Category Archives: Privatisation

Integrated Care is the most recent re-naming of Accountable Care: the system currently being implemented in the NHS in England and which is derived from the US. This blog addresses issues arising from this implementation and whether or not Integrated Care is fit for public purpose.

The narrative that comes from Westminster, echoed by parts of the media and even some campaigners, is that whilst cuts and closures, underfunding, understaffing and poor NHS management at the highest levels are all contributory factors to the problems the NHS faces, there is no overarching concern with Integrated Care itself.

On the contrary, the bringing together of commissioners (purchases of services) and providers of services is viewed as getting rid of the hated ‘purchaser-provider split’ which is isolated in this narrative from all other structural components and becomes a proxy for the market system. On this point alone the move to Integrated Care is seen as a stepping stone to a return to public service. There is even some movement to reclaim ‘integrated’ as a term of public service.

There are very good reasons why tackling this issue head on may be politically sensitive. Labour is keen to claim for itself not only the creation of the NHS (which it historically deserves) but a current role as the best defence against Trump. The Secretary of State for Health also claims that he will not allow the NHS to be in US-UK trade talks ‘on his watch’. That is understandable, but the love affair of the major UK political parties with United Health and Kaiser Permanente, amongst others, goes more than skin deep. US Integrated Care has been introduced into the NHS piecemeal over the last 30 years and we are now into the full adoption of an NHS ‘version’ being rolled out at speed. It’s here where the argument lies for politicians, think tanks and amongst campaigners . A question mark is raised over its origins and over whether it is irredeemably bad for the NHS or not.

Our counter argument is threefold:
1. The Integrated Care System does not in fact remove the ‘purchaser-provider split’, but merely changes it to a different type.
2. The constraints put upon the NHS to meet the requirements of Integrated Care are set out in terms of restructuring the service in such a way that it will no longer meet the key tenets embedded in it from its creation: delivering all services for everyone within (mostly) easy reach.
3. “One thing the community cannot do is insure against itself. What it can and must do is to set aside an agreed proportion of the national revenues for the creation and maintenance of the service it has pledged itself to provide.” Bevan’s statement worked on a national level while the ICS model creates a risk and reward system in which profit and loss are to be shared locally between the constituent players of 44 ‘local health economies’. This is entirely upending the basis for financing the NHS.

Integrated Care
The concept of Integrated Care is a longstanding method in the United States which was created to try and reduce the healthcare costs which are spiralling out of control. The most expensive part of any healthcare system anywhere in the world is acute care. It needs higher concentrations of staff per patient, more infrastructure – both buildings and equipment – and changes more rapidly than other parts of the service in its response to technological advances.
It follows from an accounting point of view that any measures which can be taken to ‘reduce demand’ on the acute sector will reduce costs. Part of the cost reduction exercise in the US involves forming collaborative bodies (Accountable Care Organisations aka Integrated Care) which share profit or loss across the different constituent bodies – that is to say the insurance groups who provide the funding from their clients (state or private) plus various hospitals, GP practices and other health services. The profit and loss sharing is designed to provide incentives for keeping people out of hospital and in theory to keep them more healthy in the community.
From the above, it is clear that purchasing and providing still exist within US Accountable Care and that it in no sense represents a return to the kind of planning required to run a public service NHS. The same is true of the system being implemented in England.

Restructuring the NHS
In order to attempt to meet the accounting criteria behind Integrated Care, the NHS’ historical provision of local GP family practices, local District General Hospitals that include full Accident and Emergency and other local services must be dismantled. Acute and emergency provision is calculated to be more cost effective if it is concentrated in hospitals that service a much larger population. Local hospitals then become satellites to the centralised major trauma hospital no longer offering the full service we are used to.
GPs are being corralled into much larger units which may run the satellite hospital or work from large centralised clinics. Property made ‘surplus’ from these restructurings can be sold as a result.
These changes are an intrinsic part of the development of Integrated Care. They are not optional, nor do they come about only as a result of the last nine years of below inflation funding.
None of the descriptions above are based on assumptions. They all come from official NHS England and Sustainability and Transformation Partnership policy documents. The reality is evident on the ground.

Risk and Rewards
“Risk and reward sharing is underpinned by a theory of change that expects a provider to adjust its behaviour in response to financial incentives”
Early adopters of the ACO model in 2012 in the US, known as Pioneers (see our report on ACOs for more details), were allowed to move to a full capitated budget. This represents the full transfer of risks from the commissioner to the ACO and it means the ACO has the incentive to cut costs in order to maximise its profit share from the budget. As in those early pioneer ACOs, NHS England has made it clear that it wishes to pass all financial risks to the Integrated Care Systems. But unlike the US model, an NHS ICS does not necessarily have to include acute hospital services in its provider collaboratives. As the greatest losses fall on acute hospital services this creates the possibility of a collaborative being formed only from those providers who can best make profits.
Our report into ACOs explains how many of the participants in the early US pioneer programme failed to see many of the implications of a shared savings programme, seeing only its potential benefits. They later discovered that they had serious financial difficulties.
This question of risk and reward sharing is one of the most important issues for an NHS provider and illustrates how they have moved from being government provided services to government commissioned services. Under this scheme an NHS provider could potentially suffer significant losses risking its financial viability to the point where it may collapse as a business.

The failures of private sector providers, as we have seen in recent years, causes inconvenience for commissioners and loss of services for patients but the potential collapse of an NHS body would have far more serious ramifications. There is also the case where a majority of an ICS’ services are provided by private sector organisations which opens the door to profits flowing out of NHS funds. Furthermore the arrangements for how both risks and rewards will be shared between providers adds another layer of complexity to the transaction costs of the NHS. This, of course, provides yet more work for management consultancies, big accountancy firms and lawyers.

What’s to be done?
We fully appreciate the desire of campaigners to achieve victories in the face of what feels to be overwhelming odds. Each local victory does throw a welcome spanner in the works. However, to ignore the structural changes being brought in and not to recognise the part that each individual closure or downgrade plays in the overall pattern of change is to ignore the elephant in the room.
That is why we think the slogan ‘Act Local, Think National’ should always be embedded in every campaign. It is important to understand that the national picture gives the corporate sector a major role in the future of the NHS as it has done increasingly over the last thirty years and that the model currently being adapted is specifically based on US Integrated Care.
This is a system built fundamentally on business principles with competition and the profit motive in its DNA. This is not a system that lends itself to public ownership and provision serving the public interest.
President Trump’s statement about the NHS being on the table in future trade talks set off a raft of responses including Jeremy Corbyn tweeting, ‘Labour will [..] ensure US private companies cannot lay a hand on our NHS. The NHS is not for sale’ and Matt Hancock saying, ‘not on my watch’. It has understandably provoked a lot of comments on social media and discussions in the press about the importance of keeping the US out of the NHS in the future. But the challenge is to change the conversation so that we openly oppose US corporate interests influencing our NHS now.

Deborah Harrington

Who We Are

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This article was first published in the Camden New Journal under the title, Brexit, and spectre of NHS US sell-off, on 16 May 2019.

There is much talk at the moment about the prospect of Brexit resulting in a trade deal with the US which will sell off our NHS to American private healthcare providers.

This fear has also been expressed by Shadow Health Secretary Jonathan Ashworth. [1] But it is critical to understand this “sell-off deal” has been under way for a long time and is fast gaining momentum, argue Susanna Mitchell and Roy Trevelion.

 

The driver of the “sell-off deal” is Simon Stevens, who in 2014 was appointed head of NHS England, the body that controls all NHS spending. Before this, Stevens had been vice-president and CEO of the mammoth American healthcare corporation the UnitedHealth Group.

Stevens has proceeded to “Americanise” the service through his subsequent NHS policy, based on a privatisation strategy he had outlined at the World Economic Forum at Davos in 2012. [2]

From first to last, his NHS policy – the Five Year Forward View, the Sustainability and Transformation Plans and Accountable Care Organisations (renamed Integrated Care Programmes) that back it up, and now the 10-year Long Term Plan – have worked to import the US model into the UK.

