Category Archives: Privatisation

Good integrated healthcare or neoliberal con?

La Ribera Hospital

The Alzira Model is named after the town in Spain where the La Ribera hospital, the first hospital using this model, is located

Map of Spain

The Alzira Model:

  • Goes beyond the PFI model of the building being privately operated to also include clinical services
  • Paid for by a capitation fee
  • The first contract covered only the La Ribera hospital and was signed in 1997, the hospital opened in 1999 and the contract was terminated in 2003 due to losses.
  • Replaced by second contract, which widened the remit to also manage the primary healthcare of the surrounding health area.

The Spanish National Health System

Spanish health system

There are operational differences to UK NHS

  • Responsibility for healthcare has been devolved to the regions
  • Specialist care  (e.g. Children’s hospital) is covered at Health Area level
  • A health zone contains a hospital plus primary health centres. Residents are allocated to primary health centres. (No choice of GP, as in UK) Residents are referred to hospital by a GP at their primary health centre.

The model was hailed as a tremendous success story by neoliberal groups around the world with the following claims:

  • Cheaper to deliver than traditional public sector healthcare – savings of around 25% being achieved
  • Good for patients and staff
  • Affordable for the taxpayer

The Reality

(a) The Spanish context

  • Labour costs in Spain: Clinical staff in public hospitals are part of the Spanish Civil Service, which has very generous pay, above OECD average, whilst working hours are less than average – if we compare to the UK NHS savings of around 20-30% can typically be made.
  • Financing by regional savings banks Prior to financial crisis their governing bodies were dominated by regional politicians – so no risk transfer. Low rates of interest charged on loans

(b) No financial success story

  • The integrated contract was only viable because of:
  • Generous Increases in capitation fee in early 2000s
  • Low interest rates
  • Low labour costs
  • Cherrypicking and freeriding

All of this was hidden due to poor governance systems and lack of accountability

Further flaws

  • Very optimistic capitation fees at start
  • 1st contract failed – political coverup on re-letting
  • Wage protests
  • High staff/patient ratios
  • Additional costs of monitoring ignored
  • Many items omitted from contract
  • Recommended structures for managing PFI-style policy all missing in Spain (Specific Public/Private Partnership unit, model standardised contracts, public sector comparator, any method of project evaluation)

Proliferation of the Alzira Model

  • Used for other integrated healthcare (i.e. hospitals and primary care) in Valencia region with similar findings
  • When used elsewhere (both in Spain/elsewhere in world), it has tended to be for hospitals only


Given that it’s NOT a good cost effective way of delivering healthcare, what does the usage of the Alzira Model mean?

  • A way of keeping artificially keeping debt off the public sector balance sheet?
  • A way to impose an ideological right wing view of creating a market for healthcare?

Performative Frame

  • Superiority of private sector style techniques in delivering a better quality service
  • Linked with political will to create a market for Public/Private Partnership healthcare over the long term – shift from infrastructure (just 5% of global healthcare spend) to clinical services (lucrative and stable long term returns)
  • Increasing involvement of healthcare companies


Breakdown of Alzira model in Valencia

Regional government changes from right wing Partido Popular to left wing coalition who scrap the policy amid corruption scandal of director of the healthcare group

The rhetoric of success from global consultants needs to be challenged

This was presented at our conference on Accountable Care Systems

Tagged | Leave a comment

Some of us that have worked in and around the NHS for years are getting very worried. Not just about the mismatch between aspirations and funding but because of a malaise deep within the NHS itself – the culture might be one word for it.

Particular concerns come from those of us who examined the STPs and are now looking at plans for ACS/ACOs; and separately but connected – the sudden outburst of plans to outsource NHS services to wholly owned companies.

Parking for now the wisdom of these moves what raises concern is the appalling way the NHS is going about trying to force changes through.  The lack of any robust governance, refusing to consult, badly written documents and obviously implausible plans just being voted through by apparently sensible people.  We even have the Chief Executive of one of the major NHS quangos admitting on his exit that they were managing plans they knew were bonkers.  The NHS leadership and the Ministers can’t even agree on basic issues such as the extent of “additional” funding.  Those same leaders also admit that the system is unable to deliver what it is “Mandated” to do.  Full speed into the iceberg.

Why are people signing up to things they know won’t work?

What on earth is going on?

A select band had the misfortune to look in detail at the STPs.  We have also recently had the task of evaluating plans from multiple Trusts to set up wholly owned companies.  Our immediate reaction is exasperation at just how poorly prepared these plans are (with a few notable exceptions).  The NHS appears to have lost the skills required to write Business Cases and to be able to subject these to proper evaluation and change control.  Many Trusts turn to “consultants” who give them cut and stuck reports of poor quality and limited value which they slavishly follow – what happened to due diligence?  The shelves full of guidance and the endless reports on lessons learned and common causes of failure are simply gathering metaphorical dust.

And let us not forget the infamous Strategic Projects Team that for many were the consultancy of choice; ironically they were not procured through any competitive tendering despite their enthusiasm for markets and competition.  They advised Trusts on magic plans and it took years for them to go from winning awards to being forcibly wound up.  The NHS does not learn

With the wholly owned approach the driving force is now wrapped in the age-old NHS saga – we are being put under pressure, something must be being done, this is something, we are doing it.

When we had at least some form of strategic oversight (through Strategic Health Authorities) there were some with the skills and the clout to push back on the more daft plans that came to their attention.  No more.

Developing the STPs was a master class in how not to develop plans for a whole system change programme.  Keeping things secret, anonymous leadership, refusing to consult organisations that were claimed to be partners, wasting millions on private sector advice to do the obvious was bad enough.  What was worse was that when what were claimed to be plans finally emerged they were pants.  The level of quality varied from poor to awful (OK with 2 or maybe 3 exceptions).  Already analysis by various reputable groups has shown how totally inadequate these plans are.  So they lost the word plan from the title!

Now, yet again plans that have serious financial risks and which require thousands of staff being moved out of the NHS are being pushed through without a Business Case, without having conducted any Options Appraisal, with a refusal to publish the documents and with decisions about spending our money being taken in private  and with a refusal to consult with staff representatives.  Why is that even allowed – what oversight is applied to these Trusts who say they have been given the go-ahead by the Regulator!

So how is this possible?  Where are the system leaders challenging autonomous dysfunction?  Where are the Non Executive Directors who ask tough questions?  Where are the Trust governors who refuse to sit back and allow stuff to get forced through?  Where is the oversight of commissioners?  And even – what happened to common sense?

Maybe we know the answer.  It is back to that word culture.  In the NHS the toxic culture of bullying with all that implies is rife.  Successful NHS leaders do what they are told, even when they know it won’t succeed.  In fact for many, their tenure is so short they will have moved before failure occurs.

So what of the latest wheeze, to let the NHS lead on setting up Accountable Care Organisations responsible for the planning and delivery of the care needs of large populations?

Well, based on the above no STP/ACS/ACO should be permitted if it has leadership drawn from the NHS.  It is time we found proper leaders, willing to engage and consult, able to speak their own minds and there to genuinely represent the best interests of the patients and public.


Tagged | 7 Comments

The disgraceful failure by the private sector to provide vulnerable addicts with the safest and best quality treatment available was exposed at the end of last month in a damning report issued by the Care Quality Commission (CQC).

72% of private providers of residential-based detoxification were found to have been failing in at least one of the fundamental standards of care that everyone has a right to receive. Shamefully, providing ‘safe care and treatment’ was where the CQC found the most breaches: 63% of providers failed to meet this standard at the time of their first inspection.

Detoxification under clinical supervision is often the first stage of a person’s addiction treatment. Often difficult and unpleasant, it is vital that they receive the best possible treatment to support their onward rehabilitation and recovery.

And yet systemic faults were found in the way these services are provided by the private sector. Many were basic and entirely avoidable errors.

No alcohol for me

For example, some staff were caught giving paracetamol to people within their care more frequently than every four hours, despite the heightened risk of liver damage among heavy alcohol users. In other cases, staff failed to plan how they would manage fits during withdrawal, despite knowing that the people in their care were at risk of having seizures.

Training in basic life support, consent, mental capacity and safeguarding were all found to be severely lacking. At times staff were found to be administering medication, including controlled drugs like methadone, without the appropriate training or being assessed as competent to do so.

This is extremely serious. People undergoing residential-based medical detoxification from alcohol or drugs often have complex physical and mental health problems alongside their addictions. According to the Royal College of Psychiatrists, the potential dangers of erroneous detoxification include fits and hallucinations, suicide risk and risk of prescription opiate drug overdose.

That’s why it is essential staff looking after these vulnerable patients are properly trained, follow national clinical guidelines and have appropriate 24-hour medical cover.

So what explains this appalling failure?

My own research in September revealed that the Tories have cut vital alcohol and drug treatment programmes by £43 million this year, forcing many people to turn to the independent sector for help. These cuts are part of wider damaging public health cuts, to the tune of £800 million by 2021.

Specifically, 106 local authorities are reducing their drug treatment and prevention budgets this year, with a combined cut across England of £28.4 million. Similarly, 95 local authorities are reducing their alcohol treatment and prevention budgets this year by a total of £6.5 million. Equally concerning, services for children needing help with drink and drugs will be slashed by £8.3m across 70 town halls.

Last month the Children’s Society revealed that parent’s alcohol abuse is damaging the lives of 700,000 teenagers across the UK. Frustratingly, at a time when demand for councils’ children’s services is rising, severe funding cuts from central Government are leaving more and more families to deal with these huge problems alone.

