Thursday, 23 June 2011

Kill the Bill, volume two

Review of The Plot Against the NHS
By Colin Leys and Stewart Player


A correction. Scotland and Wales don’t “commission” healthcare, contrary to the BBC’s inept description. This is the heart of the difference with England. While England buys health services from private and public “suppliers”, post-devolution Scotland and Wales plan and fund the NHS through health boards.

It might seem a soporific distinction but, in it, lies the choice between preserving a “national health service” and changing into a taxpayer-funded health market.

Leys and Player acknowledge a Scottish and Welsh commitment to social democracy “which politicians of all parties have to respect”. But there is another, more prosaic reason – the financial cost of introducing a market.

“Even before the financial crisis politicians of all parties in Scotland and Wales realised that if they followed the English route, and allowed the costs of operating a market to start soaking up ten per cent or more of the health budget, health services would be liable to deteriorate, with dire political consequences for themselves,” the authors say.

A healthcare market leads to a hike in cost - which will be funded by the weirdly uncomplaining taxpayer -and a growth in bureaucracy.

The authors are specific. “Each consortium [now clinical commissioning group] will have to employ a team of commissioners to negotiate contracts, monitor their performance, accountants to pay all the bills, lawyers to vet contracts and conduct court cases over disputes, team to vet drugs prescribed by GPs, and check their referrals to specialists and the treatments proposed by specialists. It will also need an advertising and PR department. Every hospital and chain of clinics will need the same.”

Public health researcher Allyson Pollock has estimated the cost of maintaining a market is £20 billion a year, which coincidentally, is exactly the amount in cuts the English NHS has to make by 2014.

As Pollock shows in her book NHS plc, the old NHS was so economical to run precisely because it had so radically eliminated market mechanisms. There was no invoicing and payment of bills within the system.

As Pollock has said recently the question is not whether we can afford to have the NHS, but whether we can afford not to have it.



In contrast, in the US market health system, one dollar in every three in absorbed in administration costs. Or to use another word, bureaucracy.

To quote a GP, Julian Tudor Hart, the old NHS was a system “in which wealth was distributed according to need, and nobody knew the cost of anything”.

But that system proves vastly cheaper than a market where the cost of everything has to be measured. Because the act of constantly measuring costs, and demanding payment, eats up money.

The meaning of “nobody knew the cost of anything” is not that costs were not estimated. The old NHS was not a wonderland where nothing cost anything. Not every drug was available. But doctors paid no attention to cost when they treated patients. It was all about medical need.

If you move to a market system that firewall crumbles. If independent businesses in the NHS, such as foundation trusts, have to compete and be financially self-sustaining, it becomes extremely relevant how much a patient will cost. Whether they are old, their treatment is complicated and they will need to spend more time in hospital. Or whether they are young and healthy and their treatment will be swift.

It’s here that the deception of being not for profit and therefore different, should be exposed. The UK government is doing its level best to get public sector workers to form non-profit mutuals and social enterprises. There are no shareholders demanding profit in these enterprises. How could anyone be so petty to object to a mutual or social enterprise?

But the most important factor in determining behaviour is not for profit or not for profit. The most relevant question is whether these enterprises work in a market system or not. Foundation hospitals are constitutionally non-profit but they have to make a surplus and will soon compete for patients with private companies.

As Leys and Player say, if the Health and Social Care Bill becomes law, all NHS hospital trusts, mental health trusts and ambulance trusts will be converted into independent businesses.

“They will be competing in a market, in which the penalty for financial failure will either be closing or being taken over by a private company”

In a market, financial considerations are paramount, even without “rapacious” shareholders. The beauty of the old NHS and the reason why for neoliberals, it has always had a target painted on its back, is that it removed a need everyone has – healthcare - from the market. It wasn’t only non-profit, it was, more importantly, non-market.

Leys and Player give an illustration in their book. They talk about a US Health Maintenance Organisation (HMO) settling “criminal charges for discharging a 63-year old patient and then dumping her on the street in a hospital gown in a run-down area of Los Angeles”.

The HMO in question was Kaiser Permanente, a non-profit organisation.

The absence of shareholders did not, according to the authors, stop this particular organisation avoid taking on high risk, costly patients. It was reported, they say, “cherry-picking whole communities by closing down facilities in areas of high deprivation to avoid the cost of having to provide services to uninsured victims of accidents or gunshots and other emergencies that are more common in deprived areas.”

It’s not as if the UK government is unaware of the results of what it is doing. In 2003, the UK Treasury published a document on why a market in health was not a good idea.

Price signals don’t work, the consumer doesn’t have the necessary knowledge, there is a risk of over-treatment, a potential abuse of monopoly power and it’s hard to let hospitals go bust.

Actually the risk of over-treatment, or over-selling is present in any market. It’s just in health the consumer is in less of a position to argue (‘no I don’t need that craniotomy’).

In markets, especially markets populated by profit-maximising corporations, over-selling is inherent. As the economist Harry Shutt has pointed out, the customer is not always King, but there to buy as much as h/she can be persuaded to buy. It’s why markets are unavoidably anti-ecological. There are inherently unlimited.

But genuine markets are also risky. If you don’t succeed you go under. Leys and Player say that the NHS is being privatised. But it is a specific kind of privatisation. The companies involved don’t covet real risk. What they want – and are getting – is low risk procedures (the difficult things like intensive care are someone else’s problem) coupled with a guaranteed inflow of tax, from the every-suffering, though thus far, compliant, UK taxpayer. The English NHS is, in American parlance, a single payer system.

“The private health industry is not interested in a purely private market,” said Allyson Pollock in NHS plc. “Its interests lie in becoming for-profit providers in a basic health system funded out of taxation, while also providing, for additional fees or co-payments, a much higher quality of service for those who can pay for it.”

The most apt comparison – and the original Health and Social Care Bill makes this explicit – is with the UK railway system. The railways aren’t privatised, they are contracted out by the state to profit-making private companies. The result has been that the service has declined, the price of tickets has shot up and the cost to the taxpayer of funding the system has risen by five times. But the East Coast Mainline is not going to close if passenger numbers drop and if numbers do decline the government will step with a handy top-up from guess who?

Scotland and Wales have shown, Leys and Player would argue, the NHS doesn’t have to turn into a “low risk playground” healthcare corporations. It’s not inevitable and it can be resisted.

But is the only alternative fighting a defensive battle? The corporations in question – mostly American – are only doing what, from their inevitably self-interested perspective, is only possible course of action. Find new sources of revenue. They aren’t going to stop.

Maybe the problem needs to be addressed at its source.


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