Unsurprisingly, the UnitedHealth Group will make major gains from this transformation. It is now the largest healthcare company in the world, with a 2018 revenue of $226.2 billion. It has many secondary companies that serve more than a hundred-million people globally. [3]

Over the years it has been prosecuted for fraud and bad faith practices. This included limiting insurance payments to doctors, and not stating its true financial results in reports to shareholders. [4] [5]

One of its fastest growing subsidiaries is Optum (formerly UnitedHealth UK). This is a leading information technology- enabled health services business. In February 2015, it was one of the commercial organisations approved by NHS England as “Lead Providers” to carry out the financial work of GPs.

It is now firmly positioned in the system and ready to take away more public money. [6]

The healthcare system in the United States is hugely more costly, and outstandingly less effective than that in the UK. In terms of funding and wellbeing, there is no rational argument for imposing it on our NHS. The only benefit it brings is increased profits for shareholders in the commercial healthcare sector.

To take three examples, first comparing cost:

On average, other wealthy developed countries spend about half as much per person on health as the US – in the US $10,224 compared to $4,246 in the UK. In 2017 the US federal government spent 7.9 per cent of GDP directly or indirectly on healthcare; however in total, taking into account private expenditure, the US spent a vast $3.5trillion or 18 per cent of GDP. This private sector spending is triple that of comparable countries. [7] [8]  This structure excludes many citizens from affordable health­care. Appallingly, one in four adults skipped a medical treatment in 2017 due to an inability to pay. [9]

Secondly, from the point of view of efficacy and wellbeing, statistics are also devastating. The US has the lowest life expectancy at birth among comparable countries (US 78.6, UK 81.2). Statistics show that life expectancy for both men and women has increased more slowly in the US. It comes 12th in the global life expectancy table. [10]

Thirdly, the US maternal mortality rate is truly shocking. It stands at 26.4 per 100,000 live births, the worst among all developed countries. [11]

In the UK the rate stands at 9.2 per 100,000. [12] [13]

Deaths for African-American women are three to four times higher than for white women. [14]

The infant mortality rate is also worse. The US rate is 5.79 deaths per 1,000 live births. [15]  The UK rate is 3.8 deaths per 1,000 live births. [16]

It is clear that if we follow the American model of healthcare it can only reduce wellbeing in the UK. Simon Stevens’ “sell-off deal” simply increases the wealth of global corporations (such as the Mayo Clinic, which has recently opened in London [17]).

It is time that this fact was “called out” loudly and clearly. All possible measures must be taken to prevent the continuing imposition of this ineffec­tive and costly system.

Susanna Mitchell and Roy Trevelion are members of the Socialist Health Association.
References, some links, live at the time of writing, may not have been maintained:
[1] BBC Question Time 25.04.2019  at 47.21 ff  https://www.bbc.co.uk/iplayer/episode/m0004hkk/question-time-2019-25042019 .
[2] https://www.sochealth.co.uk/2017/05/25/truth-stps-simon-stevens-imposed-reorganisation-designed-transnational-capitalism-englands-nhs-stewart-player/
[3] http://selloff.org.uk/nhs/CVforSimonStevens260516.pdf
[4] https://www.sec.gov/news/press/2008/2008-302.htm
[5] https://law.freeadvice.com/insurance_law/insurers_bad_faith/unitedhealth-pays-400-million-in-bad-faith-claim.htm
[6] http://selloff.org.uk/nhs/CVforSimonStevens260516.pdf
[7] https://www.crfb.org/papers/american-health-care-health-spending-and-federal-budget
[8] https://www.healthsystemtracker.org/chart-collection/health-spending-u-s-compare-countries/#item-average-wealthy-countries-spend-half-much-per-person-health-u-s-spends
[9] https://www.federalreserve.gov/publications/files/2017-report-economic-well-being-us-households-201805.pdf
[10] https://www.healthsystemtracker.org/chart-collection/u-s-life-expectancy-compare-countries/#item-le_the-u-s-has-the-lowest-life-expectancy-at-birth-among-comparable-countries_2019
[11] https://www.npr.org/2017/05/12/528098789/u-s-has-the-worst-rate-of-maternal-deaths-in-the-developed-world?t=1560004210914
[12] https://vizhub.healthdata.org/sdg/
[13] http://digg.com/2017/uk-birth-us-safety-comparison
[14] https://www.huffingtonpost.co.uk/entry/elizabeth-warren-black-maternal-mortality_n_5cc0e93fe4b0ad77ff7f717b?guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAACQmWXh6QTnSJI5sjLN1KEdQCuSnVb__LEQLJAyEiK2PZwqnVABYxo500JrU24NHWCooflTZAia50H4OJ-YzSPMUqXyGODWHMGcBXUxhfVY-fau-ViM-Ly9n32SQ1vXD-SGhWXohZRVo2givDSEbM1D3TVs38R5MjmfY_5rGZXuP&guccounter=2
[15] https://www.cdc.gov/nchs/nvss/deaths.htm
[16]https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/deaths/bulletins/childhoodinfantandperinatalmortalityinenglandandwales/2016
[17] https://www.medcitybeat.com/news-blog/2019/mayo-clinic-oxford-university-clinic-partnershiphttps://www.medcitybeat.com/news-blog/2019/mayo-clinic-oxford-university-clinic-partnership.

 

 

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All the Tory contenders to be prime minister should categorially rule out the NHS being part of any future US/UK trade deal, Unite, Britain and Ireland’s largest union, said today (Wednesday 5 June).
Unite, which has 100,000 members in the health service, said the new prime minister ‘should not offer up the NHS as a sacrificial lamb to US president Donald Trump’.
Unite national officer for health Colenzo Jarrett-Thorpe said: “The Tory prime ministerial contenders need to put the national interest – in this case, the safeguarding the NHS from US privateers – before the personal ambition of getting their hands on the keys to 10 Downing Street.” 
Concern about what a US/UK trade deal could mean for the NHS has heightened this week following remarks by Donald Trump and his ambassador in London, Woody Johnson about the NHS being included in a future US trade deal
Colenzo Jarrett-Thorpe added: “The NHS is the UK’s greatest achievement – but for Trump and his ilk, who despise the very idea of universal healthcare free at the point of delivery, all they can see is the money to be made from the sick, frail and vulnerable. 
“This was made obvious by the US ambassador’s very frank comments about his country’s intentions towards the NHS in any future US/UK trade deal, a point that was again made by Trump himself. The president’s comments today are not reassuring in any way. Unless the government categorically says that the NHS is not for sale, then patients and staff will face increasing uncertainty and worry.
“The Tory leadership hopefuls need to state categorially to the British public that the NHS is not up for sale to profit hungry US private healthcare companies as part of a future trade deal.
‘Leading Tories and their cheerleaders in the media may think that the US offers a blueprint for how a post-Brexit Britain should be – however, it should not be forgotten that millions of Americans don’t have any health insurance which does not inspire confidence.
“We strongly believe that the NHS should not be offered up as a free trade sacrificial lamb to the mercurial whims of Donald Trump – our sick, frail and vulnerable deserve so much better.”

 

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In the two decades since the publication of the Sutherland Royal Commission report on long-term care the issues around the cost of caring for an ageing population remains one of the major issues in public policy. And we remain no nearer to its resolution.

While varying elements of catering for long-term care remain the responsibility of the UK Government, devolution has allowed a fair level innovation and diversity in approach including the introduction of free personal care in Scotland which was one of the main recommendations of the Sutherland Commission.

In Wales the National Assembly’s Finance Committee has recently published a useful report on the matter from a Welsh perspective.

In very broad terms the report looked at two inter-related issues i) delivering quality care and ii) how that care will be accessed and paid for.

The report highlighted that while social care in under considerable financial pressure in Wales the level of spend has remained broadly flat in real terms between 2009-10 and 2015-16 compared to a 6.4% decline in England. None the less with an increasingly older population the per capita spending has reduced by 12%.

In responding to this pressure, and despite the increase in numbers, there was evidence that fewer older adults were receiving care. It was suggested that this was in part a reflection of the Welsh Government’s policy to promote more self-reliance and a better matching of service to need but concerns was also expressed that eligibility criteria were being tightened which means that it is more difficult to access care.