Yet without support at an early stage as problems emerge, families can quickly reach crisis point and the risks for the children involved grow.

The children of addicts must not be forgotten and supporting them is a personal priority of mine. Having grown up with an alcoholic father, I’m acutely aware that as a society we simply aren’t doing enough to deal with the effects of addiction.

We know that children growing up with an alcoholic parent can often themselves go on to develop problems with alcohol or drugs or suffer mental health problems.

That’s why during our party conference I reiterated my pledge to implement the first ever national strategy to support children of alcoholics and drug users.

We also mustn’t ignore other forms of serious addiction. My colleague Tom Watson, Labour’s Deputy Leader, has powerfully exposed the Government’s abject failure to treat problem gamblers.

According to the Gambling Commission the number of people with a serious habit has risen to 430,000, with a further 1.6 million at risk of developing a problem.

And yet, shockingly, the government has no idea how many problems gamblers are being treated by the NHS or how much their addiction is costing. Like alcohol and drug addiction, we must start viewing gambling addiction as a mental health problem and not a moral failing.

Theresa May’s mishandling of Brexit and her narrow majority in the Commons has left her with little ability or inclination to tackle these ‘burning injustices’ across society. Addiction treatment services have unquestionably suffered as a result.

Forcing people to turn to inadequate private sector treatment is entirely unacceptable. That’s why Labour will continue the fight to ensure our health and care system, including addiction services, remains public, free at the point of use and there for all who need it.

First published by Our NHS

Tagged | 1 Comment

While the snow delights children and Instagram users, it is confirmation for our NHS staff that winter is most definitely here. Already hospitals have had to divert patients away because of over-capacity and 20,000 patients were stuck in the back of an ambulance for over 30 minutes in a period of just two weeks.

The state of the NHS under the Tories gets worse each day with ever-lengthening queues of the sick as waiting lists climb beyond four million. Last year 2.5 million people waited more than four hours in A&E, while over 560,000 people were designated as “trolley waits” because of acute bed shortages.

Austerity for the NHS has meant the biggest financial squeeze in its history, public health budgets cut and social care slashed severely by billions.

Some 14,000 beds have disappeared from the NHS and hospitals are now often occupied at unsafe levels. Over 400,000 elderly and vulnerable people are without the social care support they otherwise would have received. Community walk-in-centres have closed and local pharmacies seen their budgets cut all putting more pressure on A&E departments.

There are vacancies for more than 35,000 nurses, despite promises to recruit more GPs, we have 1,000 less than a year ago and we have seen district nurses and health visitors lost from the front line. The abandonment of the 18 week target for “non urgent” operations will mean more and more of our constituents waiting longer in treatment in pain and distress.

The news earlier this year that increasing numbers are now paying for operations such as hip replacements or knee replacements, because of escalating waiting times, should send alarm bells ringing for campaigners who share my belief that we must restore a fully-funded, comprehensive, universal, publicly-provided and owned national health service.

Meanwhile, advertisements have emerged across the London Underground for private healthcare – “topdoctors” – telling London commuters that when you need a doctor you need the “best one” implying the best aren’t in our NHS. I’m not sure they could be more offensive and crass if they tried.

This are all the very real implications of Tory underfunding and we’ll make no apology for continuing to highlight the impact on patients. Indeed we’ll redouble our campaigning efforts to demand our health service is given the investment it needs as we head into the 70th anniversary of the NHS.

And as we celebrate 70th years of the NHS we’ll continue to campaign to end the toxic privatisation agenda that destroys the very soul of the NHS too.

In our recent manifesto we pledged to repeal the health and social care act, and to reinstate the powers of the secretary of state for health to have overall responsibility for the NHS. We are determined to reverse the Tory privatisation of our NHS.

That’s why earlier this year I raised warnings about a possible fire sale of NHS assets after my research showed that ministers had doubled the amount of land  – now up to 1,332 hectares including many used for medical purposes – they’re looking to sell off.

And at our party conference John McDonnell confirmed his intention to deal with the PFI deals that see taxpayers’ money drain out to private companies.

But perhaps the urgency of our commitment to end privatisation was laid bare last week with the shocking revelation that Virgin Care had successfully sued our NHS, some say for possibly up to £2m, after losing out on an £82m contract to provide children’s health services across Surrey.

This action has drawn widespread condemnation with thousands signing a petition demanding Virgin “give the money back”. A tweet from Richard Branson asking whether it’s possible to fall in love with a brand seems particularly ill judged in this context.

Meanwhile Babylon have been given a contract for an online GP service effectively cherry picking the patients easiest to treat.

Under the Tories more of the NHS budget has gone to private health firms, many of whom have become increasingly aggressive in pursuit of contracts. Department of Health figures show that the percentage of its funding allocated to the private sector is about 7.6 per cent, the equivalent of £8.7bn of the total NHS budget.

In fact the real figure is most likely far higher: much private work is masked from official records by complex operating arrangements with large private-sector health corporations whose sole concern is creaming off profits from public money.

NHS staff will be the first to tell you just how harmful this needless privatisation has been. A survey earlier this year of BMA doctors found that more than two thirds were fairly or very uncomfortable with independent sector provision of NHS services. Many were rightly concerned that the primary motivation for many independent sector providers is profit, rather than providing the highest possible standard of care for patients.

The source for this privatisation agenda is the Tory health and social care act. Despite vociferous opposition from Labour, patients and the public, Part 3 of the 2012 Act extended market-based approaches to health care, resulting in far greater private sector involvement as competition became the preferred means of improving health care.

Prior to the act, hospitals were only allowed to make 2 per cent of their income from private sources, but with the legislation’s passing the cap was egregiously lifted to 49 per cent.

Unsurprisingly, the Tories’ expansion of the internal market has led to one third of contracts being awarded to private providers since the act came into force in April 2013.

Some of these private contracts are vast and their failures have wasted millions of pounds worth of public money. A contract in Staffordshire to deliver end-of-life and cancer care worth £1.2bn was dropped in April- the procurement for the cancer element alone cost the four Staffordshire CCGs more than £840,000.

UnitingCare Partnership in Cambridgeshire and Peterborough is another controversial example of a procurement collapsing. Over £1m of public sector cash was wasted after an £800m, five-year contract to provide older peoples care collapsed just eight months after going live.

Similarly, in January 2015 the private sector operator, Circle, pulled out of a 10 year contract to run Hinchingbrooke Health Care Trust, a privately managed NHS district general hospital. This left the NHS with the subsequent operational risk when the franchise failed: Circle were only liable to cover financial deficits of up to £7m over the ten years, which was far below the total deficit incurred during the three years the private firm were in charge.

Private meddling is equally damaging on the commissioning side. Just a few months ago Burton Hospitals Foundation Trust was forced to pay £300,000 in VAT charges due to a controversial “prime provider” contract involving Virgin Care. These charges would not have been incurred had services been commissioned directly by the CCG rather than Virgin Care, which is outside the group of NHS organisations that can recover VAT costs.

In many instances, because of underfunding local health bosses feel compelled to turn to the private sector. The resultant lack of capacity means mental health and community services in particular have often had to rely on the private sector for short-term fixes.

Similarly, in the acute sector, drastic bed shortages have forced NHS hospitals to turn to the private sector to carry out non-emergency services. NHS Improvement reports that expenditure on outsourcing elective treatments to the private sector rose significantly from £241m in 2015/16 to £381m in 2016/17. For example, earlier this year we learnt that more than one-third of hip and knee operations are being carried out by companies such as Spire Healthcare, BMI and Nuffield.

Desperate NHS Trusts have also been forced to increase their expenditure on private ambulances by a fifth in just two years, despite serious patient safety ramifications. Indeed, the Care Quality Commission has highlighted that some private firms use less qualified staff who are forced to work in poorly equipped ambulances, with insufficient infection prevention and inadequate clinical governance.

For example, one patient transport contract was handed to a private company who sub-contracted to 20 other companies. When some of these companies ceased trading they couldn’t pay their ambulance drivers for eight weeks. Patients were routinely left stranded for hours often missing important appointments. Eventually this shambolic privatisation was ended and brought back in house.

The unprecedented financial squeeze on the NHS, coupled with the private sectors’ ability to undercut NHS providers, means CCGs will increasingly be under pressure to outsource more contracts, despite concerns about the quality of service that may ensue. This is another reason why campaigners must join us in demanding the underfunding of the NHS comes to an end.

Moreover, there have been shocking increases in hospital car parking charges, much of which has been contracted out to the private sector. Whilst thousands of disabled drivers and low-paid staff lost their free hospital parking last year, one of Britain’s biggest parking firms celebrated a 38 per cent jump in profits. It’s why Jeremy Corbyn committed Labour to abolishing car parking charges across the NHS.

The sad truth is that privatisation schemes like these are increasingly, and disproportionately, affecting the most vulnerable people using our health service.

But we can fight back.

Just a few months ago my shadow ministerial colleague Justin Madders secured a major victory by forcing the government to back down on their outrageous plan to privatise NHS Professionals. This effective and successful public body saves the taxpayer around £70m a year, by ensuring hospitals don’t have to rely on expensive private staffing agencies.

New privatisation fronts could well emerge too. There are fears that not only will Accountable Care Organisations (ACO) be a means to control local health spending through greater rationing and service cuts but that also they will be used as backdoor to private sector involvement in commissioning and providing local services too.

It’s why last week I tabled EDM 660 demanding a Commons vote and full parliamentary scrutiny on Tory plans to push through the creation of these Accountable Care Organisations.

