A BRIEF HISTORY OF NHS PRIVATISATION US-STYLE



In my documentary film ‘Groundswell: The Grassroots Battle For The NHS And Democracy’ (2018) a campaigner is succinct about what we face; “Having torn the NHS apart they are now putting it back together again with the private companies embedded inside it”. How did this deformation and corruption of one of our most cherished and globally admired institutions come to a pass?

The genesis goes back over 40 years. In 1977 Tory grandee Nicholas Ridley’s secret report to his party’s Economic Reconstruction Group declared that; “Denationalisation should not be attempted by frontal attack but by preparation for return to the private sector by stealth. We should first pass legislation to destroy the public sector monopolies. We might also need to take power to sell assets. We should fragment the industries as far as possible and set up the units as separate profit centres.”

For the NHS this process was started in 1986 with the privatisation of hospital cleaning services by the Thatcher government. In the Nineties and early Noughties, under Labour as well as Tory governments, competition was then introduced into the NHS with the development of the ‘internal market’. This separated the parts of the NHS that pays for services from those that provide them, the so-called ‘purchaser/ provider split’. Hospitals were turned into ‘trusts’ able to operate as commercial businesses.

The trusts in turn entered into partnerships with private companies who undertook responsibility for the building and maintenance of hospitals as Private Finance Initiatives (PFI’s). These £11.4 billion deals lumbered the NHS with over £80 billion of debt, depriving it of huge amounts of money needed for frontline services.

Between 1990 and 2012 94% of ‘social care’ (care homes) was also privatised, leaving this vital but NHS funding-starved and private sector debt-ridden healthcare arm in crisis, with over 1.5 million over-50s now not getting access to the care they need and ‘bed blocking’ in hospitals due to lack of care home beds to which patients can be transferred.

Meanwhile, after years of convincing the public that the NHS is ‘unaffordable’, the floodgates for completing the conversion of the tax-funded NHS to a US-modelled public/private enterprise were opened by the 2012 Health and Social Care Act brought in by the Tory/Lib Dem coalition government.

The Act enabled hospital trusts to raise 49% of their budgets from private patient and other earnings. Hospitals could use the public’s ‘brand loyalty’ to the NHS to attract patients to their private services. Swindon’s Great Western Hospital could advertise; “We are in the unique position of being able to offer high quality healthcare in a premium environment, alongside the safety of the specialist services associated with the NHS.” Patients at the private facility would enjoy shorter waiting times.

70% of the NHS budget was handed to local Clinical Commissioning Groups (CCGs) comprised of GPs and clinicians to spend on commissioning services from the private sector as well as from the NHS.

Given their lack of business expertise they were provided with Commissioning Support Units run by hugely costly private companies like KPMG, Price Waterhouse Cooper and Optum, a subsidiary of US health insurance giant United Health. These effectively run the franchising of NHS services and the use of private companies.

The Act also abolished the Health Minister’s responsibility for providing healthcare for England’s citizens. This was left to NHS England. In 2013 a new CEO of NHS England Simon Stevens was appointed. Stevens, a former CEO of United Health, launched plans, drawn up with US private sector consultancy behemoth McKinsey and Optum, to radically ‘reconfigure’ the NHS by 2020.

Reducing the public’s local hospital usage is the plans’ central aim. The public will have a restricted number of US-style ‘hub’ hospitals available to them. These are to cover far wider areas and larger populations, with specialist units like cardiac and cancer concentrated in a selection of them.

Beds are being cut or transferred from public to private patient usage and A & E services are to be slashed from 144 to just 40-70. They are being replaced by far cheaper Urgent Care Centres (a US import) with less skilled staff and resources. Urgent Care Centres owned and run by US companies like Hospital Corporation Of America (HCA) are now openly advertising their services here.

Cost-saving family and community-dependent homecare and at-home online and mobile app consultations like Doctaly, GP At Hand and myGP are being heavily promoted. GP services, with their long-term, personal doctor/patient relationships, are being substantially reduced and replaced by temporarily imported, less qualified but cheaper doctors and by impersonal US-style ‘physician assistants’ and pharmacists.

