Political differences in privatising NHS services

As we enter a general election year, many are wondering what the differences are between Labour and the Conservatives when it comes to health.

It’s a subject we’ll be returning to a lot in the coming months, but privatisation of the NHS is as good a place as any to make a start.

As everyone is aware, there’s not much ideological daylight between the two parties on the NHS. Certainly, both believe in the continued privatisation of NHS service delivery.

But, for whatever reason (probably a combination of poor value for money and potential electoral unpopularity), Labour has beat a mini-retreat.

Since Andy Burnham became health secretary, it’s looking a lot less pro-market. In November, Burnham announced that under-performing NHS providers would be given “at least two chances” to improve before alternative providers were considered.

It was talked down by the government at the time but did indeed represent a significant U-turn in policy. They’ve also looking less enthusiastic about independent sector treatment centres, saying new ones will have to compete on a level playing field.

The right wing think tanks are up in arms about the government’s apparent retreat.

A report by Civitas, called Markets in healthcare, accuses Labour of trying to appease the TUC. The reining in of marketisation is a retrograde step that will leave the NHS struggling to meet huge financial pressures, it says.

The report supports the use of markets saying they’re creating more efficiency, innovation, and equity in the NHS, and criticises the government for using the word “competition” only once in its recently-launched five year plan for the NHS.

After seven years of reform, the government’s thinking is now “mired in confusion”, it continues.

It argues that the government is wrong to place its reliance purely on the trust and professionalism of existing staff, because “the interests of providers and professional groups sometimes trump those of patients”.

Asking patients to express their dissatisfaction or satisfaction with services is an inadequate way of driving improvements. The report asks: “What, without the ultimate threat of exit that exists in markets, or threat of sanctions that exists in state direction, ultimately incentivises the disinterested provider to improve?”

James Gubb, director of the health unit at Civitas, said: “At a time when real clarity of vision is required for the NHS, the government is in a state of confusion.

“No-one is saying that markets are perfect, but we should not lose sight of the flaws in other models. When operating in the correct framework, the potential of markets to drive innovation and efficiency by empowering those at the ‘coal face’ can deliver change like no other system.”

The BMA, however, put up a resolute defence in December for the public sector provision of health services through its campaign Look After Our NHS.

It recently gave evidence to a Lords economic affairs select committee into PFI projects, and accused private companies of generating “excessive profits” for shareholders at the tax payers’ expense.

The union also released a paper listing reports of money wasted as a result of market-driven reforms.

It quotes an Association of Chartered Certified Accountants report which suggests that, in 2004, capital charges from PFI schemes were estimated to be costing the tax payer £125m per year.

Furthermore, research published in June 2009, by Dr Chris Edwards of the University of East Anglia, suggested that £217m could be saved if the PFI contract governing the Norfolk and Norwich University Hospital were bought out from the private company that originally financed the deal.

This would equate to £2.4bn if extrapolated to the contracts of the 53 current PFI hospitals.

On independent sector treatment centres (ISTCs), it points to information provided by the Department of Health to the Health Select Committee showing that across the first wave of ISTCs the cost of work carried out was 12% more expensive than the same work carried out by the NHS.

And BMJ research suggested that as much as £927 million, or almost two thirds of the total first wave contracts worth £1.54 billion, might have been overpaid to ISTCs.

Management consultancy spend in Department of Health, in response to a freedom of information request, was £125 million for 2008/09, while the Management Consultancies Association estimated that spending in the wider NHS for 2008 equated to £300m.

The Tories are, of course, undeterred by the BMA’s evidence. They’re committed to increasing the diversity of provider delivering services in the NHS. The problem lies not with privatisation, but with how it has been done. They want more open competition for provision based solely on quality of delivery.

So, as with many other issues, the decision comes down to degree and stewardship. Both parties will be desperate to maximise NHS budgets and both perceive the way to greater efficiency through encouraging the patient to become a sophisticated consumer and growing the involvement of the private sector.

Which party is going to be better at delivering a more complex, diversely provided NHS? I’ll leave that one to you.

If, like the BMA, you passionately believe that services should remain publicly delivered then you’re going to have to look beyond the mainstream parties for an alternative approach.

Tags: Funding, Privatisation