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The NHS DismantledJohn Furse
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The Americanisation​ of the NHS is not something waiting for us in a post-Brexit future. It is already in full swing. Since 2017 Integrated Care Systems (ICSs) have been taking over the purchasing as well as the provision of NHS services in England, deciding who gets which services, which are free and which – as with the dentist and prescriptions – we have to pay for. Known in the US as Accountable Care Organisations (ACOs), ICSs are partnerships between hospitals, clinicians and private sector providers designed – and incentivised – to limit and reduce public healthcare costs, and in particular to lessen the demand on hospitals. Health Maintenance Organisations (HMOs), the forerunners of ACOs, were pioneered by the US health insurance provider Kaiser Permanente in 1953. President Nixon’s adviser John Ehrlichman explained to his boss the basic concept before the passage of the 1973 HMO Act: ‘The less care they give them the more money they make.’ In May 2016 Jeremy Hunt, then health minister, admitted at a Commons Health Committee hearing that Kaiser was a model for his planned NHS reforms. When a trial of ACOs was announced in the UK in 2017, it caused an outcry from campaigners and NHS England quickly rebranded them ICSs. But the Kaiser model isn’t new to healthcare policy in the UK: it has been the inspiration for the long and discreet process of the dismantling and reformation of the NHS since the 1980s.

In his report to the Conservative Party’s Economic Reconstruction Group in 1977, Nicholas Ridley wrote 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. Secondly, we should fragment the industries as far as possible and set up the units as separate profit centres.

After coming to power two years later, Thatcher was able openly to denationalise many industries, but the NHS, with its huge number of staff and institutions, its largely effective and equitable provision of healthcare and its great popularity, was a far more difficult proposition. In 1986 hospital cleaning services were privatised. In 1988 Oliver Letwin and John Redwood published Britain’s Biggest Enterprise: Ideas for Radical Reform of the NHS, which proposed turning the NHS into an independent trust and advocated joint ventures with the private sector and the introduction of fees.

The first major legislative step was the creation of the internal market. Kenneth Clarke’s 1990 NHS and Community Care Act split the NHS into ‘service purchasers’ and ‘service providers’: hospitals and GPs would compete for custom and the successful parties would be rewarded with greater funding. The influence of the HMO model and of the Kaiser consultant Alain Enthoven was acknowledged in Parliament by the then Tory MP Quentin Davies. ‘The fund-holding practice concept owes something to the system of HMOs in the United States … Elements of the Bill reflect some of the thinking of Professor Enthoven in his famous report and reflect his concept of an internal market.’ Enthoven was seen as an expert on ‘unsustainable growth’ in health expenditure and in 1985 his report ‘Reflections on the Management of the National Health Service’ had advised the Thatcher administration that ‘in competition doctors impose on themselves controls they would never dream of accepting if the government tried to impose them.’ ‘The system needed to be reconfigured,’ he later explained, ‘in such a way as to give incentives to motivate the self-interest.’

Letwin and Redwood’s ideas also had traction in Tony Blair’s 1997 National Health Service Act. Together, the 1990 and 1997 Acts turned NHS hospitals into trusts able to operate as commercial businesses. Many formed Private Finance Initiative partnerships to build and maintain hospitals – these deals, originally worth £11.4 billion, have lumbered the NHS with more than £80 billion of debt. Under New Labour a number of hospital trusts commissioned Kaiser and United Health, the largest US private health insurer, to run pilot programmes. ‘Consumer choice’ had been the mantra of the Thatcher era; under New Labour NHS patients became consumers and the goal ‘patient choice’.

These changes were minor compared to those introduced by the 2012 Health and Social Care Act (Letwin was by then a senior figure in Tory policy-making), which enabled hospital trusts to raise 49 per cent of their budgets from private patients and other sources, and to use NHS ‘brand loyalty’ to attract patients to their private services. In 2017 Swindon’s Great Western NHS Hospital advertised its private service saying: ‘Our patients benefit from a premium environment while having immediate access to specialist services often only available in large NHS hospitals.’

The Act gave more than 60 per cent of the NHS budget to local Clinical Commissioning Groups (CCGs), comprised of GPs and other clinicians, to be used to commission services from the private sector as well as from the NHS. Writing anonymously, one GP described the change as ‘how to get turkeys not only voting for Christmas but also plucking, basting and putting themselves in the oven’. Given their lack of business expertise, CCGs were provided with Commissioning Support Units run by private companies including KPMG, Price Waterhouse Cooper, McKinsey and Optum, the UK subsidiary of United Health. In practice, these companies now run the franchising of NHS services.