Rationing GP and publicly available services adds to the increasing delays and inaccessibility of treatment for public patients and, along with the shortage of care home beds, creates an NHS ‘crisis’ such as the much-publicised ‘bed blocking’.

All this pressures the public to accept privatisation and to use expensive private providers and private health insurance companies. The promotion of private health insurance is now burgeoning.

Hi-tech ‘solutions’ using apps and online appointments services are being offered to provide speedy but costly medical attention and treatment from private sector GP’s. GP family practices are being merged into business federations to be taken over by large private companies like Virgin Healthcare and US healthcare giant Centene.

GPs are being moved from the family practice model to a system of commercially-driven clinics called Multi-Speciality Community Providers (a US import). Patient records are being transferred on to US-originated national databases used in the US for risk assessing and billing patients. Risk assessment is key to the USA’s private health insurance-based system whereby higher risk patients – eg. the older generation and those with a history of mental and physical disabilities – pay far more for their healthcare costs or have serious problems with accessing the healthcare they need.

The NHS’ deliberate fragmentation, as envisaged by Ridley, and the deliberate underfunding and squeezing of NHS and GP services makes the NHS appear ‘unworkable’. This and its ‘unaffordability’ are central to justifying the dismantling of what was once the cheapest and most cost-effective public healthcare system in the developed world.

And it’s central to the drive for then ‘reconfiguring’ our public healthcare as a US-modelled 2-tier public/private system – an accessible one for the better off and another less accessible one for the worse off.

The Ridley report said that privatisation had to be enacted ‘by stealth’ because of the strong opposition it would face. It was delivered privately to Tory colleagues and only came to light by being leaked to The Economist. Hidden behind its cherished logo the NHS’ privatisation continues to be enacted covertly, with considerable stealth, obfuscation, lack of transparency and outright deception.

This is aided by the national media who mouthpiece the privatisers’ patter about an ‘unworkable’ and ‘unaffordable’ NHS in irretrievable ‘crisis’ and who conspicuously fail to properly question what lies behind all this.

Why do they not refer to the 2012 World Economic Forum in Davos at which NHS England boss Simon Stevens, then a United Health CEO who opposed President Obama’s Medicare programme on the corporation’s behalf, led proposals to undermine public healthcare systems around the world and replace them with Accountable Care Organisations?

Why do they not question the free-marketeers’ mantra about taxes being the only source for paying for a fully nationalised NHS when the Bank Of England and the Government were able to guarantee credit of £1.16 trillion (£1,160 billion) to rescue our bust and corrupted financial sector, with no damaging effects on inflation or the value of the pound, as the years since the 2008 Banking Crash have shown? Why do they not go back to the foundation of the NHS when then Minister Of Health Nye Bevan drove it through despite Britain’s national debt being more than twice as large as it is now?

Why is the NHS being privatised? The NHS is the 5th largest ‘business’ in the world and healthcare is a dream business. Patients are never in short supply and the government will act as the back stop when it comes to payment for the least well off, or will pick up services which the private sector drops if the profits don’t match expectations.

Who stands to profit? Major private stakeholders in the $7.6 trillion global healthcare sector, including US healthcare services/health insurance conglomerate Kaiser Permanente – originator of the Accountable Care Organisations /ACO model which NHS England are importing – are looking to expand in global markets through massive trade agreements like the mooted US/UK one. These will remove protections from public services and open them to market predators.

Who stands to lose? Most of us are dependent on the tax-funded, publicly-provided, publicly-accountable NHS. But the true costs of its increasingly privatised sectors are impossible to obtain as the implicated private companies are protected by commercial confidentiality laws.

Privately-provided services, with their bank loan costs, dividend payments and market-rated management fees, cost far more than State-funded ones. And the administration of marketisation, with all the consultants, lawyers, accountants, billing agents etc involved in franchising NHS services, is also hugely expensive.

Added to that is the cost of the panoply of commercially-driven performance monitoring imposed on GPs and NHS staff, with all the extra time it takes them – a factor in the huge, attritional demoralisation of NHS personnel – and with all the extra NHS management and admin involved.

From the founding of the NHS in 1948 to 1990, when the first legislation for its privatisation was enacted, the management costs share of the NHS annual budget remained steady at 3.5% – 5.0 %. It then shot up to 14% by 2010.

