Category Archives: Health and Social Care Act 2012

Privatisation has been the economic policy of successive governments since the 1970s. All the major infrastructure, utilities and manufacturing industries which had been brought into public ownership in the immediate post-war period have been sold off, as single share offers, wholesale private transfers, or partial staged transfers. Privatisation has been developed through the remaining public services, with local authorities increasingly turning into commissioning hubs rather than direct employers, education transferring its assets and management to the private sector through the Academy programme and courts, prisons and more being owned and run by the private sector. 

That privatisation is government policy is not in question. The question is how far that has affected the NHS.  

Privatisation of the NHS began as far back as 1983 when the cleaning services started to be put out to tender. That has had fairly disastrous consequences with the spread of ‘superbugs’ being attributable to the cleaners no longer forming part of integrated core teams on wards.

Other privatisations, including IT services, facilities management, out-of-hours GP services and the 111 service, have had patchy results; some have been a waste of money, some have failed to show any benefit over public provision, some, like the cleaning services, have been cheaper but a lower standard. Interestingly these privatisations are not discussed or presented as ‘privatisation of the NHS’, or part-privatisation, although they clearly are.

The NHS is the sum of all the parts that make it function, not just its clinical services. This intellectual sleight of hand of naming private-sector takeover of asset ownership and management, ancillary and backroom services as normal business practice or ‘just outsourcing’ rather than service privatisation has allowed a significant part of the NHS to be privatised without being acknowledged as such.  

The House of Commons Library briefing on privatisation defines the need for a competition regulator as one of the essential features of the move from public to private provision. Regulators have been brought in over the last 20 years via various bodies up to the current position of the CQC and NHS Improvement, reflecting the need for market regulation. 

The Health & Social Care Act (2012)

The Health and Social Care Act (2012) continued the process of privatisation. It has become commonplace to describe the Act as a mistake. But given that privatisation is the dominant economic policy, the Act is not a mistake, it is merely a continuation of that policy.  

Privatisation is embedded in the Act in several ways. It removes the NHS in England to arm’s length from government. The relationship between the state and the service changes with the responsibility of provision lying outside the government department. The government’s remit alters significantly from being responsible for provision and planning to providing a Mandate and a funding stream to NHS England and authorising the NHS ‘kite-mark’ through NHS Identity.  

NHS Identity’s website gives advice and regulations about using the brand to the NHS family, which includes public, private and voluntary sector partners. 

The Act also created the Clinical Commissioning Groups (CCGs). Section 75 3(a) of the Act imposes requirements relating to competitive tendering for the provision of services. 

The interpretation of this provision is a source of contention with the government arguing that the clause gives CCGs choice about tendering out services and the CCGs feeling that they are open to legal challenge if they do not tender. The CCGs and Section 75 are the engine that powers the privatisation of clinical services. The constituent members of the CCGs – GPs – do not have the collective skills to carry out the complex procurement process of putting services out to tender. They use Commissioning Support Units such as Optum, the UK subsidiary of United Health of America, to perform this function. 

The CCGs are also not bound to supply the same range of services nationally. They have some core clinical responsibilities but can put restrictions on others according to their financial needs. This can lead to situations where hospitals request patients to check with their commissioner to ensure they will cover payment before they start treatment, otherwise they have self-pay and insurance options available. In all but name this makes the CCGs act as local insurance groups to their registered patients, rather than service providers with common service standards set at national level. 

Trusts and Foundation Trusts are also empowered by the Act to increase the amount of private patient income they can earn. The Act specifies that they must earn the majority of their income from NHS funding. But that is interpreted as meaning that up to 49% can be from other sources. This can include rent from retail spaces and car parks as well as private patients.  

The Five Year Forward View

Simon Stevens, CEO of NHS England, produced a Five Year Forward View (5YFV) for the NHS in England in October 2014. This is largely presented by the media, politicians of all stripes and think tanks, such as The King’s Fund, as a way of integrating services to end the fragmentation caused by the 2012 Act and to bring an end to the split between commissioners and provider organisations. In 2013, immediately after the implementation of the Act, The Better Care Fund was rolled out as a series of local programmes under different names; ‘Better Together’, ‘Fit for the Future’, etc… Its stated intention is to shift the focus from acute hospital settings into local authority based social and community care.

The 5YFV started with a series of Vanguard testbeds and will end with Integrated Care Systems and possibly Accountable (or Integrated) Care Organisations.  The stated intention of the 5YFV is to shift the focus from acute hospital settings into local authority based social and community care. In other words, even though they have different names, the two programmes have exactly the same aim.

This illustrates that the HSCA 2012 was not a mistake but is in fact a continuation of policy. That is why the findings of Michael Mansfield’s 2015 independent inquiry into Shaping a Healthier Future in NW London is still relevant. It highlights how this programme is moving services away from those areas most in need of them towards high-density, more profitable areas.

The reality of the 5YFV is that it is a re-shaping of the NHS to fit with a predicted permanent reduction in funding levels. It is based on a reduction of the total number of fully functioning blue-light A&Es from the 144 A&Es in England in 2013 reduced to somewhere between 40-70. These will be large major trauma centres. There will be no more than two for each of the 44 Sustainability and Transformation areas (STPs) which were announced in December 2015 as part of the implementation of the 5YFV. Some STPs will only have one. This is the case in Northumberland, an early adopter of the system. 

Other hospitals are having their A&Es downgraded and services transferred to the trauma centres along with their income. When campaigners are fighting across the country to save their local A&Es they are really fighting against the 5YFV. Acute and emergency care is being separated from elective (planned) care. Planned care is more attractive to the private sector as it is low risk and high income. It is one of the areas of clinical care included in the ‘7.9%’ of privatisation quoted in the Health and Social Care Select Committee’s oral evidence session. 

The 5YFV also envisages using the sale of property as a form of pump-priming of the changes. The Naylor Review (part of the 5YFV process) goes further in working on the transfer of services out of owned properties into rented accommodation, built and managed by the private sector. 

The 2012 Act also created NHS Property Services Ltd, the ‘PropCo’, which took ownership of all the properties previously in the stewardship of the Strategic Health Authorities and Primary Care Trusts. The PropCo is a private company, currently wholly owned by the Department of Health & Social Care. It also charges commercial rents. 

The 5YFV encourages the separation of midwives from the hospitals to form their own companies to provide midwifery in the community. It contains plans for the widespread use of vouchers for maternity and personal health budgets for the disabled and those with other long-term health needs. These vouchers and budgets can be spent in the private or public sector. 

Privatisation: an economic policy

Analysing the overall effect of privatisation in the NHS will take time. Whilst there is little evidence of an increase in health insurance schemes, there is evidence that more people are turning to self-pay options to avoid waiting times. For a cultural change to happen people have to accept the principle that there will be things outside the ‘NHS menu’ that they will have to pay for – that cultural change hasn’t happened yet.

Descriptions of how little impact the private sector has currently had on the NHS avoids the issue of how little unmet need is being created by the reconfigurations. It is in the unmet need that the principles of universal and comprehensive care are being lost.

The report from the Health and Social Care Select Committee on Integrated Care is absolutely explicit about the need to retain ‘choice’ of providers and to avoid the ‘danger of creating airless rooms in which you simply have one provider who is there for a huge amount of time’.

This is the economics of privatisation and it needs to be addressed at parliamentary and legislative level. The Health and Social Care Committee recommends new legislation. On the current trajectory that will mean the introduction of ACOs.

The battle to promote the principles of public service as public good still has to be fought and won if the privatisation agenda within the NHS is to be brought to a halt.

The NHS [Reinstatement] Bill will be presented under the 10 Minute Rule by Eleanor Smith MP on 11 July 2018.

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I have not blogged about the NHS for quite some time. In fact the last occasion I explicitly did so was when Wendy Savage and I were campaigning together in 2011 to strangle the Health and Social Care Bill at birth (our talks to students still reside somewhere on YouTube). I remain sceptical and confused about the BMA’s slipshod, innocent or opportunistic failure to act decisively. I was alongside many others literally yelling at them through a megaphone even as they reached their momentous resolution to step aside and raise the white flag. In doing so, as Wendy and I had both tried to spell out, they effectively condemned the NHS as we had come to revere it through the post-war, social democratic or welfare statist era. The post-2011 careers of the principal decision-makers should be researched? Who won? Who lost?

In this offering I draw on a paper co-authored with Sasha Scambler and Ewan Speed and published in Social Science and Medicine. It represents an extension of an argument I have been pushing for some time. I have maintained that not only the national distribution of longevity and health but also the planning and delivery of health care have been undermined and perverted by the very predictable implementation and extension of the Health and Social Care Act of 2012.

Trading on a plea for forbearance, I must refer once more to the greedy bastards hypotheses (GBH), namely, the announcement that it is the rich who – mostly indirectly, but issuing nevertheless from an expedient strategic amorality – restrict and sometimes totally cut the supply of oxygen from those asset flows conducive to health and well being and threaten the NHS.

So how to understand the prospects/plight of the NHS? I will offer a summary (sociological) analysis before committing to a series of personal/political interventions.

In the 1970s the American abrogation of Bretton Woods and the emergence of the Eurodollar freed up money capital from national regulation by central banks; plus the international recession drew banks deeper into the global arena. The word financialisation was used to encompass not just this deregulation and internationalisation, but also a shift in the distribution of profits from productive to money capital, and to a reorientation reaching deep into industrial corporations towards the financial sphere. Within banking, deregulation precipitated capital centralization in banks with ‘global tentacles’, whose activities ranged from financial production to speculation in derivatives, while institutional investors controlling capitalized deferred wages became important centres of allocative as well as strategic power. This was all before the global financial crash of 2008-9.

The greedy bastards referred to above comprise a small proportion of the 1% who have profited most, and obscenely so, from post-1970s ‘financial capitalism’. A cabal or hard core of CEOs/directors of largely transnational corporations, major rentiers, and, most conspicuously, financiers or ‘banksters’, now provide financial capitalism’s cutting edge. They epitomise fine-tuned class action (or ‘class warfare’). We are witnessing a new breed of ‘super-rich’ pitted against a squeezed middle, enlarged ‘precariat’ and a US-like category of the abandoned. Their class supremacy has been accomplished via the purchase of power from Britain’s political elite (whether New Labour, Coalition or Tory), which has in turn become more controlling of its publics, even repressive. Britain is now ruled by a governing oligarchy or plutocracy. Capital buys power, and in financial capitalism it gets more for its money than during the preceding postwar era.

In the early Thatcher years, attempts were made to introduce ‘corporate’ management structures to the NHS, leading commentators to talk of a ‘new managerialism’. Her commitment to markets prompted the NHS and Community Care Act of 1990. The resultant ‘internal market’ sat on a spectrum somewhere between a bureaucratic ‘command and control’ economy and a private fee market. If it was closer to the former it was also a sign of things to come.

Thatcher’s displacement by Major saw the introduction in 1992 of the Private Finance Initiative (PFI). This allowed for the private sector to build (and own) new hospitals and other health care facilities, which they then leased back to the NHS at often exorbitant rates on the back of 20-30 year deals. It was a convenient arrangement for the political elite since PFI building and refurbishment did not appear on government books (they represented an investment of private not public capital). Blair and Brown lovingly embraced PFIs from 1997 to 2010. As Alyson Pollock presciently noted, one day the chickens would come home to roost. And they have: PFIs are a major contributor to the indebtedness of many an NHS Trust, the more so given the cuts or austerity measures following the financial crash.

The 2010 election resulted in a Cameron/Clegg coalition that backtracked on a (Tory) pre-election promise not to engage in a top-down reorganization of the NHS. Health Minister Lansley published a White Paper ‘Liberating the NHS’ a mere 60 days after the election. It was the product of protracted and insistent pre-election private sector lobbying. This was followed by the Health and Social Care Bill that opened the door for a root-and-branch privatisation of health care in England. It was a long, complex and devious Bill. There were five main ‘rhetorical’ themes: strengthening commissioning services; increasing democratic accountability and public voice; liberating provision of health services; strengthening public health services; and reforming health and social care’s arm’s length bodies. Five organizational changes were mooted: by April of 2013 the existing 192 primary care trusts to be abolished and GPs to join commissioning consortia; consortia to control 80% of NHS budget; services to be purchased from ‘any willing provider’; all NHS hospitals to be foundation trusts by 2014; and commissioning to be overseen by an NHS ‘financial regulator’, Monitor. Like many others, critics like Wendy Savage and I were not fooled. Why would the new commissioning consortia be better than primary care trust commissioning? What would the role of private companies be with regard to commissioning criteria? What would be the role of Monitor in European law? How would patients have ‘more choice’? Where would the efficiency savings come from? Would the pursuit of efficiency savings be at the expense of quality?

A period of ‘consultation’ and debate was extended. The medical profession, a reluctant recruit to the original concept of an NHS, questioned and subsequently opposed the Bill. Then it folded. They were ready to take industrial action to defend their pay and conditions but not to safeguard a public NHS. Public protests were similarly ineffective and the Bill became an Act in March of 2013. Later in 2013 the coalition pushed a (strategically re-written but equivalent) ‘regulation 75’ through the Houses of Parliament, removing residual obstacles to the unfettered promotion of for-profit health care.

A number of comments are in order here. Neither the Tories nor the coalition had a mandate to ‘reform’ the NHS in the way they did. Moreover it was a reform carried out against the background of Brown’s efficiency savings announced in mid-2009 and amounting to £15-20bn in three years starting April 2011. The reform was opposed by the medical, nursing and other health professions; polls showed widespread public concern; and a series of campaigns and protests were sidelined and ignored. Although a small number of health professionals and academics were recruited to the coalition cause, there is no doubt that ‘best evidence’ on comparative health care bore testimony to the regressive nature of the Health and Social Care Bill/Act: this was ‘policy-based evidence, not evidence-based policy. Finally, it emerged later that for-profit providers were not only lobbying the Tories before the election, but were intimately involved in the thrust and composition of the Bill (e.g. via the Future Forum). They were lining up to takeover NHS services. The leading private providers – H5, accounting for 80% of private hospitals and 85% of private beds – formed an alliance as early as December 2010. Much of this ‘secret’ activity was portrayed as ‘internal to the NHS’ rather than as external lobbying.