And as the government attempts to negotiate new international trade deals we will be watching carefully, ready to call out any attempt to include the NHS in free trade agreements.

Next year is the 70th anniversary of the national health service, our party’s greatest achievement built by Nye Bevan and opposed tooth and nail by Tory parliamentarians who voted against its creation over 20 times.

Our commitment 70 years later is a fully funded NHS, reinstated and reintegrated NHS. An NHS restored as a public service, publicly provided with its democratic accountability strengthened.

I’m calling on Labour members, trade unions, NHS campaigners, and patients to join me as we campaign for the future of our NHS. Just as Labour created the NHS and rebuilt it in government, we will again fight to save our NHS today keeping it universal in scope and there for everyone when you need it.

First published by LabourList


“One more term of Tory government after this should be enough to see off the NHS.  It will not collapse overnight and Ministers will not announce is abolition.  Rather, it will go the way of dental services, where more and more practioners went private until, in some areas, it has become almost impossible to find an NHS dentist.

In a few days, a doctor’s conference will debate a motion calling on the British Medical Association to consider how GPs “can  be supported……………within a private, alternative model”. Nothing may come of this motion. and doctors  won’t walk out en masse.  But some time over the next few years, without anybody really noticing, significant numbers of GPs will start to charge for at least some services.  The numbers will grow, as will the charges.   The NHS will not die with a bang but fade away with a whimper.”

Peter Wilby – New Statesman 3-9 November 2017

This warning must act as a challenge to ensure our precious NHS receives adequate support and funding


Over many years we have seen the NHS develop some really stupid ideas. To be fair realising that they were stupid may only have become obvious with hindsight – but not always. Key characteristics of stupid ideas are that they rest of dubious assertions not solid evidence; they make wildly optimistic assumptions; they lack (or refuse to publish) the details of the case; they are not independently assured; they are driven by outsiders (usually management consultancy firms); and those who decide to go ahead are never there to be accountable when everything goes wrong.

Many PFIs, a lot of the ISTC’s, much in Connecting for Health, Commissioning Support Units, Regional Procurement Hubs, outsourcing commissioning (Cambridge, Staffordshire etc), outsourcing patient transport, pay cartels, management franchises, some STPs and so on ad nauseum (literally).

You might say this is the price of being innovative and trying things and that failure is one way of learning. But evidence of any learning from failures is scant.

So, the latest wheeze is wholly owned companies – arm’s length bodies. The ideas around setting up arm’s length bodies is hardly new as it has been done for two decades in local authorities. But some parts of the NHS are determined to ignore all that has been learned.

There are examples of sensible approaches to arm’s length bodies – where the reasoning behind the venture is clear. An example would be some ALMOs set up to manage council housing. One NHS FT has set up a company to better deal with facilities management and some other services using a model that makes some sense.

But what we seeing now in the NHS is the use of such a devise simply to undermine national terms and conditions – with claims that workforce costs can be reduced by 15% (or pluck any figure you like) simply be taking the staff out of the mainstream NHS. This is just like the argument that brought us Circle managing Hinchingbrooke – that a new model of management has to be better and cheaper – which proved eventually to be nonsense.

Other reasons offered as a smokescreen are that there are tax benefits or the ability to be more “commercial” or the idea that the shiny new organisations adds new customers which then add income – these are all fanciful and risky. It’s amusing that making profits for one part of the NHS as service provider out of another part of the NHS as a customer is supposed to be sensible.

There is no doubt that this is all about an attack on the workforce. One case set out that “flexibility” was needed, that sickness absence must be better controlled and that new kinds of jobs were necessary – all of which are perfectly possible within the mainstream NHS. Again, the echoes are there from a time when facilities management of various kinds was outsourced simply because the Trusts were unable to manage their staff properly.

Setting up new bodies that are outside the NHS, behaving like commercial companies, setting their own bargain basement terms and conditions and competing for business from other NHS bodies is surely exactly what we are all trying to get away from. The most likely scenario is that the change will cost a lot to implement, will alienate a large section of the workforce and make others fear they may be transferred later. Why not deliver all services through arm’s length arrangements? We could have commissioning Trusts that just meet once a year and place contracts – a nightmare dreamed up by some local authorities.

This is a stupid idea and those who should know better in NHS England and NHS Improvement should step in and stop it, because this kind of outsourcing does not work. Just as they should have stopped the outsourcing of commissioning debacles in Cambridge and Staffordshire or the never-ending saga of the in/out CSUs. Get a grip!

Tagged , | 2 Comments

Much of the reporting about the NHS is dubious to say the least. Both the government and those that oppose it are prone to making false claims and also whipping an anecdote into a major issue. Experts are no longer regarded as necessary or valuable.

As we move out of the era of markets and competition into what should be a better future we have to find better ways to communicate, to make more effective use of a wealth of actual evidence and also to challenge those peddling false news on social media – even if it means hate mail and trolling!


In recent papers Steve Iliffe and I have argued that the second era, of markets and competition and of market choice, in the NHS is now over. We look forward to the third era – a better care system. In developing ideas around the third era we need to ask how to involve the public. But there we have a concern as so much reporting about the NHS is “fake”; we appear to be in a new era of information provision where experts are devalued; where evidence is replaced by anecdotes; and where clicktivists and social media reporting replaces the trade press. Cognitive dissonance is mainstream and confirmation bias reduces genuine debate.

Sadly, this is made worse by the lack of openness and transparency in the NHS (fed by lack of accountability) which then opens up the chance for alternative news and views.

So how can the public assess proposals for change – in the increasingly unlikely chance anyone asks them?

Examples of Fake News1

The first example needs no comment.

Mid Staffordshire Hospital

NHS targets may have led to 1,200 deaths’ in Mid-Staffordshire.

NHS managers were yesterday accused of putting targets and cost-cutting ahead of patients as a report into at Mid-Staffordshire Hospitals trust found up to 1,200 people may have died needlessly due to “appalling standards of care” at a single hospital. 

Telegraph 18 March 2009

The reporting around the poor care identified at Mid. Staffs was itself poor. The most authoritative comment was that “it would be unsafe to infer from the figures that there was any particular number or range of numbers of avoidable or unnecessary deaths at the Trust.” But allegations of thousands of needless deaths persisted.

(What we do know is that the data on death rates at Mid. Staffs was wrong as it was not recorded correctly.)


To show how Ministers and the government can also be implicated there was the long running saga over the funding with a headline: £10 billion or £4.5 billion: what’s going on with NHS spending?

In brief there was the claim that the government is providing not just the £8 billion of extra funding that the “NHS requested”, but £10 billion of extra funding. Every analyst pointed out that the government’s £10 billion commitment isn’t all of what NHS leaders asked for, and isn’t as generous as it sounds. The false claim is still made.

(No serious analyst believes the claim that the NHS is getting the funding it reasonably needs.)

Hunt v Hawking and Weekend Effect

We then have: Jeremy Hunt accuses Stephen Hawking of ‘pernicious falsehood’ in NHS row. One aspect of the spat was the doctors urging an inquiry into Jeremy Hunt’s NHS ‘weekend effect‘ claims; claims that increased mortality at weekends is due to staffing (and related issues). The argument included a letter signed by doctors and scientists including Stephen Hawking accusing the health secretary of misrepresenting evidence – a subtle form of fake news

(There is a weekend effect and there are raised mortality rates, seen in many countries with different health systems, but there is no evidence to support this being due to staffing issues – in fact it is not yet know what causes the effect.)

HSMR Dr Foster and More Deaths

The joint venture with Dr Foster saw many years of high profile reporting around death rates and much hype over league tables and all sorts of claims about what this showed in terms of care. Some who questioned the validity of the methodology and the claims were threatened with disciplinary action! Anyway here is the current voice of reason:-

The small proportion of deaths judged to be avoidable means that any metric based on mortality is unlikely to reflect the quality of a hospital. The lack of association between the proportion of avoidable deaths and hospital-wide SMRs partly reflects methodological shortcomings in both metrics. Instead, reviews of individual deaths should focus on identifying ways of improving the quality of care, whereas the use of standardised mortality ratios should be restricted to assessing the quality of care for conditions with high case fatality for which good quality clinical data exist.

(It’s all gone a bit quiet on the HSMR front and anyway we now have the less commercial SHMI which is better but still cannot be used objectively to point to poor care – it might but it might not.)


After a few years away mergers are back in fashion. If you have one locally you will see press reporting of what a great idea a merger is and all the benefits that it will bring. The evidence says otherwise: –

Given the lack of evidence that mergers typically lead to more sustainable organisations, it is increasingly difficult to justify the amount of funding being dedicated to mergers rather than other potentially more effective approaches to transformation.

Where providers contemplate transactions, we need to ensure a higher standard of strategic thinking on alternative options and a realistic assessment of the costs and benefits of merger.

PFI (Into more contested space)

Nobody doubts there are serious issues with many PFIs through massively naïve contracting and accepting ludicrous business cases…..

However, on the fake news front, it has often been stated that £1 in every £10 that goes to the NHS is to pay off debts from Private Finance Initiatives (PFIs). Reality intrudes. The total annual payments to PFI providers in NHS is £2bn in round numbers; so that would be more like £1 in every £55. But the £2bn includes around £1bn which is for Facility Management services, including ongoing maintenance, and soft FM like cleaning and grounds maintenance – which is not free to provide. So, £1 in every £110. But this too ignores the possibility that there are at least some compensatory benefits (the benefits set out in the business cases made huge claims!); and actually, building new hospitals costs money however you finance the work

So the excess cost of PFIs is more likely to be around £000ms pa (less benefits), serious money but not £1 in £10 and not easy to claw back.

