The NHS: Anatomy of a Demolition (Part 1)

by Colin Leys, James Arnold

Colin Leys gives a meticulous and systematic discussion of the long assault on the NHS and its dramatic intensification under the current government.

First published: 02 June, 2011 | Category: Employment & Welfare, Health, Politics

Colin Leys is an honorary professor of politics at Goldsmiths College London, who has worked in the UK, Africa and Canada, and was until recently the co-editor of Socialist Register.

An expert on the politics of health, Colin has recently written The Plot Against the NHS, co-authored by Stewart Player. The following interview, conducted by James Arnold, provides a meticulous and systematic treatment of the issues raised in the book. This part discusses the move towards privatisation and marketisation under Labour, showing that Lansley’s healthcare bill didn’t just spring up ex nihilo, but is the logical development of a cross-party consensus on the direction of reform of healthcare. It also focuses on the forces driving the policies - such as private insurance and other healthcare companies, the rightward turn of New Labour and the ‘revolving door’ system - as well as how dissenting voices have been marginalised. The second part will follow shortly.

I thought we could begin by discussing what the ‘plot’ against the NHS is. I imagine many readers know about Lansley’s bill, and that it’s a huge step towards the privatisation of the NHS. But you talk in the book about how this is the culmination of longer-term tendencies, and I was wondering if you could discuss those.

There was a group of people, represented in the Independent Healthcare Association (IHA) back in the mid- to late-90s, who really thought the NHS should be abolished, and that there should be a return to a pre-NHS market. With the decision of the Blair government to move towards a more market pattern, and the meetings with the IHA which represented that current, that whole process got underway. As you’ve seen in the book, it was quite by chance that somebody drew my attention to the fact that in a radio interview Eamonn Butler [Director of the Adam Smith Institute] in conversation with Matthew Taylor, was asked by the host ‘do you really think the NHS could become just a franchise?’ And Butler said, very casually, ‘well it’s been in the planning for twenty years, I think they’ll do it.’ I think that’s a very interesting indication of the reality that there was a group of people who had that idea, and they found a sympathetic hearing in Blair, and the ministers closest to Blair, notably Milburn and Hewitt; and with the new money that was coming into the NHS under the Blair government after 2000 they were able to push that agenda without upsetting anybody, because it wasn’t at the expense of something else. There was expansion going on, people were happy, jobs were being recategorised in the Agenda for Change programme within the NHS, again without much hardship, because there were increases available all round. So ten years down the road they’d accomplished a lot of it.

How was the plot hatched, as it were? You mention in the book that there was a hitch at first, because private companies couldn’t really compete with NHS hospitals at NHS prices, as the NHS has high standards and low costs. So what was done to give private companies an entry into providing healthcare?

The first step was the Independent Sector Treatment Centres (ISTCs), which were the entering wedge. It involved identifying standard surgical procedures that would be relatively low-risk, and inviting private companies to set up clinics which would do just those specialised procedures, and allowing them to decline to take any patient with more than one co-morbidity, so they only got the low-risk patients. And they got very low-risk, in fact no-risk contracts to undertake it. What the government was doing was showing the established UK private sector companies, which had high costs and low-turnover, that if they really wanted to get a share of the NHS budget they were going to have to go down a different route, with a different business plan, and this was the model. The ISTC programme ran for effectively about five years, at the end of which time most of the new centres had been assimilated into a wider network called the Extended Choice Network, which by then had brought in a lot of the existing private sector hospitals. I would say that by 2010, although in terms of the total NHS budget this sector was still small, in terms of the private sector it was massive, there was a jump from about 7% of their income coming from NHS work to about a quarter of it, with some companies pushing up towards a half. So you have clinical services now being provided by companies which are primarily doing government work. The ISTCs were the bridgehead.

One problem that one could foresee in this is that NHS staff, especially high status staff like GPs and consultants, might not be willing to work under private sector management. Could you talk a bit about how they created conditions under which NHS staff would be willing, or pushed, to accept private sector management?