We are already experiencing the predictable short-term effects of the Health and Social Care Act, with ill-equipped and predatory for-profit providers taking over services and benefitting from the NHS ‘brand’. The ‘revolving door’ is also well oiled. Alex Scott-Samuel has taken a medium to long-term view, anticipating that: the NHS will become a subcontracting operation privileging competing private providers; that services of ‘low clinical priority’ will cease to be free; that a market for health insurance will emerge, affordable for the affluent, which will drive up costs (administrative, fees, private profits); and that the development of personal health budgets will lead to personal charges as commissioning groups come to operate on an individual basis in order to be compatible with the insurance companies (i.e. an end to ‘population-based pooling of risk’).

In short, the Health and Social Care Act was always going to be and is an unmitigated disaster for which the BMA in particular was a shameful accomplice. PFI debt, cuts and privatisation are destroying perhaps the most just, efficient and effective – ‘imperfect’ – health care system in the world.

The point of this blog is to ask why. It seems clear enough. The super-rich greedy bastards who fuel our governing elite or plutocracy – that is, those who buy, hold and use power to their advantage – now have sufficient sway in financial capitalism to open up (even) the NHS for profiteering. Follow the career trajectories of Lansley and his successor Hunt (and a few Blairites). The privatisation of the NHS, and the future commodification of health care, might have been halted by a BMA-led campaign provoking a crisis of legitimation for the power elite, but that opportunity was lost. We need to recognise that if capital can purchase enough power, it will pursue accumulation via, to borrow Wallerstein’s phrasing, ‘the commodification of everything’. It’s a class/command issue. If we ignore this sociological/structural dimension, we become ideological co-optees and deny ourselves the theoretical capacity to explain and counter regressive policies. To paraphrase Bill Clinton, ‘it’s class warfare, stupid’.

Reference

Scambler,G, Scambler,S & Speed,E (2014) Civil society and the Health and Social Care Act in England and Wales: theory and praxis for the twenty-first century. Social Science and Medicine 123 210-216.

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Legal and Policy Briefing for the Second Reading of the National Health Service Bill 2015-16 in the House of Commons, on 11th March 2016

The NHS in England is being dismantled. This is the result of Parliament over 25 years applying market ideology. The main Acts which made this happen were the:

  • NHS and Community Care Act 1990: introduced the internal market into the NHS; split purchasers from providers, so that the planning and delivery of services was to be undertaken by separate bodies, with the money flowing between them; ended direct management of services by health authorities with the creation of ‘NHS trusts’ as self-governing accounting centres (bodies corporate) with borrowing powers, and their own finance, human resources and PR departments; brought in GP fund-holding, which delegated budgets to individual GP practices enabling them to be commissioners or purchasers of services and to retain surpluses.
  • NHS (Private Finance) Act 1997: empowered NHS trusts to enter into externally financed development agreements;
  • Health Act 1999: introduced Primary Care Trusts;
  • Health and Social Care (Community Health and Standards) Act 2003: introduced NHS foundation trusts and their regulator, Monitor;
  • NHS Act 2006: de-coupled the Secretary of State’s duty to provide and secure services in accordance with the Act, from the duty to promote a comprehensive health service;
  • Health and Social Care Act 2012: abolished the duties of the Secretary of State to provide and secure services in accordance with the Act, and to provide listed health services throughout England, replacing the latter with a duty on over 200 new clinical commissioning groups to make contracts for those services for persons for whom each Clinical Commissioning Group is responsible; established the NHS Commissioning Board (NHS England); prospectively abolished NHS trusts, with the intention of them all becoming NHS foundation trusts; allowed NHS foundation trusts to receive 49% of their income from outside the NHS; created “public health” functions as two legal categories split between the Secretary of State and local authorities, and carved them out of the NHS; introduced virtually compulsory contractual tendering for providing NHS services; extended Monitor’s role as an economic regulator with functions aimed at preventing anti-competitive practices.

    Summary of main Clauses of the NHS Bill

Clause 1: restoring the founding principles and excluding EU and international trade, competition and competition rules.

The Bill would reinstate the Secretary of State’s legal duty to provide the NHS in England, abolished by the Health and Social Care Act 2012 (Clause 1(1)). It would be delegated to local Health Boards, to NHS England with its regional committees and to local authorities (see especially Clauses 6, 8 and 9 below).

Taken together, these and other provisions of the Bill will have the effect of taking the market and pricing tariff out of the NHS. The uncoupling of resource allocation from service provision through the pricing system and market competition would be discontinued, and resource allocation would return to being on the basis of all-inclusive geographic populations, not membership of a group. Commissioning would focus on the essential tasks of assessing needs, planning to meet those needs, setting clinical standards, matching funding to delivery, capturing information to support the various stages of the cycle, and ensuring accountability, without commercial contracting except in the most exceptional circumstances when absolutely required. At the same time the billions of pounds saved from administration of the market will enable new positions to support and enhance planning information and direct clinical care including employing more doctors, nurses, therapists and support staff and restoring much needed services such as mental health and therapy services.

Clause 1(3) provides a primary legislative framework for integrating health and social care services (see further Clause 9 below).

Clause 1(4)(a) declares the NHS to be a “non-economic service of general interest” which is aimed at exercising the UK’s competence to provide, commission and organise health services free from any constraints in the EU Treaties; and declaring the NHS to be “a service supplied in the exercise of governmental authority as a service supplied neither on a commercial basis, nor in competition with one or more suppliers” is aimed at excluding the operation of the World Trade Organization’s General Agreement on Trade in Services (Clause 1(4)(b)). This is supplemented by Clause 23, which is aimed at preventing the Transatlantic Trade and Investment Partnership (TTIP) and other international agreements affecting the NHS without the approval of Parliament, the Scottish Parliament, the National Assembly for Wales and the Northern Ireland Assembly.

Clauses 2-5 contain provisions intended to frame restoration of the founding principles. These include particularly the duty of the Secretary of State to provide key services throughout England.

Clause 6: re-integrating public health into the NHS and allowing delegation to local authorities, Health Boards, and to a re-constituted Public Health England and NHS England Public health functions were carved out of the NHS by sections 11 and 12 of the Health and Social Care Act, supplemented since by regulations. (The Local Authorities (Public Health Functions and Entry to Premises by Local Healthwatch Representatives) Regulations 2013 (S.I. 2013/351), amended in 2015 (2015 No. 921).)  For example, the Secretary of State’s public health functions include vaccination, immunisation and screening, whilst services to promote healthy living, such as sexual health services, are the responsibility of both local authorities and the Secretary of State. A general power to provide services to prevent, diagnose and treat illness – previously only a function of the Secretary of State – was conferred on local authorities; a power that may be exercised as a result of the ‘devolution deals’ that will be implemented through secondary legislation under the Cities and Local Government Devolution Act 2016. Regulations now require local authorities to provide or make arrangements securing provision of open access sexual health services in their area by exercising the public health functions of the Secretary of State to make arrangements for contraceptive services; and by exercising their functions relating to preventing the spread of and treating sexually transmitted infections.

Clause 6 re-integrates these functions into the NHS by returning them to the Secretary of State. These would then be delegated in accordance with regulations to local authorities and Health Boards in accordance with joint proposals that they would prepare under Clause 9; and to Public Health England and to NHS England reconstituted under Clause 7 as Special Health Authorities. The re-constituted NHS England’s functions would be performed via regional committees (Clause 8).

The reason for this ‘re-integrate, delegate and propose’ approach is to acknowledge the view that public health and many community services should be delivered through and by or in conjunction with local authorities, whilst restoring these services as an integral part of the NHS. The fact that a service was designated as a ‘public health service’ and provided by a local authority would not be a basis for permitting charges.

Clause 9: Health Boards would plan and deliver services, and be jointly responsible with local authorities for public health and integration of social care

Health Boards would plan and deliver health services on behalf of the Secretary of State on the basis of bottom-up proposals prepared by local authorities with NHS England, clinical commissioning groups, NHS trusts and foundation trusts and approved by the Secretary of State. Patients, clinicians and other staff, voluntary organisations, trade unions and academics would be empowered to participate in preparing the proposals which would be finalised over two and a half years and would be required to minimise disruption in accordance with regulations.

Having assisted in developing the proposals for Health Boards, clinical commissioning groups, NHS trusts and NHS foundation trusts would be replaced by the Health Boards (Clauses 13-15), and NHS re-constituted (Clause 7); and the regulator, Monitor, would be abolished (Clause 18).  Health Boards would also be responsible jointly with local authorities for bringing forward proposals in accordance with regulations for the planning and delivering public health services, and integrating health and social care services.

Integration of health and social care requires careful consideration, and ideally its own primary legislation (not only regulations), as in Scotland. ( Public Bodies (Joint Working) (Scotland) Act 2014.)  The original distinction, which sought to balance the interests of hospitals and local authorities, was created by the NHS Act 1946 and the National Assistance Act 1948, and has been fairly described as “a fudge”. (Bridgen, P and Lewis, J. Elderly people and the boundary between health and social care 1946-91: whose responsibility? Nuffield Trust, 1999.)  The broad formal differentiation was between free nationally-provided health services and means-tested locally-provided social services. Over time this fudge has been exploited in various ways to enable a shift from NHS-funded to means-tested local authority care, using policies such as Care in the Community, closure of NHS long-stay beds and NHS day care provision, and introducing continuing care criteria which enabled the NHS to discontinue NHS care by time limiting care or redefining eligibility.

There is much genuine concern that integration would lead to the provision of means-tested – and reduced – health services. Changes proposed by the Bill in the location of functions through delegation do not extend to changes in the power to charge, and health services must remain free. We support the principle of free publically provided social care, but this is an issue which ideally requires further primary legislation.

Contracts with and/or grants to voluntary organisations would be permitted.

Administration of medical, dental, ophthalmic and pharmaceutical services would also be the responsibility of the Health Boards (Clause 10).

Clause 12: the Secretary of State would be given a limited power to give directions

The Secretary of State would have a general but limited power to give directions to Health Boards and NHS England (and others). He or she would be obliged to have regard to the desirability, so far as consistent with the interests of the health service and relevant to the exercise of the power in all circumstances, of protecting and promoting the health of patients and the public, and of the bodies being free to exercise their functions in the manner that they consider best calculated to promote the NHS. Neither could the power be used to interfere with the professional independence of health service staff. Their professional autonomy and right to participate in scientific and public debate on matters relating to health and the needs of their patients would be guaranteed as happened prior to 1990.

These directions must be contained in regulations, except in a genuine emergency, so that the exercise of executive power would be open to Parliamentary scrutiny and procedure. This provision is a modified version of the duties of autonomy (the hands – off clauses) introduced by the 2012 Health and Social Care Act and which would be abolished by Clause 2.

Clause 16: Transferring staff should not result in large redundancy payments for technical job losses

After consultations with trade unions, the Secretary of State would be required to make regulations to set out the terms and conditions applying to the transfer of staff. These include entitlement to redundancy payments, particularly for senior staff whose job loss is technical rather than real. The Bill will not affect the vast majority of staff engaged in clinical care, and those skilled in the essential tasks of commissioning will still be required.

However, the inescapable down-side of the Bill is that there will be the unavoidable loss of a number of jobs directly connected with administering the market bureaucracy and promoting competition, such as managing commercial contracting and billing, as well as positions in finance, human resources and the marketing and press departments. This is particularly distressing because most of the jobs that would be lost would be those performed by people with clerical, accounting, media and similar skills, many of whom will not be particularly well paid. Their positions need to be addressed with the greatest sensitivity and flexibility, in close consultation and cooperation with trade unions, in bringing about a just transition. This should involve proactive opportunities for redeployment and re-skilling. Involvement of trade unions in the design of the Health Boards is also intended to help keep job losses to the absolute minimum.

Clause 17: local accountability would be ensured by Community Health Councils

Community Health Councils, with the duty of representing the interests of the local public in the health service, would be re-established. Since 1990, there has been a progressive downgrading of the systems and mechanisms for local accountability alongside growing complexity resulting from the increasing fragmentation of services and the different responsibilities of local authorities, CCGs, trusts, foundation trust boards, Monitor, NHS England and the Care Quality Commission for commissioning and providing NHS funded services. The Bill simplifies those structures and restores area responsibilities. Further consultation will be required to enhance representation of the public, patients, local authorities and trade unions in order to strengthen local accountability.

Clause 19: preventing NHS foundation trusts from reducing services

This Clause, whilst not technically necessary within the scheme of the Bill, highlights the need to prevent NHS foundation trusts reducing NHS services and disposing of assets.

Until April 2013, Foundation Trusts were required to provide “mandatory services” listed in their authorisations. From April 2013 until March 2016, these services were listed as “Commissioner Requested Services” (CRS) under their licences. From April 2016, CRS will be re-designated, and Monitor has said that it expects services CRS – i.e., mandatory services until April 2013 – to be reduced.

Buildings and equipment needed to deliver CRS must be identified on an Asset Register, with restrictions on their disposal. Reductions in services designated as CRS will give NHS foundation trusts greater freedom to dispose of them or use them for other purposes such as for private patients. This is particularly worrying in the context of the ability of NHS foundation trusts to obtain 49% of their income from outside the NHS.

It is also very worrying and unacceptable that Monitor has stated that “[i]t is not intended that the [CRS asset] register should be a public document so the licensee can apply appropriate measures to ensure its confidentiality”. (The asset register and disposal of assets: guidance for providers of commissioner requested services. Monitor, April 2014.) These are NHS assets and the public must have the right to know what they are.

Clause 20: national terms and conditions would apply

This Clause is intended to ensure that the UK-wide ‘Agenda for Change’ system under the auspices of the non-statutory NHS Staff Council that has been in place since 2004 would apply to all staff employed by those who provide NHS services. Recognising the NHS as a national service and the desirability of staff being able to move freely between its constituent parts without suffering detriment would help ensure fairness, equity and equal value for NHS staff and good patient care. This Clause would not affect those staff not currently covered by the Agenda for Change system such as hospital doctors and dentists and very senior managers.

We are aware that currently junior doctors have been told by the Secretary of State that a national contract will be imposed on them. If they do not agree to this, Foundation Trusts have the ability to and may decide to offer locally negotiated terms and conditions of service thereby introducing local pay bargaining on a foundation trust by foundation trust basis. Under these contracts junior doctors would be required to treat both NHS and private patients regardless of their own moral position on the NHS and its values. Junior doctors must be protected from exploitative employers and not be used to facilitate new inequalities.

Clause 21 – Centralisation and reduction of PFI obligations

The Private Finance Initiative (PFI) in the NHS has placed excessive financial burdens on NHS trusts and NHS foundation trusts which detrimentally affect their ability to deliver services to patients.