Given the surge in its commercialisation since the 2012 Health & Social Care Act the current cost of the NHS’ marketisation could be reasonably guesstimated at £10-25 billion a year.

It’s abundantly clear that getting rid of privatisation would actually cover the lion’s share of the costs of the extra demands facing the NHS which are blamed for making the NHS ‘unaffordable’.

Instead, with ever more limited public healthcare for their needs and decreasing access to it, the public are being confronted with having to pay the substantial additional costs of privately-provided services out of their own pockets and/or by resorting to ever increasing private health insurance premiums as they get older or suffer illness – in addition to the taxes they are already paying.

Health insurance involves all kinds of exclusions and limitations leading to patients having to make substantial additional payments for their healthcare – healthcare costs are the biggest cause of personal bankruptcy in the US.

Denial of treatment, unnecessary operations and serious misconduct – United Health is currently the subject of a multi-million dollar lawsuit from the Justice Department for defrauding the US healthcare system – are a feature of the US’ profits-driven system. Recently judged by the influential US foundation The Commonwealth Fund as the most expensive, least safe and least publicly accessible healthcare system amongst leading countries, it is failing so badly that even Republicans are now voicing their concern at its viability.

Yet the Government and NHS England continue their drive to complete the major steps of converting our tax-based model to a US-modelled public/private enterprise as speedily as possible, with Brexit providing a blanket diversion from what they are doing. It is already seeing the development of a US-style 2-tier system and a further widening of the gap between rich and poor produced by the unfettered free market.

This is being done without any proper public knowledge or consent or due Parliamentary legislation, which NHS supremo Stevens openly admits they are seeking to “work around”. This deliberate circumvention of democratic principles and public accountability, along with the current drive to sell off NHS land and property assets needed for future NHS demand to private developers, appears to be part of a ‘slash and burn’ strategy aimed at making the NHS’ ‘reconfiguration’ effectively irreversible.

The final step was to be the rushed contracting of Accountable Care Organisations or ACOs (a US import) in April 2018. These were to be comprised of NHS Clinical Commissioning Groups, NHS hospital trusts and local authorities partnered with voluntary and private sector companies. ACOs were to use the NHS’ public money to manage and deliver packages of care for a set budget based on their cost-savings rather than on local population needs. The door was left open for them to be run by private companies, including private health insurers.

But legal action by campaigners has led to ACOs being recast as Integrated Care Providers or ICPs in a purchaser/provider structure that will still allow the intentions of the privatisation plans to be realised – that not only the provision but also the running of huge tracts of the NHS be handed over to the private sector in a cost and profit-driven system rather than a public healthcare needs-driven one.

The plans have had a decades-long fuse, enabling their perpetrators to rubbish the longstanding warnings of campaigners like the estimable social and health policy expert Professor Allyson Pollock. But time has proved Pollock and other campaigners repeatedly correct. Were it not for their actions around the country over the last few years the Ridley Report’s 40-year old vision of private sector annexation of the NHS would now be all but complete.

But with the Government and NHS England now pushing ahead at high speed to complete the implementation of the plans by 2020 the campaigners desperately need the support of opinion formers and those in positions of influence. As yet this has not been forthcoming in any meaningful way.

The free-marketeers’ agenda and public messaging, with its ‘there’s no such thing as government money; there’s only taxpayers money’ and ‘belt-tightening’ mantras, continues to hold sway despite having been discredited by the humungous bailouts for the financial sector following the 2008 Banking Crash.

The failure of liberals and social democrats since then to challenge the free-marketeers’ ideology that has dominated our society over the last 40 years has led to popular anger being channelled into the arms of the free-market extremists. We can see where this failure is leading in the right’s rise in the US and EU, and in the emerging nationalism here in the UK. And we know what happened in Germany in the 1930s.

For many campaigners the battle to save the NHS is also a battle to save our democracy from the free market extremists’ lethal contagion. It is vital that all those of influence, indeed all who espouse the values of a fair, libertarian democracy, now take up cudgels on behalf of an institution that is being destroyed covertly and undemocratically at great cost to our health, our pockets and our best social principles.

Note: This blog was written in 2018. For incisive updates and analyses see the Public Matters website: https://publicmatters.org.uk/

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