Cost of the Market

As Steve and I have argued the market and competition in the NHS has demonstrably failed. There are major opportunity costs in having the market ideas within the NHS but what about the real costs of tendering, invoicing and other work that comes specifically with a market? Here is a quote from a recent article:-

No-one knows the exact cost of this bureaucratic ‘marketplace’. A recent estimate by rebel Lib Dems put the figure as high as £30billion a year. Dr Jacky Davis and other doctors and campaigners including the National Health Action Party have put it at £10billion a year. The Centre of Health & the Public Interest put it at a ‘conservative’ £4.5billion a year.

The £10bn figure is a misrepresentation of a report from the Health Committee2 – when the actual cost evidence is accessed (it relates to 2003) the actual research does not identify the cost of the market – it looks at changes over time in total costs of administration and management. The £4.5bn has no source at all except the discredited £10bn – the CHPI paper does not cite evidence.

Extensive searches reveal that there has been no study into the actual cost of the market in the (English) NHS. Nobody has gone through NHS accounts and picked out the headings for “market” costs. Some studies have gone round the margins and looked at comparisons with non-market Wales and Scotland. Some have used FoI to ask Trusts and CCGs how much they spent on market activity like procurement. We do know some £000ms has been spent (totally wasted?) on consultancy related to procurement.

But, much work around tariff (HRGs), activity costing, coding, resource allocation, funding flows would be needed whatever kind of system there was in place; they don’t just come with the “market”. And actually if the £10bn was true then Wales, which would have no such costs, would have a huge costs advantage: there is no sign of this.

At best £000ms pa could over time be saved once we get rid of the market.


As mentioned the era of markets and privatisation in the NHS (the second era) is over and it failed to deliver. It did not fix the problems inherited from the first era or bring the benefits its proponents claimed. However rarely a day passes without someone claiming the NHS has gone or is going soon. It is being sold off, or privatised or Americanised – or a plot is being hatched.

There is a frequent mixing of various meanings of privatisation. The extreme version is of a privatised NHS which is no longer free and has moved away from the single payer NHS:-

No longer

  • Universal
  • Comprehensive
  • Free
  • Funded centrally from taxation

There is no sign of any opposition to continuing the single payer model, no matter what a few politicians are quoted as saying some years ago. All the evidence to the Lords Sustainability Committee supported this view – there was no opposition.

Privatisation in the sense of NHS services being outsourced to the private sector has increased since it was first measured consistently in 2006. It remains a threat and activists and others rightly challenge attempts to outsource core services, usually successfully. Much outsourcing has actually been ineffective – as with well evidenced scandals such as with Patient Transport Services. Various very large contracts which effectively attempted to outsource commissioning responsibilities have collapsed, but again there remains a real threat to be confronted by some poorly led CCGs.

Specific threats (such as to community services) obviously remain. But in general terms this version of privatisation is not really increasing. Payments to private (for profit) providers for health care accounts for 7.7% of the NHS budget in 16/17 the same level as in 15/16. Payments into the NHS for the treatment of private patients stands at just under 2% of income, much the same as it has always been.

The Plot and its Outcomes So Far

To complete the discourse on privatisation it is worth looking at what was claimed to be the evidence based and inevitable consequences of the 2012 Health & Social Care Act:-

  • The NHS would become just a kite mark attached to all sorts of providers
  • There would be a much reduced NHS hospital sector
  • Foundation Trusts would focus entirely on financial success
  • The majority of outpatients setting would be in privately owned cheaper local facilities
  • NHS hospitals that remained would be run by private companies
  • Specialist clinicians would be self employed and work for a mix of organisations including private
  • Many patients with long term conditions would have a fixed care budget which could be topped up
  • Insurance companies would sell products offering support for co-payments
  • Commissioners would use and become reliant on private healthcare companies.

The reality is that none of that happened, is not happening and is not planned for any future we can reasonable expect.


Much of the reporting about the NHS is dubious to say the least. Both the government and those that oppose it are prone to making false claims and also whipping an anecdote into a major issue. Experts are no longer regarded as necessary or valuable.

As we move out of the era of markets and competition into what should be a better future we have to find better ways to communicate, to make more effective use of a wealth of actual evidence and also to challenge those peddling false news on social media – even if it means hate mail and trolling!

1 (Reports that are either just made up or else so factually wrong as to defy any sensible impartial examination.)

2 4th Report of the Health Committee, Session 09/10 on Commissioning

Taken from the presentation to the Health Policy and Politics Network Conference – September 2017


 How We Can End the PFI Rip Off

Next time you have an appointment cancelled at hospital, or a headteacher tells you their school will be losing staff because of budget cuts, ask how much PFI debt they have – the answer may surprise you. My hospital trust, in north-east London, spends nearly £150m a year repaying its PFI debt – nearly half of which is on interest payments. If Theresa May is serious about taking on the unacceptable face of capitalism, she could save Britain a fortune if she goes after the legal loan sharks of the public sector.

New research from the Centre for Health and the Public Interest (CHPI) shows just how much these debts are hurting our NHS. Over the next five years, almost £1bn of taxpayer funds will go to PFI companies in the form of pre-tax profits. That’s 22% of the extra £4.5bn given to the Department of Health in the 2015 spending review, and money that would otherwise have been available for patient care.

The company that holds the contract for University College London hospital has made pre-tax profits of £190m over the past decade, out of the £725m the NHS has paid out. This alone could have built a whole new hospital as 80% of PFI hospitals cost less than this to construct. This is not just about poor financial control in the NHS – UK PFI debt now stands at over £300bn for projects with an original capital cost of £55bn.

Private finance initiatives are like hire-purchase agreements – superficially a cheap way to buy something, but the costs quickly add up, and before you know it the debt is crippling.

For decades, governments of both main parties have used them for the simple but ultimately short-sighted view that it keeps borrowing off the books – helping reduce the amount of debt the country appears to have, but at great longer-term expense. Its now painfully clear that the intended benefits of private sector skills to help manage projects have been subsumed in the one-sided nature of these contracts, to devastating effect on budgets.

No political party can claim the moral high ground. The Tories conveniently ignore the fact that these contracts started under the John Major government – and are expanding again under Theresa May, with the PF2 scheme. Labour veers between defensive rhetoric that PFI was the best way to fund the investment our public sector so desperately needed during its last government, and angrily demanding such contracts be cancelled outright, wilfully ignoring what damage this would do to any government’s ability to ever borrow again.

It’s time to grasp the nettle and get Britain a better line of credit. That requires both tough action on the existing contracts to protect taxpayers’ interests, and getting a better deal on future borrowing. Some have already bought out contracts – Northumbria council took out a loan to buy out Hexham hospital’s PFI, and in doing so saved £3.5m every year over the remaining 19-year term. But as the National Audit Office has shown, gains from renegotiating individual contracts are likely to be minimal – what is saved in costs is paid out in fees to arrange.

However, the CHPI research also shows up another interesting facet of PFI.  Just eight companies own or appear to have equity stakes in 92% of all the PFI companies in the NHS. Renegotiating not the individual deals done for hospitals or schools, but across the portfolios of the companies themselves could realise substantial gains. Innisfree, which manages my local hospital’s PFI and others across the country and has just 25 staff, stands to make £18bn alone over the coming years. If these companies are resistant to consolidating these loans into a more realistic cost, then it’s time to look again at their tax reliefs, or – given the evidence of excessive profits in this industry that shareholders have received – resurrect one of New Labour’s early hits with a windfall tax on the returns made.

Longer term, we need to ensure there is much more competition for the business of the state. Despite interest rates being low for over a decade, these loans have stayed stubbornly expensive. The lack of viable alternatives – whether public borrowing or bonds – gives these companies a captive market. If the government wants better rates, it needs to ensure there are more options to choose between, whether by allowing local authorities to issue bonds, or reforming Treasury rules that penalise public sector borrowing in the first place.

As our public services struggle under the pressure of PFI, Labour must lead this debate to show how we can not only learn from our past, but also provide answers for the future too. The government has already spent £100bn buying the debt of banks through quantitative easing. With Brexit expected not only to add £60bn to our country’s debt but also affect our access to European central bank funds, taking on our expensive creditors is a battle no prime minister can ignore in the fight to stop Britain going bust.

This article was originally published by the Guardian newspaper on Wednesday August 30th 2017.

Tagged | 1 Comment

The NHS (Private Members) Bill, which once again is looking for a sponsor in Parliament, sets out proposed legislation to return the NHS to the organisational structures that were in place in the 1980s. That was before the purchaser/commission/provider split, before the increase in NHS clinical services being provided by private sector, before the quasi internal external market and before external governance and regulation

It is difficult to debate the value of the NHS Bill. It anticipates the closure of hundreds of existing organisations and the creation of hundreds of new ones, across the NHS and local authorities – with all that implies in terms of transfers of staff, assets, responsibilities and accountability. There is no supporting analysis of the impact; what it would cost, how many jobs would be changed or moved, how assets (and debts!) would be allocated, how long it would take and how a better care service would emerge as a result of changing structures. There would also be implications for the wider care system, especially social care.

However those supporting the Bill know it could never become an Act. No subject as complex and with such far reaching consequences could be dealt with by a Private Members Bill. And Private Members Bills are only (rarely) passed into law when they have wide ranging support – which the NHS Bill clearly lacks. Many MPs who are sympathetic to the aims simply will not back any proposal to have yet another major top down redisorganisation.