Clause 21 would transfer financial obligations for the buildings and maintenance under NHS PFI agreements to the Treasury, which would have the duties to assess and publish the obligations, and to explain to Parliament how it proposed to reduce them. This would include publication of detailed information on interest rates, equity returns, refinancing deals and subcontracts, so that all public money would be auditable.

Service contracts linked to PFI for ancillary and other services would not be renewed, as these services would be directly provided and managed in-house by Health Boards. Adjustments would need to be made to the resource allocation formulae as required to reflect differences between Boards, for example, in maintenance, capital charges and other obligations. (In time, the capital charging system should also be abolished.)

Since the Bill was tabled, one potential limitation in the Clause as currently drafted that has been pointed out is whether it would ensure a return to the public sector of any property and other assets that PFI deals may have transferred to or vested in the private sector; this should be covered and can be addressed at the committee stage of the Bill. Concerns have been expressed that taking the debts away from trusts would render them a more attractive privatisation prospect; this cannot occur under the Bill as trusts will no longer exist and will be replaced by Health Boards.

However, one clear limitation of the Clause is its applicability only to NHS PFI deals. We think there is merit in a new Bill to propose ending PFI deals across all sectors.

Clause 22 – Abolition of new charges for migrants and overseas visitors

Sections 38 and 39 of the Immigration Act 2014 enable the imposition of new charges on certain categories of persons.

Section 38 empowers the Secretary of State by order to require certain migrants to pay a charge for NHS services, known formally as “an immigration health charge”, payable in advance when applying for leave to enter or remain in the UK or when applying for entry clearance. The Immigration (Health Charge) Order 2015 has now been made under this section, imposing since April 2015 an annual immigration health surcharge on people applying for a visa to enter the UK to work, study or join their family for more than six months, or to extend their visas for a limited time. EEA nationals are excluded. Australians and New Zealanders were also initially excluded, but the government has announced that they will be included from April 2016. Exemptions apply to about a dozen categories of person, such as those who are seeking asylum, are identified as a victim of human trafficking, and have suffered certain domestic violence). This charge is currently £200 per person per year, or £150 for students. Children and other dependants are also charged at these rates.

Section 39 of the Act has the effect of extending the categories of persons who can be regarded as “overseas visitors” and so in the words of the Explanatory Notes to the Act, “ensuring they can potentially be charged for health services throughout the UK.” It provides that people needing leave to enter or remain and not having it, and people who have limited leave to enter or remain, are not to be treated as ordinarily resident. This includes people who have lived in the UK and paid taxes for several years. (These charges are now imposed under The National Health Service (Charges to Overseas Visitors) Regulations 2015.)

These sections offend against the fundamental principles of the NHS. They are also potentially in violation of the United Kingdom’s long – standing international legal obligation under the International Covenant on Economic, Social and Cultural Rights to respect, protect and fulfil the right to health without discrimination, and so would be repealed.

Moreover, the complexity of both sets of the 2015 Regulations makes determining the people who must pay or who do not have to pay a bureaucratic nightmare; and it is highly questionable whether the rules will raise more money than the costs of administration.

Clause 24: allows flexibility in timing of implementation of the Bill

The timescale for implementation is flexible over a twelve-month period, save for clause 1 which would come into effect on royal assent. Further flexibility is provided by allowing proposals for Health Boards to be prepared and finalised over two and a half years, and not replacing CCGs, NHS trusts and NHS foundation trusts until after they have assisted local authorities with those proposals.

Clause 25: further amendments and repeals are necessary

Many more amendments to and repeals of existing legislation than are mentioned in the Bill would be needed. It was originally proposed that these would be included in a parallel Act of consequential provisions, as was done in 2006. However, as that Act does not exist currently as a Bill, Clause 25 proposes that this would be done via regulations. These amendments would include, for example, abolition of Healthwatch.

Professor Allyson Pollock and Peter Roderick, Queen Mary University of London.  The authors of this Briefing are the co-authors of the Bill.

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The National Health Service in England is being dismantled. But you wouldn’t know it from listening to the radio or reading the newspapers. As so often, you have to look beyond the headlines about pressures on funding and the junior doctors’ dispute to find out what’s really going on. In 1990, Kenneth Clarke introduced an internal market into the NHS, following on from the ‘options for radical reform’ set out by Oliver Letwin and John Redwood in 1988. It had three pillars: GP fund-holding (delegating budgets to individual GP practices); the replacement of health authorities by ‘NHS trusts’ (self-governing accounting centres with borrowing powers, and their own finance, human resources and PR departments) and the splitting of purchasers from providers (the planning and delivery of services was to be undertaken by separate bodies, with the money flowing between them). In its 1997 manifesto, New Labour promised to ‘end the Tory internal market’. It did get rid of GP fund-holding (only to reintroduce it later as Practice Based Commissioning), but otherwise took the Tories’ ideology even further by introducing, in 2003, the market-oriented ‘NHS foundation trusts’ and their regulator, Monitor, as well as scaling up the Private Finance Initiative. Clarke was able to say on the sixtieth birthday of the NHS in 2008 that ‘in the late 1980s I would have said it is politically impossible to do what we are now doing.’

Then came Andrew Lansley’s Health and Social Care Act 2012. No longer does the government – or anybody else – have a legal duty to provide hospital services throughout England. The hundred or so NHS trusts were all prospectively abolished, and a plan set out to transform them (if not to close them down or sell them off) into foundation trusts. The 150 or so foundation trusts had their private patient income cap abolished and were permitted to receive 49 per cent of their income from non-NHS sources. About 113 private providers have since been licensed by Monitor, and tendering for services has been made virtually compulsory. ‘Public health’ has been carved out of the NHS, and shared between local and central government. Meanwhile, Lansley, having stood down as an MP before the election in May, has been given a peerage and hired as a consultant to Bain & Company, which, according to its website, ‘helps leading healthcare companies work on the full spectrum of strategy, operations, organisation and mergers and acquisitions’. The appointment at Bain was signed off in July 2015 by Baroness Browning, who chairs the Advisory Committee on Business Appointments – herself a consultant to Cumberlege, Eden and Partners, ‘a specialist consultancy to the health sector’ led by Baroness Cumberlege. You couldn’t make it up.

We are now at a crucial time in the wrecking process. Under the 2012 Act, clinical commissioning groups (CCGs) buy services from providers, especially from NHS foundation trusts. But the trusts are no longer obliged to provide particular services. Since April 2013, their services have fallen essentially into two categories: Commissioner Requested Services (CRS), and the rest. Services designated as CRS are subject to ‘continuity of service’ restrictions on the trust’s ability to cut or alter them. Monitor has the power to make the trust provide CRS services for a specified period, but cannot stop them being cut once that period expires. Trusts also need to have Monitor’s consent before they sell off buildings and equipment used to provide CRS. Services that are not CRS are not subject to these restrictions. So the more services that are not designated as CRS, the more freedom an NHS foundation trust has to do what it likes – so long as 51 per cent of its income comes from NHS services.

When the 2012 Act was implemented, the services that foundation trusts had to provide under the previous rules were automatically designated CRS for three years, until April 2016, in their new licences. But Monitor said then that the planning and purchasing responsibilities of CCGs include ‘designating a range of services that local commissioners believe should continue to be provided locally if any individual provider is at risk of failing financially. We call these Commissioner Requested Services.’ CCGs are supposed to imagine that the foundation trusts they contract with could financially fail and to use a four-stage Designation Framework to come up with a new list of CRS by April 2016 on the basis of that imagining. ‘We expect the number of services that are designated as Commissioner Requested Services to decrease as a result’ of CCGs doing that, Monitor says, because if a trust goes bust it is expected to provide fewer services than it would otherwise. In other words, services that were mandatory until April 2013, and which for three years afterwards will have had some protection from ‘continuity of service’ conditions, are expected to decrease. This is an instance of applying powers supposed to ensure continuity in order to bring about discontinuity.

Halting the demise of the NHS in England won’t happen without a new law. The National Health Service Bill, scheduled to have its second reading in the House of Commons on 11 March next year, would prevent the specific sleight of hand I have described from going ahead, as well as reversing 25 years of marketisation. It was tabled in June by the Green MP Caroline Lucas, and is supported by Labour (including Jeremy Corbyn and John McDonnell), as well as by Lib Dem, SNP and Plaid Cymru MPs and the British Medical Association.

The question now is whether Labour under Corbyn will end its support for the market in the NHS and get behind the bill. The shadow health minister, Heidi Alexander, is still finding her feet, but the signs are not good. Unlike McDonnell, she has not brought in new political advisers. She is being advised by those who advised Andy Burnham, and judging from a meeting I had with her very recently New Labour thinking on the NHS is for now still very much in place. Ross McKibbin, writing in the LRB of 8 October, expected Corbyn’s leadership to end in tears. If that turns out to be the case, one reason may well be that Corbyn just wasn’t able to translate the support he has in the party into parliamentary backing.

First published in the London Review of Books.

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Back in 2011 there was thought to be a consensual political narrative on the NHS: no pointless reorganisations. However, David Cameron was soon persuaded by his old mentor Andrew Lansley to bring in market oriented reforms and, supported by the `orange book’ LibDems he did just that. However, the story of those reforms are not the focus of this article (see here for information on the reforms). The Health and Social Care Act of 2012, which was widely anticipated to be a disaster in waiting, has been a disaster in actuality.

The re-organization that has followed the Act led to an extremely complex organizational and governance structure which has been distracting to the NHS, to say the least. It has taken place during a period of financial turmoil resulting from a fixed budget and the Quality Innovation Productivity and Prevention Programme (QIPP), which is itself linked to cost and efficiency savings in the order of £20billion over the next parliament.

What’s more the leadership of commissioning has been stripped out at a time when major service change is needed. Things are so bad that even the King’s Fund (who were cautiously optimistic about its introduction at the time) have been critical of its outcomes. Lansley was reshuffled out of the job by September of 2012 and Jeremy Hunt was brought in to `steady the ship’. By 2014 it became clear that the Health and Social Care Act couldn’t be made to work so a face saving solution had to be found.

The incoming Chief Executive of the NHS, Simon Stevens has subsequently been quietly sidelining the reforms and Jeremy Hunt, seemingly bereft of ideas himself has been supporting him. This has taken place quietly, because politically the Government cannot openly accept the failure of the reforms.

The QIPP challenge has been redoubled and Stevens put forward a plan whereby if the Government funded £8bn a year then the NHS would reform to achieve the rest of the £20bn Government requirement. One of the first steps in the Stevens process was to create Units of Planning around each `health community’ in November of 2014. These new bodies (which have different names in different places) comprised of the CEO’s of all the NHS and local authority social services in each health community area and it has the job of planning health and social services and has the authority to make decisions on behalf of the individual health and social care organizations. It can make decisions that will be binding on all other health organizations. It’s very unwieldy and certainly has its own governance issues, but it’s there. This quietly sidelines the Health and Wellbeing Boards that are meant to be setting local strategy (though many of the same players are present).

A second change Stevens has brought in is to bring about shared commissioning, between CCGs and Area NHS Teams,  of primary care services. In practice there is little shared about the commissioning. I chair a Primary Care Commissioning Committee of a CCG and we are being performance managed by NHS England. This creates a conflict of interest issue within the CCGs as the GP membership organisation is now responsible for commissioning GP and community health services. In short, the CCG is increasingly taking on the roles that the old Primary Care Trusts used to do and the freedom of clinical commissioning groups is being reigned in to an extent by the new developments.

However, it’s the Five Year Forward View (FYFV) (and the separate devolution agenda) that sets out the new direction and, yes, this is essentially reforming the reforms. The NHS budget as a percentage of GDP is set to fall from its high of 9% in 2009 to under 7% of GDP by 2021. Against this, the projected demographic related demand points to a £30billion funding gap by 2021 and when compared the EU average looks miserly. In a real sense FYFW was the NHS’s response to this funding reality with the government putting up £8 billion a year and the NHS finding the rest via reforming services. These reform models have very recently been put into operation as Vanguard sites.

The NHS has realized that the diversity and lack of system leadership brought about by the reforms is damaging to what really needs to be done to transform services and to increase efficiencies, which is to integrate health and social care services. The NHS itself is seen as too big to do this so responsibility is being devolved to local communities. The FYFV is essentially inspired by `the Valencia model’. In Valencia all health and social care services have been contracted to a single (private as it happens) provider who has taken on the management of all the services within the health system and it’s been heralded as a great success. The NHS is essentially adapting the model in its FYFV.

It proposes a small number of models, but essentially two stand out. The first one is the Primary and Acute Care Systems  where one organization will take responsibility for all services within a defined health community. This could be one NHS organization or a new organization that comprises all the organizations within that community. It can be pictured as the local District General Hospital running everything from the Hospital itself to GP services to mental health services and community care services within a single organization.

The other key model is the Multi-Specialty Provider Service. Here groups of GP practices would expand, bringing in community health services and hospital specialists within a single organization within an area to provide integrated out of hospital care. The Vanguards are set to devolve their capitation funding to the new organizations (which they can’t legally do at present) – which will make the CCGs themselves redundant. So I would argue that CCGs are on their way out.

Indeed, the CCGs and Hospital Trusts were completely side-lined (and without consultation) when the whole NHS budget of Manchester was given to the Local Authority to manage from 2017 provided they elect a mayor. This was a surprise announcement by George Osborne earlier this year. I have heard from reliable sources that Simon Stevens wasn’t consulted when this decision was made. Cash strapped councils around the country are now clamoring to do the same and the Cities and Local Government Devolution Bill is currently wending its way through parliament to allow them to do just that.

If funding within the NHS is challenging, it is many times worse in the social care sector and there are no additional funds heading in that direction. However, the prospect is raised of the Local Authorities being able to raid the NHS budget to fund social care, as Roy Lilley has argued. There is already experience of the Public Health Budget (devolved to Local Authorities from 2013) being raided to fund core Local Authority services as long as some health impact can be demonstrated. I’d expect to see this intensified once Councils have their hands on the whole of the local NHS budget for their area.

Certainly more needs to be done to protect social care services and there is an impact on length of hospital stay if a social care package takes time to be put in place prior to discharge. There is also their role in prevention – for example, of falls etc amongst the elderly in the community. But this won’t be shared budgets. There will be a raiding the NHS budgets in ways I don’t think envisioned by Simon Stevens in the FYFW. Indeed, indications from the National CCG forums are that there is already discontent and in-fighting in the Manchester devolution over proposed restructuring and budget reallocations – though nothing has hit the press yet.

