The ideologues behind the Tory plan, Equity and Excellence: Liberating the NHS, maintain that competition makes healthcare providers more efficient. But the evidence from the US suggests the opposite.
There is a good reason why this is so. Good healthcare is above all a matter of having enough, highly-trained staff; yet employing fewer, cheaper staff is the only way to make money out of it.
In reality, the plan to turn the NHS into a healthcare market does not rest on rational arguments but material interests. Any realistic strategy to resist the Tory plans must start out from that fact: the plans are not really new, but are the culmination of a decade-long campaign by the private health industry to get its hands on the NHS budget.
How otherwise could the white paper have been produced so fast - a mere two months after a general election during which none of its far-reaching proposals was even mentioned (let alone made an electoral commitment) by either of the two parties now in office? It’s hard to imagine that even the overall shape, let alone the detail, of the white paper, was put together in two months. So where did it come from?
The HMO model: how its foundations were laid
The reality is that successive Labour health secretaries, working closely with the private sector, had already constructed almost the entire edifice of a healthcare market. The Tory plan merely speeds up the final stage and makes it more clearly visible.
The idea that New Labour planned to replace the NHS with a US-style market, complete with HMOs, may come as a shock to some readers. But the fact is that HMOs have been the inspiration behind practically every element of the ‘system reforms’ pursued by New Labour since 2000.
One HMO in particular, California-based Kaiser Permanente, the largest HMO in the US, has been intimately involved in shaping the Department of Health’s strategic thinking. New Labour’s ‘reforms’ have been worked out in constant discussions with and visits to Kaiser. This includes the conversion of NHS trusts into independent businesses (foundation trusts); the introduction of ISTCs; payment by results; giving NHS work to private hospitals and clinics and encouraging NHS patients to choose them; changes in NHS staff contracts; and, not least, the development of HMO-style commissioning.
The US example
These changes have been introduced in a largely piecemeal fashion, concealing their overall intent. But when looked at with reference to the Kaiser model the various elements assume their true significance.
A defining feature of the US healthcare market and its HMOs is its complexity, with myriad forms of organisation and bureaucracy fragmenting provision, and with thousands of different ‘plans’ (i.e. insured packages of care) confusing customers, concealing profits and adding hugely to costs. It was precisely to avoid this expensive dog’s dinner that the NHS was created. But the basic structure is clear enough.
An HMO like Kaiser receives insurance premium income from its ‘enrollees’ (and for over-65s, from the US state’s Medicare programme), and then ‘manages care’ for them through three basic ‘arms’: it owns hospitals and primary care/ambulatory facilities; which are staffed by physicians, who, while nominally independent, are tied into an exclusive relationship with the company’s insurance arm.
How do the government’s plans correspond to the US model?
At the level of infrastructure, hospitals are being progressively removed from public ownership - all NHS trusts are to become foundation trusts and are then to become ‘social enterprises’ owned by their staff, not the taxpayer. Meanwhile privately-owned facilities are subsidised (sweetheart deals for ISTCs, charitable status given to Nuffield hospitals, etc).
Some struggling NHS hospitals will close, while others, such as Hinchingbrooke in Cambridgeshire, will be handed over to private companies to be run for profit. Mark Britnell, who was the Department of Health’s head of commissioning under New Labour and is now lucratively installed in the private sector, says Hinchingbrooke is “only the tip of the iceberg” and anticipates perhaps 20 to 30 more such transfers over the next year.
ISTCs, too, provide ready-made privately-owned venues for ambulatory and short-term secondary care, while some 150 private hospitals and clinics in the ‘Extended Choice Network’ that are already available to NHS patients under the ‘choice’ agenda form the nucleus of an expanded network of private suppliers.
In terms of staffing, the Kaiser model calls for market relationships with independent teams of consultants, primary care physicians and nurses. In order to develop these, staff must be disengaged from the NHS and redeployed into the above-mentioned teams.
The main initial lever to bring this about will be the significant numbers of hospital doctors who become redundant under the cuts programme. At the same time, GPs already have a semi-independent status and can more readily be included in such teams, which have already been emerging in parts of the country. While such teams may initially have some autonomy, it is unlikely that they will be able to compete with the major providers in the long term; it is more likely that most will end up working for one or other of them, on the Kaiser model.
The third arm of the HMO model, the insurance function, will be the work of the new commissioning consortia, advised by - or, more likely, progressively outsourcing the work to - private health insurance companies, and some American HMOs. There are also indications in the white paper that patient choice of GP will in due course extend to choice of commissioning consortium - since all GPs will be required to belong to one, so free choice of GP means free choice of commissioner - and that the consortia and hospitals will become free to compete on price and not just on ‘quality’ as they do now.
It is likely that competing healthcare ‘plans’ will eventually be a feature of the market here too, as consortia begin to compete for patient income.
The insiders
Pushing through these changes is a tight-knit ‘policy community’, comprising a number of leading private sector figures, some doctors and some health policy think-tanks, working closely with a group of strategists within the Department of Health. Among the latter, a highly influential figure has been Professor Chris Ham, who was for some years head of the Department of Health’s strategy unit and is now director of the King’s Fund. Ham has been a long-term champion of Kaiser, organising a series of visits to the company’s California headquarters and being instrumental in setting up a number of ‘Kaiser beacon’ projects within the NHS to introduce and ‘normalise’ Kaiser’s aims and methods among NHS managers.
Even more emblematic is Dr Penny Dash. After working briefly for Kaiser in the 1990s, Dash was appointed head of strategy and planning in the Department of Health, and co-authored the NHS Plan of 2000, which initiated the marketisation process.
Since then she has served on the board of Monitor, led Lord Darzi’s recent review of health services in London, and is currently vice chair of the King’s Fund.
But it is Dash’s function as placewoman for the global consultancy giant, McKinsey, that is probably most significant. McKinsey has been described as the gold standard for the provision of corporate strategy advice to the Fortune 500 companies, and as ‘global thought leaders’ in the areas of strategy and operations management. The company has played a central role in ‘system reform’ in the NHS under New Labour, and Dash is now a partner in their London office.
One of her initiatives, the Cambridge Health Network, is essentially a McKinsey front for exchanges between private health corporations, financial institutions and the Department of Health. Sponsors of the network include some very big game: Halliburton, General Electric, and Perot Systems, as well as our very own GlaxoSmithKline, BUPA, Assura (now owned by Virgin), Mott McDonald and Carillion. McKinsey has been in many ways a key architect of the reforms that have prepared the way for the coalition. It was also, not coincidentally, McKinsey who came up with the figure of £20 billion that is now starting to be cut from the NHS.
Resisting the destruction of the NHS
As everyone recognises, successful resistance to the Tories’ plans to cut back public services permanently will call for a mass mobilisation with exceptional levels of solidarity, organisation and commitment. But, as Gregor Gall has recently pointed out, the defeat of the poll tax – the last time anything on this scale was successfully attempted – is not a good analogy with the situation we face now.
The poll tax affected everyone; its injustice was massive and obvious; and it required people to co-operate by registering and paying the tax, which they could and did refuse to do in vast numbers. None of these conditions applies to the complex, uneven, protracted process of dismantling the NHS that the Tories intend to push through.
Yet the injustice that will flow from the loss of the NHS will be massive. It will change the face of English society more profoundly than the poll tax. And it will be for all practicable purposes irreversible - unless we stop it now, all of us resisting in whatever way we can.
Read the first article in this three-part series that examines the aims behind current NHS reform.
Look out for next week’s article on the interests who are driving the privatisation of the NHS.
This article first appeared in Red Pepper.
Tags: Health policy, Privatisation
