http://politics.guardian.co.uk/publicservices/comment/0,11032,1532025,00.html


The reinvention of failure

Existing health services are being deliberately destabilised
to pave the way for an ideologically driven privatisation
programme
John Lister
Guardian, Wednesday July 20, 2005

How is it that with spending on the NHS now running at
double the level of 1997, the service is running into an
autumn crisis, with debts totalling at least £750m, bed
closures, theatres closed, services cut and estimates of
8,000 or more redundancies?

The answer lies in the breakneck process of "modernisation",
under which existing services are being deliberately
destabilised to establish a competitive market system
incorporating for-profit private providers, in place of a
planned system of public healthcare.

Under John Major the NHS was buying less than £200m worth of
treatment from private hospitals a year. This will have
increased 10-fold by 2007. Up to 15% of elective surgery
will be hived off to private hospitals, leaving NHS trusts
to cover the remainder.

Hospital buildings have also been privatised: private
finance initiative schemes worth more than £5bn have been
completed since 1997 or are being built, and another £12bn
of projects are under negotiation - all of them locking
trusts into costly, long-term leasehold deals.

But while New Labour ministers press relentlessly on,
opposition is starting to coalesce. Last week in London a
group of consultants, academics, MPs and trade-union
officials met to plan a "save our NHS" coalition against
these "stealth reforms", which have little public support -
a recent poll showed 89% against private provision of NHS
care - and are little reported or discussed.

That is likely to change in the autumn as huge,
unprecedented budget deficits - and cuts in services - begin
to take shape alongside the new competitive health market.

Soon all patients must be allowed to "choose and book"
elective treatment from a list including both NHS and
private providers. Millions will be siphoned out of trust
budgets into private-sector treatment centres: Brighton and
Sussex University Hospitals NHS Trust stands to lose 85% of
its elective orthopaedic work, worth £15m.

The attempt by the health secretary, Patricia Hewitt, to
claim the mantle of Nye Bevan in her defence of New Labour's
NHS reforms earlier this month - arguing that even Bevan
"saw a role for the private sector" - should have drawn a gasp.

When Bevan nationalised the flagging network of voluntary
and municipal hospitals in 1948 he made compromises that
left some relics of the pre-NHS private sector intact - pay
beds and private practice for consultants, and allowing GPs
to remain as "independent contractors".

But what for Bevan were concessions, to ensure the passage
of ground-breaking changes, have for Hewitt become a point
of principle. Billions are now diverted from NHS budgets to
create a new, expanding private sector, which will now be
free to poach staff from NHS hospitals. Hewitt's first
announcement in her new job was that another £3bn was to be
spent on services exclusively from private providers - with
NHS hospitals forbidden to bid. Two modern NHS treatment
centres are to be privatised, reversing Bevan's
modernisation. This is neither expanding capacity nor
supporting patient choice, since existing high-quality NHS
services will no longer be available in these areas.

Hewitt is also creating a new private sector in primary-care
services, while GPs are encouraged to act more like
businesses, and allowed to retain unspent surpluses from
"practice-based commissioning".

A survey of more than 40 countries shows that for 15 years
England has gone furthest and fastest down the road of
market-style reforms; but there is no evidence that these
reforms improve efficiency or cut costs.

Thatcher's 1990s marketising reforms, by fragmenting the NHS
into purchasers (health authorities and GP fundholders) and
providers (trusts), massively increased administrative costs
and boosted the number of senior managers.

Throughout Europe and around the world, insurance-based
systems with separate purchasers and providers cost more to
administer than the NHS: admin costs in France and Germany
are over 20% of health spending, while in the US almost a
third of the $1.4 trillion spent on health goes on
administration.

New Labour came to office pledging to scrap the costly
internal-market system, and began to do so - only to turn
rapidly back towards the current policy, creating a market
in which the NHS competes on unequal terms with a private
sector free to cherry-pick the most profitable specialities
and treatments.

NHS productivity has been hampered by soaring costs of goods
and services from the private sector. For every £1 spent on
NHS staff in 1995, according to the Office for National
Statistics, 71p was spent on procurement of goods and
services from the private sector; by 2003 the figure was
£1.15 for every £1 on staff.

Hewitt's plans to spend billions on buying in treatment from
private hospitals and treatment centres will therefore
increase costs - just as private-sector care, especially
for-profit care, costs more in almost every country where it
is purchased alongside public provision.

New Labour's ideologically driven modernisation reinvents
failed policies and ignores the evidence. Competition, which
brought fragmentation, dislocation and widened inequalities
under the Tories, is coming back as "payment by results"
from next April; it is already destabilising local NHS
hospitals, and will bring more closures. Foundation Trusts
ape failed experiments that were dropped in Spain, brought
soaring debts in New Zealand, and led to outright
privatisation in Stockholm.

In Britain, what is called modernisation has already
increased costs and overheads, demoralised and alienated
staff, undermined planning - and done nothing to ensure
equal access to local care. It cannot continue to go
unchallenged.

· John Lister is the information director of London Health
Emergency, and lectures in health policy and journalism at
Coventry University; his book Health Policy Reform - Driving
 the Wrong Way? is published this month.
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