However, the Stevens plan is running into other problems already. Hospital Trusts in particular are not performing as well as anticipated. The Kings Fund highlights that the Hospital sector has only made a 0.5% increase in productivity over the last 5 years. This won’t cut the mustard and threatens the projections within the FYFW. What’s more these productivity gains have been made on the back of massive overspending by Hospital Trusts – up to £822m million deficit in the last financial year which is 8 times that posted in the previous year. The plan is therefore already facing challenges. Moreover, on the ground, it’s seen as yet another plan that’s been imposed from above with short timeframes and minimal consultation. In short it’s not owned by the Trusts or the clinicians within them which will impact on the enthusiasm with which they are implemented. Even in the primary care sector lean working techniques which may allow GPs to see more patients in a day (and reduce the number of A&E attendances in a PWC projection) are sometimes viewed suspiciously by overworked GPs as wanting them to work harder for the same money. Magnify this right across a reform weary health sector and a what’s in it for me attitude may well arise especially as contracts and wages are themselves altered as part of the reforms.

There are other elements of Health Policy over the first 100 days since the election that are also impacting on the NHS. The Government’s commitment to a 7 day a week NHS and to run 8am-to 8pm GP services bring the Department of Health head on with the consultants the GPs and the junior doctors as they try to renegotiate their contracts. It is not just vested interest here as the Clinicians don’t see these 7 day working proposals as evidence based. No government has yet managed to successfully bring in new health policies when all three branches of the medical profession are aligned against them. But the 7 day working proposals pale almost into insignificance though when set to the backdrop of the FYFW and the devolution agenda. What is interesting is that the Government has decided to fight all these battles at once rather than pick them off one at a time. Machiavelli would have been shocked.

So there are definitely stormy waters ahead, but there isn’t a plan B. We live in an interesting time for health policy.

This was first published by Discover Society

 

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Foreword

The historical and social significance of the National Health Service (NHS)

Social change is now so rapid that it is hard to make sense of it let alone learn from it. The opening sentence of this report is a measure of that. The first words: ‘The NHS may be the proudest achievement of our modern society’, while seeming to assert the value of the NHS, fail to reflect its full significance.

Our pride in it is beyond doubt – no ‘may be’ about it.  It is impossible to overstate the importance of the NHS: It needs to be spelled out that the NHS is an evolutionary social development which has changed the lives of everyone in this country, “our country”, and peacefully effected change in “our” society so profound that we do not recognise it, or fully remember the circumstances in which it arose.

For example, optimism in 1945 was less important than the clear-eyed determination to eradicate pre-war squalor, ignorance and fear: of sickness, of the cost of medical treatment and of the loss of livelihood that it entailed.

Only those people now well into their seventies can remember that the sacrifices of war had not been left behind in 1945: despite rationing, food and fuel shortages were critical and the scars of the blitz still dominated urban landscapes. The pre-war housing crisis had been exacerbated by the devastation of the air raids. The country, “our country”, was bankrupt.

It is against that background that the present condition of the NHS should be considered. It faces new problems and challenges, of course, but its condition cannot be described as critical, still less insupportable, considering that we have recently managed to meet the costs of two long-drawn-out wars (supported by both major political parties), and the bail-out of irresponsible bankers – all money down the drain.

By contrast, the relatively small amounts needed to maintain and develop the NHS have beneficial effects, now as in the past, not just on the nation’s health, but on its prosperity, as the post-war experience shows. The NHS creates employment and expertise in many fields as well as health. It increases the disposable income of the general population by removing the burden of personally financed health care. (c.f. The USA). A healthier, longer-lived population is almost the least of the benefits of the NHS. We cannot afford to waver in our commitment to universal health care – publicly funded and provided.

Tackling Changing Health Issues In A Changing World

 Our values haven’t changed, but our world has”. The two cannot be separated. Our values have changed, not in relation to the almost universally beloved NHS, but in response to changes in the world. The new challenges of longer life have still to be fully addressed at all levels. As for health problems “of our own making”, once problems reach the proportions cited in this report (60% of adults are overweight or obese, 30% misuse alcohol, 20% still smoke) they can no longer be seen solely as personal, but as public issues. (C. Wright Mills).

 It is beyond the remit of the NHS to deal with such complexity: it derives from the unchallenged pressures and persuasions of a commercialism and consumerism so insidious and pervasive that they fail to attract the critical analysis and counter measures that are needed even in relation to life-threatening issues like obesity and alcohol misuse.

The Stevens Report perpetuates this myopia. It is the business of government to deal with this situation, not the NHS. Some may say that this sounds like a ‘Nanny State’ approach. In fact such measures would attack the infantilisation of everyone (by mass advertising and the mass media) which is breaking the back of the NHS. The propaganda lessons of the Second World War need to be redeployed in improving national health. Clever merchandising skills cannot be left solely in the hands of those selling us stuff that does us no good, simply for profit

The task is too huge and important to be left to cash-strapped Local Government, elected mayors and an overburdened NHS: it is a major national issue for Central Government. If the NHS is to be able to cope with the challenges of longer life expectancy, a benefit for nearly all of us, the adult population needs to be enabled to behave like adults: the commercial interests profiting from unhealthy life-styles can only be challenged effectively by Central Government. It is now the case that local authorities have a statutory responsibility for improving health, but it is responsibility without power, the reverse of the case with the media.

As in the 19th century, preventive health measures are more important than medicine in improving the nation’s health; then it was sewage and water supply; now it is tackling the problem of over-consumption: problems of affluence not effluence : just as damaging.

The NHS – A healthy workforce promoting public health?

 The NHS is urged in the report to improve public health by promoting health in its workforce and making itself an exemplary employer. As well as setting a standard for all employers, it suggests that sickness absence would be reduced saving a great deal of money. But the report overlooks the unhealthy effects of long working hours and excessive shift work that are the result of 20,000 unfilled vacancies in the NHS. These cannot be unrelated to deteriorating pay and conditions of work as a result of pay freezes and cut-backs.  These government created conditions do not help to make the NHS an exemplary healthy employer. Better food on night duty etc. cannot solve the problem.

Parallel to this, while emphasising the central role of the care sector in future health care, the report ignores the plight of care workers in the private sector on less than the minimum wage (150,000 according to King’s College Care Workforce Research Unit) dependent on food banks for a healthy diet, while 370,000 are on zero hours contracts in the name of ‘productivity’. (Norman Lamb, Care Minister). But has anyone ever met a ‘hard up’ private care home owner or shareholder? The report does not consider these issues in urging a better integrated Health and Social Care system.

Funding Issues And Organisational Change

 The five year forward plan betrays the same lack of incisiveness (even blandness) throughout: an evasion of the nub of the problems the NHS is valiantly facing.

While generously recognising the successes it has achieved against the odds (e.g. quoting improved cancer and heart disease outcomes; the Commonwealth Fund Report’s endorsement), the Stevens report fails to make explicit some of the main causes of the major funding challenges confronting it, e.g. the extortionate costs of the Private Finance Initiative (PFI), the implementation of the 2012 Health & Social Care Act and competitive tendering, still less to consider ways of dealing with those problems. The longer standing administrative costs of operating the ‘internal market’ within the NHS (the 1992 purchaser/provider split) are similarly ignored.

An issue nowhere addressed in recent reports, including this one, is the costs the NHS has incurred as a result of out-sourcing ancillary services, the first wave of privatisation dating back to the 1980s. In every area of Britain, there are people who have made private fortunes delivering services that were previously in-house (cleaning, supplies etc. etc.). It is arguable that causal links can be made between that process and infection in hospitals. Agency nursing is another hugely costly means of dealing with staffing shortages related to erosion of pay and conditions for full-time nursing staff.

These key financial drains are ignored. They make an enormous contribution to the financial predicament of the NHS, and they mark only the tip of the iceberg of the costs of more recent privatisation.

The 2012 Health and Social Care Act has unleashed unprecedented, hugely expensive, unnecessary and unpopular changes on our comprehensive and publicly funded NHS. This was done by a coalition government after the dominant partner had promised no top-down reorganisation in its election manifesto; the junior partner had pledged commitment to the public NHS and its Party Conference voted against the Health and Social Care Act weeks before it colluded in passing that Act. No one outside Parliament voted for that legislation; It was an attack on democracy itself. The results go unmentioned in this Report.

Health care, correctly delivered, is not and never can be a commercial undertaking. All diversion of tax funded resources (e.g. into profits, dividends, bonuses, etc) represents treatment denied and is directly harmful to patients and injurious to the common good. Recognition of this is the basis of public support for the NHS.

While omitting mention of all these issues and developments, calculations of billions of pounds are bandied about in this report, figures plucked from the air with no firm link to reality. When the NHS was founded, the average wage was roughly £5 a week.  Inflation takes care of most debt. We can afford the NHS, especially if more effort were to be made to retrieve unpaid taxes – another factor omitted from this text. We spend the least on healthcare as a proportion of GDP of all G7 countries (as Stevens acknowledges) and have the second lowest number of hospital beds per capita in Europe. Ring-fencing a budget that doesn’t meet our needs is meaningless.

In Conclusion

Overall, the problem with this report is its failure to grasp the full social and economic significance of the NHS in all its complexity. The range of its activities is enormous: ‘from cradle to grave’ it attempts and largely succeeds in meeting the health needs of a large, complex, rapidly changing, post-industrial society as it invents and responds to new technology and evolving culture and life-styles. Depth analysis should encompass finance and economics, cultural factors, and management, especially of change and cross-boundary working, logistics ….the list is endless. Miraculously, the NHS deals with all these factors and it WORKS.

 The 5 year plan is unconvincing because it skims the surface of the issues it does address, and fails to raise the core questions. Perhaps the omissions are unsurprising, given Steven’s roles in the private sector over the previous two decades.

The structure of the NHS prior to the Coalition Government’s Health and Social Care Act:

NHS structure 2011

Following the changes it now looks something like the diagram below ~ in the words of David Hunter, Professor of Health Policy and Management at Durham University (to whom we are grateful for the use of these slides) – “a complete dog’s breakfast, as the NHS performed well already, the changes increased bureaucracy and the case for competition, which the coalition increased, remains unproven”.

NHS Structure 2012

The Way Forward – An Alternative View

The NHS is now becoming a key election issue as the public begin to realize what is at stake, and the media can no longer afford to turn the other way. Cameron has been forced to say he did not understand the Lansley Bill and its implications. A look at the second diagram explains his incomprehension.

Direct assault on the NHS has always been politically impossible – better by far to introduce ‘reforms’ that sound as if they are rising to the challenge (even if the Prime Minister himself doesn’t understand them). Few will be taken in by Steven’s representation as the saviour of the NHS. Contrary to his assertion, experience with adult social care suggests that further contracting out of NHS services is likely to see exponential growth, unless stopped by the electorate. We must repeal the Health and Social Care Act, increase NHS funding to meet the growing need for health care, stop unsafe closure of services to save money, renegotiate crippling PFI debts and give a fair deal to NHS workers. If Simon Stevens’ heart is in the public sector can we hear him pledge support to these objectives?

Concrete Proposals

Whatever the legislative strategy of the incoming government after the 2015 General Election, its first goal must be to address the worst excesses of the 2012 Act: This can be done without reconfiguring the whole of the new system (a process that would be eye-wateringly expensive, utterly demoralising for NHS staff and damaging for patients).

The following points are the simplest and most easily accomplished measures that will ensure the survival of the NHS as a publicly provided service:

  1. Responsibility for health care should revert to the Secretary of State.
  1. The 2013 regulations which restored the pressure on CCGs (rejected during the passage of the Bill) to put services out to tender should be cancelled. (Any Qualified Provider).
  1. The power and centrality of Monitor should be curtailed.
  1. GPs with private, commercial health company interests should be ineligible for membership of CCGs (or anything that replaces CCGs)
  1. The private, commercial health company interests of MPs and Peers should be publicised.
  1. The clause allowing NHS hospitals to raise up to 49% of their income from private care should be revoked and replaced by the previous arrangement.
  1. The impending US/EU Trade Agreement, the Transatlantic Trade and Investment Partnership (TTIP), should, at the very least, exempt Health Care from its measures (as is the case in Canada).
  1. Private Finance Initiatives (PFIs) should be swiftly renegotiated and measures adopted to reduce the excessive NHS debt that has resulted from them

These suggestions would restore the essential nature of the NHS, and give a breathing space where longer term reforms could be allowed to develop in full consultation with service providers and users.

The interest and concern that has been generated by the present government’s destructive policies can be harnessed to inform genuine public debate about the future of the NHS, involving lay and professional opinion, a process which could re-invigorate democracy itself.

The NHS is the crowning achievement of British democracy, along with the defeat of Fascism. We must not now let it fall into the hands of anything-but-democratic multinational corporations.

 Defend our NHS York and Leeds Keep Our NHS Public

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From the New Statesman..
It emerged this morning that Labour MPs took the extraordinary step of blocking the publication of the Health Select Committee report into the NHS – because the conclusions backed up government reforms. I have just been handed details of this report, and it’s clear why Labour wanted it suppressed: it contradicts the party’s attack message. Here are the main points:

No sweeping privatisations: there has been little increase in private sector providers since 2010.
Nor has there been an extension of charges or top-ups during the current parliament, and that these are not planned.
Less red tape: a general trend of declining administration costs in the NHS.
No evidence that the Transatlantic Trade and Investment Partnership poses a threat to the NHS.
http://tinyurl.com/paamey4

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The Socialist Health Association was amongst the first to come out and resolutely oppose the Equity and Excellence Liberation nonsense that eventually became the Health & Social Care Act.  At the start of the long fight to oppose the Bill only a minority actively opposed it, led by Labour and the major trade unions; far too many who should have known better gave the Bill a muted welcome.

The SHA was clear in its analysis that the aim of the Bill was to start the move of the NHS onto a regulated market basis following the path set by the Tories in respect of the utilities. Over time it would have ended the NHS as we know it. It was designed to favour greater entry of private providers in all parts: provision, and commissioning and back office support.  It made market competition (initially on price, which was dropped) the driving force for change in the NHS.  For the first time it brought compulsory competitive tendering for clinical services. The Bill’s apologists openly boasted that it removed political control over the NHS just as it removed accountability and direction.