Supporters of the Bill say the point is not to change the law but to get debate on serious and important issues. But the arcane and legalistic framework of a Private Members Bill is not a sensible way to facilitate debate – there are far better ways that experienced parliamentarians can explain.

There is however some scope for a Private Members Bill to address the chaos that has been caused by the obvious reality that what is actually happening in the real world of the NHS is at complete odds to the legal framework set out in the disastrous Health & Social Care Act 2012. The NHS leadership and even the Tories in their manifesto have signalled the need for change – maybe even primary legislation to restore some credibility.

So it would be better for all if a more consensual, less complex Bill could be proposed, one which might even have some chance of making progress with the possibility that this could force the government to at least do something. Many of the aspirations of the NHS Bill to push back against privatisation could be met.

Any Bill would need to do two fundamental things. First remove any externally imposed requirements for NHS services to be arranged through a system of competitive tendering and second to allow the NHS to adopt organisational forms to better suit a system based on planning, collaboration and cooperation.

Obviously expert help is needed with drafting but this would appear to require

  • repeal of Section 3 of the H&SC Act 2012 (and with it the S75 Regulations)
  • restoration of the powers of the Secretary of State to direct any NHS body (including Foundation Trusts)
  • and a power for the SoS to approve changes in organisations (mergers, partnerships, acquisitions) including bringing commissioning and providing together or bringing local authorities and NHS bodies together. (This could even allow for Health Boards.)

Concentrating powers again with a SoS legally and politically accountable to parliament for a universal and comprehensive NHS would be achieved but such powers might need to be constrained for example by making the powers to issue directions or introduce regulations being subject to proper public consultation and scrutiny.

The big debate to be had would hopefully then be about accountability and governance and what is “National” in a system where boundaries of all kinds are constantly shifting – what arrangements for service delivery would be variable according to local circumstances.

There could be scope for a much simpler and shorter Bill which deals with the immediate and serious issues widely accepted to be making highly challenging times even worse. Of course it would never pass but it would get a lot of support and so a lot of coverage of important questions which need answers. It would push at a door which is already starting to open and would also pile pressure on the government to do something.

Of course none of this deals with the most serious issue facing the care system which is the chronic lack of adequate funding.


Privatisation in its various guises is “spreading across Europe’s health services like a rash”, writes John Lister of Keep Our NHS Public and Health Campaigns Together. EU member states’ health systems are broadly split between those based on employment-related health insurance and those financed via general taxation. But both have been subject to political and policy pressures, including from the EU-level, that have created conditions conducive to a growing role for private sector companies in this traditionally public service.

The threats to public healthcare (cartoon) pro-privatisation
The threats to public healthcare

Squeezing profits for shareholders out of health services risks deteriorating working conditions; worse pay, reduced staff levels, greater workloads, more stress, all of which negatively impact on safety and quality of care. Greater health inequality is fostered as private, for-profit providers ‘cherry-pick’ lower-risk and paying patients, whilst higher-risk and poorer patients, or those needing emergency care, remain reliant on under-resourced (thanks to austerity) public health service provision.

A combined set of EU-level pressures appear to have helped create a pro-privatisation environment. Whilst there is no single channel of influence in Brussels of private healthcare interests (e.g. private hospitals, private health insurance, etc), there is evidence of corporate lobbying influence by big business groups, companies and think tanks. This, and a shared underpinning ideology, helps feed the financial and political agenda that encourages more privatised models of healthcare. This article explores the EU policy areas – and the role of corporate lobbying – that help create this pro-privatisation orientation in the field of healthcare: marketisation, trade, public private partnerships, and economic governance.

1. The marketisation of healthcare

Healthcare is a national competence, not the remit of the EU. Right? Yes and No. Rulings from the European Court of Justice, and the European Commission’s policies of recent years, mean that “Services delivered by national health systems are, as a rule, now considered as an economic activity”.1 For a long time, member states argued healthcare is not an economic activity, as most providers do not intend to make a profit.2 But its treatment as one means EU rules on the internal market (free movement of goods, persons, capital and services), public procurement and state aid, in principle apply to healthcare services. TheCommission’s 2011 directive on cross-border health care, partially based on internal market rules promised to expand the choice of patients in Europe.3 More fundamentally, it answers the question of whether healthcare should be publicly planned or subject to market forces. It also opens the door to countries’ exporting their healthcare problems, e.g. richer member states sending patients to poorer ones where treatments are cheaper, potentially depriving locals of medical resources that instead go to well-paying foreign patients – a problematic kind of ‘medical tourism’. There is also an inbuilt inequality around whose choices are increased: patients likely to leave their country for treatment will mainly be those able and accustomed to travel or live abroad, in other words those with higher incomes. Whilst “the choices of those who are not mobile, for language and cultural reasons, and who are dependent on neighbourhood support, may actually shrink as a result of local services becoming increasingly under-funded” ie those on lower incomes.4

According to academic Dr Christoph Hermann, the “public nature of healthcare provision in Europe has been challenged through a series of reforms that amount to what can best be described as the marketisation of health care.”5 The process of marketisation isn’t just the establishment of internal markets in health (ie domestically or via the EU single market); it includes outsourcing, public-private partnerships, competition between different providers, and the sale of public hospitals to private investors. Officially aiming to cut costs and improve efficiency, such reforms, says Hermann, have really helped create healthcare markets that “promote inequality among patients and healthcare workers and erode the public nature of healthcare provision.”6 There is also an obvious limiting factor to a ‘market’ in healthcare: those in most need of healthcare are least able to pay the ‘market price’ for it – “the elderly, very young, people with mental illness or the chronic sick, many of whom are poor”.7 So, for private healthcare to be profitable for more than just the wealthiest minority, it still requires public funding. Despite all of this, the Commission’s enthusiasm for a free market in healthcare has not dampened. When Health Commissioner Vytenis Andriukaitis’ started office in November 2014, Politico reported that the Commissioner envisioned “a single market for health services” that mirrors the logic of a single market for energy.8

Box 1: Professional (privatisation of) services firms

According to Jane Lethbridge, Director of the Public Services International Research Unit (PSIRU), global accounting and consultancy firms have “played a key role in promoting health sector reform by supporting governments to introduce internal markets to public health care systems”.9

  • The Commission outsourced an ‘evaluative study’ on its cross-border healthcare directive to professional services giant KPMG.10 KPMG is a “committed Corporate Partner” of right-wing UK think tank Reform,11 which, writes The Independent, is “at the forefront of controversial calls for ever more private sector involvement in the delivery of health care”.12 Apparently, Britain’s ex-European Commissioner for Financial Services, Lord Hill, once sat on Reform’s board, and was expected to “be very successful indeed” at “bringing that reform to Europe”.13
  • Price Waterhouse Coopers (PwC) has drawn flack over its revolving door with UK health policy decision-makers, and for cashing in on ‘restructuring’ of the UK’s National Health Service (NHS), including the notorious PFIs14 (see box 4). Lethbridge also notes that firms like KPMG and PWC specialise in refining the language of privatisation reforms into more palatable rhetoric about ‘patients choice’ and a ‘safer, sustainable future of healthcare’.15
  • McKinsey plays an integral role in the creeping privatisation of the UK NHS, which it has firmly embedded itself in.16 Despite clients including health insurance companies and hospital chains,17 McKinsey says in its EU lobby register entry, “We are independent advisors to EU institutions”.18
  • Another EU-level influencer is Brussels-based think tank Health Consumer Powerhouse, run by former Burson-Marsteller and KPMG men.19 Branding itself as a neutral monitor of healthcare systems, it is in fact deeply partisan: it told the Commission the EU must build “a well functioning healthcare service market”, and make healthcare “a competitive European service industry.”20

Spotlight on the European Union of Private Hospitals (UEHP)

No doubt having an office just a few hundred meters from the Commission’s Berlaymont headquarters helps lobby association UEHP in its mission to promote private hospitals in Europe and an “internal market in the field of healthcare”.21 The private hospital lobby’s reported €200,000 – €299,999 lobby expenditure (2015) probably doesn’t hurt either, nor its presence in multiple Commission advisory structures,22 and regular invitations to Commission seminars and conferences.23 Released documents reveal that Commission health directorate DG SANTE sent officials all the way to Madrid and Monaco for UEHP’s 2015 and 2016 council meetings, and to Milan for a 2015 conference covering the role of private hospitals in healthcare ‘modernization’.24 And that’s not all. In November 2016, UEHP met with Health Commissioner Andriukaitis to discuss ‘patient mobility’, ‘modernisation of health systems’ and ‘sustainability of healthcare’25 friendly sounding rhetoric for marketisation and more private-sector service provision. UEHP’s President described the Commissioner’s “interest and consideration”, with the meeting confirming that UEHP’s “voice is important”.26 Meeting minutes show Andriukaitis’ emphasis on “the need to cooperate” and to consider how private and public health sector “cooperation” can be “rationalised so as to counter unfair competition”.27 In this context, ‘unfair competition’ means not letting public healthcare providers receive public money unless private firms get their hands on it too.

