The wrong medicine

The overwhelming weight of evidence suggests market-based reforms are bad for healthcare, finds the latest report by the New Economics Foundation.

Anna Coote
27 November 2014
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Image: Flicker/Tambako

Government reforms of England's National Health Service (NHS) over the last three decades have transformed a democratically controlled public service into an open, competitive market. Despite political leaders regularly claiming to base their decisions on evidence, our new report finds no sound evidence to support these changes. 

England's 2012 Health and Social Care Act is the latest and most extreme move towards markets in healthcare. Large profit-seeking organisations, many of them based in the United States, are now winning more and more NHS business. A new trade agreement between the European Union and the United States (TTIP), due for completion next year, threatens to lock in private sector control of the NHS by inflicting heavy financial penalties on a future government trying to return health services to public ownership.

The momentum towards an open competitive market has been widely opposed by professional bodies, including the Royal College of General Practitioners, the Royal College of Paediatrics and Child Health, and the Royal College of Physicians. Lord Owen has warned that the Health and Social Care Act could “create a fully marketised national health service”. Even senior Tories have called the Act the Coalition government’s biggest mistake.

The costs of maintaining market mechanisms in the NHS have been conservatively estimated at £4.5 billion a year – enough to pay for either ten specialist hospitals, 174,798 extra nurses, 42,413 extra GPs, or 39,473,684 extra patient visits to A&E. 

Not many people know this. Two in three people polled by Ipsos MORI said they knew little about changes being made to the NHS. Neither the Conservatives nor the Liberal Democrats promised voters the Health and Social Care Act in their 2010 election manifestos.

Most remarkably, the overwhelming weight of evidence suggests that markets are bad for healthcare. There is certainly no compelling evidence that market mechanisms or private ownership are more efficient or more likely to improve care for patients than a publicly owned, controlled and funded system. Our review of the impacts of NHS reforms finds that:

  • market mechanisms and privatisation in healthcare systems have largely inconclusive or negative effects of quality and equity in healthcare
  • there is no conclusive evidence that patient choice has made UK health care more responsive to patients or even more competitive
  • the Private Finance Initiative, which has used private sector investment to build most new hospitals since the 1990s, has inflicted dangerously heavy long-term financial costs on NHS trusts without compensating savings or benefits
  • the US healthcare system ranks much lower than the UK’s in international comparisons, in spite of having the highest per person spending. Poor performance is directly attributed to market mechanisms. The NHS consistently ranks higher than the US system for quality, equity and value for money.
  • markets in healthcare almost always fail patients, citizens and taxpayers. They function best when all parties can make fully informed choices, but patients rarely have enough information, often find choice bewildering and usually prefer trusted, local care.
  • problems caused by markets in healthcare cannot be solved by regulation, or by fixed tariffs for specified treatments, which encourage ‘gaming’ by providers
  • markets are not well-suited to encourage prevention of illness or more integrated health and social care. They depend on increased activity, which calls for more people getting ill and needing care. A healthy patient is not a source of income. Integration calls for high-trust, long-term relationships and willingness to share information, risks and rewards: these are not fostered in a competitive marketplace.

In short, market-based reforms are undermining the capacity of the NHS to maintain its world-class performance. And now it is desperately – and increasingly – strapped for cash. Public funds have been drastically cut as part of the government’s austerity drive, while demands for healthcare continue to rise, leaving many NHS trusts in deep financial trouble. 

The prevailing narrative is that health services are not working under state control: strong medicine is needed to save the NHS and that means more markets and more private sector providers. And the more it falls prey to financial pressures, the more easily the NHS can be described as a failing public institution – a problem begging for market solutions. Noam Chomsky (among others) has noted that this is a standard technique of politicians bent on privatisation: “defund, make sure things don’t work, people get angry, you hand it over to private capital”.

What are the alternatives? Following the evidence, it appears that health services for all, according to need, not ability to pay, are best provided through collaborative, public provision where (to quote Gordon Brown in 2005) “dedicated public servants put duty, obligation and service before profit and personal reward”. Brown ignored his own sensible advice. Indeed, no prime minister in the last three decades has resisted the trend towards markets in healthcare; most have encouraged it.

In the absence of supporting evidence, we can only conclude that today’s NHS reforms are driven by ideology: a set of ideas that shape policy and – in this case – favour competitive markets with multiple, profit-seeking providers, over public institutions that aim to serve the public interest. As NEF has noted elsewhere, political leaders take great pains to distance themselves from ideology, insisting that their policies are shaped by necessity and “urgent truth” (David Cameron) and “whatever works” (Tony Blair). It is time they owned up – and took the debate to the public. The NHS is still a well-loved institution, but public satisfaction has plummeted since 2009. Voters need to know why the NHS is in trouble and that markets are part of the problem, not the solution.  

This piece is cross-posted from the New Economics Foundation.

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