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For ‘Liberating the NHS’ read ‘Dismantling the NHS’

By Clive Peedell, consultant clinical oncologist at James Cook University Hospital, and co-chair of NHSCA - 4th January 2011 10:18 am

The NHS white paper is the government’s roadmap for a market based healthcare system, which is designed to encourage increasing roles for the private and third sectors, whilst diminishing the role of the public sector in the England. The NHS is going to be dismantled by using the market forces of ‘creative destruction’. This will have profound effects on the medical profession with attacks on T+Cs, pensions, medical training, professionalism. More importantly, the knock on effects for patient care will be devastating.

The key policy levers enabling this to happen are:

1. The purchaser provider split, with GP commissioning consortia taking the leading role on the purchaser side of the divide.

2. Patient Choice.

3. Competition between a plurality of ‘any willing providers’.

4. Payment by Results with price competition.

5. Patient held budgets.

6. Foundation trusts becoming social enterprises and the abolition of the cap on their private income.

These policies are mutually reinforcing and this is how they will work:

GPs will be formed into GP consortia and will control 80% (£80bn) of the NHS budget to buy in services for their patients from a variety of providers (including FTs, private hospitals and third sector organisations) competing against each other in competitive healthcare market. Market competition will be enforced by applying EU competition law and overseen by the economic regulator, Monitor, as well as the new National Commissioning Board. Money will follow the patients via the Payment by Results (PbR) system. This has traditionally been a fixed pricing system, but the tariffs will now be opened up to price competition (I’ll come back to this).

GP consortia will take over most of the roles of PCTs and SHAs, which are being abolished. Since the process of purchasing healthcare, designing care pathways and interpreting healthcare outcome data is a complex process, they will need to buy in management expertise. Although some consortia will employ ex-PCT staff, many will take on private companies through the Framework for Procuring External Support for Commissioning (FESC). These companies include US HMOs like United Health and Aetna, as well as UK companies like BUPA. These companies will therefore be involved in both purchasing and providing healthcare. Consortia will have strict financial responsibilities and will therefore be encouraged to ration care or opt for cheaper services.

Meanwhile, all hospitals are going to become FT, which will subsequently become social enterprises, i.e. owned and run by their staff and essentially not-for-profit private hospitals. They must be able to make a small surplus to re-invest and will not be able to be bailed out if they fail financially. If they do fail, they will be merged or taken over by the private sector. Hospitals will need to make money through Payment by Results. However, the marketplace will be competitive and PbR tariffs will no longer be fixed. This will lead to a ‘race to the bottom’ as consortia look to save money by referring to hospitals with the cheapest tariffs. As tariffs fall, Hospitals will need to generate more income by cutting costs or treating more private patients. In addition, increasing numbers of people will take out additional healthcare insurance as consortia ration more and more services and waiting lists increase because of the abolition of waiting list targets.

Over time, we will see an increasing role for the medical insurance industry and a two-tiered mixed funding healthcare system, ending one of the founding principles of the NHS. There will also be a new health insurance market for patients with patient held budgets, who will want the option to ‘top up’ their care to avoid the risk of running out of money.

It is clear that many hospitals in poorer areas will be able to attract less private patients and will be seriously disadvantaged by this system. Meanwhile, hospitals in wealthier areas may be able to continue to reduce their tariffs, supported by greater private income, putting even more pressure on struggling hospitals.

As tariffs fall, all hospitals will be pressured to drive down costs. This is most easily achieved by cutting staff and changing skill-mix. In addition, national T+Cs will no longer apply to hospitals that are social enterprises because they are private organisations. Thus, they will be able to set their own local T+Cs. Existing NHS staff will be protected by TUPE legislation, but new members of staff will not and they will potentially no longer be entitled to NHS pensions. If medical students and future students think it’s bad now, then they should think again. It’s only going to get worse.

In addition, since some hospitals will fail, many staff will be transferred to the private sector and have to accept worse T+Cs, especially is unemployment levels are high. This whole process will set in train wage deflation and the destruction of the NHS pension system, which is paid for by current employees.

The white paper is therefore designed to fulfil a longstanding Tory dream - to dismantle the NHS and replace it with the private sector, which will receive its profits from the UK taxpayer.

This NHS will not fall overnight because the market’s invisible hand will destroy it in a piecemeal fashion, leaving the unprofitable areas of healthcare firmly in public sector hands. It is also political suicide to dismantle the NHS, so it is being performed using the political rhetoric of patient empowerment through the patient choice agenda, and clinician empowerment by giving GPs a budget of £80bn.