UEHP’s voice not only reverberates down the corridors of the Commission; it also makes sure to be heard in the European Parliament. In March 2017, UEHP presented its vision at a conference in the Parliament,28 assuring MEPs that “private hospitals in Europe promote patients’ freedom of choice”, which stimulates “fair competition in healthcare” among EU member states, and so contributes to the “sustainability” of national healthcare systems! It also called for greater private sector involvement in the implementation of the cross-border healthcare directive.29 Writing in the Parliament Magazine in 2016, UEHP noted its “long term cooperation” with policy makers, “working on new financing rules, integrating public and private insurances reforms”.30 And, it emphasised its work at national levels, with ministries “connected with health policy reforms”. A disturbing indicator of its national level agenda is given by a news story on UEHP’s website about its German member. The German Association of Private Clinics (BDPK) is suing a district council for subsidising a local public hospital.31BDPK’s complaint against the District of Calw is that subsidising only local municipal clinics with taxpayers’ money is unfair, and discriminates against e.g. other hospitals in the vicinity that are operated by private companies. Put simply, no public money for public hospitals unless it also goes to private ones. The application to healthcare of the principles behind EU internal market rules, like non-discrimination, underpins this claim.

Box 2: The glossy world of private healthcare business conferences

UEHP was a media partner of Healthcare Business International’s 2017 conference, the private healthcare networking event of the year (tickets around £2000 a pop!).32 Held in the political heart of London, “governmental relations” was an over-arching theme, and sponsors included Siemens Healthineers, Abbott Diagnostics, private equity firm Advent International and healthcare real estate investor Medical Properties Trust. KPMG co-hosted the awards for ‘business model innovation’.33

2. Trading health for profit

There is great concern across Europe that the EU’s international trade and investment deals “could further open up healthcare for competition and hand a bigger role to private commercial providers, financial investors and insurance companies” – as put by the European Public Service Union (EPSU).34 Trade deals of the ilk of EU-US deal TTIP and Canadian sister deal CETA, may pose a threat by treating healthcare as part of the services sector, opening it up to competition from global healthcare companies. The devil is in the details: public services are defined as being “supplied neither on a commercial basis, nor in competition with one or more service suppliers” (GATS Article 1.3). But, as PSIRU has pointed out, after “twenty years of public sector reform and the marketization of public services, very few public services operate on a completely non-commercial basis without any form of competition”.35 The negotiations on the Trade in Services Agreement (TiSA) are also of concern, as “semi-public services” like healthcare are covered by the negotiations. These do not fall under TiSA’s narrow definition, and henceforth could be privatised at the drop of a hat”, warns Transnational Institute.36

Another major worry is that investor protection mechanisms (private courts in which companies can sue governments for policy changes that reduce their ‘anticipated’ profits) in trade deals make it very difficult for governments to reverse healthcare privatisations without facing hefty lawsuits.37 And unfortunately, the Commission is (re-)negotiating many trade deals, including with Japan, the Philippines and Mexico,38 in which services’ market access and investor protection provisions are standard. As are other features designed to give corporate actors more influence, like so-called ‘regulatory cooperation’ (based on the wishes of corporate stakeholders, ironing out differences in regulation that create ‘barriers to trade’, even if such ‘barriers’ provide important social or environmental protections). Or features intended to make it difficult to roll back existing levels of liberalisation, like ratchet clauses.

Pro-trade deal lobbying

German private healthcare company Fresenius, the largest private hospital provider in Europe (as of March 2015), has been a vocal promoter of TTIP. Notes from a meeting with DG Trade in December 2015 refer to “strong support for TTIP and active communication work being carried out by Fresenius CEO across Germany”, with a “list of press articles/public statements” supporting TTIP provided.39 Fresenius has also hired EU lobby consultancies Brunswick Group LLP and Avisa Partners.40 The company is moreover active in “international healthcare consultancy involving public-private partnerships”41 (see part 3).

The European Services Forum (ESF), a member of the Commission’s TTIP Advisory Group,42came out explicitly against efforts to protect public health services in TTIP. ESF’s members include national business lobbies like the Confederation of Swedish Enterprise, professional services giants like KPMG, and insurance industry players like Insurance Europe and Prudential. In response to the European Parliament’s Trade Committee drafting a TTIP resolution for a carve-out of public services including health, ESF recommend maintaining “the possibility of European private investors to invest in ‘privately funded’ education and health services.”43Combined with DG Trade meeting notes documenting ESF’s concern that an “excess of transparency” around TTIP might constrain negotiators’ “room for manoeuvre”,44 ESF’s hopes for such trade deals are clear: circumvent transparent, democratic process to further wrench open healthcare services to the private sector. Yet ESF and the Commission have a well-documented shared agenda on trade and services’ liberalisation. High-level Commission officials have, over the years, described ESF’s contribution to trade negotiations as “absolutely decisive”, claiming they need “a constant link” to ESF “or we simply cannot negotiate.”45 The EU’s negotiation agenda for TTIP often appeared a copycat of ESF’s demands, which not only encompass healthcare services’ liberalisation, but also ‘investor protection’ (e.g. investor-state dispute settlement (ISDS).

There are already clear precedents showing how private companies have used ISDS mechanisms to successfully seek colossal sums of money from governments that have attempted to reverse previous healthcare privatisation policies. For example, in 2008, Dutch insurer Achmea(formerly Eureko) sued Slovakia via its bilateral investment treaty with the Netherlands because the Slovak government had required health insurers to operate on a not-for-profit basis.46Achmea complained of t48he “systematic reversal of the previous liberalisation of the Slovak health insurance market that had prompted the claimant to invest”.47 The ISDS tribunal decided in favour of Achmea, awarding the company €22 million in compensation from Slovakia.48 Achmea, it is worth noting, spent €100,000 – €199,999 lobbying the EU in 2015, with ‘public health’ a policy target,49 and hired Brussels lobby firm Dr2 Consultants50. It is also a member of (re)insurance industry association Insurance Europe, which spent nearly €7 million lobbying Brussels in 2016,51 with multiple high-level Commission meetings.52 ESF member Insurance Europe welcomes TTIP and the “deeper integration” of EU-US economies from “trade, investment and regulatory cooperation”.53

Another influential group that merits attention is free trade and corporate-backed think tank the European Centre for International Political Economy (ECIPE).54 Together with US healthcare lobby the Alliance for Healthcare Competitiveness (AHC),55 ECIPE (represented by lobby consultancy Edelman) invited Trade Commissioner Malmström to a healthcare and TTIP roundtable in March 2015.56 ECIPE met with the Commissioner later in March.57 The invitation promised to present the ECIPE report ‘The Health of Nations: A Transatlantic Trade and Investment Agenda for Better Healthcare.’ This report makes the grandiose claim that: “Just like Adam Smith helped Europe to move away from the shackles of manufacturing mercantilism several hundred years ago, there is now a great need to do the same in services, especially healthcare.”58 It dismissed the “myth” that expanding trade in healthcare is a Trojan horse to undermine public healthcare, whilst at the same time setting out how it would help do just that. Where healthcare services are open to competition, it says, (and remember, few national health services are entirely public anymore) foreign suppliers (think giant US for-profit healthcare firms) should face no restrictions, nor be disadvantaged by public-sector health services receiving public subsidies (ie they should get EU taxpayers money too). And the cherry on the cake: the “direct gains” to be reaped by deregulating trade and investment in healthcare should be a model for trade policy with other countries.

The Commission commissions its own echo chamber: Despite concerns repeated widely by public health and legal experts, unions, and civil society, the Commission insists its trade deals cannot fuel healthcare privatisation. “TTIP has no influence” on the structure of health financing systems, says DG Trade.59 There is “no reason to fear” for the UK’s NHS now or in future “as a result of TTIP or indeed EU trade policy more broadly”, writes Commissioner Malmström.60 Luckily for the Commission, its view was confirmed in the Trade Sustainability Impact Assessment it commissioned from economic consultancy Ecorys.61 Ecorys concluded that civil society’s concerns “seem unfounded fears”, worries over the definition of public services in TTIP “are unnecessary”, and that EU trade deals “provide guarantees for the protection of public services”. These conclusions provide DG Trade with the echo chamber it desires. One might wonder if the breakdown of stakeholders Ecorys consulted impacted its conclusions: 373 business/industry, 98 social/consumers, 43 environmental, etc (and some corporate groups listed under ‘environmental’ or ‘social’!)62 Or note that Ecorys’ clients include companies and “Health (care) institutions”,63 and that it assists both “public and private decision makers in shaping health (care) systems and markets”.64 Or worry over its claim that its “privileged presence” in the EU market improves its offer to clients, to make the “best use of its substantial business opportunities”.65

Box 3: Brexit, Trade and the NHS

Public campaigns spread across the UK concerned that TTIP could open up public services like the NHS to competition from multinational companies, resulting in “a wave of privatisations.”66 Legal advice prepared for trade union Unite concluded TTIP posed “a real and serious risk” to future UK government decision making on the NHS.67 But UK officials insisted TTIP was no threat to the NHS, nor any other trade and investment deal, which “cannot force the UK to privatise public services”. Suggestions to the contrary, they said, are “irresponsible and false”. Yet they refused to back this up with evidence, denying access to their own legal advice on TTIP’s potential impacts. And the risks for the NHS are real: procurement rules that force it to contract out services, ‘investor protection’ a barrier to rolling back privatisations, and more. Brexit and Trump may have shifted the debate away from TTIP, but the threat to the NHS from such trade deals is no less real. The UK government was always a vocal supporter of TTIP (in its most extreme form), refusing to exempt the NHS, and routinely promoted corporate interests in EU trade policy. This doesn’t bode well for future trade deals it will seek with the US and other countries. Nor does a 2017 government advisory committee report on the revolving door, which found “plenty of scope” for “patient safety regulators to move to companies in the health sector”.68 Brexit is no protection from the interests driving NHS privatisation.

