Wednesday is the day we learn whether the NHS is privatised fully


9:43 pm - April 22nd 2013

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by Dr Tom Riddington

The privatisation of the NHS wasn’t announced with any triumphant fanfare. Instead a subtle shift in statute law is creeping its way through parliament, one that’s set to flood our health service with private sector companies.

The government replaced Primary Care Trusts with Clinical Commissioning Groups, and gave GPs the responsibility of juggling a £60 billion NHS procurement budget.

But it’s Section 75 of the Health and Social Care Act that sets out the coalition’s true agenda for NHS privatisation. It puts huge restraints on CCGs, forcing doctors to let private companies bid for NHS services.

Under Section 75, GPs will have to demonstrate that there is only one “capable provider” for a particular service. If the private sector can offer it too, CCGs will be forced into ‘competitive tendering’. This is a short step from a two-tier NHS.

Private companies will be able to hoover up the most lucrative services, while the public sector is left with the most costly, most necessary aspects of healthcare.

The Royal College of GPs has already expressed considerable concern about section 75. The government responded by redrafting the section with little real change. GP commissioners will remain powerless to stop private competition from engulfing the NHS.

And now CCGs are up and running, the coalition has an effective scapegoat when cracks begin to appear. It will be doctors who commission these services, and so doctors, not politicians, who will be blamed when things go wrong.

Even if you disregard the precedent set by the atrophied services that followed public sector privatisation in the UK, healthcare doesn’t operate like rail or heavy industry.

International comparison reveals private sector care as more costly with greater variation in quality than state-operated or not-for-profit providers. America’s privatised healthcare is the most expensive in the world by proportion of GDP.

The US spends more on health than France, Germany, Japan, Canada, Australia, Norway, Sweden, or the UK, but it’s at the bottom of that list of World Health Organisation ranked healthcare systems. The motivation for dismantling the NHS can only be ideological.

On April 24th the House of Lords will debate the latest draft of the procurement and competition legislation. There will be an opportunity for the Lords to reject section 75.

There is a possibility that the government may re-think their bulldozing of a health service where prior to the start of these reforms, patient satisfaction was at an all time high. But if the coalition continue headstrong with their dogmatic destruction of the NHS, we are destined to healthcare overwhelmed by a mismatch between public need and private profiteering.

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‘The US spends more on health than France, Germany, Japan, Canada, Australia, Norway, Sweden, or the UK, but it’s at the bottom of that list of World Health Organisation ranked healthcare systems.’

This is somewhat misleading. No-one – not even advocates of privatisation – is proposing that we adopt the US healthcare system, which operates on the absurd basis of having health insurance cover even routine check-ups and appointments, thereby driving up costs. Nor is the US system ‘free market’, in the sense of being free from government involvement.

In terms of an international comparison, however, France and Germany, which both have considerably greater private involvement than the UK, are ranked higher than the UK in most respects.

@1 it’s the US healthcare companies that have been advising ministers though. And in whom many have financial interests.

3. gastro george

“Nor is the US system ‘free market’, in the sense of being free from government involvement.”

This kind of statement just makes me ROFL.

4. the a&e charge nurse

Jezza will be on the board of a private health company and laughing all the way to the bank by the time enough people wake up to the fact our health care has been handed over to the corporations.

Even if you disregard the precedent set by the atrophied services that followed public sector privatisation in the UK

Nonsense.

The evidence shows that the privatised utilities and infrastructure providers:

increased labour productivity, and sometimes total factor productivity, at rates faster than those generally achieved before privatisation;

offered real price reductions (except in the water industry, where higher charges were needed to fund significant quality improvements). In the telecommunications and gas industries in particular, prices have fallen at a faster rate than they did before privatisation;

achieved sustained improvements in levels of service quality, especially in the telecommunications and water industries; and

provided very substantial contributions to public sector finances.

http://www.oecd.org/daf/ca/corporategovernanceofstate-ownedenterprises/1929658.pdf

Anyone arguing that, say, telecoms services have atrophied since privatisation simply doesn’t know what they’re talking about.

“International comparison reveals private sector care as more costly with greater variation in quality than state-operated or not-for-profit providers.”

That’s interesting. For of course you can only work out whether state, for profit, or non profit, is more expensive or not if you’ve competition between the different methods.

“France, Germany, Japan, Canada, Australia, Norway, Sweden, or the UK,”

Of that list on the UK and Canada do NOT have the sort of competition that you are complaining about.

You’re also not understanding the very basics of this market competition thing.

“Private companies will be able to hoover up the most lucrative services, while the public sector is left with the most costly, most necessary aspects of healthcare.”

We all, absolutely, agree that there are places where markets simply don’t work. The arguments from the pro-market side run roughly like this (and yes, I do know, because I am one of those pro-market people).

Markets are pretty good except where they don’t work. So, let’s have markets in as many places as we can, except where they don’t work.

You now say: “Private companies will be able to hoover up the most lucrative services, while the public sector is left with the most costly, most necessary aspects of healthcare.”

