop methods of treatment which can bring economical results. Again, the example of other advanced countries and the private sector in Britain suggests that new methods will be pioneered which involve shorter hospital stays, more localized services, more preventive medicine, and a generally less costly style of care. The incentive will be there with HMOs seeking to provide health care efficiently. HMUs and hospitals will be able to undertake new capital projects with a combination of central grants and monies raised or saved locally. Funds from the private sector might well be attracted to areas which promise a saving on current expenditures. GPs acting singly or in groups will have the incentive to add facilities, perhaps leased from their HMUs, in order to compete with the cost of more expensive hospital services. Some of the work which now has to be done in hospitals will move out to smaller and lower cost treatment centres, some in the surgeries of doctors.”
“The proportion of remuneration which derives simply from having patients on their books will disappear, leaving payment only by results.”
Patients and their GPs will have the choice to move to an HMU whose services are more attractive, and will take with them the state’s allocation per patient.
“It will be important to prevent HMUs from selecting patients by picking the one’s which cost least to treat. HMUs will be required to accept patients who register with their doctors, without any selection permitted other than on the basis of optimum size of the HMU. Even here, where patients are refused because an HMU is at its optimum, waiting lists will have to be established with new patients admitted in order of application as places become available.”
CCGs as a vehicle for increasing uptake of private sector hospital care and other commercial services
“In some areas it is quite possible that HMUs will send their patients to the private sector for some categories of service and treatment. Where private clinics offer better value than state hospitals, there will be every incentive for them to do so. What certain hospitals do in particularly effective ways they will be able to sell widely, leading to the expansion of what each does well. The result will be for a new partnership of private and public medicine, with the services of each available to NHS patients on the basis of their comparative efficiency.”
GP incentive scheme?
“GPs acting singly or in groups will have the incentive to add facilities, perhaps leased from their HMUs, in order to compete with the cost of more expensive hospital services. Some of the work which now has to be done in hospitals will move out to smaller and lower cost treatment centres, some in the surgeries of doctors.”
“The basis of funding will be the annual health allocation for each patient registered Health Maintenance Organizations is largely avoided by keeping patients with their present GP. The resources go to the HMU selected by the doctor, although the ultimate choice lies with the patient, who can change HMO by going to a doctor registered with another one. The resources are thus directed to the HMOs which are most favoured by doctors and patients.”
PHBs calculated with demographic weighting
“The size of the average health allocation will be set each year, and there will be pressures to keep up with an advancing standard of living. A major difference is thatthere will be internal competition, with some HMOs managing to offer a greater range of services than others do on the same per caput budget. There will be the option available to vary the health allocation for each patient according to the local health costs. Geography will play a part, but so will the age pattern of the population. It may be desirable to vary the allocation by category of patient, on the grounds that older patients are more expensive to care for. This is not different in degree from varying the central funding for each age group of child in the education system.”
Personal health budget (partial roll-out now commencing) as allocations calculated for individuals which the individuals can transfer from public to private sector providers (from CCGs to insurance companies selling NHS top-up insurance)
“Under this idea, each individual would receive from the state a health voucher, equivalent in value to the average per caput sum that is presently spent on providing health care. The voucher can be used towards the purchase of private health insurance or exchanged for treatment within the public sector health system. Through this mechanism, the state honours its assumed obligation to ensure that everyone has access to health services. Those who opt into private insurance can use the voucher to pay their premiums, and the insurance companies then collect the cash value of the voucher from the government. This guarantees that everyone can afford at least a basic level of insurance cover, and (perhaps more importantly) it allows each individual a choice between different insurers and insurance packages, no matter how rich or poor they might be. However, people who decide that health care is particularly important to them are free to add to the amount covered by the voucher and thus purchase more expensive forms of insurance, perhaps covering more unlikely risks or providing superior standards of comfort or convenience. The voucher does not force people into private insurance, although it certainly makes the option of going private instantly available to everyone. Those who want to use the state service will continue to receive it, their voucher being their ticket to free treatment just as their national insurance number is at the moment. Under the more modest voucher proposals, that is the end of the story, the NHS continuing much as before — though perhaps losing some customers to the private sector that has suddenly become so much more affordable to all. In more radical versions of the idea, however, patients are given a wider choice about the NHS doctor and hospital they want to treat them, and the average per caput health expenditure represented in the voucher actually follows them when they choose. Thus, the pressure of competition is introduced in the public sector as well, because those doctors and hospitals which are popular with patients will be taking in more vouchers and thus getting a larger share of the government’s health budget. There are strong incentives to improve standards of care and to regard the patient more as a paying customer who must be satisfied.”
CCGs as transitional structures leading to unification of the NHS with the private healthcare industry
“Perhaps the greatest advantage lies in the flexibility of the new system. In place of the rigid demarcation between a public health service which does what it can on a take-it-or-leave-it basis, and a private system for the rich which offers choice and competition, the distinction between the two is blurred. They begin to overlap, each on the territory of the other. “
CCGs as insurance mechanisms
“The public sector HMUs, taking responsibility for total health care of NHS patients, are not too far removed in structure from private insurance and management bodies. The funds for premiums are publicly provided, but the same competition and incentives operate, and the same choices are made available.” “This convergence is one of the most attractive features of the change which HMUs will bring. The HMU principle lays the groundwork and the basis for further changes at a later stage, but it brings its benefits immediately. Most of the groups involved in health care stand to gain from its introduction, the patients most of all. It is from realities such as this that change is made possible.”
Phase V Here are the new resources to be brought into the healthcare system that the 2010 White Paper mentioned: payments to private health insurance companies from private individuals to pay for their healthcare, as in the USA. PHBs have been created in the form of transferable vouchers which can be spent on a pooled basis through CCGs or transferred to supplement a purchased top-up insurance policy. Such top-up policies are already being marketed intensively in England as the insurance industry prepares for the Transition planned by the DH.
“At present in the UK, car drivers are required to have a motor insurance policy that compensates other people in the event that they cause damage or injury in an accident. Similarly, it is argued, we could meet the health needs of everyone without the need for the government itself to provide health services through the NHS, simply by requiring that all individuals have medical insurance cover for a range of services that are deemed to be the acceptable minimum standard of health care. Of course, those who wished to have a superior standard of service could take out a more extensive policy: there would be no Objection to individuals insuring themselves for additional or more costly services, as long as the basic requirements are met.” “A key advantage of the universal private insurance approach is that individuals have much more choice and that the insurers and health care providers face far more competition than the NHS faces at present. Although people are obliged to have a minimum level of medical insurance cover, they can shop around between insurers and decide which provides the best value for their premium money. Because there is competition, they can decide which insurer’s particular package of services is most suited to their individual needs, instead of having to accept the standard service provided by the NHS. In addition, they can spend more on their health care, if they judge it worthwhile, than is presently spent on their behalf by the government, so new resources will be brought into the health care system.” “Under this idea, each individual would receive from the state a health voucher, equivalent in value to the average per caput sum that is presently spent on providing health care. The voucher can be used towards the purchase of private health insurance or exchanged for treatment within the public sector health system.” “The actual provision of health care services in such a system of universal private medical insurance would be undertaken by private sector doctors and hospitals, and the nationalized health sector in the shape of the National Health Service would lose its reason for existence.”
Owen Smith MP is doing a great disservice by pretending to be the ‘controlled opposition’ to the privatisation of the NHS, when there are great NHS campaigners who have vociferous about this for years.
As such it won’t matter – as I bet my life Owen Smith MP won’t win the Labour leadership.