There is a greater proportion of unpaid carers in Wales compared to other parts of the UK and Europe representing 12% of the population. They are responsible for 96% of the care that is given in the community even though 65% of older carers have health problems of their own. The Social Services and Well-being Act (2014) in Wales was intended to increase support for carers but of the 370,000 carers only about 6,200 / year had an assessment with less than 20% receiving an offer of care. In response the Welsh Government has said that it is preparing a major publicity drive to make the carers more aware of their rights and to better equip social workers in their assessment of carers’ needs.

In Wales the means testing for care services is more generous that in England with the Welsh Government committed to increasing the capital eligibility thresholds for residential care to £50,000 by the end of it present term. In addition there is a cap on the level of payments for domiciliary packages. There were concerns that these thresholds could deprive social services departments of vital resources but the Welsh Government grant support has prevented that from happening.

The social care sector remains in a fragile state.. There are many instances in which private domiciliary care companies have handed back contracts to local authorities who have, in some instances, been obliged to in-source the service. The residential care sector is also under pressure particularly smaller more community based care homes. In part this is down to the fees that it is able to agree with social services departments. The rates vary across Wales, often inexplicably, and the Welsh Government has committed itself to introducing a new assessment methodology to bring greater transparency and consistency in the fee structure. In addition it is hoped that this new process will address the concerns where self-funding care home residents are paying fee levels which are, in effect, cross subsidising the public sector.

These problems are compounded by the difficulties in the recruitment and retention of staff with some providers reporting turnover levels of 25-33% every year. There are real issues of pay, status and training that need to be addressed. The Welsh Government has been promoting the voluntary registration of domiciliary care workers from 2018 with the target of compulsory registration by 2020. As well it is committed to reducing the use of zero hours contracts and to requiring a delineation between travel and work time in the working day. However it is still difficult to keep care staff when faced with better pay and conditions in other parts of the public and private sector. And all of this is likely to be exacerbated by the UK’s departure from the EU.

The report also looked at future funding models. The Welsh Government believes that a UK wide solution would be preferable but the continuing postponement of the UK Government’s green paper on social care means that other options will have to be looked at including the use of Welsh income tax powers which will be available from April 2019.

In addition a lot of consideration was given to the social care levy which has been advanced by Prof Gerry Holtham and Tegid Roberts.. Their proposal involves the HMRC to collect a levy between 1-3% depending on a person’s age. This sum would be lodged in an investment fund and used to pay for an enhanced social care package. However the report strongly believed that there needed to be a wider public debate on what the public could expect to receive in return for their contributions. The Welsh Government has established an Inter-Ministerial Group on Paying for Social Care with five separate work streams to consider the the full range of the implications of such a social care levy.

The Welsh Government’s policy statement A Healthier Wales (2018) confirmed its intent to support closer collaboration between health and social care in Wales using regional partnership boards as their main instrument to achieve this. Concerns were expressed that Wales lacked a sufficiently robust evidence base to inform social care planning thought the Welsh Government was not convinced about this. There was also a recognition of the very useful role that the Intermediate Care Fund has played in facilitating joint working between health and local government bodies.

Overall this is a useful report which highlights many of the key challenges facing social care in Wales. However there is little evidence that the Welsh Government is in a position to move toward an fully integrated “health and care service” free at the point of use or that it is likely to seek the devolution of the administration welfare benefits service which could allow for a more innovative proposals for the paying for the care of older people in Wales.

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The following article was first published in the Camden New Journal on 06 December, 2018

A private company being promoted
by government to recruit patients to its doctor service spells ruin for the whole-person integrated care we need from the NHS, argue
Susanna Mitchell and Roy Trevelion

The sneaking privatisation of our National Health Service now aggressively threatens our GPs. In Camden and across London, we all need to be aware of the long-term harms this development will cause GPs and primary care NHS services.

Last year, a global multinational corporation called Babylon Healthcare – owned by a former Goldman Sachs investment banker and Circle Health CEO – established a “digital- first” business called “GP at Hand”.

Disastrously for the NHS, Babylon Healthcare Services Ltd can be traced back to a holding company in Jersey, the offshore tax haven.

GP at Hand is contactable through a mobile app which uses standard calculations as a symptom checker. Unfortunately NHS England have not provided our existing practices with this software.

Instead any patient registering with this commercial enterprise will be deregistered from their normal GPs. And, although the GPs employed by the company can also be accessed by video or phone, this process delivers no continuity of care or whole-patient assessment.

Continuity of care is a cornerstone of general practices. However, Matt Hancock, the health secretary says, “If we need to change the rules to work with the new technology then change the rules we must.”

In addition GP at Hand’s own promotion material actively discourages older people from registering. Explicitly these are those who are frail or living with dementia, or in need of end-of-life care. Pregnant women and those it describes as having complex social physical and psychological needs are also discouraged from signing up.

In other words it is “cherry-picking” young and healthy patients who will be more profitable to its shareholders. Its use of standard practice via information technology, and the easy access it offers, is particularly attractive to the young.

Of the 31,519 new patients who have signed up with GP at Hand over the past 12 months, 87 per cent are aged between 20 and 39 years, while patients over 65 now make up just 1 per cent of the population registered with the service.

All this poses serious problems both for patients and general practices. In the first place, our present primary care system consists of GP practices committed to whole-person and integrated care for everyone in their local communities. Healthcare services are organised around geographic areas to enable better co-ordination with hospitals and social services.

In contrast to this, GP at Hand fractures this fair and impartial community-based model, registering patients who live or work anywhere within 35 to 40 minutes of one of the clinics. In addition, should any of their patients require more complex care, they will no longer have their own GP to turn to.

Secondly, by picking the most profitable patients, GP at Hand drains money away from ordinary GP surgeries. Normal GPs are funded according to the number of people on their patient list and this funding is combined into a single budget to provide the services they offer. This means that funding from the roughly 80 per cent of patients who remain reasonably well helps to pay for the 20 per cent who are elderly, who are chronically sick, or have multiple illnesses.

But if the “capitation fee” of the young and healthy is scooped up by a for-profit company like GP at Hand, it will critically undermine the funding available to surgeries. This will leave practices to deal with the sick, the frail and the old on a much reduced budget.

Shockingly this commercial entity is funded by NHS England. It can be commissioned through our clinical commissioning groups (CCGs).

It’s expanding fast, and already has over 35,000 patients. Currently the corporation operates out of five clinical locations in London including one in King’s Cross. Plans for rolling it out nationwide are under discussion. It is also advertised widely, with the health secretary Matt Hancock recently announcing that he has registered with the company.

Future developments in information technology and artificial intelligence that can be useful to our public health systems should be funded directly towards our existing GP surgeries.

It should not be used as a vehicle for profit-making by private corporations at the expense of our NHS.
We need to make the dangers of adopting this business model clear to the widest possible public. We must encourage those who care about our publicly-funded NHS to boycott Babylon’s GP at Hand.

We need to bring public pressure to bear and end this attack on a valued and trusted institution that serves us all.

The NHS has always been for the benefit of everybody. It must be kept that way.

• Susanna Mitchell and Roy Trevelion are members of the Holborn & St Pancras Labour Party and of the Socialist Health Association.

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Brexit is opening the door to NHS chaos in so many ways. But we are now presented with a new threat.

There have been concerns for many years, often expressed in this column, that the 2012 Tory design of the NHS opens the way to privatising not only services but also commissioning itself. Fighting the impact of the 2012 Act and its offspring such as ACOs/ICSs has been paramount. By shrinking the state at the same time as imposing austerity, the Tories have created the conditions for increasing mortality rates. This appears to be taking place now.

But Brexit has opened a new front: The Ideal US-UK Free Trade Agreement – A Free Trader’s Perspective.

Striking trade deals independent of the EU is the Brexiteers’ dream. This document shows how it can become a nightmare for the NHS.

The paper was released in September and is a US/UK collaboration of right-wing institutes fronted by the Initiative for Free Trade and the Cato Institute. MP Daniel Hannan is a co-author……………………

The aim is to open all sectors of the economy to investment from business. It should open all services markets without exception to competition.