We have to look at them all separately. Senior hospital doctors, particularly consultant grade, which account for less than half of all hospital doctors, but are the most powerful figures in the hospital sector, have always thought they were safe, have always been well-represented, have always had champions in the British Medical Association. It’s always been a star-rated system; the famous people get knighthoods and so on. They’ve always tended to think they were untouchable, whatever happened. I think it’s quite significant that it’s only in the last sixth months that consultants in general have woken up to the fact that actually they’re not secure. Particularly in large cities, and above all in London, where a lot of hospitals are threatened with dramatic reductions or closure, hospital consultants suddenly see that they’re not in a sellers’ market. So that’s one part of it. New contracts were made in the early part of the last decade, after 2000, with both consultants and GPs, which were very favourable to them. After a show of trying to push the consultants to work harder and accept more management, the government basically said ‘what the hell’ and gave them increases in pay. But I think the smart money inside the Department of Health and among those who had their eye firmly fixed on the market was ‘let’s not worry about this, because the time will come when there are not enough consultant jobs in the NHS and then they’ll have to choose.’

Junior hospital doctors have been messed around in one way or another. What’s really happened there is that as hospital trusts become foundation trusts they are free to set their own terms of service and they’ve created a lot of staff grades which are short of being a consultant, but which are specialist positions. Basically they’re paid on something more like registrar rates of pay, so the consultant workforce has actually been diluted at the margins.

GPs are a different story because they’re self-employed. The real question for the government there was not whether GPs were going to agree or not agree to take the pay from the NHS – of course they were going to do that – but on what terms they would have to do it. And what the government did was to invite the commercial companies to set up general practices in areas where it could be said that there were not enough GPs, and the GPs working for those companies are on salary. Once again, GPs might have thought that they’d got it made, but they’re beginning to find out that they have to compete with these companies, and that the contracts they have had with Primary Care Trusts are time-limited. When the five years, or whatever it is, are up, they’ve got to compete to operate the practice with large companies which are prepared to outbid them. That’s already happened in a number of places. It famously happened in Camden, where UnitedHealth, this big American HMO [Health Maintenance Organisation] bid against local groups of doctors, and was judged inferior to the local groups on everything except cost, and won the contract. So those particular doctors are on salary, and notoriously throughout general practice it’s only the partners who are making the famously substantial salaries, £100,000 or over, and by no means in all practices, whereas the salaried GPs are on significantly below that. Incidentally, in April the Camden practices were sold by UnitedHealth to another company, The Practice, without the patients even being informed.

You discuss in the book the way in which ‘marketisers’ in Britain were inspired in their developing vision by the notion of ‘integrated care’, which they got from US HMOs.

The concept of ‘integrated care’, by that name or any other name, is not a new one. Many thoughtful policy-oriented doctors, both GPs and hospital doctors, have long thought that the divide between general practice and community care on the one side, and hospital care on the other, is arbitrary and inefficient. And that while the ‘gatekeeper’ function of GPs limiting the flow of people into specialist care, and therefore limiting the misuse or abuse of highly trained specialists, is a good thing, it has a downside, which is that this gap exists. For instance, when a GP refers a patient, that patient ceases to be the concern of the GP for the time that they under the care of the specialist, and the two may never meet. In fact, there is no system whereby hospital specialists and GPs systematically meet together. It does happen on a local basis where likeminded doctors do meet and collaborate. But it’s a weakness. At the other extreme, which you get in both the European and the American models, there is free access of patients to specialists, which tends to be very wasteful and problematic. So how to integrate continuity of primary care, and patient-oriented, family-oriented care, with the necessary specialisms, is a long- standing question.

But the form in which the idea has been promoted in the Department of Health during the last decade has been the one modelled on Kaiser Permanente, the Californian HMO, which basically owns both the hospitals and the primary care infrastructure, and also employs directly the hospital and primary care physicians. So it can direct how much time each spends in what ways, what are the so-called ‘care pathways’, and what role each type of physician plays in relation to a patient with a particular condition. It is worth noting that this model in itself is all about planning, not about competition. If those who admire the Kaiser model didn’t also have a market agenda they could have got the sort of integrated care Kaiser is said to provide by putting GPs on salary, like hospital doctors, and reorganising the relationship between hospital trusts, primary care and community health care. But the real agenda of most of those calling for integrated care has been to bring in private providers.

You mentioned Kaiser Permanente there, and two elements of their control are firstly over the hospitals themselves, and secondly over the workforce. But you have this third element with US HMOs - the insurance. So how have insurers been involved in commissioning, and how has that developed in the UK?

