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How to Dismantle the NHS in 10 Easy Steps
By Youssef El-Gingihy
John Hunt Publishing Ltd.Copyright © 2014 Youssef El-Gingihy
All rights reserved.
Step One: Create an Internal Market
The 1980s saw the outsourcing of non-clinical hospital services like catering, cleaning and laundry. Under John Major, most NHS bodies were made into trusts. NHS hospital trusts — or providers — run by boards of governors and chief executives 'sold' their services to purchasers i.e. Primary Care Trusts. This became known as the purchaser-provider split. This means that hospitals have to compete against each other to get business. Except the NHS is not the City of London; what you really need in healthcare is collaboration rather than competition.
The internal market was introduced on the premise that the NHS is a monolithic bureaucracy, encased in red tape and stifled by centralisation. In other words, the public sector is inefficient and the private sector brings innovation. In fact, as a direct result of these reforms, NHS costs rose substantially. This is largely due to increased numbers of administrative and managerial staff.
A 2005 study by a team at York University demonstrated this. Administrative costs rose from 5% in the mid 1970s to 14% in 2003 mainly due to internal market operations.
Around 10% of the NHS budget or £10 billion a year is therefore spent on running an internal market.
In fact, this study was commissioned by the Department of Health but hushed up, leading Parliament's Health Select Committee to state that they were 'dismayed' and 'appalled':
'The suspicion must remain that the DoH [Department of Health] does not want the full story to be revealed'.
Recent reforms have added to these costs. The Health & Social Care Act could push these administrative costs to 30%, which is similar to the US.
This experience of market-based reforms has been borne out in other countries. A minority report from an NHS working group highlighted evidence from international experts of soaring administrative costs in New Zealand, Canada, Australia and Germany. In the case of Germany, these costs have soared by 63% from 1992 to 2003 now accounting for 20% of the health budget.CHAPTER 2
Step Two: Introduce Public-Private Partnerships
When Thatcher was asked what her greatest achievement had been, what was her answer?
a) Falklands War
b) Smashing the miners' strike and deunionisation
c) Privatisation of public utilities
d) The big bang deregulation of the City of London
None of these. It was ... NEW LABOUR!
In the same speech, Ken Clarke, ever the good sport, was gracious enough to acknowledge the debt owed to New Labour for perpetuating the marketisation doctrines of Thatcherism. In fact, New Labour had pledged to abolish the internal market but then went full throttle in the opposite direction. New Labour's NHS Plan (2000) and NHS Improvement Plan (2004) resulted in the internal market expanding into an extensive market. This was again based on the premise that the private sector would introduce choice and competition as well as cutting costs.
In 2000, a 'concordat' between the NHS and private health firms paved the way for the provision of elective care and diagnostic tests, paid for by the NHS. This concordat facilitated private companies becoming permanent providers of treatment to NHS patients.
For example, when your GP requests an ultrasound or MRI scan, there is a good chance that a private company is being paid by the NHS to carry this out. Again, when your GP refers you to an outpatient clinic to see a specialist, this may be run by a private company. In theory, this sounds like a good idea.
Tim Evans, who negotiated the concordat on behalf of the private sector, looked forward 'to a time when the NHS would simply be a kitemark attached to the institutions and activities of a system of purely private providers'.
These public-private partnerships would take many shapes, the first of which were Independent Sector Treatment Centres (ISTC). ISTCs served as the entry point for the private sector and were intended to 'unbundle' the high-volume, low-risk, lucrative NHS work, such as cataracts and knee and hip replacements. In so doing, they would reduce waiting times. The concept may have been simple enough but the reality was messy.
As the British Medical Association (BMA) has shown, ISTC contracts were paid an average of 12% more for each patient than the NHS tariff cost. These sweeteners are often used in the outsourcing of public services to attract the private sector. They were also paid for a pre-determined number of cases — in bulk — regardless of whether procedures were carried out or not. To take one example, 'Netcare did not perform nearly 40% of the work it had been contracted to do', receiving £35 million for patients it never treated.
As of 2010, an overall average of just 85% of contracted activity was delivered. They ended up costing £5.6 billion over 5 years, yet by 2008 barely exceeded 2% of 8.6 million elective procedures.
Bringing in the private sector did not cut costs. It increased costs to the detriment of the NHS and patients, with only the private sector benefiting.
On top of this, clinical complications and legal costs were covered by the NHS. Yet more sugar-coating. There have also been repeated concerns about quality of care. Nevertheless, ISTCs were widened into the Extended Choice Network, which comprised 149 privately-run facilities by 2009.
Outsourced services are allowed to use the NHS logo meaning that patients are in the dark about who exactly provides their care. It was win-win for ISTC contractors and lose-lose for the NHS and patients. So if you are having an elective procedure or operation in the future, find out if it is being performed by a private company.
ISTCs were small fry compared to Private Finance Initiatives (PFIs). New Labour expanded PFIs, originally dreamt up under John Major, to build and run infrastructure projects. PFI schemes were used to build roads, schools, prisons and hospitals. PFI hospitals made up the biggest chunk. These projects were put out to tender to PFI consortia of bankers, construction firms and facilities management companies. This kept the money off the treasury's books and reduced the costs of government borrowing. Again, it was too good to be true. The completed PFI projects have been leased back to the government (or in the case of PFI hospitals to NHS trusts) with repayments, usually over 25 to 30 years, at high interest rates (some over 70%). Repayments are indexed so that they increase every year, even when the income of NHS trusts is falling. The Conservatives are fond of drawing analogies between the economy and a household budget; so think of PFI as a mortgage ... a hideously expensive mortgage, which ends up bankrupting the family!
The bill for hospitals alone is projected to rise above £79 billion. This exceeds the original capital cost (i.e. actual value) of £11.4 billion seven-fold.
PFIs came with strings attached in which 'facilities maintenance' was also subcontracted out. For example, if you need to change a plug socket or a light bulb, only a specific contractor is allowed to do this. A Daily Telegraph investigation flagged up several examples for the edification of the general public but this one really stands out:
One hospital was charged £52,000 for a job, which should have cost £750.
If you wanted to think up a way to bleed the NHS dry then you would struggle to do better than PFI. Is it any wonder then that more than half of NHS hospitals are now in deficit and potentially in danger of going bust? It is estimated that as many as three quarters of all hospitals could be in deficit in 2015.
One of the main factors behind this is PFI, although this is not usually mentioned.
The total PFI tab for the taxpayer stands at £301 billion for infrastructure projects with a capital worthof £54.7 billion.
That's a difference of £246 billion.
Just think what you could do with this money?
Well it would pay for all the nurses (there are just under 350,000) in the NHS for 10 years.
Plus all 40,000 consultants for 10 years.
Plus all 40,000 GPs for 10 years.
Still £67 billion to burn.
Well there are 18,000 surgeons in England. It costs around £400,000 to train a surgeon (surgeons and fighter pilots are the two most expensive professions to train so I'm told). So the next generation or two of surgeons i.e. another 18,000 would cost around £7 billion.
Plus 80 state of the art hospitals (based on the estimated cost of the new Papworth hospital — the national heart and lung transplant centre — at £165 million).
And pay for chemotherapy and radiotherapy for a million cancer patients (at £35,000 each).
If you wanted to keep it simple then the PFI drain would cover the entire NHS budget for over 2 years.
And with the leftover change, you could cover Wayne Rooney's £300,000 a week salary should Manchester United ever require a government bailout! And even George Osborne's first-class train fares (in view of his tendency for fare-dodging) until the next election.
PFIs and ISTCs are just two examples of how the private sector and a few really high-net-worth individuals have siphoned off public money.
I was born at the Queen Elizabeth hospital in Birmingham. My father has been under their excellent care for many years. It has been rebuilt as a PFI hospital with the original cost at £627 million but repayments will reach £2.58 billion. This begs the question: how many other patients could receive fantastic NHS care for this money?
I did my GP training at the Royal London Hospital, which is part of Barts Health trust. This is the largest trust in the country and accordingly has the most expensive PFI scheme, which is one of Innisfree's flagship projects. Innsifree is the biggest player in the PFI market. The original capital cost (i.e. actual value) of the Barts Health PFI was £1.1 billion (around £1 million per bed) but will end up costing £7.1 billion by 2049.
£6 billion will go to the PFI consortium Skanska Innisfree and partners. Barts Health are paying £100 million a year in interest before they even see a patient. That's £3 billion, just in interest, over 30 years. Imagine what you could do for healthcare in East London with this money.
So it's not exactly surprising that Barts Health have declared that they are in dire financial straits.
The Princess Royal Hospital in Bromley was another Innisfree gift to the taxpayer. It will cost the NHS ten times what it is worth — that's £1.2 billion. It's the main reason why South London Healthcare Trust went bust in 2012. Norfolk and Norwich University Hospital is another PFI part-owned by Innisfree. A few years into the contract, the PFI owners refinanced it, raising their annual rate of return from 16 to 60%.
There are many more Innisfree PFI timebombs detonating up and down the country — 19 in total. The healthcare of people in all these areas is jeopardised just so that Chief Executive David Metter and his total of 25 employees — yes that's right 25 — can make a killing! The Daily Telegraph describes him as the 'the man, who owns 28 hospitals and a motorway'. At the last count, one might add.
Apparently there's no money left. Unless you are someone like Metter, who took home £8.6 million in pay and dividends in 2010.
Money that could have been used to treat patients, pay for more NHS staff and build more hospitals instead of cuts, sacking staff and closing hospitals. This is why Conservative MP Edward Leigh, chair of a Treasury Committee report on PFI, described it as the unacceptable face of capitalism.
The insidious encroachment of the private sector into the NHS had thus far been a salubrious warning of the unchartered waters that lay ahead. Or so you might have thought ...