They say: “The ideal FTA is one that removes all barriers to trade in goods and services, opens up all sectors of the economy to investment and, ultimately, goes as far as possible to remove all administrative impediments to integration of the economies of the parties without encroaching on the sovereignty of governments to pass laws and regulate in the public interest in ways that do not discriminate against foreign goods, services and companies”

They call for “zero restrictions on competition for government procurement.”

They have a particular interest in health services.

“Health services are an area where both sides would benefit from openness to foreign competition, although we recognise any changes to existing legislation will be extremely controversial. Perhaps, then, the initial focus should be on other fields such as education or legal services, where negotiators can test the waters and see what is possible. That said, we envisage a swift, time-tabled implementation of recognition across all areas within 5 years.”

There it is – a blueprint for privatisation, starting with what they deem softer areas like education and moving on to the NHS within 5 years.

The document goes into some detail about how such a Free Trade Agreement would deal with a range of other arenas and issues.

Milton Friedman, one of the principal architects of the current neo-liberal world order now failing the world, said: “There is nothing as powerful as an idea when its time has come. I say that time is a crisis, actual or perceived. When the crisis occurs, the actions that are taken depend on the ideas lying around.”

Hannan and his co-conspirators are seeding these ideas so that they become available when needed.

Beware Brexiteers bearing false promises – many were hoodwinked by the lies about massive NHS investment. Trade Agreements are likely to offer similar attractive lies. We must remain vigilant against these crazy and dangerous proposals.

Published with acknowledgements of GP Magazine.

 

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National Health Service (Co-Funding and Co-Payment) Bill

2017-19

Type of Bill:

         Private Members’ Bill (Presentation Bill)

Sponsor:

         Mr Christopher Chope

Progress of a Bill

House of Commons

First reading, Second reading, Committee stage, Report stage, Third reading

House of Lords

First reading, Second reading, Committee stage, Report stage, Third reading

Consideration of the Amendments

Royal Assent

This Bill is expected to have its second reading debate on Friday 26 October 2018.

This Bill was presented to Parliament on Tuesday 5 September 2017. This is known as the first reading and there was no debate on the Bill at this stage.

Details of the Bill

National Health Service (Co-Funding and Co-Payment) Bill (HC Bill 37)

A

BILL

TO

Make provision for co-funding and for the extension of co-payment for NHS services in England; and for connected purposes.

Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—

1.    Amendment of section 1 of the National Health Service Act 2006

  (1)      The National Health Service Act 2006 is amended as follows.

  (2)     In section 1 (Secretary of State’s duty to promote comprehensive health  service), in subsection (4)—

           (a)   the words “the making and recovery of charges is expressly provided for by or under any enactment, whenever passed” become paragraph
                  (a), and

                 (b)   after paragraph (a), insert or

                 (b)   the charges form part of an agreement in England for co-funding or co-payment.

2.  Other amendments of the National Health Service          Act 2006

  (1)       The National Health Service Act 2006 is amended as follows.

  (2)      After section 12E (Secretary of State’s duty as respects variation in provision of  health services), insert—

                                       ““Co-Funding and Co-Payment

  12F                Co-Funding and Co-Payment: England

  (1)            For the purposes of this Act, co-funding of NHS care shall be permissible in England when NHS-commissioned care is proposed to be partly funded—

                     (a)         by a patient, or

                     (b)      on behalf of a patient

  (2)           Co-payments permitted by virtue of this Act shall, in England, include payments made through co-funding as provided for in subsection (1)

 3             Extent, commencement and short title

  (1)          This Act extends to England and Wales.

  (2)          This Act shall come into force at the end of the period of two months after the day on which it receives Royal Assent.

  (3)          This Act may be cited as the National Health Service (Co-Funding and Co-Payment) 2018.

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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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Despite the legitimate protests against the continued fragmentation of the NHS in England and privatisation of services, a sensible look at the state of play confirms that we still have plenty of NHS to fight for and defend against further erosion. Against the clamour in some quarters that the (English) NHS has already been lost we would propose reasoned counter narrative: that campaigning has been largely successful, in ways not seen in other public services also under attack.

Despite eight brutal years of virtually frozen funding, and legislation (the 2012 Health and Social Care Act) clearly intended to carve up local services and hand over the maximum possible range of services to private providers, the NHS has been remarkably resilient in resisting both “New Public Management” and also the wider neoliberal agenda.

Those of us who have campaigned for more than three decades could instead argue for success.  We are winning the argument. Of course, we keep up the fight and are never complacent, but we need to do this with confidence not in desperation.

This does not mean there is no crisis facing the NHS. There are huge issues caused by years of inadequate funding and compounded by an incoherent fragmented system – but this is not anything new.  The NHS has seen it all before and recovered: for the last 40 years or so, Bevan’s model for the service has effectively weathered the storms of repeated efforts at reform or transformation.

With the exception of some less complex elective care, the acute and tertiary care landscape is much the same. The half-baked efforts at privatising acute management in Hinchingbrooke, George Eliot and Weston hospitals all predictably failed; as did previous attempts at franchise. The private sector has no appropriate expertise to bring to bear. Private hospitals are tiny, exclusive and uncomplicated, focused solely on delivering selected elective treatment – although happy to fill otherwise empty beds with NHS funded patients even at NHS tariff prices. There is little in the way of expansion of private hospital capacity to respond to the growing waiting lists created by flatlining NHS spending.

PFI (as implemented in health together with the equivalent LIFT schemes in primary care) was pretty well recognised and discredited as an expensive failure by the mid noughties long before the high profile collapse of Carillion. Some trusts like Cambridge and Peterborough, Sherwood Forest, and Barts are effectively bankrupted by sky-high and rising annual PFI payments.  They have been bailed out year by year through extra handouts to avoid embarrassing collapse. New schemes have slowed to a halt, the most recent being Birmingham’s Midland Metropolitan Hospital – where construction work is at a standstill.

Realistic plans are now being discussed to claw back the worst of the PFI excesses as trusts count the costs of soaring unitary charge payments. Hundreds of millions in payments each year now flow out of the NHS and out of the country to the tax-dodging offshore companies that have taken them over.  The growing reaction and disgust at windfall profits has made buy outs and forms of nationalisation now credible.

The GP role and nature of their contract in most areas is much the same: APMS contracts allowing corporations to take over have only ever achieved limited penetration, and many of those contracts have failed.  Sadly, parts of non-GP primary care have been fragmented and distorted by privatisation, started over a decade ago as part of splitting purchasing from providing.  But some of these contracts have now come back, and the fragmentation of urgent primary care (NHS 111 and Out of Hours) is being reversed in places.

On the commissioning side, the idea that every service would be put out to tender, as the most vocal supporters and opponents of the H&SC Act claimed and expected, never happened. Section 75 Regulations although eagerly exploited in a few areas, have been largely ignored or circumvented.

A series of major attempts to outsource commissioning for example cancer care and end-of-life care in Staffordshire and older people’s services in Cambridge failed or fell flat.  Huge contracts to put swathes of services in the hands of private companies (which opponents of Accountable Care Organisations fear will follow) are not happening. While the private sector holds 39% of community health contracts, these equate to just 5% of the value, with all the larger contracts remaining with the NHS. Nor, indeed, is there any significant sign of investment by US health care corporations, which would be needed if they were in fact hoping to take over any substantial parts of the NHS.

The experience so far suggests that the idea of private companies acting as the “integrator” or as the “prime contractor” for huge contracts is now laughable.  It is increasingly obvious that private firms will not take on the risk of big contracts, so these have to go to public providers.  The takeover of commissioning support units by the private sector failed and has been abandoned.

Indeed the whole mantra of ‘choice’, ‘markets’ and ‘competition’ has taken a back seat as NHS leaders extol the virtues of cooperation and collaboration. New models of care are openly touted as ways to get around the competition legislation – which remains in place as an obstacle to any genuine integration of health services. Academic efforts to “prove” the claimed benefits of markets and competition have been abandoned as a failure. There is no proof.

Of course it is a concern that the level of private for-profit provision of acute clinical services has risen steadily since 2006 (when collection of data commenced) and is now at 8% of total NHS Budget. However a significant driver for the increase is using private capacity to augment the lack of NHS capacity rather than anything ideological. The rate of increase, far from accelerating as some have feared due to H&SC Act, has slowed.