This is hugely important. Stewart Player [Leys’ co-author] is the real authority on this, he’s done a lot of work on it. But broadly speaking there are two ways of doing it. For privately insured patients, British health insurers have been developing American style practices which they didn’t use before. They’ve been moving, for example, to create networks of NHS consultants who will work for them in their spare time (which a high proportion of NHS consultants do). Insurers such as AXA and BUPA say, ‘we will only send our private patients to you if you work for this sort of fee, in return for which we’ll send you all our private patients, or an appropriate proportion of our private patients.’ In other words, ‘we will exchange price for volume – you’ll get less per patient, but you will maintain your income in this way.’ So there’s been a shift in the former English model, which was extremely high-cost to the fee-paying, privately insured patient, towards the American model, which seeks to reduce premiums, because they depend on premiums.

This becomes important when you start to introduce the insurance principle into the NHS itself, and that’s been happening through the use of the FESC, the Framework for External Support for Commissioners, which has been running for about four years now, under which Primary Care Trusts were encouraged, or perhaps instructed, to use one or more of fourteen accredited private companies, mostly insurance companies, to help them with their commissioning. This meant that their mode of thinking about health – how to calculate the different risks, how to apportion your resources in relation to the expected expenditures of different categories of patients – has been introduced into the heart of NHS funding. And now, in the last twelve months, that has gone beyond giving advice to Primary Care Trusts, to actually handing over, to UnitedHealth, the big American HMO we talked about earlier, the commissioning for a group of west London practices, which is undoubtedly a model that is going to be adopted elsewhere. And not just the commissioning of services, but also vetting GPs’ referrals, to reduce cost by redirecting them where possible to non-hospital kinds of treatment, including treatments offered by private providers.

We’ve talked about a few companies and interests already that have cropped up. But I was wondering if you could talk about the interests driving policy-makers in this direction. Because on the face of it the NHS is an incredibly popular public institution. In the 2010 State of the Nation poll, for example, 87% of people said that treatment on the NHS should be enshrined in a Bill of Rights. So we can surely rule out popular pressure. So what are the pressures driving the policy?

The interests of the private sector are obvious. Private medical insurance in this country, the proportion of the population seriously insuring themselves for private treatment, has been at a plateau for quite a long time. And as money flowed into the NHS from 2002 onwards, under the Blair commitment, waiting times fell steadily; and since waiting times for elective surgery were main driver for most people taking out private insurance, the private sector was facing a problem. So for the private sector, moving from relying on private patients to getting a share of NHS spending is one of the main drivers of NHS privatisation. They became very interested, and they were pushing at an open door, because the decision to go for a market model for the NHS meant that civil servants in the Department of Health had to bring in private sector people to show them how to do it. They didn’t know anything about markets, most of them; they had a vague idea, or they could go on a course to MIT or something like that. So you had a massive influx of private sector people from the big management consultancies, but also directly from private sector insurers and health providers, into the Department of Health, as well as the use of management consultants outside, doing specific pieces of work. So the private sector quickly became part of the policy-making community and was consulted on further developments. It was a collaboration, it wasn’t a contest; you didn’t have much to explain, they were on a similar track.

I think the senior policy-makers in the Department of Health probably had a range of expectations as to where this would all lead. Some clear-sightedly saw that the logical destination of this was a return to a fully marketised health system, only with what the Americans would call a single-payer; in other words, tax-payer funded, but privately provided. Others had a different idea, of a more managed system, where bits of it would be market driven and other bits of it would remain centrally controlled.

But besides these specific drivers, ministers were already sympathetic to market-related solutions following the ‘group of four’ takeover of the Labour party. In other words, people who were part of the so-called ‘Blair revolution’ – ‘the new reality’ – wanted the Labour party to be seen representative as much of the private sector as of the public sector – in effect, of corporations as much as voters. I think they had a somewhat naïve conception of the beneficent intentions and outlook of the private sector. They saw it as offering efficiency and cost-consciousness and a kind of impatience with obstacles to change which was lacking in a sedimented, large organisation such as the NHS, with trade unions and lots of demarcation rules and grades and so on. You look at a business, and you think, if it wants to change direction, it changes direction, there’s no argument about it. I think that kind of outlook was common among Labour ministers, and somebody like Patricia Hewitt illustrates it very well. Her trajectory is very interesting. She starts out as Secretary of the Association for Civil Liberties (now Liberty). She then moves to be Kinnock’s press secretary and set up the Institute of Public Policy Research. She then moves to be head of research for Arthur Andersen Consulting,  comes back into politics as an MP, and winds up as Secretary of State for Health with a very powerful private sector set of links and commitments; and after leaving office she’s back full-time in the private sector. So I don’t think it’s nefarious, it’s a mind-set: the private sector is the way to be efficient. I think it’s very poorly problematised by the people concerned. The word “markets” is substituted for “capital” in this thinking, and markets seem to be sort of neutral fields in which good things compete and the best happens. There’s no concept of corporations with shareholders, looking for a way to maximise their return, and relatively indifferent as to how that’s achieved, whether it’s in health, or in energy, or in education, or any other field of accumulation.