Most never believed the private sector would take over all, or even most, of NHS services but they could have been allowed to cherry pick the ‘profitable’ bits. They were expected to extend their entry into primary and community care and that has happened.

It was a long fight and there were two opportunities to kill the Bill.  If the GPs had clearly stated they wanted no part of it (they did not want to be commissioners) the Bill was doomed – but the GPs did not say that and GP based organisations were amongst the supporters. Then much later on once some of the flaws became blindingly obvious the collective voice of the Royal Colleges could have fatally wounded the Bill – but after much prevarication the great and the good of the professions found they did not have strong enough objections.

So we got the Act and, as the Kings Fund and others point out. we got an expensive and unnecessary reorganisation.

The NHS in 2010 needed direction and a period of stability to try to deal with austerity as best it could.  Social care was in a mess.  What was needed was reform and investment in social care and a strong policy direction towards integration.  We got a bigger integrated mess.

Arguments that the Act reduced management costs and improved quality don’t stand up to any serious analysis.  Similarly claims that the private sector is poised to take over all services are still also untrue.

So where now?

Well perhaps the last thing we need is another top down imposed reorganisation.  We also have to stop thinking of the NHS as somehow outside the rest of the public services, outside any democratic control with its own unique structures.  And we have to genuinely start to accept patients and communities as assets.

So that does not mean no change, it means changes take place locally at different rates looking at the whole system not just the NHS.  It means bringing planning of services under democratic control and firmly within the family of public services.  It means allowing changes to take place without external interference from competition rules or regulations.  It means integration in all its meanings.  It means personalisation of services in all its meanings. It needs new solutions not a return to some mythically golden era.

The Ten Year Plan announced by Labour moves in the right direction but until the funding issues are resolved it may be too ambitious even for a ten year horizon.

Having won the battle of ideas and relegated competition and markets into a more sensible place the new big arguments are about making social care far more effective, making whole person care a reality and finding ways to bring stable funding.

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The National Health Service remains the envy of the world and is a touchstone issue in British politics. It has been subject to considerable reform by both Labour and Conservative governments since the 19905.

The present arrangements for the delivery of state-funded health­care services in the UK are of bewildering legal complexity, matched only by the complexity of the management structures of the NHS. The British public has a steadfast commitment to the NHS, and any changes to NHS services have the potential to become politically con­tentious. However there is a widespread lack of understanding about how the NHS is managed and how it actually functions. In marked contrast, changes to state-provided social care services do not have anything like the political impact of changes to NHS services. Social care services are largely administered by local authorities whose budgets have been radically cut by the present government without any sustained political challenge. However, the successful delivery of health services is dependent on the successful delivery of social care services, and vice versa.

There are however a number of key differences between health and social care services, notably that the NHS is largely free for patients at the point of use, whereas social care services are (and have always been) means tested, with some service users meeting the full costs of their care.

Legal and policy framework

The law relating to the NHS is largely contained within a single con­solidated Act, now the National Health Service Act 2006. In contrast, social care law has been spread across a myriad of different statutes, including the National Assistance Act 1948 and the Chronically Sick and Disabled Persons Act 1970, all of which get regularly amended by new legislation. The Law Commission produced a report criticising the complexity of adult social care legislation in 2011 and proposed a consolidated Bill. The present government introduced the Care Bill in May 2013, which became the Care Act 2014 in May 2014 but will come into effect when an order is made by the Secretary of State. Once implemented there will be a single Act of Parliament for care services to complement the National Health Service Act 2006.

It remains to be seen whether a single Care Act will make any sig­nificant difference to users of social care services. However, a single statute should make the job of those advising social care users (who are very often not lawyers) more straightforward.

The future of the NHS is the subject of academic departments, policy commissions, endless consultations and vast media comment. NHS controversies have led to politicians losing their parliamentary seats, and those who oppose any set of local or national changes to NHS services can be relied upon to predict the worst and wave shrouds to support their case. The NHS is, as the former Conservative Chancellor, Nigel Lawson said, ‘the closest thing the English have to a religion’. A politician therefore meddles with the NHS at his or her peril.

The Conservative MP Andrew Lansley spent years in opposition thinking about the NHS and finally got his hands on the ministerial red boxes when he was appointed Secretary of State for Health in May 2010. Within a few short weeks he had published his vision for the future of the NHS in a White Paper called Equity and Excel­lence: Liberating the NHS, which very largely built on the speeches he had made in opposition. That led to the Health and Social Care Act 2012, which was one of the most complex Bills ever presented to Parliament. It eventually got through the parliamentary process after a tortuous passage (including the famous Spring 2011 ‘pause’ to facilitate a ‘listening exercise’). Despite the complexity of the 2012 Act the vast majority of the changes it introduced to the NHS could have been introduced without legislation. The net result of the political fallout was that Andrew Lansley lost his job as Secretary of State for Health soon after the Bill was passed, even though he said it was the only job in government that he wanted. The new Health Secretary is Jeremy Hunt who is largely carrying on the reforms of his predecessor.

However, political shortcomings in the Lansley vision of a ‘Bank of England’ type of NHS, largely run by NHS England and free of political control, have become increasingly clear. In June 2014, junior Health Minister Jane Ellison complained that the NHS was largely ‘out of control’ of ministers, without apparently realising that this was the policy of the former Secretary of State. The 2012 Act provided that ministers remain politically accountable for the NHS, but largely removed their means of control. Ministers were thus left politically accountable for a government service that they had little if any formal means of controlling.

A list of problems

There are a series of problems with the NHS that an incoming Labour government will have to accept. The first is that those who supply the services are trusted far more than those who manage the service. It is thus a sector where ‘provider interests’ have far more weight than almost anywhere else, apart perhaps from the military. The BMA, the Royal Colleges and the staff trade unions all have tremendous policy influence, and are not afraid to use their voices to object to change that will adversely affect their members. The strapline of the BMA is ‘Standing up for Doctors’, but it is highly effective in presenting the interests of doctors as being coterminous with the interests of the patients, and thus gaining public support for its positions. Having said that, the professionalism and commitment of the doctors, nurses and NHS managers is a resource that any Secretary of State underesti­mates at his or her peril.

Second, after the Health and Social Care Act 2012 is implemented, the legal and management structures within the NHS are wholly unclear to the public as well as to most of those working within the system. Lord Darzi, a hugely respected surgeon and former Labour Health Minister commented in a House of Lords debate as follows concerning the Lansley reforms:

We now have health and wellbeing boards, clinical commissioning groups, clinical senates, local healthwatches, the NHS commissioning board, a quality regulator and an economic regulator …At the end of the day, who is responsible for making sure that the NHS saves more lives this year than last? Who is accountable for how its budget is spent? Who will inspire NHS staff to lead the difficult changes?

Working out who is really responsible for performance in the NHS has never been straightforward and is perhaps even more difficult today than ever before.

The third problem is that many of the complaints made about the marketisation impacts of the 2012 Act failed to appreciate how far a Labour government had already taken the NHS down that path. Lansley was anxious to present his reforms as being a radical depar­ture from Labour policy, while Labour politicians, free from office, were free to complain about privatisation of the NHS by stealth. Simon Stephens, a former Health adviser to Tony Blair and now the Chief Executive of NHS England saw things differently in July 2010 when he said, ‘what makes the coalition’s proposal so radical is not that they tear up that earlier plan [the NHS plans of the Labour gov­ernment]. It is that they move decisively towards fulfilling it’ . Labour complained about the competition aspects included in Part 3 of the 2012 Act but, unless fundamental changes are made to the structure of the NHS, most of the legal obligations that brought the EU procure­ment and competition regimes into the NHS were already present. EU competition and procurement law was already having an impact on the NHS before the coalition government took office because of decisions made to create legal separation between commissioners and providers. The duties of transparency, equal treatment and non-dis­crimination in Part 1 of the Public Contract Regulations 2006 applied to the placing of NHS contracts long before 2010, and thus a disap­pointed contractor already had the right to sue an NHS commissioner for breach of procurement law duties. Part 3 of the 2012 Act increased the focus on procurement and competition for NHS bodies but, given the structures set up by the Labour government, it probably made little practical difference to legal obligations in this area.

Fourth, the NHS that an incoming Labour government will manage needs to serve an ageing population where demand for NHS services will substantially increase each year by maybe 4 per cent. The Royal College of Physicians reported recently that:

The number of general and acute beds has decreased by a third in the past 25 years, yet during the past 10 years there has been a 37 per cent increase in emergency hospital admissions and a 65 per cent increase in secondary care episodes for those over 75 in the same period (compared with a 31 per cent increase for those aged 15-59).

A 2012 parliamentary select committee report also noted the need to change services and reported:

The National Health Service will have to transform to deal with very large increases in demand for and costs of health and social care. Overall, the quality of healthcare for older people is not good enough now, and older people should be concerned about the quality of care that they may receive in the near future. England has an inappropriate model of health and social care to cope with a changing pattern of ill health from an ageing population. Further fundamental reform to the NHS in the next few years would be undesirable, but radical changes to the way that health and social care is delivered are needed to provide appropriate care for the population overall and particularly for older people, and to address future demand.

It is unclear whether the present government has a coherent plan to manage this increase in activity and equally unclear how an incoming Labour government would do so.

A fifth problem is that, as medical science develops, the treat­ments doctors can offer that may benefit patients increase each year.

The pharmaceutical industry is a great British success story but each development of new drugs creates a demand for funding for a defined cohort of patients from an already cash limited budget. With every new wonder drug the need increases for robust systems within the NHS to decide what treatments do and do not deliver both clinically effective and cost-effective treatment. An interesting observation on this issue emerged in an NHS rationing legal case where the chief executive of the local primary care trust (PCT) explained the problem as follows:

Doctors have a duty of care to their patients and thus press for the best possible care for each and every patient they are treating. The treating consultants are generally not concerned with issues of overall cost effectiveness. Their role is to press for the best treatment for their patient. Where such treatment is not routinely commissioned by a PCT, the consultant is not able to provide the treatment as part of NHS care unless an exception is made for the patient. The role of the consultant in such cases is to write letters and reports to seek to persuade the PCT to fund the treatment for patients … This means that we need to consider carefully the costs of different treatments and the benefits that a treatment delivers before we plan to commission it. For the PCT, the decision to commission a particular kind of treatment is not just a question of whether a medical treatment is clinically effective: if a treatment is not clinically effective we would not commission it. However, if a treatment is clinically effective, the PCT needs to judge whether the treatment is a cost effective use of the limited resources available to it. As the PCT has a fully committed and limited budget, the duty to break even means that if we commission additional services we need to pay for this by disinvestment from other services … PCTs can only spend money frotft taxpayers once.”

NHS policy makers often underestimate the problems caused by the entirely legitimate differences between the perspectives of treat­ing doctors and those of NHS commissioners. These two groups are using the same resources but, as the above quotation explains, they approach the issues of resource allocation in very different ways.

The way forward for NHS policy under Labour

Against this background one political reality is crystal clear – there are no votes in changing the ‘wiring’ of the NHS. A major reform of the NHS structures is politically undeliverable and should be firmly rejected by an incoming Labour government. Andy Burnham, as Shadow Secretary of State for Health, may have promised to repeal the Health and Social Care Act 2012, but in reality this promise cannot extend further than repealing parts of Chapters 1 and 2 of Part 3 of the Act (concerning the role of Monitor and Competition). However, even that would leave a vacuum which, given the constraints of EU law operating in this field and the Public Contracts Regulations 2006, could not be left unfilled. The last thing that the NHS needs is another major structural reorganisation, and the public and the professions would not stand for it.

However, an incoming Labour Secretary of State may be obliged to recognise that the commissioner/provider divide in the NHS has been largely ineffective and, to date, has been a huge waste of public money. The division between those parts of the NHS that commis­sioned healthcare and those parts that delivered it was originally devised by former Secretary of State for Health, Ken Clarke, in his 1989 White Paper Working for Patients (and at that time called the purchaser/provider divide) in order to introduce some market mecha­nisms into a state monolith. But there is little evidence that commissioners (as the purchasers are now called) have acted like effective private sector purchasers and so ‘market’ mechanisms rarely if ever deliver the intended results.

The Health Select Committee came close to recommending the abolition of commissioning in its report of March 2010, The com­mittee concluded that commissioners tended to be ‘passive’ and added that they failed to justify their own existence. It said: ‘Weaknesses [in commissioning performance] are due in large part to PCTs’ lack of skills, notably poor analysis of data, lack of clinical knowledge and the poor quality of much PCT management. The situation has been made worse by the constant re-organisations and high turnover of staff.’

There was no evidence that GPs, trained to deliver services to individual patients, would be any better at commissioning popula­tion-based medicine than PCTs. Commissioning has been further undermined because a large number of staff with knowledge of NHS commissioning have left the NHS in recent years as part of the £2obn ‘Nicholson Challenge’ and, as a result, the support structures for the new Clinical Commissioning Groups (CCGs) have been left with fewer experienced staff. However, a King’s Fund report published in July 2013 was not wholly pessimistic. It observed:

Despite the early timing of our fieldwork, we found some evidence that CCGs were already having an impact on members’ clinical practice … The most commonly cited effect of CCGs was that peer-to-peer dialogue had heightened GPs’ awareness of their referral and prescribing patterns and how they compare with those of others. In most sites, at least some practices or localities reported that this had led to their succeeding in reducing their referral rates or prescribing costs. Others, however, reported that their clinical practice remained entirely unaffected so far.”

Making commissioning work for the benefit of patients and the taxpayers is perhaps the most serious challenge in answering the Lord Darzi question about who is really responsible in the NHS. The right answer is the commissioners should be responsible and have all the tools and levers to use to make change happen. But if ditch­ing commissioning is off the agenda for an incoming Labour govern­ment (because it would involve a major change to the NHS ‘wiring’), the only alternative for a Labour Secretary of State for Health is to invest in NHS staff and support structures to make commissioning work as effectively as possible. That means reversing the present ‘clinicians good, managers bad’ rhetoric and recognising that something as complex as the NHS cannot work effectively without high-quality and effective managers in both commissioning and providing organisations.

Tools available to a Labour government to change NHS policy

Perhaps the single biggest problem that an incoming Secretary of State will inherit is a lack of legal ‘levers’ to pull to make changes happen. Under the National Health Service Act 2006 all NHS bodies other than GPs and NHS Foundation Trusts were required to follow ‘directions’ made by the Secretary of State. GPs were excluded because they were independent contractors and NHS Foundation Trusts were excluded from the Secretary of State’s direction-making powers in order to give them independence. However the Secretary of State was able to issue directions to all NHS commissioners who could, in turn, use their contractual powers to effect necessary change. The direction-making powers of the Secretary of State have virtually disappeared as a result of the Health and Social Care Act 2012. The Secretary of State does not now even have a clear power to issue directions to the NHS Commissioning Board (also known as NHS England) and in turn NHS England only has very limited direction-making powers in respect of CCGs.