To which the response is. Excellent. So, we’ll end up with markets where they don’t work and not markets in those areas where they don’t work. And the problem with this is?

@4 – ay, maybe so but the roll call has strange bedfellows.

http://www.ft.com/cms/s/0/dff5c3a0-7a63-11e1-839f-00144feab49a.html#axzz2RHyBGtiX

8. the a&e charge nurse

[7] I though you might be referring to a socialist rather than the wife of a fellow neo-con, like Tony.

I have no doubt Jezza will follow in the tradition typified by troughers like Patricia ‘best year ever’ Hewitt and oor Alan ‘more time with the family’ Milburn – it’s hard to keep up with the dizzying interface between our politicos and board rooms in the private health sector.
http://www.awrsc.co.uk/wp-content/uploads/private-healthcare-network_spinwatch.pdf

“If the private sector can offer it too, CCGs will be forced into ‘competitive tendering’.”

With all the complexity and costs that entails. These are very complex services. When contracting out even fairly simple services, Local Councils frequently find they have to engage expensive consultants like PWC.

We can expect either (A) extremely high costs or (B) companies to run rings around the GPs and be paid for providing services without providing them.

Or, of course, (C) both.

I wonder how many people involved in devising this process owe something to (or expect something from) businesses specialising in procurement consultancy or contract law…?

@8 – without wanting to, yer know, wallow in a slough of despond but the phrase ‘they have more in common with each other than they do with any of the voters’ is becoming more and more telling.

If anyone can tell the difference between any of these 3 teenagers currently err…leading(?) their parties then i’ll bake them a nice cake. I want my money back! To be so shite takes some serious talent.

@gastro george – ‘This kind of statement just makes me ROFL.’

Care to explain why?

The only point which matters here is – what bloody right has this evil government to do any of this without a mandate from the British people?

What I like most about this discussion is that everyone has ignored Worstall.

What I like most about this discussion is that everyone has ignored Worstall.

Yes, you would.

That’s much easier than trying to engage with his extremely cogent argument. So why bother. It’s a lot less work just repeating an old mantra, isn’t it?

Try playing the ball.

15. gastro george

@Joshua

Maybe you can start by trying to explain the point you are trying to make.

As there is no such thing as a national health service that is free of government involvement, nor could there be, it seems like a statement of the bleeding obvious.

But it sounds like you’re trying to absolve the “free market” of any responsibility for the debacle that is US health care because of it is not free enough. Which is the default mode for free marketeers when things go tits up.

So you get weird arguments like the US is bad, but (hint, hint) it’s absolved because there is some state involvement, and France is good but, look, they allow the private sector to be involved.

Both arguments are bollocks because they’re not looking at the organisational and financial structure of the respective health systems.

16. gastro george

@Tim

“And the problem with this is?”

Resources will follow the money. Away from “non-profitable” parts of the health service, which will languish in an under-funded nether-world, to fund private sector profits, for companies that will continue to rely on public education for their doctors and nurses, etc., ad nauseam.

17. Derek Hattons Tailor

@ 6 The problem with that is you are introducing a supply side only “market”. The customer (taxpayer) is unable to choose the supplier, in fact the supplier chooses him, based on his illness. Where is the competition for customers, supposedly the basis of the market ?
Markets don’t work in health because to achieve efficiency and EOS it has to be run as an integrated service (the private sector can’t do integration, just look at the mess they made of railways) and a natural monopoly (no practical means of competition). Corporate welfare is the only outcome.

18. the a&e charge nurse

[17] ‘Corporate welfare is the only outcome’ – spot on, and when it arrives, as it surely must given the political climate surrounding such a mouth watering health budget, there will an industry of disinformation whose job it will be to deflect attention away from the boardroom and toward the patients, or somewhere else when the gaps, and inadequacies you mention become more and more common place.

“@ 6 The problem with that is you are introducing a supply side only “market”. The customer (taxpayer) is unable to choose the supplier, in fact the supplier chooses him, based on his illness. Where is the competition for customers, supposedly the basis of the market ?
Markets don’t work in health because to achieve efficiency and EOS it has to be run as an integrated service (the private sector can’t do integration, just look at the mess they made of railways) and a natural monopoly (no practical means of competition). Corporate welfare is the only outcome.”

This is a wondrous splicing together of some barely understood phrases.

For example, who really is the customer here? The taxpayer? The patient? (No ,not one and the same person). The commissioning GP or organisation? In at least one variant of what’s going on the patient does get to choose, certainly which hospital. The commissioning agents get to choose again, who gets the contract for whatever it is that’s being done.

And certainly the taxpayer gets to choose: here’s the different buidders for the contract, which one do you want to take?

Then we get this natural monopoly stuff thrown around. Seriously? You think that GP services are a natural monopoly? Is that why they’ve been privately run all along? Or that fixing teeth is? That’s why dentists have been private contractors all along? Spectacles? Prescriptions?

Excellent, so we agree that there is no monolithic “health” natural monopoly.