A key part of the 2012 Act, to which McKinsey was a significant contributor, was the abolition of the health minister’s responsibility for national healthcare provision. This was left to NHS England under its new director, Simon Stevens, a former health policy adviser to the Blair government appointed by David Cameron because ‘he knows more about NHS problems and market solutions than any man alive.’ In his previous role as a CEO of United Health, Stevens had led corporate opposition to the introduction of Obamacare. His ‘Five-Year Forward View’, launched in 2015, became the basis for NHS England’s Sustainability and Transformation Plans (STPs), drawn up with Optum and McKinsey. The STPs were supposed to create savings of almost £5 billion a year by 2020. As in the Kaiser model, costs are cut by reducing access to care. (Meanwhile, the revolving door continued to turn: senior government and NHS England figures who took prominent positions at Optum include Cameron’s health adviser Nick Seddon, NHS England’s commissioner David Sharp and its mental health director Martin McShane.)

The STPs divided England into 44 CCG-run ‘footprint’ areas, all of which were put under pressure to amalgamate hospitals and shrink specialist units. Hospital beds have been progressively cut: the UK’s bed-to-patient ratio is now one of the lowest in any developed country. Accident and emergency departments, which not only require expensive equipment and high numbers of staff but also take the brunt of social care failings, are in the process of being cut from 144 to about fifty. GP care is increasingly provided by ‘physician associates’, nurse practitioners and pharmacists, while patients are exhorted to use privately owned, profit-making online and app consultancies such as Doctaly, GP at Hand and myGP. Opening up new markets for US tech giants is a key factor in the reconfiguration of the NHS.

Enforced centralisation has resulted in ‘hub’ hospitals and fewer, larger GP practices: at least a thousand have closed since 2014 and the number with more than twenty thousand patients has tripled. With funding incentives from NHS England, GPs are merging their practices into competing, largescale organisations with names like Primary Care Networks and Super-Practices, or becoming partners in commercially driven Multi-Speciality Community Provider centres. These reduced and restructured services are open to takeovers by private companies. NHS hospitals now lease space on their own premises to private companies. Guy’s Hospital, in the absence of the funding it needed to develop adequate cancer facilities, rented space to the Hospital Corporation of America for private cancer suites that were given access to the hospital’s facilities. The merging of public and private provision in the same space usefully blurs the distinction between them. And the rationing of non-urgent operations such as hip replacements and restrictions on follow-up therapies – as well as increased waiting times – encourage patients to seek private treatment.

A recent report by the Strategy Unit, an NHS consultancy, acknowledges that ICSs are designed to ‘moderate’ demand and reduce spending, while their partners keep the savings they make if they run below budget. It cautions that, as with ACOs, there is ‘only limited assurance that providers will not game the system and that quality will not suffer … large financial rewards may flow out of the NHS.’ At the 2012 World Economic Forum, Stevens (then working for United Health) led proposals to replace public healthcare systems around the world with accountable care systems. His collaborators included Medtronic, the world’s largest producer of medical devices (a US company based in Ireland for tax purposes), Qualcomm Life, which designs medical technology, and Kaiser. Since his arrival at NHS England, the influence of such companies has grown: IBM is now a lead supplier of IT; Optum runs GP referrals services and is in a partnership with the second largest GP federation, Modality. The UK’s largest GP network, the Practice Group, is owned by the American company Centene. Similar companies, such as the Priory Group, are major players in mental healthcare provision and are involved in mental health ICSs.

Private companies, with their increased overheads, higher rates of borrowing and shareholder dividends, are inherently more costly to the public than state-funded services. Less obvious are the high costs of management and administration involved in franchising and marketing services. In the US these are estimated to account for more than 30 per cent of the $3.6 trillion spent on healthcare. A 2010 report commissioned by the Department of Health estimated management and administration costs at 14 per cent of total NHS spending, more than twice the figure in 1990. Commercial confidentiality laws and opaque NHS accounting make the costs of privatisation hard to quantify but privatisation is probably adding at least £9 billion a year to the NHS budget.