There are ways of influencing the actions of NHS England and, through NHS England, other NHS bodies. The days of instructions coming from Richmond House with the force of law are over. In fact, however, little if anything has changed, and edicts from ministers remain part of the NHS. As political realities emerged, the naivety of a ‘Bank of England’ style NHS became clear. Ministers have thus reasserted political control and are acting as if they remained in charge. At present, however, they have no legal right to do so. At some point the power of persuasion may not be enough, as NHS bodies assert the legal freedoms they were given under the 2012 Act. At that point, ministers may be gently but firmly told to back off. There is an inherent contradiction between a legal Bank of England style NHS and ministers being politically accountable for an NHS they cannot control. It is an issue that will need to be resolved.

An agenda for reform

So what are the major legal issues that an incoming Secretary of State might wish to consider? I would suggest that they should include the following.

Restoring the Secretary of State’s direction-making powers

There are three reasons why an incoming Labour government should rapidly change the law to restore (or create for the first time) the Sec­retary of State’s power to issue directions to NHS England, and in turn to give NHS England the power to issue directions to any public (or private) body delivering NHS services:

  1. The Secretary of State is accountable to Parliament for the deliv­ery of NHS services. That accountability is meaningless without giving the Secretary of State the power to intervene if those charged with the day-to-day delivery of the services fail NHS patients.
  2. The resumption of NHS direction-making powers will make it clear that the NHS is a national health service directable by a single Secretary of State, and not a joined up collection of local health services.
  3. NHS direction-making powers will make it clear that the Secre­tary of State retains a measure of control over all NHS services, and thus will allow the NHS to remain outside of the regime for
    EU procurement law. It will help bring the NHS back within the Teckal exemption (which avoids the need for procurement exer­cises when services are commissioned from public bodies under a common system of control by the purchaser).

The Secretary of State imposing his will by making directions is, of course, a last resort. The existence of the power usually means that it does not have to be used. However, now that NHS England has been created as a stand-alone board for the NHS, it makes far more sense to channel a direction-making power through NHS England (with the Secretary of State directing NHS England and NHS England then directing individual NHS bodies) rather than have the Secretary of State directing individual NHS bodies.

Making NHS contracts the norm

An incoming Secretary of State should change the law to insist that all arrangements between NHS commissioners and providers for the delivery of services to NHS patients must be set up as ‘NHS con­tracts’ and not as legally binding contracts. This may appear to be a minor technical change but it will save substantial legal costs and reduce the scope for providers to miss the big picture when delivering NHS services. Partners who work together under an NHS contract are far more likely to work cooperatively to deliver integrated services for patients as opposed to those who are worried about protecting their own position by attempting to assert their legal rights. It will also assist in ensuring that EU procurement law obligations stay out of the NHS to the greatest extent possible.

Creating legal structures that can take binding decisions on NHS acute service reconfigurations against a fixed timetable

The NHS has some of the finest hospitals in the world, and the Labour government from 1997 to 2010 had a proud record of building new hospitals. But the time has come for the NHS to focus care for fewer patients in fewer hospitals and to deliver far more healthcare in the community. That requires NHS hospital reorganisations, but these have been plagued with both political and legal controversy, in part because of a lack of clear structures that define how such decisions should be taken, by whom and against what timetable.

For example, an attempt to reduce the number of centres at which children’s heart surgery should be delivered suffered setbacks as a result of two judicial reviews that challenged the lawfulness of the complex process adopted by the NHS to resolve this problem. That process has now been effectively abandoned, even though there was a wide medical professional consensus that reducing the number of centres would save the lives of sick children. That consensus did not, of course, extend to which centres should be removed from the list. The NHS will not be able to deliver more services for an ageing popu­lation in the community unless robust action is taken to reduce invest­ment in secondary care, which inevitably means fewer and larger hospitals. Four key points about these issues should be noted:

  1. Although politicians are neither qualified nor politically able to take decisions about the downgrading of individual A&E or mater­nity services, Labour politicians must be wary of supporting every local service in the run-up to the 2015 election. This was the Con­servative approach in the period leading up to 2010 – supporting every local unit under threat of change. This approach resulted in the ludicrously vague and unworkable ‘four tests’ policy intro­duced in May 2010. This approach makes it extremely difficult to take lawful decisions to make changes to a local health economy because every set of local GP commissioners effectively has a veto to stop change in local services. The only responsible approach by politicians is to make the case for change and to emphasise that decisions about the most clinically effective arrangements for local health services must, at least in the first instance, be for medical and managerial professionals. It may be too much to ask the public to accept that the NHS should be focused on healthcare services and not institutions, but opposing every NHS reconfigura­tion is a political cul-de-sac.
  2. Decisions about configuration of local NHS services must involve multiple CCG areas in order to be effective. The NHS Act 2006 does not recognise the term ‘NHS local economy’ but decision making on configuration of local NHS services is rarely effective if confined to a single CCG area. Thus new legal structures needed to take these decisions must treat the local NHS commissioners as participants and consultees, but ultimately cannot give a veto to each individual CCG.
  3. Reconfigurations of NHS services are afflicted by timidity, delay and uncertainty. The legal structures an incoming Secretary of State should create for taking these decisions should therefore allow NHS England to initiate the process rather than waiting for the local NHS politics to be sufficiently acute to allow a change programme to be examined, provide for clear timetables, and allow (as now) for expert advice and validation to any change plans, but then require swift implementation.
  4. The role of the Secretary of State for Health as the appellate body for the final decision (on referral from the local authority committee) may need to be reconsidered. Is it a proper use of the Secretary of State’s time to take a decision about the future of a local A&E unit and/or does it unnecessarily ‘politicise’ the process? Or is a final appeal to the Secretary of State a feature of his or her political accountability for NHS services? There are fine arguments both ways but there is a compelling argument that any appellate decision by the Secretary of State or an appellate body should be taken within a short time period (of say three months).

Investing properly in NHS commissioning

Doctors and other medical professionals work with skill and dedica­tion to treat their patients. But without effective commissioners the NHS does not know whether the treatments being provided are either clinically effective or cost-effective, or whether doctors are pursuing a course of treatment which is neither. The only justification for the commissioner/provider divide is that NHS commissioners are able effectively to represent both the patient (but to be more informed than many patients) and the taxpayer to ensure that all NHS care is being delivered in a way that is both clinically effective and cost-effective. But there is precious little evidence that this is happening or has ever happened. The ‘world class commissioning’ programme aimed to achieve this and was widely welcomed, although it was discontinued by the present government before reaching its potential and, of course, many if not most of those who were part of the programme are no longer working in the NHS. In March 2010 the House of Commons Health Select Committee observed:

The key question is whether WCC [world class commissioning] will be enough to address the enduring weakness of commissioning. Although WCC seeks to bring about a ‘step change ‘in the capacity and capability of PCTs to act as effective commissioners, some witnesses thought that the enduring weakness of commissioning was unlikely to be addressed by WCC alone.

The answer from the Committee to that question was that WCC was not sufficient, of itself, but it was part of the answer in developing an NHS that commissions care in an effective manner. A new Secre­tary of State should explicitly recognise that effective commissioning is a difficult, technical process that requires attention to detail and the confidence to confront clinicians. The present structures deliver greater clinical involvement in commissioning and it is possible that this will deliver more effective commissioning. But that will only become a reality if both GPs and secondary care consultants recog­nise and respect the role of commissioners, which in turn needs an enhanced role and status for commissioners. The NHS thus needs politicians who abandon the lazy rhetoric of ‘manager bashing’. A key role for the new Secretary of State will be to promote the role of those who speak up on behalf of patients and the taxpayers in the NHS system – namely the commissioners. Either that or to abandon the whole commissioner/provider divide as a waste of time and money.

Tackling postcode prescribing

The NHS has never given patients a legal right to the same level of medical treatment anywhere in the country. Decisions about what medical treatment a patient is entitled to as part of NHS funded healthcare are decisions of local NHS units, with patients being subjected to ‘postcode prescribing’. Variation between policies of different NHS commissioners is thus both lawful and inevitable. Thus a patient who is registered with a GP in Stoke can be entitled to a life-saving bariatric surgery operation with a threshold body mass index of 35, whereas patients would lawfully require a BMI of 50 in neighbouring North Staffordshire. The creation of the National Institute for Health and Clinical Excellence (NICE) was designed to inch the NHS in the direction of a national service as a result of directions made in 2003 which required PCTs to fund treatments recommended in NICE Tech­nology Appraisal Guidance. However, only a tiny number of treat­ments have been taken through the laborious NICE process. Even then, there are legitimate complaints that NICE decisions involve a process of decision making that is focused solely on the individual treatment in question and does not properly ask how that proposed investment fits into a scheme of local or national priority-setting.

There are two interconnected problems when attempting to tackle postcode prescribing. First, the NHS cannot afford to ‘level up’. Any expansion of mandatory treatment rights would inevitably result in local NHS commissioners being unable to afford other treatments that they currently fund, which would be presented as ‘cuts’. Second, a politician cannot ever be seen directly to take a ‘prioritisation’ decision because those who are denied any item of care will loudly cry foul in the media. The answer to this age-old problem may be for the Secretary of State to set a much more detailed framework and to influence NHS England (via the Mandate if needed) to impose much greater standardisation of commissioning policies across CCGs, thus reducing the more glaring disparities. However, in the end difficult decisions on which treatments are to be made available to which patient groups face formidable difficulties if they fall to be taken by anyone who directly faces election by the public.

Joining up healthcare and social care

The Shadow Secretary of State for Health, Andy Burnham, is presently discussing the most effective way to join up health and social care so that, particularly for the elderly, it becomes about care services and not whether these are health or social care services. There are obvi­ously difficult issues about funding such a service and worries about meeting the cost of the increased demand that such a service change would trigger. However if an incoming Secretary of State was minded to expand the social care services that could be provided free at the point of use, there is an established mechanism that could be used to bring this about without the need for primary legislation. Section 3(1)(e) of the NHS Act 2006 provides that CCGs must provide such ‘other services’ as part of the NHS as the group considers are ‘appropriate as part of the health service’. This is the power that is used by the NHS to fund social care and accommodation costs of patients who are eligible for NHS Continuing Care. The process that CCGs are required to follow to decide whether a person is eligible for social care (as part of NHS funded care therefore free at the point of use) is set out in regulations, which currently require CCGs to follow the National Frame­work for NHS Continuing Care in making decisions as to where the health/social care boundary lies. This boundary is crucial for patients as it defines the boundary between services that are provided free of charge and those that are provided on a means-tested basis. However, if a future Labour Secretary of State wished to expand the areas of social care that were to be provided without charge, this appears to be the most appropriate mechanism to do so. Adding care services which can be delivered under section 3(1)(e) to include a greater level of social care (and thus making them free at the point of use) would deliver on a joined-up service without major structural reorganisation.

Becoming Secretary of State for Health in a Labour government is both the best and the worst job in government. It is the best because the NHS is so close to the heart of the Labour Party, and is the worst job for the same reason. The above are a series of practical steps that an incoming Labour government could take to regain control over the NHS, restore it as a politically accountable public service and to stop the slide towards the NHS becoming a state-funded healthcare insurance system.

Summary of principal recommendations

  • To restore the Secretary of State’s power to issue directions to NHS England, and in turn to give NHS England the power to issue directions to any public (or private) body delivering NHS services.
  • To change the law so that all arrangements between NHS commissioners and providers for the delivery of services to NHS patients are set up as ‘NHS contracts’ and not as legally binding contracts.
  • To create legal structures that can take binding decisions on NHS acute service reconfigurations against a fixed timetable.
  • To invest properly in NHS commissioning.
  • To tackle postcode prescribing.
  • To join up healthcare and social care by, in the first instance, expanding the ‘other services’ that can be commissioned under s. 3 of the NHS Act.

This article first appeared in Law Reform 2015, published by the Society of Labour Lawyers, and is reproduced by kind permission of the author.

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In the coalition era, PMQs has become a pretty unedifying event. But, this week, it sank to a new low. In the Prime Minister’s absence, his Deputy picked up the Cameron textbook and followed it to the letter. In fact, he took it to a whole new level. Most of his replies did all, or a combination, of the following: evade the question; blame Labour; distort the facts; and celebrate a coalition policy unconnected to the original question.

Clegg’s pantomime-style gestures to the massed Tory ranks behind him, inviting cheers for policies he and his Lib Dem MPs were never given a public mandate to support, will not quickly be forgotten. But he did do one thing that may in the end prove beneficial. Clegg’s incendiary claims about NHS privatisation have at last ignited a debate which the country desperately needs to have at the coming election. Because it certainly didn’t happen last time out.

In this parliament, NHS policies have been introduced that were in neither the Tory nor Lib Dem manifestos. The pace of change is now accelerating: only this week the BBC reported that, of 3,494 contracts let between April 2013 and August 2014, 1,149 contracts (33 per cent) have gone to the private sector. The NHS is changing fast and the country needs to decide whether it supports these changes, because there is a real danger that, by the 2020 election, they will be irreversible.

Clegg’s opening gambit in this important debate attempts to divert attention from what his own party has done by making audacious claims about Labour. His claim – Hinchingbrooke Hospital – the only NHS hospital to be privatised, and by the Labour party – is, as I will show, simply untrue. But, if this debate is to be of a quality that the public deserve, then they do have a right to ask all parties and politicians to account for past policy decisions in this area and what they would do in future if elected. I accept that challenge on behalf of Labour.

I was involved in health policy from various vantage points throughout most of Labour’s 13 years in office, from working for the NHS Confederation in 1997 to Health Secretary in 2009/10. I am well-placed to account for what we did.

Back in 1997, the relationship between the NHS and private sector we inherited was one where the latter traded off the failings of the former. People were routinely told that they would have to wait months or even years for operations on the NHS. But, if they were prepared to pay, they were often offered the operation the following week by the same consultant.

Labour set out to end this scandal – and we did. Our drive to bring down NHS waiting lists began to change the nature of the relationship with the private sector. As the NHS improved, so the private sector’s main selling point began to disappear. This led to a big change in the relationship where the private sector threw its lot in with the NHS in a supporting role, making its capacity available to bring down NHS waiting lists even further.