The 8% level – largely located as it is in the sectors of elective hospital care and provision of mental health beds to fill gaps in NHS provision – is still far smaller than many claim, and hardly shows we have lost the argument, let alone the NHS. Contrast this with social care provision which sadly is almost entirely privatised; with disastrous consequences.

Many of the contracts that have been signed for community health services have been dogged by failure: it’s clear that few if any profits are being made by providers, and contract values have been driven down by spending cuts.

April 2018 saw contracts for the vast majority of NHS services simply agreed between commissioners and NHS Trusts without any sign of any competition at all.  GP contracts also continue to defy competition law. Treatment of private patients in NHS hospitals edged up very slightly but not overwhelmingly as some predicted.  Private providers such as Netcare, which owned the largest chain of private hospitals, are signalling their intended exit, not expansion – there is no money.

In reality the huge consensus appears to be that recent events have shown what the theory and evidence said all along – market competition does not really work for health care services. Private providers increase costs, lower quality and impede integration and efficiency – quite the opposite of conventional claims.

As regards privatisation at service level, or outsourcing, the sell-off of NHS Professionals was abandoned after heavy protests, and there have been successes at stopping back office services being outsourced, NHS Improvement has abandoned its targets from the Carter Review.  However there have also been setbacks, notably the disgraceful recent trend of trusts and foundation trusts setting up “wholly owned companies” as a tax dodge and seeking to shift staff out of the NHS.  But we are also seeing resistance to this from the unions, and other services have been coming back in house.

And so back to campaigning.

There are two threats to the NHS – the first is from the a small minority who reject entirely the NHS model and wish to see an American-style (or more likely a European-style) insurance based model.

The second is from those who think that the NHS should keep its core principles but that private sector providers and private sector styles of management are to be given a much larger role and that patients must have more choice within some sort of competitive market.

Dealing with the first threat it appears that the argument in favour of the traditional NHS, universal, comprehensive, free and funded from taxation has been won; again!  No proper political party dares pronounce itself in favour of changing this, and in fact opinion polling shows no political party could win an election if this was amongst its policies.  Evidence to the Lords sustainability committee showed that support for “our” NHS is as high as ever.

Some argue that by deliberately cutting funding and running down the NHS public opinion will shift, so moves to an American model could be got through. A government attempting this would have to ignore the colossal cost and inefficiency of the US system, which spends more than three times the current British level per head but leaves tens of millions uninsured or under-insured, and wastes more money on admin and other overheads each year than the entire NHS budget. And, political reality suggests any government running the NHS down to a level where it lost all public confidence would not be popular! Nor is there significant support for this even among Tory party members or Tory voters, who like the rest of the population are entirely dependent on NHS provision of emergency and other services.

Others argue that creeping privatisation is being used as a tactic, believing that the introduction of massive cuts through STPs or ACOs will allow us to ‘sleep walk’ into an NHS where charges and top ups have been agreed and providers from America have taken over our hospitals and GP practices by winning long term contracts. But as mentioned above early skirmishes show these tactics are being strongly resisted, the cuts are unlikely to take place and the Americans are showing little interest.

Public vigilance on the NHS has been continually rising, to the level that even relatively marginal cutbacks in provision of walk-in centres can trigger strong public reaction. The Guardian’s leak last year of NHS Improvement’s plans to impose cutbacks through a Capped Expenditure Process triggered a sufficiently widespread angry response to force the plans to be swiftly diluted and dropped. It is inconceivable that plans for any potential US takeover would not result in an even bigger backlash.

Any change from the traditional free NHS would also require a government able to get the necessary extensive and complex primary legislation through parliament, and willing to tough this out in debate in the full gaze of a hostile public.

Nonetheless the second fear, of increased use of the private sector, is genuine and fits to the campaigns that have been running for two decades.

The only way to stop this privatisation is to have a government which does not allow it; or only allows it in extremely limited circumstances.

We want to see legislation removing markets and competition from the care system (health and social care) altogether, moving back to a public service model, minimising and then over time reversing the role for private sector providers who are largely discredited anyway.

The case for that public service approach is gaining ground and is now firmly re-established as mainstream Labour policy.  And despite what some claim we can do this whether we are in or out of the EU.

Until we get a change of government we must continue to campaign wherever necessary. We can do so strengthened by the knowledge that we can win – and steeled by awareness that if we don’t fight we will be sure to lose.

As we celebrate the survival of “Our” NHS after 70 years, and demonstrate to demand a substantial increase in funding, with year by year increases to keep pace with demographic pressures, we can be proud of our successes to date – and prepare for the next battles to come.

By John Lister and Richard Bourne

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Recent months have seen three debates in parliament about NHS privatisation. The first in Westminster Hall (23 April) the second and third in the Commons, on Subsidiary Companies (20 March) and in an Opposition Day debate (23 May). None of them mentioned the role of the private sector in determining the direction of travel of the NHS.

Commissioning, regulatory and property boards have opened a space for the revolving door to operate, embedding private sector influence – and profit – at the highest levels of decision-making.

Consistent parliamentary committee scrutiny of the Big Four Accountancy firms has raised serious questions about their suitability to work in public service, particularly in the case of corporate taxation, yet they are repeatedly given government contracts.

There are serious questions to be asked about the conflict of interest arising from having two paymasters – the public and private sectors – and about the democratic deficit which arises when public services can no longer be held consistently and transparently accountable. The collapse of Carillion and the problems around the performance of Capita have highlighted this, but the issue goes deeper than poor service provision. It undermines the role of government itself.

The de-politicisation of government

There has been a substantial shift in the governance and management of the public sector since the late 1970s. Electoral and manifesto commitments have increasingly focused on the need for ‘economic discipline’ and the idea that consumerism and efficiency will lead to lower deficits and debts. Between the parties the battle has been fought on which is the most ‘responsible’ with the economy.  In our current times that translates directly into plans to shrink the state to fit notional economic demands rather than to address the real needs of the population.

Since the early 1990s this shift has been characterised by New Public Management. Key elements of this ‘managerial state’ include creating autonomous agencies and devolving budgets and financial control. It has created market competition in the provision of the services themselves, treating the private and public sectors as businesses on an equal footing. Public services have been contracted out rather than having planned delivery through government departments. Arm’s length agencies can enter into contracts with performance-based targets which attract financial incentives. An artificial separation between policy (‘ideology’) and service provision (‘management’) has been created.

This has resulted in a parliamentary war of words in which ‘politics’ and ‘ideology’ – previously the very essence of the differences between the parties – have become insults. This was very noticeable in the NHS privatisation debate held in Westminster Hall where there was competition between the opposing sides over which was being ‘ideological’ and which was simply ‘trying to do what works best’. The NHS is frequently also described as ‘weaponised’ or ‘a political football’ whenever a rise in unexpected deaths occurs, or an individual tragedy and the opposition of the day tries to hold the government to account. The principles of public service versus privatisation are absent from this process.

Speaking in the Opposition Day debate, in his role as Shadow Secretary of State for Health, Jonathan Ashworth, maintained this approach. He described how Labour are not opposed on principle to a role for the private sector in the NHS, but they have strong objections to the wrong sort of involvement and the failure of contracting evidenced by the likes of Carillion.

The government has shown the same attitude to the failed Carillion contract. They have looked for alternative private sector providers, rather than considering a straightforward return to public service.

The irresistible rise of the management consultant

This transformation of government has meant not only an increasing emphasis on performance, outputs and customer orientation rather than population needs, but a rise of the management consultant as a necessary adjunct of policy development and service delivery. Dealing with the private sector on large scale and complex tenders is not a skill of the public sector civil service. To fulfil this function US consultancies such as McKinsey and Bain are brought in to advise and they serve two clients: government and global corporations.

David Oliver, a former clinical director at the Department of Health, wrote in the BMJ in 2014 that NHS spending on management consultancy had doubled between 2010 and 2014. “Enough”, he wrote, “to run three medium sized hospitals or employ 2,000 extra nurses. ‘Disruptive innovation’ has led to (..) spoils for management consultants, with taxpayers’ money diverted from already struggling health and care services. The health sector regulator Monitor, meanwhile, has placed contracts worth about £32m with the “big four” management consultancy companies, though its work was done with a fraction of such spending before the election”.