Stevens was recently praised by politicians and the media when he called for the repeal of Section 75 of the 2012 Health and Social Care Act, which requires competitive market tendering for the provision of services – ostensibly a move away from privatisation. But the real reason lies in the small print. Section 75 subjects private contractors to the Competition and Markets Authority. Its repeal will deregulate the sector and make ICSs more attractive to companies. Andrew Taylor, the founding director of the Co-operation and Competition Panel for NHS Funded Services, told a Commons committee hearing in May: ‘I don’t think anyone’s realistically talking about removing the private sector from the NHS. What the proposals do in effect is deregulate NHS markets. They don’t actually remove markets from the NHS.’

The Ridley Report’s proposals for denationalisation are being hurried to fulfilment. NHS property and land assets worth £10 billion are being sold to private developers. The fragmentation of a once fully integrated service into competing and commercially-driven units is well advanced and has been accomplished without proper public scrutiny, knowledge, consent or appropriate Parliamentary legislation. Successive governments have been assisted by the failure of the media to recognise the overall shape of the project and sufficiently analyse the disparate changes. ICSs will be fully up and running throughout England within 18 months.

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Letters

Vol. 41 No. 23 · 5 December 2019

John Furse makes a number of assertions about NHS reforms that are misleading or simply incorrect (LRB, 7 November).

Since 2017, he writes, Integrated Care Systems (ICSs) have been ‘deciding who gets which services, which are free and which … we have to pay for’. The emerging ICSs are partnerships of NHS organisations and local authorities, and may also involve the voluntary and independent sectors. They are not statutory bodies in their own right. They have no legal duties or powers beyond those of their constituent bodies, and no powers whatever with regard to charging for healthcare services.

Furse claims that the 2012 Health and Social Care Act included the ‘abolition of the health minister’s responsibility for national healthcare provision’. The Act in fact says that ‘the secretary of state must continue the promotion in England of a comprehensive health service … the secretary of state retains ministerial responsibility to Parliament for the provision of the health service in England.’

The number of Accident and Emergency Departments, Furse writes, is ‘being cut from 144 to about fifty’. This is doubly misleading. It presumably refers to a 2013 review by Sir Bruce Keogh, former medical director of NHS England. Keogh actually wrote that ‘we expect the overall number of Emergency Centres … to be broadly the same as the current number of A&E departments.’ In any case, the review is not being implemented.

On general practice, Furse writes that ‘patients are exhorted to use privately owned, profit-making online and app consultancies such as Doctaly, GP at Hand and myGP … GPs are merging their practices into competing, large-scale organisations … open to takeovers by private companies.’ The reality is that almost all GP practices are already private businesses, and have been since the founding of the NHS. New entrants such as GP at Hand work under exactly the same contract as other practices. They may work and treat patients in a different way – and they do need to be monitored carefully to make sure they don’t suck in more money than they should – but they are no more and no less private. The same is true of GPs combining into networks. These alliances are made up of collections of already private practices. They cannot be sold without those practices’ agreement.

Distracted by myths, Furse fails to mention the major problems the NHS is actually facing. The most significant of these is a shortage of staff. There are currently about a hundred thousand posts vacant, in a workforce of around 1.3 million. Meanwhile the NHS has been starved of capital investment for a number of years; the bill for ‘backlog maintenance’ of creaking buildings and equipment now stands at some £6.5 billion. Notwithstanding the promises painted on the side of a bus, leaving the EU’s single market is likely to raise costs by hundreds of millions of pounds, and if Brexit is used as an opportunity to clamp down on migration it risks worsening the staffing crisis.

The biggest threat posed by a prospective US trade deal is not privatisation, but the push by American pharmaceutical companies to get the NHS to pay more for medicines. In the US these firms enjoy a system that is extremely ineffective in bargaining down the cost of drugs. They resent the NHS’s ability to get better value by doing so.

Helen Buckingham
Nuffield Trust, London W1

John Furse sketches a chronological account of the influence of US health policy on successive British governments in their approach to reform of the NHS in England. Chronology can imply coherence, but what is missing from Furse’s narrative is any sense of how haphazard the changes have been. Far from some grand – let alone secret – plan to ‘privatise’ or ‘Americanise’ the NHS in a comprehensive manner, reform has involved a series of convoluted compromises.

These can be traced back to the inception of the NHS and its relationship with the private healthcare sector. Section 5 of the National Health Service Act 1946 made provision for consultants to continue private practice alongside their NHS workload. (‘Stuffing their mouths with gold’, Bevan called it.) The ‘pay-beds’ of the original NHS have now been superseded by private patient units in NHS Foundation Trust hospitals. New Labour’s policy of ‘patient choice’ between the NHS and private providers was made explicit by Tony Blair: ‘We should give poorer patients … the same range of choice the rich have always enjoyed.’ More recently, Andrew Lansley’s attempts to equate NHS reform with the privatisation of utilities in the 1980s met with controversy both before and after passage of the Health and Social Care Act 2012.