3. A shared ideology: PPPs and public spending cuts

There is a shared ideological underpinning of (much of) the European Commission and the corporate lobbies it has a close relationship with: business knows and does best. In the context of the Commission’s promotion of public private partnerships in healthcare, and its use of economic governance to cut public expenditure on health, the Commission’s actions appear to be less a result of corporate lobbying than a consequence of this shared ideology.

Can nothing put the Commission off public private partnerships (PPPs)?

The Commission promotes PPPs as a way to reduce government spending. Its 2014 Investment Plan for Europe uses public investments and guarantees to “engage” private capital,69 with its main instrument (the European Fund for Strategic Investments) happy to hand public money to corporations for health infrastructure and services.70 Back in 2003, Commission guidelines for successful PPPs noted “growing acceptance” of their use in healthcare, suggesting they’re not only cheaper, but better: raising finance in times of “budgetary restrictions” and using “private sector operational efficiencies” to reduce costs and increase quality.71 Alas, experience contrasts with these assumptions (see box 4). But that hasn’t stopped growing support for healthcare PPPs “through policy, EU legislation and financial assistance”, says Jan Willem Goudriaan, of the European public services trade union federarion EPSU.72

Box 4: Not PFIt for purpose

Nicknamed the “Great PFI Swindle” by pro-NHS campaigners, Private Finance Initiatives (PFIs) – widely used in the UK since the early 1990s – involve private companies building NHS hospitals and leasing them back to the NHS.73 Immensely profitable for the companies, the interest lands government with billions in PFI debts (£222bn, calculated the Independent in April 2015).74 Barts Health NHS Trust in London, for example, is tied to a 43-year PFI that will see it pay back £7bn on contracts worth only £1.1bn. It would be cheaper for government to borrow money directly.75 UK academics have described PFIs as “an enormous financial disaster” which “no rational government” would do, and noted that the diversion of funds from other budgets to PFI payments make them “an engine for closure of public services and further privatisation”.76 Many UK examples show how PFI hospitals face “loss of bed capacity, loss of staff, and loss of other services” to pay the increasing contract costs.77 The UK’s PFI model, now being rolled out across Europe with “gleeful encouragement” from the Commission, says EPSU, has, over 25 years, shown “no evidence of being a cheaper, more efficient or innovative method of providing public services.”78

Even in light of the dire results of some PPPs (see box 4), the Commission seems reluctant to draw negative conclusions. For example, DG SANTE commissioned a study to evaluate healthcare PPPs, which found a sparsity of reliable evidence on their performance. But it did recognise that UK PFIs haven’t performed “as well as promoted or expected”, and “strong evidence” that restrictive PFI contracts can “have an adverse effect on patient quality and financial performance”.79 The Commission then requested an opinion from its Expert Panel on Effective Ways of Investing in Health (EXPH). EXPH “did not find scientific evidence” that PPPs are cost-effective compared to public healthcare provision, “no generalized evidence” that PPPs are more efficient than a public provider, and various reports showing they’ve been more expensive.80 Yet from this, EXPH merely concluded further research is needed! It did however advise that EU Structural Funds not be used for healthcare PPPs until the Commission has got “evidence of their comparative advantages”. But in response to this, the Health Commissioner simply stated that the panel’s advice isn’t binding, and that the Commission isn’t planning any recommendations to member states as follow-up to it.81

4. How ‘economic governance’ strengthened the Commission’s hand on health

There is a complex landscape of post-crisis EU ‘economic governance’, introduced after the 2008 financial crisis spilled over into a government debt crisis. Ideologically-driven austerity policies have forced the public to suffer for the profligacy and greed of the financial sector. National healthcare reform is often a target of EU economic governance, which ranges from macro-economic surveillance and policy recommendations (e.g. via the ‘European Semester’ annual economic policy cycle) to more coercive instruction.82 The crisis, notes the European Trade Union Institute, “radically altered the nature of EU intervention in domestic healthcare reforms” from a ‘soft law’ and best-practice-sharing role to increasingly binding calls for major healthcare reforms as a means to cut public spending.83 The potential to issue sanctions for non-complying Eurozone countries under the so-called ‘Six Pack’, ‘Two Pack’, and macroeconomic conditionality linked to European Structural and Investment Funds, means Commission ‘recommendations’ are “increasingly tantamount” to ‘instructions’.84 And the Commission’s new powers to enforce budgetary austerity are inseparable from the fact that “austerity measures have reduced access to care for the most vulnerable patients in many EU Member States (WHO 2014)”.85 Brute implementation of austerity “in Greece, Ireland, Latvia, Portugal and Spain, where mass cuts and hospital privatisations have taken place, has resulted in an upsurge in infectious diseases, including HIV, and suicides.”86

Researchers from European Social Observatory (OSE) have expounded “how the Eurozone crisis created a policy ‘window of opportunity’ to push through fiscal surveillance of health systems as part of the solution to the crisis”.87 So whilst lobbying by private healthcare actors may not be directly responsible, the shared “cognitive frameworks”, to borrow OSE’s term, of neoliberal elites like the Commission and the big business world lead to “the primacy of an economic perspective over health objectives.”88 That said, corporate lobbies don’t miss a potential lever for influence. This is shown in comments from BusinessEurope’s Swedish member on Sweden’s 2016 European Semester cycle. Swedish Enterprise’s ‘reform priorities’ include increasing “competition in education and health care to improve efficiency and productivity.”89 And business groups have a clear ally in the Commission’s economic and financial directorate (DG ECFIN), whose 2016 report on ‘healthcare and fiscal sustainability’ sings the praises of competition. Competition “between public and private can improve quality”, it says, promote “better outcomes” and “greater efficiency and cost containment”.90 And a key issue in driving “the incentive to compete to attract patients is the possibility to retain profits”! These are not neutral facts but ideological assertions; shared by the private healthcare sector, but not by vast swathes of the European public(s).

The European Semester has not been used as a blunt tool to push privatisation, but rather to push for cutting public expenditure on healthcare. ‘Cost-efficiency’ is the name of the game, reforming healthcare systems to “enhance the quality of public finances”.91 The diversity of EU member states’ national health systems however has tended to mean that impact on public budgets is the only criteria the Commission can easily compare. Thus, healthcare reforms are seen as successful if they reduce costs or shift them from public to private funding “no matter what the consequences may be for the quality and accessibility of health care.”92 Cutting public health spending may mean pushing more healthcare provision into the arms of the private sector (though it is a myth this necessarily costs the public sector less; see box 4). Or, lead to shifting healthcare expenditure from the public purse to patients (out-of-pocket payments). And when public cuts lead to a worsening public healthcare sector, those who can afford it are more likely to seek private healthcare alternatives.


The combined effect of EU-level policy pressures has been the incremental encroachment of an increasingly privatised model of healthcare provision across Europe. These pressures come from marketisation, trade policy, public private partnerships and ‘economic governance’. To avoid a system that puts “profits before patients and competition before cooperation” at the expense of patient care,93 there is a pressing need for public campaigns to safeguard health as a universal right, not a commodity for business to profit from. The good news is that resistance has already begun: on 7 April 2017, the European Network Against Privatization and Commercialization of Health and Social Protection, together with EPSU, held its second European Day of Action.94Coinciding with World Health Day, mobilisations from India to Brazil, and Brussels to Barcelona, spread the messages that our health is not for sale, and that health is for all, not just those who can pay.95 Shoring up these messages are more concrete demands: an end to austerity policies; public and collective financing of healthcare; massive investments in public health, with “not a single euro of public money” going to the commercial health services sector.96 Ensuring health is protected from EU market rules is another important demand; some propose specific EU treaty changes to exclude public services like healthcare from EU liberalization.97 Trade unions highlight the need to keep fighting trade deals like TTIP, CETA and TISA, which push the commercialisation of health.98 Ultimately, it is in all our interests to confront and challenge the interests, and ideology, that seek to incrementally co-opt universal public healthcare into private, for-profit, hands.

As part of her research for this article, Rachel Tansey did background interviews with, and would like to thank, Jan Willem Goudriaan and Mathias Maucher (European Federation of Public Service Unions), Jane Lethbridge (Public Services International Research Unit, University of Greenwich), Rita Baeten (European Social Observatory), Zoltán Massay-Kosubek (European Public eHealth Alliance) and Sonia Roschnik (Health Care Without Harm Europe). Views in this article do not necessarily reflect those of interviewees.

This first appeared on the Corporate Europe Observatory blog


– and the roots of the change go back to Davos

The principles underlying the creation of the National Health Service exemplify solidarity expressed through policy: comprehensive care for all, without charge, publicly owned and provided, funded from progressive taxation. Nationally defined pay, conditions and quality standards completed the picture. Such a “single payer” system allows pooling of risk, so that resources can be allocated to the individuals and the areas where they are most needed: from each according to their abilities, to each according to their needs.

Prior to the Thatcher governments, there was a broad consensus regarding the nature of the NHS. Thatcher’s early attempts at privatisation were opposed even by her cabinet colleagues, who recognised they would bring electoral disaster. Later in the 1980s Letwin, Redwood and other right wing ideologues drafted plans to privatise the NHS.

The Major government then created the “internal market” whereby NHS hospitals were forced to compete for patients rather than simply treating their local populations. Under Tony Blair, this costly and wasteful exercise was expanded further through the imposition of private surgical provision into the NHS.