Even if there is, at the core of the system, a natural monopoly (I dunno, say ICU, A&E maybe) we all agree that there are large parts of “health care” that are not part of such a monopoly.

Where we do have a natural monopoly of course, competition via markets ranges from v. difficult to impossible. But we do have to determine where that monopoly is. Take electricity for example. Some say that “electricity” is a natrual monopoly. Which it ain’t. The Grid is indeed a natural monopoly, but feeding electricity into it isn’t. Thus what we’ve actually done is separate that natural monopoly (and we regulate it heavily) while we have competitive markets in feeding ‘leccie into that grid.

If, as you say, there is a natural monopoly at the heart of health care then fine, that’s what there is. But that’s no reason at all to then assume that health as a whole is such, nor that we should preserve it. Strip out the bits that are not monopoly: replacing hips is not a natural monopoly, care of Alzheimers’ victims is not, etc etc.

As to the private sector cannot do intetgration. Hmm. Methinks you’ve been swallowing the ideological Kool Aid there. The process by which a smartphone is designed, made, delivered, the services powered up and I can use it seems pretty integrated to me. And it’s all done by cooperation. Cooperation in markets of course. For that’s how different companies cooperate, through the use of markets. Corning makes Gorilla Glass which is shipped to Sharp which makes the screens which are shipped to Foxconn which assembles the phones which are shipped to Apple who had designed them which are shipped to Vodafone who owns the shop and the network where I can buy one and which it runs on. Cooperation through competitive markets.

The factory here in Czech where I have an office makes the sapphire which covers the lens on the smartphone….so some is shipped from Czech to Japan where it is……and so on. We have, globally, very wide and also very deep cooperation between companies through the use of markets. And it is, of course, cooperation that is vital in providing an integrated service, not public ownsership.

Indeed, the NHS itself depends upon such market cooperation. Lutetium comes in hte main from a mine in China. Which goes to Texas where it is made into crystals which are then placed into MRI machines. It’s the magic bit that makes them work. If health care must be publicly owned to be “integrated” then the NHS should be running a mine in China, shouldn’t it?

@gastro george – ‘it sounds like you’re trying to absolve the “free market” of any responsibility for the debacle that is US health care because of it is not free enough.’

It may sound like that, but it happens in this case to be demonstrably true. Things like occupational licensing, the tort system and prescription laws raise the cost of medical services.

In any case, the Left is hardly averse to attributing anything bad about a system to private involvement without actually looking into why it is bad – just as you have with the US system. France and Germany at the very least demonstrate that private involvement in healthcare isn’t axiomatically bad.

21. gastro george

@Joshua

“It may sound like that, but it happens in this case to be demonstrably true.”

So your solution for the US is, what? Less regulation? Really?

“In any case, the Left is hardly averse to attributing anything bad about a system to private involvement without actually looking into why it is bad.”

Well it might help if you actually read my post, which advised “looking at the organisational and financial structure of the respective health systems.” Which is hardly a Left/Right, Black/White statement.

I’ve no problem with a certain level of private involvement in the health service. As you say, this can be made to work, as France and Germany show, as GPs have been operating in this country for many years. The point is that these systems are/have been **highly** regulated, and so they should be. These are not free markets.

@gastro george – ‘So your solution for the US is, what? Less regulation? Really?’

No. As I said, the whole system of having health insurance cover routine check-ups is absurd, and needs to be overhauled. I don’t necessarily disagree with you that the organisational/financial structure is what matters.

My point is that the ‘public good, private bad’ philosophy to which the writer of this article seems to subscribe is patent nonsense (and is often premised on a false dichotomy between our system and that of the US). The problem may be the wrong kind of private involvement, but this is not a problem for private involvement per se.

Anyway, I’m glad to see that we can agree on something.

23. Derek Hattons Tailor

@19 “As to the private sector cannot do intetgration. Hmm. Methinks you’ve been swallowing the ideological Kool Aid there. The process by which a smartphone is designed, made, delivered, the services powered up and I can use it seems pretty integrated to me.”

Bad example if you are trying to blow smoke up the free markets arse. The technology behind mobile phones, and the radio infrastructure, gps satellites etc were developed using public money, as was the internet they all use, in the form of defence/space programmes. Not to mention the fact that until regulators stepped in, you were forced pay extra for using another network, or that until recently many components e.g chargers weren’t standardised, which wastes resources.
The analogy with the health service is of course who does the investment in training, drugs and treatments, and how do you ensure that you don’t get wasteful duplication.
And I won’t even start on the electricity “market” except to say that due to a lack of (promised) private sector investment over the past 20 years the taxpayers is still having to pay for the replacement generator capacity to power up your mobile phone.

@23.

So, smartphones technology originally done by govts. Training of medics done by govt. Your analogy, not mine. Regulation needed to make sure no rips offs and compatibility among suppliers. Your analogy, not mine.

And yet smartphones, given those work extremely well as products and services provided by private, competing, profit making companies. Given the original govt push and the regulation.

And the reason this won’t be true of health care is?

Sophisms aplenty from Worstall. Quelle surprise.


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