He says there is a “constantly revolving” door between the Department of Health, NHS England, Monitor, 10 Downing Street, and the consultancy firms, “creating commercial advantage.” He also points out that consultancy firms, “are unaccountable and can walk away from bad or damaging advice with no consequences.” He concludes, “It’s time for management consultants to face the same transparency and accountability as the rest of us.”

The constantly revolving door

An examination of who is on the boards of the NHS bodies created to run the service in England as a result of the Health and Social Care Act (2012) illustrates David Oliver’s point about the revolving door. The board of NHS Property Services, for example, has been chaired by Ian Ellis since 2014. Ellis was previously a director of Telereal Trillium, one of the UK’s largest property companies. The company sponsored an event in Cambridge in November 2013, Developing a roadmap to cultural change: the stewardship of the NHS’s property portfolio’. This event brought together ‘leading figures in the property world today’ including heads and former heads of FTSE-100 companies with over 100 members of the senior management team of NHS Property Services (NHSPS otherwise known as ‘The PropCo’), NHS England and the Department of Health.

The property portfolio of NHSPS, a private limited company, holds all the assets that previously were publicly owned through the stewardship of the Strategic Health Authorities and Primary Care Trusts.

Telereal Trillium is owned by the William Pears Group which owns the property portfolios of the DWP, British Telecom and the BBC.

The board of NHSPS has members who were previously senior managers at private sector companies which are or were themselves involved in contracts for the NHS such as KPMG, Andersens and Pfizer. The Chief Executive Officer was group property director of the Trillium-owned BT portfolio and also previously Crown Representative for Property and Facilities management for the Cabinet Office. There is certainly the potential for ‘commercial advantage’ when these are the people in control of a portfolio containing £3bn of assets, which are earmarked for sale or commercial rent under the current plans for the NHS.

The efficiencies that never were

An analysis of external management consultants by academics at the universities of Bristol, Seville, and Warwick Business School published in February this year showed that the £millions spent by the NHS has led to a “significant” rise in inefficiency, ultimately worsening services.

Jonathan Allsopp, writing in OpenDemocracy in March this year brings this story up to date with details of a typical intervention by EY (formerly known as Ernst & Young) in his NHS department. He writes that management consultancies and the Big Four accountancy firms put in bids for contracts designed to create cost efficiencies, but use cheaper, less experienced members of staff to perform the tasks to keep their own costs low. In this case, he says, “Very early on in the audit it became apparent that, beyond the basics, the auditor’s knowledge of NHS costing processes and mental health services was scant.” The auditor spent only two and a half days on site, followed by a few phone calls and emails. The draft report appeared over four months later and, “was strewn with errors including reference to ‘urology IAPT services’ which given that IAPT refers to improving access to psychological therapies makes the mind boggle. The (corrected) report itself, once published, was lacking in any real insight, full of half-baked recommendations and with the overall feel of a piece of work that had failed to get to grips with the topic that it was meant to be reporting on.”

This exercise cost the NHS £3.9million, for predicted savings that would have made the contract value £2.4million. But the payment is for barely a week’s work and as the article says, ‘a report that told us nothing about our costing processes that we didn’t already know.’

Allsopp’s experience in the service reflects the mantra that drives the UK’s economic policy as he writes, “For as long as I’ve worked in the NHS (I joined as a trainee accountant in 1990) a view has persisted that, whether we’re caring for patients or supporting those who do, no matter how hard we work or how good at our jobs we are, we’ll never quite be as efficient as our private sector counterparts; forever the lower league journeymen to their Premier League superstars.”

How many beans make five?

The practice of adopting private sector practices is called into question by a CIPFA report, Statutory Financial Accounting in the UK Public Sector: Relevance and Cost. They raised concerns over the complexity of the accounts, arguing that the public sector has followed practices in the private sector, “blindly and without any consideration of the differences between the two types of organisation and the relevance of the information provided.” They added that “it may be in the interests of the accounting profession and large accounting firms (who audit a large proportion of public sector accounts) to have more complex arrangements”.

The point the CIPFA report drives home is that accountability of public services depends on the information available about those services to be presented in a meaningful and accessible style. They say that there are standard accounting procedures for statutory services. But our public services have been required to adopt global practices issued by the International Accounting Standards Committee. This committee issues International Financial Reporting Standards (IFRS) for multi-national companies. There is also domestic legislation which must be adhered to and a number of other accounting conventions. CIPFA says, ‘the outcomes are a complex and elaborate system of financial accounting the usefulness of which is debatable’.

The report suggests that accountability is based on a fundamental belief that the public have a right to know about their public services in order that there may be public debate between them and their elected representatives. Accountability – informing the public how, what and why public money has been spent and the services it has provided – is therefore the cornerstone of public sector financial accounting. And the current system does not serve that purpose. The accounts are business accounts, not public-sector ones.

If it’s incomprehensible, it’s unaccountable

Our research into private patient income has shown us that the public accounts of the various NHS bodies are not at all geared to providing accountability. Their complexity makes them hard to fathom and drawing out the necessary figures is time-consuming and not always illuminating.

But the process of producing the accounts is profitable for the accountants. The authors of the CIPFA report were unable to find any valid data on the total costs of producing accounts for public service organisations based on the IFRS rules they are obliged to follow, but they identified a few for illustrative purposes as follows:

 

Leeds NHS Teaching Hospitals Trust 2007/08 31 pages £251,000
St Helens and Knowsley NHS Trust 2007/08 33 pages £101,000

 

The accountants who provide these services are the Big Four – Deloitte, PwC, EY and KPMG. They all have been involved in corporate scandals. These include the auditing of Carillion, about whom Rachel Reeves, chair of the Commons Business Select Committee said, “Carillion’s annual reports were worthless as a guide to the true financial health of the company”. Carillion provided services to the NHS as diverse as building hospitals and supplying meals. KPMG was its auditor.

A Public Accounts Committee report published in February 2015 said, “the tax arrangements PwC promoted in Luxembourg bear all the characteristics of a mass-marketed tax avoidance scheme”. Yet PwC, along with the other accounting giants, is still the recipient of government contracts and is auditing the liquidation of Carillion.

Frank Field MP, chairing the Inquiry into the collapse of Carillion, said,

“PWC had every incentive to milk the Carillion cow dry. Then, when Carillion finally collapsed, PWC adroitly re-emerged as butcher, packaging up joints of the fallen beast to be flogged off. They claim to be experts in every aspects of company management. They’re certainly expert in ensuring they get their cut at every stage.”

These organisational arrangements, constructed and operated by the private sector, play a key role in the privatisation of the NHS. Their activities are responsible for £millions being diverted from key front-line services into activities of great cost and dubious benefit.

Far from being value neutral, the default position of New Public Management is privatisation. This is not ‘simply’ about what works best. It is about what continues this particular economic policy.

There is an absence of debate over the competing values of the corporate and public sector.

On 11 July 2018 The NHS (Reinstatement) Bill will have a 10 minute reading presented by Eleanor Smith Labour MP for Wolverhampton SW
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On 18 May, in its property section, the Guardian ran an article entitled ‘NHS privately planning to develop Royal Free nurses’ home into luxury flats.’   

A week earlier the HSJ (paywalled) reported that University College London Hospital Foundation Trust boasted a £76m surplus after asset sales and a Sustainability and Transformation ‘bonus’.    

Most of the focus on privatisation of the NHS has been on the outsourcing of clinical services to private health providers. More recently the creation of wholly-owned private Subsidiary Companies has attracted attention and they have been debated in parliament. But there is consistently less attention paid to the extent of the policies in place dedicated to selling NHS land. These policies are shrinking the amount of publicly owned land in the name of providing cash to ‘pump prime’ transformation.   

In a Guardian article 8 February Brett Christophers, Professor of Social and Economic Geography at Uppsala University wrote, “All told, around 2 million hectares of public land have been privatised during the past four decades. This amounts to an eye-watering 10% of the entire British land mass, and about half of all the land that was owned by public bodies when (Mrs) Thatcher assumed power.”  