By the end of the last decade, the NHS had the lowest-ever waiting lists in its history. I am proud of that achievement by the last government and my role in it. But, by then, a difference of opinion had opened up. Some were arguing for the continued development of the relationship with the private sector and further steps to increase choice of providers through the Any Qualified Provider concept.

I believed that approach, in an era of flat funding, would prove very damaging to the public NHS. So, in late 2009, I changed Labour policy on the NHS and the private sector from Any Qualified Provider to NHS Preferred Provider. I did this for a number of reasons.

First, I believed the AQP approach would take the NHS in the wrong direction: towards fragmentation of care when the future demanded the opposite – integration. The logical consequence of it is to bring an ever-increasing number of entities onto the pitch dealing with one person’s care, intensifying the frustration they already feel of telling the same story to everyone who comes through the door.

Second, I was clear that AQP and open tendering would be a barrier to reform. I believed then, as I still do now, that re-engineering the way services work – moving from the hospital to the home – is the big challenge that the NHS faces. I believed those changes were likely to happen more quickly if NHS organisations and employees had the stability and security to embrace changes in the way they work. Also, the amount time and bureaucracy tied up in the contracting process can delay service change.

Third, I knew that all the evidence from around the world tells us that market-based systems cost more to run than systems like the NHS.

But there was another, more simple reason. In the end, I am not neutral about who provides NHS services. I believe in the public NHS and what it represents – a service based on people not profits. That is worth protecting.

These were the principles and values I brought to the on-going process I inherited as Secretary of State in late 2009 in respect of Hinchingbrooke Hospital. This process has been initiated some time before I arrived under the then thinking about provider neutrality. When I changed policy to NHS Preferred Provider, I specifically asked for my new rules to be applied to this tender process. In addition, outside of that process (and although there was still an NHS organisation involved in it), I asked the NHS to approach directly all surrounding NHS hospitals to see if an NHS operator could be found.

That was the position I left behind when the parliament was dissolved and it was the situation which the coalition inherited. Nothing had been signed by me and the process could have been stopped at any time.

From there, 18 months later, a private operator for the hospital was appointed by coalition ministers. That is why Clegg’s claims in the Commons on Wednesday were a total distortion of the facts. The fact is that the decision to appoint Circle probably crossed his desk at some point. Clegg’s government privatised the operation of Hinchingbrooke. That is a fact.

I have acknowledged that the last government let the market in too far. That is why I changed the policy. But the coalition’s Health and Social Care Act, which Clegg and his MPs supported to the hilt, takes things much further than anything Labour did. It gives the competition authorities a role in the NHS for the very first time. It allows NHS hospitals to earn half their income from treating private patients. And it effectively mandates open tendering of NHS services and, in so doing, places the NHS in the full glare of EU procurement and competition law. That is why I fought it tooth and nail when it was going through parliament.

What is indefensible about this is that it has happened without the public ever having had a proper chance to express a clear view about NHS privatisation. No party has ever been as clear as they should have been about the extent of their plans. So the coming Election presents an opportunity to put that right.

I am clear that, if the market is allowed to carry on advancing into the heart of the NHS, it will eventually destroy everything that is precious about it. So both I and Ed Miliband have nailed Labour’s colours to the mast: we believe in the public NHS and will protect it by repealing the Coalition Act and making it our Preferred Provider. The Deputy Prime Minister, by contrast, continues to support a government policy of opening up the NHS to tendering and competition.

There is a legitimate debate to be had  over the next five months about which path represents the best future for the NHS. But let’s at least have an informed debate on this emotive issue on the basis of the facts rather than spurious claims at PMQs. I have tried to do that by giving this honest account of how Labour’s thinking has evolved over the years and shaped the clear position we will take into the coming election. Is it too much to expect Clegg, Cameron and Farage now to do the same?

First published by the New Statesman

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Profit-making in English health services after the 2012 Health and Social Care Act.

Nick Krachler (Cornell University) and Ian Greer (University of Greenwich)

This is a summary of our paper published (fully referenced)  in Social Science and Medicine, Volume 124

The current UK Government sought both to marketise (i.e. increase price-based competition between providers) and privatise (i.e. increase provision carried out by non-government providers) with the Health and Social Care Act 2012 (referred to here as ‘the Act’). The Act’s supporters argued that competition will provide innovation, better management, and improved quality but its critics argued that it would exacerbate health inequalities and service rationing, end comprehensive public-sector health service provision, and worsen democratic accountability

Will the Act deliver on these hopes and fears? In our paper, we try to assess the impact of these health reforms by relating them to the structure of the overall healthcare market in the UK. We argue that many barriers to profitability remain despite the Act while also showing how profits are made in English healthcare. Overall we argue that the privatisation that occurs is significant (especially for workers) but better understood as incremental rather than comprehensive and radical.

Marketisation and privatisation in English healthcare

Marketisation is, as we define it, a change in transactions, through the introduction or intensification of price-based competition. Privatisation, by contrast, is a change in ownership in which non-state actors become increasingly involved in provision, usually through a transfer of assets (e.g. the sale of a hospital) or an increase in work contracted out. While the opening of the market to private-sector providers is an important aspect of healthcare marketisation, intense price-based competition and an expanding non-state sector do not always go together.

UK Governments have introduced market logics into the NHS, including price mechanisms and competition, since purchasing was separated from provision under the ‘internal market’ of the early 1990s. Despite years of marketisation processes, the state is still dominant, both as funder and as provider, with private-sector involvement in the NHS estimated at around 19% for provision including general practitioners or 12.3% of government secondary care expenditure (which in 2011/2012 meant £5.22bn of expenditure on for-profit providers by Primary Care Trusts).

The introduction of the internal market in the early 1990s was accompanied by directives limiting purchasing and borrowing by Trusts, and it was plagued by various problems such as geographic monopolies, healthcare workers’ persistent professional ethos or public pressure against destabilising traditional providers.

Governments have also attempted to stimulate competition by creating private-sector entry points such as the 1983 mandate of competitive tendering for ancillary services or the 2002 introduction of Independent Sector Treatment Centres (ISTCs) in secondary care. However, regarding the ISTC programme, negative media reports, pressure from campaigners, hostility from NHS staff, and the unwillingness of some Trusts and Primary Care Trusts to send patients to ISTCs led to a reduction in ISTC contracts in the second wave from 24 to 10 so that in 2007/2008, ISTCs provided only 1.8% of elective care.

One reason for the limited efficacy of marketisation policies is that the NHS is adept at containing costs. For example, around £29bn of services are commissioned using ‘Payment by Results’, a pricing system for particular diagnoses also known as ‘the tariff’, introduced in 2003/2004. Since 2006 these reimbursement rates have incorporated annual efficiencies of 3%. Another policy limiting funding for for-profits is the Government’s austerity programme of £20bn of savings by 2015, which is around 18.5% of the NHS’s budget.

At the same time, the Act attempts to universalise Foundation Trust status, which increases management autonomy by, among other things, allowing private patient income to increase to 49% and allowing the retention and reinvestment of surpluses. Accordingly, the NHS Support Federation showed around 70% of contract awards from April to December 2013 were awarded to non-NHS providers. However, the volume of the work and the degree of change this represents is unclear. So while marketisation and privatisation form the core of the Act’s logic, the practical consequences of this legislative change is uncertain.

The conditions of profitability

We argue that profitability depends on specific conditions, the first of which is the availability of resources to private providers. The politics of austerity might constraint available resources for private providers. On the one hand, austerity could be conducive to privatisation, since it creates gaps in provision or investment backlogs that are then compensated through private means. On the other, austerity may not be conducive to privatisation, since it reduces the overall amount of money available to contractors.

The drive by politicians and commissioners to maximise value for money can also reduce profit margins. This squeeze of prices for contracted work is facilitated by changes in funding arrangements. There is evidence that the privatisation of GP services by New Labour was limited due to a top-down price squeeze by commissioners which resulted in limited profit-making.

A condition for investments being made is the degree of uncertainty built into the market structure which shapes the calculation of risks and potential returns. Without stability or predictability, private providers are less likely to enter the market.

Competition from the public sector is also important, since for-profits have to match the production costs of NHS providers in order to gain market share. Public provision has the in-built advantages of economies of scale and not needing to distribute profits. In the NHS there is also a traditional public-sector ethos which promotes high quality services at a low cost. The benefit from this ethos can be eroded by performance-related pay when workers transfer into for-profit organisations. Another effect of state dominance in funding (i.e. the fact that revenue from self-payers or private insurance is low) is that private providers depend on winning government contracts, so that they have to compete with the NHS’s extensive service portfolio (which means they predominantly provide only elective treatments).

A condition for policy changes is that policymakers are able to depoliticise their proposed changes. This depoliticisation in turn is based on the importance of the issue at stake to voters and its exposure in the news media. Market reforms are especially politicised, since they tend to undermine the power of public service workers, but have varying effects on public-sector managers, private providers, and service users; they may empower one or more of these actors, but not all of them. Despite policymakers’ attempts to depoliticise reforms by drawing attention away from the core principles of marketisation and privatisation, campaigns in England against privatisation are widespread and ongoing.

Finally, certain managerial practices constitute another condition of profitability. These practices can be divided into increasing revenues and reducing costs. Expected cash flows from demand are weighed up against costs stemming from several factors such as infrastructure investment, a need for economies of scale, the size of demand in a market, or the quality of labour regarding skills, wages, and unit costs. The ISTC programme provides some indication of how profits are made in English healthcare, namely by lowering unit costs, standardising work and having a strong performance regime. The little evidence that exists indicates non-NHS providers are able to match the quality standards of NHS providers, without, however, providing higher quality services or medical innovation. These studies indicate that profits are made by lowering unit costs, but the NHS seems to be more innovative and cost-effective.

Methodology  

Our study is based on interviews conducted 6-10 months after the passing of the Act. We focus on England, leaving aside the UK’s three devolved countries, since the 2012 Act does not apply to them, and since marketisation has gone furthest in England.

We conducted 32 semi-structured interviews with 34 participants including 15 private-sector representatives, of which 10 were senior managers (in radiology, pathology, hospitals, global service provision and home care) and 5 were management consultants (including 4 partners). We also interviewed 6 public-sector representatives and 5 trade unionists. Additionally we spoke to 4 clinicians, 3 campaigners and 1 healthcare researcher. The private-sector participants all had at least 5 years’ experience working in senior management positions in profit-making enterprises and 10 years of experience in the private healthcare market. Additionally, several had extensive clinical experience, and/or experience working in the public sector, and/or experience abroad, in Australia or the USA.

All interviewees were asked about the impact of the Act and austerity measures and the relevance of campaigning and unionisation for their work and their organisations. Private-sector participants were asked about their competitive advantages compared to the NHS and whether the Coalition Government’s health policies had created better conditions for developing business and winning contracts. Interviews with unionists and campaigners focused on labour issues and campaigning, while interviews with civil servants scrutinised policy intentions and the new regulatory framework.

Findings 1: Perceived profitability barriers

Our interviewees talked about four areas in which market dynamics frustrated profit-making.

Uncertainty in rules. Our interviewees were disappointed by a lack of clarity surrounding competitive tendering requirements. While CCGs are bound by competition law and EU regulations, a lack of bids does not require re-tendering if the process is transparent, “the providers were able equally to bid for it” (CCG GP Member), and the value of remaining with incumbent providers is demonstrable. Moreover, attempts to reduce external tendering were reported and litigation by private providers against the NHS is thought to strain the relationship with the funder.

Uncertainty also exists regarding competition rules built into Section 75, other issues like when VAT can be claimed back by the private sector, and the reality of periodic top-down NHS reorganisations. Frequent reorganisations cause periods of revenue-losing inactivity: “it’s almost like the system takes a breath and stands still for a year […] everyone needs to find their feet, find out how the new system works” (Radiology Director).

The decision-making process within the NHS was described as slow and uncertain: “policies change by the time somebody’s made a decision, it’s quite frustrating” (Home Care Director). Frequent policy changes lead to uncertainty, since services may become redundant: “there have been some well-documented organisations who spent a lot of money and have withdrawn because they’ve not seen their return on investment [due to policy changes]” (Global Services Director). Contract lengths can also be too short to get returns on investment.

The lengthy and costly procurement process also contributes to uncertainty. Advertisement to contract award in the NHS generally takes 18-24 months, and interviewees report that the investment needed for participating in tenders can exceed the likely returns of the contract. In addition, four private-sector managers complained of losing upfront investment due to the NHS cancelling tenders.

The complexity and fragmentation of regulation also contributes to uncertainty. This fragmentation frustrated, for example, the creation of large regional contracts with multiple CCGs: “The whole East of England did a big procurement around GP pathology, it took two years and [NHS organisations] were going to lose 10 million pounds of revenue […] though results were announced and [private providers] spent 10, 15 million pounds doing it, it didn’t go ahead” (Pathology Director).

The top-down price squeeze. Interviewees also often reported a top-down squeeze on prices resulting from austerity, which reduced available resources. Margins on NHS commissioning were described as eroding or low compared to other revenue streams: “there’s definitely margin erosion. The margins in the NHS are much lower than they are in our pharma or private business” (Home Care Director).

The NHS as funder demands efficiency: “we have to work even harder, because we have to produce a margin and then we have to produce the gain and the efficiencies that the commissioner wants” (Global Services Director 2). Achieving profits through NHS commissioning is further complicated by the importance of quality, which can lead to the inability to deliver services according to contract specification: “[the for-profit provider] could not deliver the quality for the price agreed […] we re-tendered at the end of the contract. They chose not to bid and in fact stopped offering that service and the contract was then won by a consortium of a non-local NHS provider and a local voluntary provider” (GP).

The steady reductions in the tariff, which is calculated as an average of reported NHS provider costs, also squeezed resources.

State dominance of funding and provision. The third profitability barrier reported is the dominance of the state. Participants complained that the market had not really opened, and six interviewees described it as ‘immature’, despite marketisation and privatisation trends since the 1980s. They pointed to a lack of funding beyond NHS commissioning due to low private medical insurance coverage and the scarcity of patients paying out-of-pocket. Executives at multinationals pointed to countries with private medical insurance as more lucrative markets.

The nature of CCGs is one source of private-sector disappointment. Decision-making processes were described as more formal and difficult to influence after the Act. Moreover, CCGs tend to structure provision in detail rather than letting providers decide how to comply with contract specifications.

