We are seeing the latest phase in a 25-year programme of privatising public assets and services. Healthcare is harder than other services to privatise, for two reasons. First the NHS is very efficient.
The only way to get companies interested is to allow them to cherry pick the easiest bits such as cataract operations and hip and knee replacements.
Even then they can’t meet NHS costs. The independent treatment centres have been given guaranteed supplies of patients, and they’ve been allowed to turn away high-risk patients.
Apparently about 20 percent of such patients are being left to the NHS because they cost too much money to treat.
The second reason why it is hard to privatise clinical health care is that the NHS is very popular.
But a series of steps have been carried out, each represented as a reform in the interest of efficiency:
- In the early 1980s Margaret Thatcher introduced general management — displacing clinicians from the management of hospital services and bringing in people whose training was in business.
- Then there was outsourcing — cutting costs in cleaning, portering and so on. Profits were made by cutting wages and lowering standards — as we find out when we see the increased incidence of hospital generated illnesses due to poor hygiene.
- Under John Major and Tony Blair in the 1990s we had the internal market and the Private Finance Initiative (PFI). The internal market forced the new NHS managers to think as business managers. PFI put private companies, the consortia building hospitals, at the centre of acute care. The NHS plan of 2000 promised 100 new hospitals. So far 98 percent have been built with PFI money.
Now we are at a new stage of privatisation of clinical care.
A healthcare market is being created in which private providers can treat NHS patients provided they are prepared to accept the NHS’s tariff.
At present no provider will accept that rate, but the idea is that their “superior efficiency” will, at some point in the future allow them to do that.
In June last year the government’s NHS improvement plan was published.
The promises it contained only really came to public attention recently, when health secretary Patricia Hewitt announced the actual handing over of NHS treatment services to the private sector.
The plan is full of touchy-feely chapter headings: “High Quality Personalised Care” and “A Healthier, Fitter Population”.
But chapter eight is called, “Aligning Incentives With Patients And Professionals”. Suddenly you are being told about the market, about payment by results, private companies coming in and hospitals going to the wall.
None of this was debated in parliament. There was discussion on “choice” and on sexually transmitted disease. “Choice” is the Conservative’s thing — they get worked up about the idea of Labour standing up for “choice”.
There’s another group of Tory MPs who get very excited about anything to do with sex.
The government’s own consumer council did a survey in 2003 about choice, asking people if they wanted it.
People, it turns out, do not want choice. It’s common sense — you don’t want to choose a hospital any more than you want to choose your fire brigade.
The result of the changes to the NHS will be worse healthcare that costs more. Then people will be offered a different kind of choice — the choice will be “top-up fees” like in the universities.
Before the decade is out we will be dealing with “user fees” for what might be called “enhanced services”.
The NHS will cost more under these plans because there will be shareholder profits to be paid. There will also be a loss of integration.
At the moment a loss to one part of the service will be a gain to another. For example the cost of cutting smoking saves on lung operations. As soon as that kind of situation goes, the costs rise.
Then there are the transaction costs — the payment for the invoice clerks, lawyers, accountants and advertisers.
In the 1970s, Charles Webster, the official historian of the NHS, thought that these costs were about 6 percent of the budget.
By the mid-1990s, with the internal market he thought they had doubled to roughly 12 percent. We are moving to a new situation and we must look around the world for a similar model.
In the US the transaction costs are anywhere from 20 percent for public hospitals, 25 percent for non-profit hospitals and 34 percent on average for for-profit hospitals.
A figure of just 18 percent, applied to the NHS budget of £80 billion a year, would mean about £10 billion a year for transaction costs.
The efficiencies you’d have to get from marketising clinical healthcare to account for £10 billion a year would have to be phenomenal.
There is no evidence whatsoever that private healthcare is more efficient.
Why is all this being done? There is the Rupert Murdoch factor. Policy since 1997 has been within a framework that the Sun newspaper will go along with.
Secondly, there is an electoral calculation — occupy the conservative ground and the Conservatives can’t win the election.
Thirdly, the World Trade Organisation and European Union are both commited to trade and services liberalisation and the British government is signatories to both.
Finally, there is the zeal of the converted. It is very difficult to live with yourself if you are doing things only because of the “new reality”, as Peter Mandleson used to call it.
There comes a point when it’s better to think that the new reality is not so bad.
What is to be done? We have to make this very complicated story simple and real. This kind of meeting and hundreds of others like it can do that.
We need to build on the energy that has lain in hundreds of campaigns to prevent hospital closures and link these up with a new understanding of what is at stake.
Colin Leys is an honorary professor at the University of Edinburgh. His most recent book, Market Driven Politics, is available from Bookmarks. Phone 020 7637 1847. Go to www.bookmarks.uk.com