Despite all protestations to the contrary the NHS has been increasingly expected to transform to commercial business practice over the last 40 years and the articles above illustrate the effects of those policies. This is a mass transfer of property from public to private ownership. It has affected our utilities, education, the courts, probation and prison service, housing – and the NHS. There are no exceptions.   

Reducing the NHS Estate: The 5 Year Forward View and The Naylor review 

The 5 Year Forward View (5YFV) and the Naylor Review are based specifically on the reduction of the number of sites from which the NHS operates: fewer GP family practices, closure and downgrading of hospitals, centralisation of services. The ownership of sections of the NHS is played out in the language of the private sector – mergers and acquisitions, sweating assets – and belongs firmly in the realm of privatisation. Sales, leases with commercial rents for properties that were previously part of a real ‘one public estate’ and the transfer of properties out of the control of local governing bodies and into publicly-owned private companies like NHS Property Services are all part of the process. 

The Naylor Review was published in March 2017. It examines how the NHS in England can raise cash from its premises. Its findings are in line with the requirements set out in the Sustainability and Transformation Plans (STPs) which were introduced in December 2015 to fast forward NHS England’s 5YFV.  

The Review emphasises the need to develop out of hospital care and to provide the necessary infrastructure to increase care in the community. It explicitly states that it is the acute division of the service that is to be scaled back and the GP family practice model to be dismantled.  

Naylor argues that 57% of the cash that can be found from the sales which will pump prime these changes will be found in London. Charing Cross Hospital, for example, may be reduced to just 14% of its existing area and the rest sold off for development. He has a second report on London estates unpublished for reasons of commercial confidentiality.  

The reality for investors looking at development properties is that central London hospitals occupy valuable sites; long-derelict, small town general practice surgeries do not. Naylor’s Review emphasises the combination of sales of existing estates and the introduction of private finance to create newbuilds as key to changing the Estate to meet the New Models of Care set out in the 5YFV.  

The danger of taking ‘surplus’ land at face value 

Although the NHS land sales are being used as part of a programme for enforced change, they are not unique in the public sector. Across all departments land sales are being promoted as a solution to the housing crisis. Theresa May chose to prioritise this area in her 2017 conference speech. This appears to be evidence of a worrying trend to prioritise land values and property, which give high returns to private investors, over the provision of essential public services. The real risk for the NHS is that the more it moves from its core purpose, the less likely it is to be there to provide a service for future generations.  

There are a growing number of campaigners, think tanks and housing organisations who support the ‘release’ of land on the basis that it should be re-used for beneficial public purpose of a different kind.  

For example, New Economics Foundation has an interactive map which shows a huge amount of public property for sale and proposes that users start to have a say in creating new community developments on those sites. The National Housing Federation produced a briefing, ‘Releasing NHS Estates for Community Benefit’. Its executive summary says: 

“The National Housing Federation has been working to explore new ways that housing providers and the NHS can work together to use NHS surplus land. NHS trusts often have surplus land, but do not have the skills or resources to develop and manage it. Given that early release housing or key worker housing could provide improved patient outcomes and reduce cost of care there is a strong case for housing providers and NHS trusts to work together in developing surplus land. 

On this principle three uses have been identified: 

  • step down facility 
  • supported housing 
  • key worker housing. 

The challenge with these proposals are the Treasury targets for income and housing receipts. This paper, including analysis from Frontier Economics seeks to explore the economic benefit and examine some specific case studies for how organisations can work together.”

The Royal Free and the lie of ‘surplus’ land 

The clash between rhetoric and reality is illustrated in the case of the Royal Free. In the Guardian article the property for sale is already keyworker accommodation. But because it is a valuable site it is proposed that it should be sold off for development for luxury flats. However, the building itself was gifted to the Royal Free nearly 100 years ago by Lord Leverhulme. That means that its current running cost will be modest and accommodation can be provided at low rents. To buy land at current prices in order to develop new key worker accommodation is likely to be impossible without increasing rental charges.  

The agents, Frank, Knight and Rutley are advertising the development on a restricted access webpage. The plans have not yet received local authority planning permission, but with everyone from the Prime Minister to local housing campaign groups squarely supporting a policy of surplus land disposal, it is easy to see why the estate agent is behaving as if it is a foregone conclusion. In the article, one current resident said, “the trust has sold several other key worker accommodation blocks in recent years”. “We wouldn’t be the first residential place they’ve sold,” he said. “They seem to be doing quite a lot of selling their affordable properties for development.” 

Perhaps the resident was referring to The Royal Free Foundation Trust acquisition of Barnet and Chase Farm Hospitals NHS Trust in July 2014. Chase Farm Hospital was the focus of local campaigning over the loss of its A&E but it is now subject to planning permission. Although a downgraded hospital is included in the plans, the key workers’ accommodation there has been lost too and 500 residential homes and a primary school will be built on the site.  

Resistance will be met with regulatory power 

As well as a push to develop any identified surpluses, Naylor’s recommendations are that GPs must move out of their old properties which they own into new ones which they will not own. Naylor suggests, “GP practices can be given incentives to move into new facilities, supported by substantial private sector investment. NHS commissioners and regulators have considerable latent authority to insist that premises be fit for purpose. These powers could be used far more explicitly to ensure that new investment is in line with the 5YFV and to force the pace of investment in or exit from inadequate premises.” 

Naylor’s analysis of the GP estate demonstrates a clear preference and expectation of mass transfer from public to private ownership and financing. Naylor himself was reported as being delighted at the £3.3billion of private financing for new primary care facilities. According to the investors, the money could fund up to 750 new primary care centres but this is predicted to cost the NHS up to £200million a year in new rental charges. 

The Review claims that within each STP those providers that have greater potential to raise money will share the money with those poorer and less well-endowed providers they are partnered with. However, with the bulk of the cash being found from sales in London it is not clear how these benefits will extend to the whole country. And that highlights a problem with the Guardian’s headline: ‘NHS privately planning to develop Royal Free nurses’ home into luxury flats’ because it isn’t ‘the NHS’ that is doing this, it is the Foundation Trust, as a business, which will reap the profit itself. 

What’s mine is mine: the inexorable rise of the disproportionately wealthy hospital trusts 

The Shelford Group, representing some of the richest foundation trusts in the country, raised the issue of cross-subsidy in their written submission to the Health Select Committee on Integrated Care Systems. The HSJ 13 April 2018 reported that the Integrated Care Systems are under threat from this approach as organisations are unwilling to risk losing their sustainability funding if a neighbouring clinical commissioning group fails to meet its plan.  

The HSJ article on University College London Hospitals Foundation Trust (UCLH) shows just how much that matters. The Trust has sold The Eastman Dental Hospital site to University College London. It has also sold a subsidiary company it created in 2011 for its radiology services in which it had a 50% share in partnership with Australian firm Everlight Radiology. 

The HSJ says, ‘the trust said it was approached to dispose of its stake as part of a process in which Everlight sold its teleradiology business to an asset management group. It was sold for £6.1m, generating a profit of £4.8m. Its original stake in the partnership had been £0.75m.  

These profits will net UCLH additional Sustainability and Transformation Fund payments of £35m on top of its own core allocation of £15m. This is the second year running it has accrued substantial additional payments because of land sales. The extra money comes from awards allocated but not paid to other Trusts either because they failed to meet their financial targets or didn’t agree one. 

The PropCo and Commercial Rents 

The 5YFV’s New Models of Care, on which all these property deals and ‘re-shaping’ of the estate are based, are experimental. Such a large-scale change without extensive consultation and testing jeopardises the NHS’s ability to provide safe care. Historically the replacement of NHS delivery of mental health care led to disastrous consequences for patients. The 5YFV relies on a similar care-in-the-community model replacing many NHS services with an emphasis on self-care and non-clinical services. Land sales and privatisation must be examined in this context. 

The Health & Social Care Act (2012) made provision for the creation of the NHS’ own private limited company which was registered with Companies House in 2011 (before the Act was passed), NHS Property Services Ltd (PropCo). It owns the property which was previously under the stewardship of the Strategic Health Authorities and the Primary Care Trusts. Although it is currently wholly-owned by the Secretary of State for Health, it is a private limited company. These properties have passed from public to private ownership. 