You mentioned this ‘revolving door’ in the health service, this interpenetration of policy-makers in the government and the civil service and of private companies. You say in the book that second to the Ministry of Defence it is the government department that most embodies this revolving door system. Can you give any other individual examples which might illustrate this system?

A good example of somebody who has played a very important role is Dr. Penelope Dash, generally known as Penny Dash. She trained as a doctor in England, and then went and did a business degree at Stanford. After that she worked briefly for Kaiser Permanente, and then moved to Boston Consulting, which is a big American-based practice, but I think she was in their London office for six years, in the late ’90s. She was doing health policy consultancy around the world, in a completely commercial context, and then was brought in under Alan Milburn to be director of strategy and planning in the NHS at a very young age, her late 30s. She was very much part of the Blair circuit. She helped write the NHS Plan of 2000. Then she left the Department and became an independent consultant, and after a while moved to McKinsey [major management consultant firm]. Not only did she stay with McKinsey advising the Department of Health, but she then also became Vice-Chair of the King’s Fund, which is easily the biggest and most influential of the think-tanks working on health policy. It’s very large, very influential and very intimately concerned with the evolution of Department of Health policy. And then she set up something called the Cambridge Health Network, based in the Judge Business School at Cambridge with somebody called Pam Garside, who’s another health care consultant, and a senior research fellow at the Nuffield Trust, which collaborates closely with the King’s Fund. When you look at any important episode in policy development over the last ten years you typically find one or the other, and usually Penny Dash, involved. If there’s an important seminar or a conference you’d expect her to be there. There’s a group of people like that. If anyone is interested they can read the book and find them.

The other kind of character is an NHS manager who is drawn from management into the Department of Health, and then as the transition begins, the revolving door goes the other way, they move into the private sector. The private sector needed to know how the NHS works, and who the key people in it are, in order to know how to pitch their bids in order to take over NHS work, so at all levels you get NHS managers moving into private sector companies. So you’ve got ministers doing it, you’ve got managers doing it, you’ve Department of Health policy-makers doing it, and vice versa.

What about the critical voices? Surely if the policies are as wrong-headed as you claim, then the marketisers must have been challenged over their plans by experts? You mention in the book Allyson Pollock, who does good work on this subject. How have individuals like that fared against this move towards markets?

Well she’s a good example of a very effective critic who was quickly marginalised once it became clear just how effective she was. I think that’s happened at all levels, from whistleblowers in NHS trusts who’ve been gagged, who’ve reported when they thought patients were suffering because of market-oriented or internal market management policies. And then there’s a network of health policy academics both in university departments, and in well-paid think-tanks, people like Chris Ham for example, who was both a professor of health policy in the university system and for a while was director of strategy at the Department of Health, then went back into academia and is now at the King’s Fund as chief executive. Some of these people were critics and have been consistent critics. And the reaction of the government to them has been to dismiss them. The book mentions Allyson Pollock because she’s a leading example, but there are others.

The other aspect that needs to be born in mind is that a lot of the funding for research on health policy is government funding, and if you want to have that it doesn’t pay to be a very vocal critic of government policy. So a lot of very capable people have over the years felt quite constrained, not necessarily in their own interest, but because if they were senior people who were pulling in the money to fund their department they would have several colleagues depending on them for their jobs. So in a sense the government has owned a lot of the potential sources of criticism and has been able to dampen it down. Allyson Pollock’s book, NHS Plc. which came out in 2005 and pointed out very clearly and unanswerably the dangers of the course the government was following, fairly quickly sold about 8,000 copies, but you wouldn’t know it from watching the course of government policy. It’s been considered irrelevant.

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