Amazingly, Lansley is getting away with it because there is far too little understanding and resistance from the medical profession, which is realistically the only group of people that can prevent this assault on the NHS.

It’s time for the medical profession to heed Aneurin Bevan’s words: “It will last as long as there are folk left with the faith to fight for it.”

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14 responses to “For ‘Liberating the NHS’ read ‘Dismantling the NHS’”

  1. chrissa says:

    the state needs to focus on the tasks that represent a national interest. to ensure that everybody has access to proven, solidly evidence based healthcare for clearly defined medical problems is in the national interest. running hospitals that cater free of charge for every whim of everybody is not.
    the americans have clean, world class hospitals because they are run indepentently. the reason the americans are in a financial mess with great difficulty of access to medical care is because they allow the insurances to be run privately. horses for courses: some things the state is better at (see the french and the swiss railway system compared with the uk) and some things the private sector is better at (compare BA and virgin to air france!). the same applies to health care: providing health care, the private sector is better at - but ensuring universal access to health care is clearly a task for the state. hence: what we need is a universal, national health insurance that guarantees access to clearly defined, evidence based health care for clearly defined conditions. with every citizen therefor a potential “customer”, the private sector will bend over backwards to provide the service. i have visited the ex-soviet union immediately after it collapsed and have seen the end stage of a totally state run health care system. awful is nowhere nearly strong enough a word to describe it. total state control does not work - it never has and it never will.

  2. Tom says:

    @chrissa

    I don’t know where you get the idea that the private sector provides better healthcare on a countrywide level than the public sector. We rank very well compared to the US, coming in at 27th in the world compared to their 37th according to the WHO http://www.photius.com/rankings/healthranks.html

    Frankly I think your view is being distorted by ideology, Your last statement certainly is a giveaway “total state control does not work - it never has and it never will”. Well unfortunately for your ego it has worked, for the last fifty years, and very well.

    What you also neglect to mention is that total healthcare spending in the US is four times that here. Four times more. And they do worse than us. That is what we have to look forward to if we privatise the healthcare system. Your examples of theings run better nationally (trains) and things run better privately (planes) seem to be picked totally at random and have no relevance to our healthcare system. Especially given that looking worldwide national healthcare systems perform better when publicly run than privately run.

    I’m sure the soviet healthcare system was terrible whilst it was being dismantled, which is all the more reason for us not to dismantle ours.

  3. [...] This impassioned post by consultant clinical oncologist Clive Peedell on the Hospital Dr blog, which warns that there is [...]

  4. chrissa says:

    tom - first of all, thanks to labour’s spending spree, the difference in healthcare spending between the US and the UK is not 4 times. because they have 6 times the population, the parameter used is percentage of GDP. they spend about twice on that measurement. the main reason is that healthcare insurance is private in america and i am all for keeping that nationalised - in terms of the access to basic health care. this is also the reason for the US’s lower ranking - no universal access to health care, smthg a national health insurance needs to be in charge of. the huge costs for hundreds of health insurance companies are part of the american health care bill - and produce nothing for patients.

    the pitfall of your argument is that you continue to see the 2 fundamentally different parts of healthcare (provision of the latter and the ensuring of access) as one thing. provision of health care and ensuring access to it MUST be recognised as 2 fundamnetally different issues for as long as the providers expect to earn a living from practising medicine or doing any medicine related work (including pharrma, equipment etc.) costs are real and need to be accounted for - that means there is a bill for health care that needs to be paid. hence, the division of service provision, the delivery of health care to patients is smthg totally different from the provision of the means to do so. the yanks are wrong to allow profit making insurers to control access to healthcare - that is the reason for their mess.

    the reason for our mess, the creation of the bottomless pit of which punters demand everything for free is the lack of accountability of cost and economic behavior amongst providers. there is no culture of saving, not even of awareness of cost.

    as i pointed out and showed examples for: in some things the state is better - in others the private sector is better. the insurance should be nationalised - the hospitals need to be free. this is the basis for dynamism, improvement, focus on patients (as the money is following the patients) and - COST CONTROL.

  5. Sonoview says:

    I have considerable respect for Dr Peedle’s campaigning spirit. However, as is his way, he generally grossly over-eggs the pudding.
    As a nation we are all deeply distrusting of politicians. However just because we distrust them we should not start seeing conspiracy theories round every corner - “they are all out to get us”. Paranoia helps no one!
    What Dr P misses out in his polemic is any sort of recognition of where the NHS is today and will be tomorrow. For all the reasons we are aware of (demographics, NHS inflation, public expectation etc) the service is going to become completely unaffordable, and the express train is rapidly speeding towards us. We ignore this at our peril!
    “Save the NHS at all costs” is a good slogan, until you actually look at the costs.
    Whether or not Lansley’s proposals will prove to be the answer may be debatable. But unless the profession comes up with better alternatives we will just end up looking Luddite and stupid. Just to shout no, no,no is not an answer and the politicians will simply bypass us (as they seem to be doing at present).