Finally, the destruction of the publicly-provided NHS was made law in the Health and Social Care Act 2012. Although this act enables complete NHS privatisation, its widespread failures and unpopularity mean that it remains partially implemented. Many NHS service contracts have been put out to tender and awarded to the private sector. NHS is now simply a logo for a partially privatised contracting operation, but most services remain free at the point of use. At the same time, in order to create public demand for change, an intentional market failure has been created through systematic under-funding of NHS and social care services. Hospitals have been issued with impossible financial targets, leading to almost the whole English NHS being labelled “in deficit“. Increasing rationing of operations such as cataracts and joint replacements completes the intended illusion of “a service unable to cope with routine demands and pressures”.

The five year forward view and STPs

Simon Stevens, a former Blair adviser and later, vice-president of US insurance giant United Health, was recruited as chief executive of NHS England by the coalition government in 2014, supposedly to complete the implementation of the Health and Social Care Act (H&SCA). But, in the face of the chaos created by the failures of the act, Stevens has instead – cleverly and covertly – imposed the massive reorganisation which constitutes the Five Year Forward View (5YFV) and the Sustainability and Transformation Plans (STPs), avoiding more legislation and accountability by using NHS regulations, without consulting local authorities, the public or parliament.

In effect, the five year view and STPs aim to seize control of all NHS institutions by imposing a universal set of NHS trust financial deficits based on arbitrary cash limits. NHS hospitals then merge and/or close to eliminate the deficits. They are then replaced by private sector and insurance-friendly “new models of care” in community settings; these employ lower skilled staff to provide a restricted range of services within a fixed budget, as dictated by the Accountable Care Organisations (ACOs) currently being introduced. The ultimate intended outcomes of this massive, dictatorial reorganisation process are privatisation, co-payments, charges and insurance-funded care for those that can afford it, as in the US.

The Davos connection

How do we know this? Research by Stewart Player has revealed that the essential elements of both the five year view and the STPs are drawn directly from two reports issued by the Geneva based World Economic Forum and discussed at its annual Davos conference in 2012. Both reports were co-authored by management consultants McKinsey. The Financial Sustainability of Health Systems examined the relations between cost, development, public debt and the state. Sustainable Health Systems: Visions, Strategies, Critical Uncertainties and Scenarios examined options for change.

The first report recommended raising healthcare productivity through delivering more services with fewer resources. This could be achieved by “reinventing the delivery system” via “new models of care” which would be located in “capital-light settings” using “leveraged talent models and low-cost channels”, such as home-based, patient-driven care models. However this shift “must be accompanied by capacity reductions in higher-cost channels” such as hospitals – and the new systems “must become more agile in leveraging the opportunities for more self-care”. In other words, make big cuts in hospitals and replace them with cheap, low-skilled community services.

The forum set up groups of “eminent health systems leaders and experts” – with a predominance of health corporations – to study and develop the two reports. Stevens, who at that time was head of United Health’s global division, was on the steering board for the first WEF report. Several of the personnel in the forum’s healthcare groups are currently implementing the five year view and STPs, with which McKinsey remain heavily involved.

Transnational capitalism for England’s NHS

The world economic forum has been described as “the most comprehensive planning body of the transnational capitalist class”, whose aim is “enhancing competition to the full and eliminating whatever niches remain protected from the full discipline of capital”. Public healthcare systems are clearly among such “niches”.

It is clear that the strategy now adopted for the NHS in England was written by and for the international business class which has the forum at its centre, rather than in the Department of Health, NHS England or by local communities, doctors and nurses, as recently proposed by Jeremy Hunt. What is now planned for the NHS is not a response to distinctively English needs, but what the global business elite sees as a way of cutting spending on publicly provided health care.

It is shameful that the Tory government recruited Stevens to lead the NHS in England and to impose the five year view and STPs – strategies whose principles and content precisely mirror the most extreme prescriptions of the Davos reports. This has been cynically withheld from the public. It constitutes a national disgrace and must be stopped now through the election of a government committed to a re-nationalised and fully public NHS

This was first published by Labour List

Leave a comment

And does it matter if I still get treatment free at the point of use?

The short answer is yes, not just plans but plenty of private contracts have been issued taking the NHS down the privatisation route. And yes, it will matter to you when you have to pay for your treatment from medical insurance and risk bankruptcy if you require multiple or long-term care. Here is the ‘blueprint’ for privatisation laid nearly 30 years ago by Letwin and Redwood – see for yourself how close we are to the end game.

In 1988 Letwin and Redwood (conservative) laid down the blueprint for the privatisation of the NHS.  It is worth reading this document in full as it will explain both our current position and give insight into the next steps.

Letwin and Redwood

Starting with a negative analysis of the use of waiting times to ration resources they swiftly moved into the reasons why the NHS needs a fundamental overhaul:

At the end of 1986 (the latest date for which figures are available), there were almost 700,000 people on NHS waiting lists; of these, half were destined to wait more than two months for treatment and one in fifty for more than a year.

When compared to today’s figures of 3.66 million waiting for routine treatment, up 11% from Dec 15 – Dec 16 and a target time now of 18 weeks (nearly 5 months) with 92% waiting significantly longer than that, House of Commons/Feb/2017  we can see the figures used by Letwin and Redwood actually reflected an efficient NHS service.   But then the premise for privatisation must start from the basis that the current system is broken.  

By chapter 2 they confirm;  [note the italics]

The need for change is now widely accepted.

The first step is to restructure at management level and make the NHS bodies independent to ‘give clear lines of responsibility’ which do not reach back to government.

  1. Establishment of the NHS as an independent trust.
  2. Increased use of joint ventures between the NHS and the private sector.
  3. Extending the principle of charging.
  4. A system of  ‘health credits’.
  5. A national health insurance scheme.

It would appear that we are currently moving between point 2 and 3 of this agenda.

By chapter 3,  Letwin and Redwood introduce the notion of charging – an idea fundamentally at odds with the ethos of the NHS – free at the point of delivery.

Another avenue which has been tentatively explored by the Government is charging. In principle, this could be extended to the point of universality – a charge for every service. That could permanently solve the problems of waiting lists and of basic attitudes towards patients – since the NHS could charge enough for each service to ensure that demand matched supply, every patient would become a valuable customer, bringing  funds to the system. If combined with the establishment of the NHS as an independent trust, this would in effect turn the NHS into a nationalised non-profit service competing on level terms with the private sector, and at arms-length  from the Government.

The NHS was already a nationalised non-profit service, so what is new here is the idea that it should ‘compete on level terms with the private sector’ and be ‘arms-length’ from the Government.  ‘Charge enough for each service to ensure that demand matched supply’ indicates hiking prices on treatments in demand – in the same way that airfares rise in school holidays.  Aware that charging would preclude sections of the population from accessing health care the pair put forward the idea of ‘credit notes’ which would create a two-tier system.

Each individual patient would receive, from his GP, a ‘credit note’, entitling him to treatment for a specific complaint. This credit note would cover the charge ·levied by the NHS for the treatment in question. If the patient chose instead to go to a private sector hospital he would be entitled to carry the credit with him making up any difference in cost out of his own resources or through private insurance.        

In order to bring in the ‘benefits of marketisation it is suggested that;

In short, increased competition would be created not only between the NHS and the private sector but also between one NHS hospital and another. Under such an arrangement, it might be possible to go even further than the establishment of the entire NHS as an independent trust or company: each major hospital or district could be separately established with only a national funding authority left at the centre to administer the payment of credits.

And finally, we reach the end goal – a fragmented NHS service, competing with itself and private providers, funded by individual payments into a National Health Insurance Scheme. 

A method of overcoming the drawback of a pure ‘credits’  scheme is to ally it to a national health insurance system. Under such a system, every adult would contribute a fixed insurance premium each year to a national health insurance fund.

Having established that under this scheme the NHS would charge the full cost of each treatment to be reclaimed by insurance, Letwin and Redwood confirm;

The existence of a national health insurance scheme would not, of course, be to the detriment of the private sector. Indeed, under any of the variants, contributors to the national scheme could be given rights to carry some or all of the insurance cover to the private sector, either in the form of rebates for private insurance or in the form of ‘credits’ usable in private sector hospitals.

The insurance premium could be actuarially adjusted, like car insurance to reflect the varying risks associated with different categories of contributor though this would need to be balanced by subsidies to those who were not well off, and were either already ill or in a high – risk category.

Before concluding;

To a great degree, the divisions between the public and private sector would fade.

Indeed, given that we would all be paying the full cost of treatment from our own insurance policies.  If you have recently taken a pet for treatment at your local vet you will know the eye-watering cost of a single blood test, let alone the management of a long-term condition.  Although apparently convinced by their own arguments, they realised that moving from a universal system of free treatment to one where we individually cover our own care through differentiated insurance, would take time.

A system of this sort would be fraught with transitional difficulties. And it would be foolhardy to move so far from the present one in a single leap. But need there be just one leap? Might it not, rather, be possible to work slowly from the  present system towards a national insurance scheme? One could begin, for example, with the establishment of the NHS as an independent trust, with increased joint ventures between the NHS and the private sector; move on next to the use of  credits’ to meet standard charges set by a central NHS funding. administration for independently managed hospitals or districts; and only at the last stage create a national health insurance scheme separate from the tax system.

‘…and only at the last stage create a national health insurance scheme separate from the tax system.’   The last stage is presumably when the entire reorganisation is complete and we have no option but to take out our own insurance policies.

Read more of this story by following the link below and find out how talks between Jeremy Hunt and Kaiser Permanente are sealing the deal with the big US health insurance companies waiting to step in.

This is an editted version of a post by





1 Comment
%d bloggers like this: