The privatisation of the NHS

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The privatisation of the NHS

• Professor Allyson Pollock
• Centre for International Public Health Policy
• University of Edinburgh

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• Government argues privatisation doesnt matter so
  long as it is publicly funded

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Health care - a Republican affair. Bush Cheney
Pioneers

• First Health Services - Tom Loeffler raised at
  least 100,000 for the Bush/Cheney 2000 campaign
• Long Term Care Pharmacy Alliance - James Neir is
  managing partner at Winston Strawn, lobbying on
  behalf of Long Term Care Pharmacy Alliance.
• United Healthcare - William W McGuire, MD, of
  Wayzata, MN, is Chairman, CEO, Director for
  United Healthcare Corp.
• UPMC Health Plan - Ronald Kaufman pledged to
  raise 100,000 for the Bush/Cheney 2000 campaign
• Well Care HMO - David Hart, is Finance Director
  for Well Care HMO, Inc. Todd S. Farha , of Tampa
  , He is President and CEO for Well Care HMO, Inc.
• Source www.hmocrisis.com_update052404.html

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Why markets in public services?

• Welfare state is the great unopened oyster
  health and education alone account for up to 20
  of western countries GDP
• High income countries hope to gain significant
  trade advantage and economic benefit - the UK as
  model maker

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1999-2000 health expenditure, GDP
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The WTO secretariat calls the health sector of
OECD countries a domestic economic giant

• WTO secretariat. Health and social services
  background note S/C/W/50 18 Sep 1998

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The United States is of the view that commercial
opportunities exist along the entire spectrum of
health and social care facilities, including
hospitals, outpatients, clinics, nursing homes,
assisted living arrangements, and services
provided in the home

• US government trade delegation

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The export of managed health care is US foreign
policy

• We believe we can make much progress in the
  negotiations to allow the opportunity for U.S.
  businesses to expand into foreign health care
  markets Historically, health care services in
  many foreign countries have largely been the
  responsibility of the public sector. This public
  ownership of health care has made it difficult
  for U.S. private-sector health care providers to
  market in foreign countries
• Coalition of Service Industries1999

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The UK NHS as model maker

• The UK NHS case study of health system
• changes
• the government is removing the barriers to
• the market through the redesign of its
• delivery

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Moving from geographic area-based planning
1948-1991
Internal market (mixed) 1991-2003
Market providers (foundation trusts) and
regulators 2004-
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Four stages of NHS privatisation

• Phase I Efficiency management
• 1979 control moves away from professionals.
• Griffiths supermarket management reforms
• Phase II Internal market
• 1991 purchaser/provider split
• public corporations
• Phase III PFI -PPPs
• 1992 privatise asset base non-clinical
  services
• Phase IV NHS Plan
• 2000 privatise clinical services- foundation
  trusts
• pricing- financial
  flows, DTCs etc
• local pay bargaining- GP/ consultant contracts
  

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Phase III- privatisation of NHS assets
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PFI and NHS hospitals

• Design, build facilities, and operate
  non-clinical
• services
• Consortia of builders, bankers, and service
  operators
• NHS hospitals land is sold or given in
  exchange to private
• sector
• NHS leases back buildings and services at a cost
  far higher than
• it could borrow
• Lease for buildings and services 30-60 years
• Lease for land 150 years

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Increase in costs from OBC to current 1999-2000
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Annual revenue implications of capital costs for
19 PFI hospital schemes comparing costs before
and in the first year in which the PFI scheme is
operating
All calculations include payments to Treasury on
existing and retained estate.
Refers to 1999-2000
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Public private partnerships

• Introduce private sources of finance and create
  entry points for the private sector in
  infrastructure and supply of services

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Changes in bed numbers at NHS trusts under PFI
development Values are average nos of beds
available daily (all specialties)
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Unattractive economics

• An incremental investment of 200m might require
  productivity improvements leading to perhaps
  1,000 job losses which might be significantly
  greater than 25 of the workforce This is
  probably only achievable by reducing the numbers
  of doctors and nurses in the local health care
  market
• PFI Futures March 1998
• Newchurch Co

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Edinburgh Royal Infirmary staffing projections as
of February 1997
Note that some ancillary staff will transfer to
PFI contractor Source Full business case for new
Edinburgh Royal Infirmary
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• The introduction of for-profit stakeholders makes
  competing claims on scarce resources and
  government seeks to pass risk and costs to staff,
  patients and taxpayers.

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Phase IV extending privatisation to clinical
services
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Phase IV extending privatisation to clinical
services

• Doctors and staff contracts
• Private treatment centres
• Foundation hospitals Payment by Results (DRG)
• Commissioning- UnitedHealth Group
• GP services- UnitedHealth Group - Derby (APMS)

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Foundation trusts and private companies

• i direct contracting out of clinical services
• ii private finance
• iii joint ventures and spin-off companies

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Multinational moves in on inner-city general
practices

• In what is thought to be the first deal of its
  kind, private
• healthcare giant UnitedHealth Europe has been
  awarded the
• contract to run a general practice left vacant by
  a retiring
• single-handed GP. UnitedHealth Europe won the
  contract to run
• the 3,000-patient Normanton practice in
  inner-city Derby
• against three other tenders. It will be one of
  the first alternative
• provider medical services (APMS) practices in the
  area.

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Privatisation efficient and effective and
integrated?

• i Increases transaction costs - pricing
• - contracting
• - overheads
• - marketing
• - monitoring
• - billing
• ii Shareholder profits
• Iii Bankers interest payments
• Iv Disintegration and fragmentation and
  inequities

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Phase V- the future?

• i user charges / private funding/top up fees,
• vouchers
• ii privatising clinical services
• iii reducing / restricting entitlements time
  limits
• on NHS care - older people and refugees
• iv services only available in the private sector

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The propaganda war
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Polluting the evidence base

• i

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Polluting the evidence base

• Waiting lists
• Productivity- PFI, ISTC,
• Value for money claims - Independent treatment
  centres, Foundation trusts, PFI
• Commercial in confidence
• Kaiser permanente
• Privatisation of data

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Why public services matter

• Redistribute income
• wealthy to poor
• Redistribute benefits by
• a sharing the risks and costs of services across
  the community
• b delivering services on the basis of
• need and not ability to pay

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Principles

• Funding system
• Redistribution - fairness of funding
• Risk pooling
• Risk pooling built into both funding and delivery
  through integration

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Kaiser Permanente - large US health maintenance
organization

• The UK can be contrasted with, for example, the
  system run by Kaiser Permanente in California.
• This is likely to be one of the reasons why
  Kaisers average number of acute bed days per
  1,000 of the population is significantly lower
  than that of the NHS.
• Wanless D. UK Treasury Securing our future
  health taking a long-term view
• 
  London. 2002, 6.50

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• www.KeepOurNHSPublic.com