The precipitous creation of the company and its nature caused concern to the House of Commons Health Committee. The National Audit Office (NAO) investigated and uncovered failures of good practice. It noted that the government had failed to properly consider forms of public ownership and failed to provide detailed operating objectives. The NAO noted that one of the outlined advantages of setting up a company was the possibility of a future complete sale to the private sector.  

There is precedent for this with the sale of both the Department of Work & Pensions estate and the HMRC estate, so this is not idle speculation. 

The PropCo announced in April 2016 it was to start charging market rents to its NHS tenants with immediate effect. The company has already commercialised the leases on the properties it acquired. The biggest transfer of properties so far took place in December 2016, when the company completed the acquisition of the freeholds of 12 Community Hospitals in Devon into its ownership, with the last line of their press release stating: ‘leases to regularise occupation are currently being finalised’. It is clear that in this context ‘regularise’ can only mean ‘commercialise’ and that rent increases will follow.  

It is estimated that GP surgeries and Community Hospitals owned by the PropCo (which are not already listed or projected for sale) will have to find in the region of £60million a year from their diminishing incomes to pay these rents.  This is another step in aligning the NHS with commercial and market practices.  

Despite the commercial rents the PropCo is taking from the funding given to NHS bodies by the government to provide frontline services, its Annual Report and Accounts show it is making a loss. Its auditors report that: ‘the substantial shortfall between the costs required to provide the company’s services and the income derived through rental is funded through a recharge to NHS England and the Clinical Commissioning Groups. This recharge is in the nature of a grant and does not have any conditions attached to it.’  

It is a private company whose debts are covered by the Treasury to keep it solvent whilst its charges undermine the solvency of its tenants. 

Project Phoenix: private organisations rising from the ashes of public service 

The latest private sector creation to be involved with this complex web of sales and public-private partnerships is Project Phoenix. Project Phoenix is the creation of six major regional public/private property deals which could be in place by June 2019. The procurement process is due to start shortly. The Project is described as a venture to attract companies to ‘unlock’ capital funding for the NHS. The companies formed by these six property deals will be known as Regional Health Infrastructure Companies (RHICs). Just like PFI, these infrastructure projects will be ‘off the balance sheet’ and will sell publicly owned property and replace it with private rented. They are described as the “delivery route” for trusts and Sustainability and Transformation Partnerships to transform their estate. 

Project Phoenix is the realisation of Sir Robert Naylor’s plan in his review of NHS property. He calculated that up to £5.7billion of funds could be ‘accessed’. The RHICs will increase the number of private subsidiary companies already proliferating in the NHS as they will be set up to run the development projects necessary to create the new privatised NHS estate. 

Bring it back into public hands  

The response from the Department of Health and Social Care to the petitioner who achieved the debate on privatisation which was held in Westminster Hall on 23 April said, the private sector has always played a vital supporting role in the NHS, for example in building hospitals, in providing facilities management services”. But the pretence that this commercial property and private company development is a normal part of public service delivery must not be allowed to carry on if we are to retain an NHS which is fit for purpose. 

Private companies can be sold, as the NAO warned about NHS Property Services Ltd and UCLH have demonstrated with their sale of their radio-imaging company. Unless something is done, unless this process is halted, there will be a proliferation of sales and developments of land, and transfers of subsidiary companies into private hands. The need to restore the NHS to public service becomes ever more urgent.  

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On the 4th July, the National Health Service will celebrate its 70th birthday and there will be much fanfare and celebration. The NHS has been described as one of the greatest social achievements of the 20th century with its promise to care for the British people from cradle to grave. But all is not well.

Intense financial pressure

The NHS was established as a publicly funded, publicly provided and publicly accountable service but the systems and mechanisms which ensure health care for all are now being progressively dismantled and NHS funding is being reduced and diverted to private operators and their shareholders.

Despite a rising tax base – the population has increased by 2.5 million and is predicted to grow by 440,000 a year over the next ten years health care needs are not being met. This is because the government has taken a political decision to reduce NHS services so that those who can pay will pay and go privately.

The visible signs of reductions in funding and diversion of funds to private operators are the closures of hospitals, GP surgeries and community services and sales of NHS estate. NHS England has cancelled tens of thousands of hospital operations, much needed operations which in turn are creating the biggest backlog in the health service’s history. A&E services are in a near permanent state of crisis on a daily basis and on many days some hospitals report having no hospital beds available with bed occupancy levels over 100 per cent.

All the key indicators within the NHS worsened over the last few years, with waiting lists reaching 10-year highs. A shortage of doctors, nurses, beds and care packages for elderly patients means that black alerts, trolleys in corridors and dangerous safety levels for patients are at a peak. What was once confined to winter is now an all-year-round occurrence.

As financial and operational performances deteriorate any additional resources allocated to the NHS by the government are being used to bail out hospitals with large deficits and enormous annual PFI charges. Precious NHS resources are being squandered on management consultants, lawyers, accountancy firms, PFI contracts and commercial contracting. Commercial contracting creates waste and fragmentation of care and risks are passed from commissioner to provider to patient like a sinister game of pass the parcel.

Faced with large financial deficits NHS managers holed up in their offices and board rooms look at how they can use their new powers to generate private income – now that NHS foundation trust hospitals can generate up to half their income from private patients and other sources. At the same time Foundation Trusts are undertaking more privatisation and entering into joint ventures and creating companies to transfer staff.

Dismantling the NHS

The fear of the financial costs of ill health is rapidly returning. The principle of a universal healthcare system free at the point of use is broken. This government has ushered in a creeping reduction of universality, with the withdrawal of entitlements and demonisation of ill people, old people, immigrants, asylum seekers, refugees alongside the incremental rationing of care, for example Windrush migrants and introduction of health care migrant charges. For 70 years people were treated on the basis of need not screened for their eligibility.

The government’s new plans for health care, which are being rapidly introduced and without proper public debate or parliamentary scrutiny, turn on new models of care are drawn from the US – the most expensive and unfair system in the world.

These new models labelled and relabelled ACOs, STPs, ICS, ICPs, MCPs PACs have one endpoint – the Accountable Care Organisation. The government plans to drum up billions of pounds and award giant contracts for at least ten years to private for profit providers.

The government calls this integration. The reality is that commercial contracting will involve transferring statutory decision making for planning and resource allocation to non statutory bodies. In this way risks and costs of care are shifted to patients are shifted to patients.

The NHS is being fragmented, undermined and decimated. There are no countries that provide universal healthcare on this basis. The legal basis for shifting commissioning functions to non-statutory bodies is currently being challenged in the court and the hearing of the judicial review will be heard on 23rd and 24th May, funded by the public.

The Health and Social Care Act 2012 removed the duty on the Secretary of State to provide universal health care throughout England and ushered in market competition. It dismantles the NHS. Only parliament can restore what parliament has taken away and this needs legislation.

Reinstating the NHS in England

This is why it so important to support the NHS Bill which will be tabled as a private members Bill on 11th July by Eleanor Smith MP.  This Bill reinstates the NHS. It will reintegrate services within contiguous geographic area based statutory health bodies making them publicly accountable to local people and to parliament. It will reinstate the duty on the Sec of State to provide universal health care throughout England. It will restore the principles of fairness for all which has been the hallmark of the NHS. It will restore needs-based planning for geographic populations. It will abolish marketisation and commercial contracting. It will abolish the internal market and Foundation Trusts and centralises PFI debts making them the responsibility of the Treasury.

The intergenerational unfairness which has made individuals responsible for long-term care must be remedied and means testing and privatization of care ended. Mechanisms for public accountability must be renewed.

We should restore the founding principles of the NHS through national terms and conditions of service for doctors and all NHS staff. Above all, we must allow professional standards to thrive since these are the basis of public and patient trust.

In its 70th anniversary year, what the NHS requires is not reform but revolution – a quiet, collective revolution that brought the NHS into being in the first place.

By Kailash Chand and Allyson Pollock

first published in Political Quarterly 1st May 2018

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