Don't believe the false reassurance about NHS privatisation

Even as they belatedly criticise the government's health 'reforms', think tanks like the Kings Fund are making one fundamental error. 

Jacky Davis
12 February 2015

The Kings Fund has at last criticised the government’s NHS ‘reforms’ as costly and 'damaging' to the NHS. Their intervention is welcome - though begs the question, what is the point of a ‘think tank’ that is 4 years too late in telling us what everyone else knew all along.

But there is a bigger problem with the Kings Fund report. While noting that the reforms have resulted in greater marketization of the NHS they conclude that ‘claims of mass privatisation’ were exaggerated.

In this they are wrong.

Accusations of privatising the NHS are highly toxic to any government and the Coalition leaders have stoutly denied it. But their argument - that there is no privatisation because the service is still free at the point of need - is disingenuous. You can have privatisation of a service that still delivers services free at the point of need - or indeed, of a service that has never been free (such as British Rail). As Dr Clive Peedell’s important article in the BMJ shows, the Health and Social Care Act meets the World Health Organisation definition of privatisation. According to the WHO definition, privatisation involves merely the increased outsourcing and/or sale of public services to the private sector.

The Health and Social Care Act contained all the levers to enforce the market in the English NHS and when section 75 was passed (requiring compulsory competition) the final piece of the jigsaw was in place. Privatisation has advanced in primary and secondary care and in community services. In primary care private companies like Virgin are taking over GP practices and compulsory competition has led to the outsourcing of entire services such as musculoskeletal work and dermatology. Capita - along with United Health offshoot Optum - have just been awarded a massive £5billion contract for administrative support and even the commissioning decisions themselves - the privatisation of privatisation. Contrary to the claims made by the Kings Fund the privatisation of areas once viewed as unimaginable, is now not only possible but under way.

The collapse of the privatisation flagship Hinchingbrooke hospital has sounded a warning to the private sector. But even as Circle walks away from the challenge of running an entire acute hospital, more insidious changes are taking place in our cash-strapped hospitals. Some are taking advantage of the provisions in the Health & Social Care Act that that allow them to increase the number of private patients. Internationally reputed NHS hospitals such as the Royal Brompton and UCH now make up to 39% of their income from private patients. Others are encouraging ‘self-funding’ patients who are prepared to pay for care but at the NHS tariff (cheaper than the private sector), which means they can queue jump ahead of those without the means to pay. Hospitals are being encouraged to become so-called ‘mutuals’, cast adrift from the NHS and vulnerable to take over by private capital. The boundaries between public and private are increasingly blurred, which suits those who want the NHS to move towards top up payments and an insurance based system.

Community NHS services has been particularly quick to be privatised. Large contracts covering everything from mental and sexual health to physiotherapy and podiatry have been awarded to names not previously associated with clinical services including Virgin and Serco, from Cornwall to Surrey. Other particular targets have been patient transport, diagnostic and lab tests, and out of hours care - though often under the NHS logo.

Those who argue that the overall percentage of NHS care delivered by the private sector is still small miss the point. The private sector is not interested in delivering all or indeed most of the NHS. They are interested in profit which is hard to come by in the acute sector (as Hinchingbrooke has showed). They tend to avoid emergency care and anything that involves complex patients and have focussed their efforts mainly on elective (planned) care, community NHS services and mental health. It is thus misleading to look at their share of the total market and more accurate to quote their share in the areas in which they are interested. For example John Lister of Health Emergency has estimated that the private sector is now delivering about 18% of elective surgery.

And by cherry picking what they hope will be profitable, the private sector undermines local NHS services, which will always be left with responsibility for core services. In Sussex local health bosses in the Clinical Commissioning Group (CCG) have had to reconsider its decision to outsource musculo-skeletal services to Bupa after the local hospitals said they could no longer guarantee emergency trauma services in their A&E departments. Nottingham has lost its adult acute dermatology services after a CCG awarded the contract for the planned (and thus profitable) bits to Circle, the same firm who made such a mess of Hinchingbrooke.

Some of the private companies who have tried to make a profit from the NHS have already given up, an acknowledgement that the NHS is run in a very cost effective way. Instead they - alongside Capita and Optum - are moving into administering the NHS market itself, which is estimated to cost at least £5-10billion a year to run. The ‘market’ grew under Labour as a way of promoting private involvement, and has been pursued with gusto by the coalition. Serco for example has already declared its intention to back away from clinical work, seeing more money in administering the unwanted market than caring for patients.

The amount of money diverted to the private sector may not be the majority of NHS funds at this stage, even in the areas in which it wishes to expand, but the direction of travel is clear. A third of contracts tendered out since the Health and Social Care Act have already gone to the private sector. Large private companies are well placed to win these public contracts. They have experience in tendering, bevvies of lawyers and deep pockets for loss leaders (the government promised that competition would not be based on price but that turned out to be another lie). Having won the contract by undercutting local NHS organisations the multinational is then left to deliver clinical care of which it may have no previous experience, with inevitable consequences for patients. As Margaret Hodge MP, chair of the Public Accounts Committee, remarked of Serco – ‘it’s pointless being good at getting contracts and then hopeless at delivering the services’

The evidence is that a publicly funded, publicly provided and publicly accountable NHS provides the best care for patients and the best value for money, so the question remains – why are politicians pushing it down the road to privatisation? The public didn’t vote for it and polls repeatedly show that we don’t want it. Privatisation is an ideological luxury which wastes money and destabilises the NHS and has no purpose other than diverting money to shareholders and enriching some MPs, peers and political donors. But whatever their motivation the evidence is unequivocal - the coalition’s legislation has put all the levers in place to privatise the service and it is going ahead. The Kings Fund should reconsider their verdict, and not leave it another 4 years to stumble across the truth.

Jacky Davis is the co-author of a brand new book, NHS For Sale, with John Lister and David Wrigley

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