  6. JB says:

    In fact the last Labour government did more to break up the NHS than any previous Tory government, and many of the proposals are a continuation of that theme with altered management and purchasing structures. As has been said, we’ll have to wait and see if Lansley’s new structure will achieve better services with less cost

  7. rob says:

    I favour patients paying for prescriptions and to see GP, to fund NHS . people simply do not value it . There should be greater level of more affordable insurance so people can attend private doctors and take load off NHS. GPs should not have the option of not doing out of hours . I don’t so why should they ?

  8. Ivan Brown says:

    I have frequently wondered whether it is or is not the case that the founding principles of the NHS have got us into the present mess( notwithstanding the best efforts of the previous government and its financial sector friends ) or whether it is really that the overhead costs of the introduction of general management, the purchaser/provider split, commissioning and skewed markets have not had a greater influence.
    I would have thought that it might be possible for someone to analyse whether the present massively increased costs that these overheads have brought upon the NHS are better value for money overall than the historic cost financing that held sway before 1983. I would not mind betting that it would be a pretty close run thing!

    The correspondents who seem to believe that the proposed changes will “set the NHS free” obviously have not read the the directives that the NHS chief Executive recently released. I do not think any communist regime could have devised a more centralised “command and control” declaration of intent. If that’s Mr Lansley’s idea of “freedom” then we need another George Orwell to satirise it far better than I could attempt.

  9. Mark Aitken says:

    The trouble with a Blog is that it is prone to degenerate into a slanging match between the whingers and the anti-whingers. This is compounded when those who offer comments fail to identify themselves. They are little better than hoodies lobbing brick bats from behind a fence. So, Chrissa, Tom; Sonoview; JB; Rob; Ivan Brown, reveal your identities and then enjoy some credibility.
    What we need are comments that help us to synthesise a meaningful alternative to those weapons of self-destruction of the NHS which were so surreptitiously planted by the Blair administration and which are now being massaged by a Government that lacks any credibility in the delivery of healthcare.
    Basically there are two main problems which need to be resolved before we can move forward.

    1. The cost of healthcare has to be constrained. There is no bottomless pot of gold.
    2. Who are best able to decide how that money should be spent?

    The Department of Health (i.e. Central Government) has loudly trumpeted their aspiration to devolve decisions on healthcare delivery to the local population. But at the same time they insist on having a gaggle of Quangos interposed between the Department of Health and the local decision makers. That is a non-starter. They need to scrap that overpaid pen-pushing layer of bureaucrats (saving maybe £20bn) and let the local community decide how to spend these valuable resources.

    I could go on but blog space is limited. You can read some of my views which have been published as articles and letters in the Journal of the Royal Society of Medicine, or refer to the welter of documents on the NHSCA website. (www.nhsca.org.uk)

    I should be happy to continue if anyone was interested.
    Mark Aitken (Physician – East Anglia)

  10. richard day says:

    The NHS is generally efficient. However it does not have the ability to provide private-hospital standards of cost control. For example, I would not be surprised if hospitals quote a single price for a service like CT scanning, tacking on to the fixed price the added costs of training, out-of-hours availability, scan provision during servicing etc.
    Any wise private provider will cost only on elective, non-guaranteed provision, using NHS-trained staff to deliver the service, and will thus get the contract for elective work from the GP consortium.
    The NHS needs to find ways of charging differential rates for cheap, day-time elective work, and expensive urgent work. Then the NHS will win contracts, and be shown to be cost-effective.
    I’m optimistic.

  11. pete says:

    People should watch what they say ……….. Sir David Nicholson’s watching you and might ‘eliminate’ anyone speaking against change!

  12. chrissa says:

    mark - i am one of the few with an open identity on dnuk. bother to look first - then complain.

  13. Mark Aitken says:

    Chrissa
    Having looked at dnuk I am still none the wiser. Not everybody who reads this blog will have enrolled at dnuk. Why not give me a lead to help me reveal your identity?
    Mark

  14. [...] grim financial situation the NHS finds itself will accelerate this process. Many NHS campaigners predicted that the number of core NHS services would diminish under the pressure of the £20billion NHS [...]

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