Our private-sector interviewees characterised CCGs as uninterested in stimulating privatisation. CCGs have “gone straight back to how it used to be” (Director Hospitals 1) with strong links to incumbent NHS providers. Equally, they were deterred by the possibility that, by switching to private providers, “you could destabilise a whole organisation” (CCG Lay Member). Moreover, GP interviewees were not interested in stimulating privatisation, and one private-sector interviewee argued that many CCG members “didn’t become GPs to manage a budget” (Consultancy Partner).

In addition, because of the range of high-quality services provided by the NHS and its ability to cross-subsidise, private sector interviewees reported difficulty competing with the NHS for certain treatments: “ think there are services that have to be provided by the NHS […] There’s specialist things that a private company will never do, it would be too expensive or too specialist” (Pathology Management Consultant).

Internal public-sector restructuring posed an additional challenge to the private sector, because – together with public-sector management autonomy under Foundation Trust status – it intensified the NHS’s cost advantages. Due to pressures on terms and conditions, increased workloads, and downbanding, NHS workers felt “the restrain of resources, trying to stretch over those gaps by working an exhaustive number of unpaid overtime [but] there’s downgrading, removing their clinical worth” (Senior Unionist). Moreover, Foundation Trusts could establish new businesses to circumvent collectively bargained work hours and pay grades: “we’ve got through subsidiary companies out of Agenda for Change” (FT Finance Manager). Several London-based FTs had also established clinics in the Middle East to funnel private patients to the UK.

Failed depoliticisation. The last barrier is the inability of for-profit providers and pro-market policymakers to de-politicise the market. Because of the high value placed on the NHS by the British public, privatising healthcare is a risky proposition for politicians: “the NHS is probably the one area of public sector that’s absolutely sacrosanct” (Consultancy Partner 2).

The NHS employment relations system contributes to politicisation, due to high union density, collective bargaining coverage, and the high degree of professionalisation. Campaigning groups such as Save Our NHS and Keep Our NHS Public draw attention to privatisation and private-sector service failures. Several private-sector interviewees also bemoaned the orientation of staff towards professional autonomy and the public interest rather than performance as defined by management.

Negative media reports were also named as difficulties in growing business. The media was seen as reporting sensational stories of service failures and negative patient experiences: “They [the media] love it when we get it wrong, they’re not remotely interested when we get it right” (Radiology Director 2). Negative media reports could damage brand value and a company’s reputation: “those levels of scrutiny create newspaper headlines and stories […] of concern to boards” (Global Services Director 2).

Campaigning was generally seen as anti-privatisation and almost successful in stopping the enactment of the Health and Social Care Bill 2011. A top-down reorganisation by the Coalition Government had not been expected, as party manifestos explicitly rejected this. Enactment was therefore described as “one of the most aggressive, quick policy, rushing through things that have not been scrutinised” (Union Researcher) causing resentment and disappointment. Moreover, campaigning was fuelled by the impact of austerity and reconfigurations: “it’s very easy for the public to imagine what’s going to happen when someone says: ‘We’re going to close your local hospital’, they’ve got an immediate emotional attachment, often members of their family were born or died within that hospital” (Campaigner).

The degree of politicisation varied according to the type of service provided, with highly visible services attracting attention from patients, staff and the public. Clinical services and services directly involving patients are highly visible, triggering demonstrations, with the University Hospital Lewisham – the first time the Act’s “failure regime” was triggered – being an extreme case: “South-East London, they hadn’t had a protest like the Lewisham Hospital for years and years and years, 25,000 people to defend one hospital in one borough” (Campaigner 2). Where the private sector was established, services tended to be less visible and more removed from public scrutiny. Community health services, for example, were seen as opaque because they dealt with marginalised social groups, and pathology worked “behind the scenes” (Pathology Management Consultant).

Our interviewees reported attempts to avert attention by employing little public relations activity: “We take a marketing-by-stealth type approach [and] tend to just quietly grow our business” (Home Care Director).

Findings 2: Profit-making in particular segments

While the system restricts profit-making, segments do exist where profits are realised. The privatisation of the community health services sector, for example, started in the 1980s, and by 2000, 69% of spending was on private services. Radiology, pathology and mental health were also named by interviewees as profitable, and some reported an increase in tendering activity or contract size, as well as attempts in the hospital segment to profit from increased waiting times by serving self-payers seeking to jump the queue. The NHS’s reduced investment capacity was also described as a private-sector opportunity in some market segments, since it prompted Trusts to consider outsourcing. The bulk of the work reported, however, was repeat business by incumbents. In these cases there were two main avenues for profit-making: cost reduction through process optimisation and reduced personnel costs amongst others; and achieving high and stable volumes.

Reducing costs. Efficiencies are gained partly through managing staff differently from the NHS. Low pay in the NHS is compensated with a high degree of professional autonomy, which reinforces a public-sector ethos and upholds quality standards. Private providers depart from this formula through the avoidance of collective bargaining and tight performance management.

Lower personnel costs result, first, from employing lower-skilled workers. In pathology, “a lot of band 6s and 7s manage the equipment [in the NHS]. You go to Europe or any of the new labs in the UK, you see band 3s and 4s” (Pathology Management Consultant). Deskilling is complemented by increased patient turnover achieved using lean management techniques. The advantage from avoiding unionisation is mitigated in cases where contractors employ former NHS staff under transfer of undertakings (TUPE) rules that protect their terms and conditions of employment. Contractors facing these requirements face increased production costs, according to one Hospital Director, of 12%.

At the same time work is tightly managed using IT, including to monitor: “we’ve got complete visibility about what [nurses] do, when they do it, how long it takes” (Home Care Director). Executives argue that work standardisation, and performance management of staff are a central part of strategy: “we can take the established infrastructure and personnel and deliver more quickly best practice [and eliminate] poor performance” (Global Services Director).

A final technique for reducing unit costs is intensive asset utilisation. In radiology, for example, private-sector interviewees reported a higher rate of average scans than the NHS, sometimes almost double the amount, due to limited working hours in the NHS.

Increasing volumes. Attaining large volumes in particular segments is the other avenue for profit-making. Obtaining large volumes is important for generating returns on investments, gaining access to capital, and reducing purchasing costs, especially in technology-driven areas such as hospitals and radiology, where austerity policies limit the NHS’ ability to borrow.

Large scale can be achieved in various ways. One is specialisation in one area and provision across a large geography. Another path to scale is the diversification of services – with some companies coming from outside the health sector – such that low-paying treatments are cross-subsidised by more lucrative ones.

Incumbent status was needed, according to our interviewees, to attain these high volumes. The NHS’s fragmentation made it difficult for new market entrants to build relationships: “We’ve seen a lot of people mostly from across the Atlantic who’ve tried to break in [the English market] and I think why we’re successful is because the vast majority of us, in particular senior positions, have been in the NHS, so understand it, can talk the language” (Global Services Director). Furthermore, incumbents could point to past success, which mitigated difficulties in demonstrating quality. Conversely, interviewees reported first-mover disadvantages due to high investment costs and lacking experience, track record, and relationships with the funder.

Conclusion

Our paper examines government efforts to increase privatisation in English healthcare through marketisation. By relating the market structure to general conditions of profitability we identify the barriers to profit-making and management strategies to mitigate them (all in all we identify 23 points with regard to barriers and profit-making avenues in a table, not cited here). Our assessment of the for-profit sector should be considered preliminary, and understanding the effects of marketisation on Trusts and non-profit providers is a matter for future research. However, much of what we find may persist due to the well-known path dependency of health systems, and our findings may resonate in other countries with NHS-style health systems.

For our private-sector interviewees, profits were difficult to realise partly because of austerity and the extraction of price concessions through efficiencies built into the tariff and through competitive tendering exercises that pit the private sector against low-cost and high-quality NHS providers. On the other hand, especially in technology-driven segments like radiology and pathology, austerity could also lead to investment backlogs in the NHS. The private sector’s access to capital was seen as creating opportunities to take over these services. Austerity thus had an ambivalent effect on profit-making.

Barriers to profitability identified by interviewees included the uncertainty built into the rules of this market, the dominance of the NHS as both funder and competitor, and the high degree of public attention and staff resistance directed at privatisation attempts. For-profits reported difficulty competing on the basis of price and quality with the NHS, and the complex relationship between politics and commissioning necessitated strategies by for-profits to avoid resistance from campaigners. Active profit-making strategies, according to our interviewees, consisted of cost-cutting and economies of scale, rather than qualitative innovation in care. This latter finding is striking, since innovation is one of the supposed reasons for marketisation and privatisation policies.

This study contributes to the international health policy literature by identifying profit-making as a precondition for privatisation in marketising healthcare systems and by generating a framework for understanding the conditions of profitability. While past studies have tended to assume that marketisation leads to privatisation, our framework helps to explain the limited extent of healthcare privatisation under marketisation in England.

Our analysis implies that under the current framework private expansion in England will be concentrated at a few big players in the market segments with a previous history of privatisation and not as an encompassing takeover of healthcare. Achieving economies of scale is all the more necessary for these firms, since guaranteed payment above market rates, as in the early ISTC programme, is not practised anymore. Since this requires incumbent status, profit-making strategies may be reinforcing entry barriers, thus thwarting the Government’s efforts to promote competition.

A final implication of our analysis is that the agency of workers and citizens matters in marketisation and is a major asset for the NHS. Campaigners have mounted a vigorous defence of the NHS, its workers, and its principles, and have kept health policy highly politicised. Private-sector managers argued that these political dynamics make investors wary, thereby inhibiting privatisation. Although campaigners may lack a strong voice in NHS reform, they have made the NHS a remarkably resilient public institution.

3 Comments

Clive Efford’s Bill being voted through hopefully marks the beginning of the end of the era of market experimentation with our NHS. The end of the failed decades long experiment with purchasing as commissioning.   Even the architects of the hated Health & Social Care Act with its aim of bringing about a full regulated market for our healthcare did not turn up to defend what their colleagues now regard as an embarrassing fiasco.

No Bill passed now will stop a future Tory administration, with or without a UKIP prop, from completing their mission to privatise our NHS.  No Bill passed now can prevent a future Tory administration from opening our NHS to US companies or from making rules and regulations which favour private interests.

But this Bill could be passed now.  It showed how enforced competition with its inevitable slide into privatisation can be removed from the NHS; without any reorganisation and without transition costs.  It showed how to make good on the many promises (or lies depending on your viewpoint) made by Ministers about how commissioners are actually not constrained in any way by domestic or EU law, about how we still have proper political accountability and that TTIP poses no threat.  The Bill makes such promises consistent with legislation.

The Bill is not designed to end the purchaser provider split; or to block any further competition of any kind; or to block private companies from playing some role; or to remove the private sector from the NHS.  Even if that was the policy and a way to carry out such a policy had been agreed it would still require far more legislation.

Whether or not the Bill becomes law (and it is highly unlikely that it will) the commitment by Labour to repeal the H&SC Act remains; that is a far bigger and far more complex task.  How this will be done and over what time scale is a major ongoing piece of work.

In the background is the almost visceral opposition within the NHS to yet another major top down rearrangement of the deck chairs.  That is why the Labour policy is clear about working with existing structures and about evolving change over a ten year period with most changes being resolved locally within a national framework.  Clive Efford’s Bill shows how a major policy change – to remove competition – can be achieved without massive structural changes, redundancies on a huge scale and huge fees to lawyers and management consultants.

We should also be aware that most of the evidence shows these structural changes do not work anyway.  In Scotland and Wales we have different structures but outcomes are much the same.  There are higher costs in multi payer multi provider systems as international comparisons show but the potential savings to be made in England are wildly exaggerated.  Even the worthwhile but more modest savings would not be easy to unlock quickly without disruption and unintended consequences.

The major issues that our care system has to address are around:-

  • Who pays for care and how (especially personal social care)
  • How do we reduce unnecessary variation
  • How do we improve outcomes and the patients’ experience of care
  • How do we make care person centred (or wrap care around the person)
  • How can the care system do more to address the determinants of poor health
  • How can the care system fit properly into the wider public sector – housing, education etc.

What we probably need is legislation to remove the barriers that prevent us addressing these key issues and to enable those with solutions to implement them.

Against this background we can look at the NHS Reinstatement Bill.

This is not really a Bill in that most of it is still to be worked out.  It is useful as it helps frame the ongoing and lively discussions about what structures might be the eventual result of replacing the H&SC Act and the market structures.  The central idea is about going back to the “Health Authorities” model of the 1980’s; a model alive and well in similar form in Wales and Scotland.

Two major problems with this approach are immediately obvious.  It sill treats the NHS as a separate entity disconnected from the rest of the public services, especially social care; it gives the NHS its own structures when what we need is proper accountability across the public services.  And it would require a top down reorganisation on a scale that dwarfs the Lansley farce.

If this idea is to be discussed properly then there needs to be a lot more clarity about how these two apparent problems might be addressed.  It would also be vital to know how accountability works and how the money flows; neither of which is clear from the scant outline we have so far.

Progressively moving away from the commissioner/provider separation is clearly necessary but a whole new understanding of what replaces “commissioning” has not yet been fully worked out even in Scotland and Wales, even though they are years ahead of England.

Some kind of “Health Authority” which is responsible and democratically accountable for the planning and delivery of all care for a defined population and funded through direct grant from the centre would be ideal for many.  But like ideal solutions generally it is almost certainly not possible; at least in England.  The huge complexity we have stupidly imposed on English systems for healthcare and for local government and the significant inroads made by private providers makes transition to the ideal structure impossibly complicated and expensive.

Juts as an illustration we can take one geographical area which is a shire County.  It has two embedded unitary authorities, five acute providers, two mental health providers, various primary and community care providers many in the private sector and a social care system almost totally privatised; the ambulance service is regional; out of hours and urgent care is a mostly privatised mess; there are five CCGs, three HWB’s, and thirteen districts which have a role in various health related functions.  None of the boundaries tie up with anything helpful, some NHS bodies have contracts to provide services outside the county as well as inside.  How you get that lot resolved into a single body which plans and provides for the County defies analysis.

So the debate continues and all contributions should be evaluated but we have to accept there are no magic answers.  Removing competition and resolving the tensions with private contracts is actually the easy bit if the political will is there; the rest is very hard and will take a long time and involve along the way some unpalatable compromises.  Wales and Scotland should be thankful they don’t have to face this mess.

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