So the next time some minister or policy wonk bangs on about the NHS being unaffordable, it's worth remembering the scandalous cost of PFI. The toxic PFI debt has led to hospital mergers with consequent bed reductions, staff lay-offs and service closures. These mergers will be followed by the final 'wave of closures in the run-up to privatisation and franchising out'. As Allyson Pollock astutely points out, the great irony is that PFI was once hailed as the largest hospital-building programme ever; in fact, it is the largest NHS hospital closure programme.
You bet there's an alternative.
One begins to discern a pattern here. Could it be that those advocating bringing in the private sector do not have the interests of the NHS at heart? You would imagine that the case for terminating PFI, in the public interest, even if it means buying out or renegotiating the contracts, is a strong one. The National Audit Office recommended that the government should have the power to cancel contracts, which are not providing value for money. In fact, one hospital has done just that by buying out its PFI contract — West Park Hospital in Darlington (expected to save £14 million). However, this is not feasible for larger PFI contracts, such as Barts Health, without the backing of government.
The effective renationalisation of Network Rail and the London Underground Public-Private Partnership upgrade provide precedents. However, this government does not have the political will to do this. They believe in the ideology of neoliberalism and are against the role of state provision.
In fact, the Treasury has been the midwife to PFI2 — a rebranding exercise, which sounds like a summer blockbuster sequel. Unfortunately it will be hospitals not movie villains, which will be blown up as a result. It is likely that PFI2 — with higher rates of return for investors — will prove to be more expensive than the original PFI.CHAPTER 3
Step Three: Facilitate the Corporate Takeover
1) Primary care:
The introduction of Alternative Provider Medical Services (APMS) contracts meant that Primary Care Trusts (PCTs) could commission care from companies employing salaried GPs rather than traditional contracts with GPs themselves. Amongst the winners were UnitedHealth (more on which later), Atos (to which the government outsourced the controversial fitness tests for incapacity and other benefits) and Virgin.
The corporate takeover of Out-of-Hours Care (OOH) saw companies like Harmoni, Serco and Take Care Now win contracts to provide OOH care. Harmoni has been the leader in this field, quietly hoovering up whole swathes of OOH care nationwide.
2) Secondary care:
Foundation trusts were introduced from 2003. This empty-sounding label essentially converted hospitals into semi-independent businesses with financial and other freedoms.
New GP and consultant contracts were negotiated in 2003-4. The GP contract appeared to be a major triumph. It made OOH care optional and led to increased pay for GP partners matching hospital consultant salaries. However, in the long run, it proved to be a significant own goal. Firstly, there was a backlash against GPs from Parliament, the CBI and the media, typified by the Daily Mail's coruscating front pages slamming 'super GPs earning £250,000'. Never mind the distortion of this applying only to a tiny number of GPs and that the Department of Health (DoH) had anticipated the majority of GPs opting out of OOH.
Harmoni has been beset by allegations of cost-cutting, inadequate staffing and sub-standard care, most recently as part of The Guardian's NHS Plc series. Serco and Take Care Now have also been implicated in similar controversies. On at least one night, it is alleged that Serco had only one or two GPs covering most (if not all) of Cornwall. It was also claimed that Serco had falsified data to meet targets. A parliamentary report, by the Public Accounts Committee, highlighted this and accused the company of bullying employees. This contract has now been terminated. Serco has been dogged by scandals in recent times. The Independent revealed that Britain's largest pathology services provider Viapath — established as a joint venture by Serco in partnership with Guy's and St Thomas' Hospitals — has been overcharging for diagnostic tests. It is estimated that the amount could be as high as £1 million in 2012 alone. There have also been safety concerns and pay cuts leading to loss of experienced staff. If this all sounds familiar, that's because it is. Serco have been under investigation by the Serious Fraud Office for overcharging the government for electronic tagging of prisoners. Astonishingly, Serco continues to make profits from taxpayer money. 2013-14 NHS figures show that it was paid £10 million. G4S — also plagued by scandal — took £3.5 million.
None of this should surprise us, as private companies only have one legal obligation, which is to their shareholders. In other words, their aim is to maximise profits usually through cutting staff and other costs. In this sense, the private sector can be seen to be more efficient.
Excerpted from How to Dismantle the NHS in 10 Easy Steps by Youssef El-Gingihy. Copyright © 2014 Youssef El-Gingihy. Excerpted by permission of John Hunt Publishing Ltd..
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Table of Contents
Step 1 Create an Internal Market 5
Step 2 Introduce Public-Private Partnerships 7
Step 3 Facilitate the Corporate Takeover 14
Step 4 Install a Revolving Door 20
Step 5 Organise a Great Big Sell Off 24
Step 6 Run a PR Smear Campaign 28
Step 7 Legislate for the Dismantling of the NHS 40
Step 8 Plot Against the NHS 54
Step 9 Brew the Perfect Storm 57
Step 10 Introduce Universal Private Health Insurance 64
Reading List 72