But while Furse accurately points out some of the links between the Ridley Report and subsequent policy developments, it is something of a stretch to argue that the current situation has evolved in accordance with a secret plan. Instead, diverse threads of competition and ‘privatisation’ have been knitted together, and proper understanding requires that we unpick them. One such thread is the expanding role of the Competition and Markets Authority (CMA) regarding not only NHS providers treating private patients, but also private providers treating NHS patients. Furse is incorrect to link the CMA with the Section 75 regulations relating to competitive tendering. These regulations, which put the previous New Labour government’s rules on a legislative footing, were introduced as a concession by the coalition government in response to mounting criticism of Lansley’s reforms. This has proved problematic in various ways, but the involvement of the CMA isn’t one of them. In fact the CMA has acknowledged that there is only a limited role for competition in the NHS, and Furse overlooks its potential to play a beneficial role – for example, in fining pharmaceutical companies which overcharge the NHS.

Furse begins his piece by remarking that ‘the Americanisation of the NHS is not something waiting for us in a post-Brexit future. It is already in full swing.’ If, by ‘Americanisation’, Furse means competition reforms and ‘privatisation’, then these are indeed not new, but have developed at a national level, entirely independent of EU law and its safeguards. He is right that there is currently no prospect of markets being removed from the NHS, but we cannot yet be sure that Brexit will not mark a turn against the deregulations proposed under the NHS Long Term Plan. Or perhaps Furse is suggesting that the NHS is being transferred to a US-style insurance-based system. But this neglects the fact that Conservative, Labour and Conservative-Liberal Democrat coalition governments have all sworn allegiance to the core principle of universal access to healthcare. How this allegiance works out in practice may well be found wanting, but there remain clear distinctions between the two systems.

Mary Guy
Lancaster University

Vol. 41 No. 24 · 19 December 2019

As a GP, I sighed with relief reading John Furse’s article on the NHS (LRB, 7 November). No lies on the side of a bus, just home truths. The critical letters the piece received in response do not reflect the changes that have already occurred on the frontline (Letters, 5 December).

Frank Dobson, as Tony Blair’s first health secretary, oversaw the introduction of the National Institute of Clinical Excellence (NICE), intended to help end the ‘postcode lottery’ in the availability of treatments. It has been a partial success but huge variations in availability of treatment remain. What has followed is an ever increasing barrage of guidelines, pathways and directions for clinicians, setting the parameters for what they can and cannot do. Young doctors and nurses, with no memory of any other way of doing things, treat these guidelines as if they were rules while general practice has been transformed into a Kwik-Fit operation that doesn’t give you the freedom to choose even the tyres your patient should have for their onward journey.

An elderly patient with a bad head injury attending casualty is seen by a triage nurse who is obliged to follow specific guidelines. He is treated for a facial cut and broken nose. But severe symptoms persist for four weeks. Only when he returns to see a doctor is a CT scan requested. The scan explains the symptoms. Had he been just a few months older at the time of the accident, he would have been old enough to qualify automatically for a CT scan.

Ankle and knee injuries used to be judged on their severity and other factors specific to the patient. Now the only pathway permitted is to direct the patient to make contact with his local ‘musculoskeletal service’, which is delivered by an outsourced private, profit-driven provider. After telephone consultations, he may, eventually, get to see a physiotherapist; only then might he be referred to an orthopaedic consultant. This may be more than six months after the initial contact. What cost the time off work, the limiting of mobility and exercise, the weight gain, the consequences for the patient’s mental health?

Another patient survives a heart attack because someone in the community performs CPR on her. After being taken to a major hospital, she is given a full cardiological and pulmonary work-up. Two weeks later a request arrives to refer the patient to cardiology for review. When the question is asked what blood tests or other cardiology tests were done when she was admitted the answer is none. New referral, further costs, more anxiety for the patient and her family.

The NHS is being dismantled, and the effects are felt daily by patients and staff alike. Everyone is struggling to practise safe care. So long as sensible thinking and commonsense selection of tests and referrals – specific to each individual – are excessively restricted by guidelines and by fears over costs, we will all suffer; and in the end, no money will have been saved.

Roy Macgregor
Cambridge

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