Markets will value cash over caring

August 27, 2004

Allyson Pollock condemns new Labour's trend for back-door privatisation, which penalises the most needy in society.

When Tony Blair needed urgent medical care for his heart problems earlier this year, he didn't exercise "choice", and surely didn't want to. He was simply taken to the nearest hospital and was more than happy to let professionals decide what treatment he needed and where he could best get it - in another National Health Service hospital, as it happened. The incident highlights a basic point about healthcare: unlike a Woolworth's pick-and-mix sweets counter, healthcare isn't something we even want to make choices about. What we want, by and large, is to know we will get nothing but the best, and that there are enough well-trained, motivated professionals available near enough to where we live and work to provide it. We want clean, quiet, hospital wards with appropriate privacy and decent food. Just occasionally we may be asked to choose between alternative treatments with different potential benefits and risks, and we may want a second opinion. But, for the most part, we can't make choices about our healthcare because they are highly technical.

Yet "choice" is the slogan under which the Government is pushing through a radical reorganisation of the NHS on market principles. So what is really going on?

The reality is that "choice in healthcare" is a codeword for a distinctive process of privatisation. Central to them all is the 2003 Health and Social Care Act, which is breaking up our once public hospitals and community services "British Rail style" into hundreds of competing quasi-private corporations, the so-called "foundation trusts" - licensed to bring other, fully private, companies into the direct provision of clinical care as joint-venture partners.

The Government is also bringing in large, mainly American, healthcare business corporations, mainly to provide standardised kinds of treatment, such as hip-replacement and cataract surgery, in competition with NHS hospitals - against the advice of the medical and nursing professions, and without public consultation or debate. Some of these corporations have notorious histories of defrauding the US Government of hundreds of millions of dollars through false billing, raising serious questions about the close nexus between the private healthcare industry, policy advisers and the Labour Government. A case in point is the United Health group and its subsidiary Evercare, which has recently been awarded contracts to manage clinical care of elderly people in the UK in spite of having paid several million in fines for false charging over the previous two years.

The Government's model for the future, never made explicit, is the one already adopted for other privatised public services, breaking with direct parliamentary accountability and putting an independent regulator - that is to say, independent of Parliament as well as of the Government - in charge.

The funding will continue to come from taxes but, as with British Rail, much of it - including the new money the Government is at last putting in, after two decades of financial starvation - will not end up paying for new investment or direct clinical care but will disappear into the pockets of unaccountable shareholders and the multiple new layers of administration required to run a system based on prices and market principles. (The Conservatives' "internal market reforms" of the 1990s increased the share of NHS spending on administration from 5 per cent to 11 per cent. The new system of "foundation trust" hospitals and pricing will push this up still further, towards the US level of more than 24 per cent.) The fragmentation of the NHS seems bound to result in increasing inequalities in access to care. For historical and political reasons, as well as because of differences in the level of need, which have never been fully recognised in the funding formula, some foundation trusts and areas have more resources than others. The new system of league tables tends to highlight this, showing that some areas have third or fourth-division levels of resources and access to services because they cannot pay what are in effect the transfer fees required to attract the specialist services and staff they need. But the new "independent regulator" has no mandate to do anything about this. On the contrary, the effects of the new healthcare market he is to regulate will tend to make such inequalities worse. "Operationalising" a market always results in winners and losers.

When challenged on this, the Government argues that competition and the profit motive "drives efficiencies", and points to studies purporting to show this - its current favourite is the US Health Maintenance Organisation, Kaiser Permanente, based in California. But there is no evidence that introducing for-profit corporations increases efficiency or quality, or reduces costs, let alone that competition between providers meets the health needs of the whole population. Indeed, all the evidence shows the contrary. Markets, even when underwritten by the Government, do not deliver comprehensive, universal healthcare, and US research has shown that for-profit health providers deliver worse care, more expensively, than public providers.

The real nature of what is being done to the NHS has to be sought in the wider picture of government policy towards the public sector and social services. Over the past three decades, the public institutions that were created or brought under national ownership and control have been turned over to shareholders and the FTSE 100: water, electricity, gas, telecoms, railways, bus services, airlines, airports, ports, prisons, broadcasting - and now, bit by bit, education and health, which together account for almost 20 per cent of gross domestic product or 15 per cent of government expenditure. Since 1948, they have been protected from private predators - but no longer. The transnational, mainly American, corporations in the service sector are hungry for new sources of profit and the unopened oyster of Europe's welfare systems offers lucrative opportunities. Why should taxpayers' money not end up in their shareholders' accounts, as it already does for suppliers of goods, from school textbooks and buildings, to pharmaceutical products, computers and information technology? Thanks in large part to the muscle of the US state in the World Bank, the International Monetary Fund, the World Trade Organisation and the World Health Organisation, and increasingly in the European Commission too, an official orthodoxy has been established that the private sector is more efficient than bureaucratic and corrupt governments and that all public services should as far as possible be privately provided.

And when the evidence doesn't support this, the argument is presented instead in the rhetoric of "choice", "diversity" and community "ownership".

But just how much does the community have control over the failed PPP school schemes in East Lothian and Tower Hamlets, where children face a delayed school year and building sites filled with portable cabins? And how much more has the taxpayer had to pay for this failure? How much control will local populations have over their new "foundation trust" hospitals, presented by the Government as a new form of popular local ownership, but in fact tightly controlled by in effect self-selecting directors, carefully insulated from the local electorate and focused on the bottom line?

The real meaning of "choice" becomes clear only when the overall direction of the Government's market-based "reforms" is appreciated. Choice in healthcare becomes relevant only when the best healthcare is no longer available to everyone, everywhere - the NHS's founding goals. Then some people will be able to exercise choice at the expense of others, as already happens in schools. Under the new system, hospitals will increasingly have to choose very carefully the patients and services they provide, on the basis of their profitability - just as teaching hospitals already compete for lucrative services such as cancer and cardiology, and secondary schools battle with each other to be "specialist" schools in fields that will secure their places in the performance league tables.

Even in schooling, parental "choice" is difficult to make, and for many, if not most, parents, it is a cruel sham. In healthcare it will be worse still. Underprivileged areas, and underprivileged individuals - the most frail and needy, the old and those with chronic illness - will be left behind, because the frail and needy have unpredictable needs and present hospitals with high financial risks. Services such as those for chronic arthritis and complex diseases and mental illnesses, and rehabilitation services for people suffering from stroke and heart disease, are difficult to price and very difficult to make a profit or surplus from. In the same spirit, some particularly needy people are already targeted explicitly for exclusion, such as the "failed" asylum seekers who were recently debarred by the Government from being given all but emergency NHS medical treatment - a policy with overtones of early Nazi Germany. Similarly in education, the most needy are those who are the most vulnerable: the poor, refugee children, children with learning disabilities, physical disabilities and emotional needs. What do they do to the performance tables, and why would any school want them?

It is the tacit acceptance of growing inequality of provision in the new market-based health service that has led the Conservatives and Labour to play with the idea of vouchers, where people are given the choice of taking a fixed sum of money out of tax revenues, and going with it to the private sector, topping it up from their own resources. The Tories are being upfront about it, whereas Labour is doing it through the back door, although it has in effect introduced this in long-term care for old people, where families and relatives can choose to pay top-up fees to obtain higher quality care. But quite apart from the aggravated inequality this will produce, it will also add dramatically to the overall cost of healthcare.

This is because when the risk of needing costly treatment is shared among the population, it is very small, whereas market competition drives hospitals and insurers to try to select the healthy and reject those who need care most. For insurers, even the small pools of those judged least at risk have higher costs because the costs are shared over small numbers, while the costs for the pool of those most at risk are very high.

This is the system we had in 1948 when half the population, mainly children, women and the old, had no access to healthcare. And this is the system that the Labour Government is now busy reimporting from the US - where 50 million people and 10 million children have no healthcare cover at all, where healthcare costs $1 trillion a year and where the annual take-home pay of the chief executives of the large healthcare companies averages $11 million a year.

What is to be done before you, your child or your relative are rendered invisible and rejected by the market? In education and health we must restore the mechanisms and structures that promote needs-based service provision. This means the abolition of market principles, including the expensive system of pricing and financial flows and provider-dominated structures. It means returning to a fair resource allocation formula and restoring public-sector accounting principles and data for monitoring health service and educational need, provision and expenditure. Above all, it means restoring democratic accountability in the running of services, taking control away from unaccountable regulators and corporations and giving it back to the people.

In the pursuit of marketisation we are on the brink of undoing the social contract that gave everyone universal entitlement to healthcare and education - the loss of universal access to higher education, dentistry and long-term care are early casualties of these policies. We are already close to forgetting what we once had, and what we have lost. Our hard-won entitlements are being given away without public debate. The consequences will be more far-reaching than those responsible have even begun to understand.

Allyson Pollock is professor of health policy and health services research and head of the Public Health Policy Unit at University College London. Her book NHS Plc: The Privatisation of our Healthcare (Verso) is available to Times Higher readers at a special price of £12.99 (plus P&P). Call Direct Sales at Marston Book Services on 01235 465 500, quoting NHSTHES.

Thanks to Colin Leys, emeritus professor at UCL, for his help with this article.

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