In search of a second opinion

Andrew Lansley, Secretary of State for Health, has put forward a white paper titled ‘Equity and Excellence: Liberating the NHS’ outlining changes to the management and commissioning structure of the organisation.

Lansley’s proposals constitute a different kind of NHS – one where “any willing provider” will be able to supply care. In one fell swoop the health secretary will introduce permanent revolution into the health service. Rather than tackling the health inequalities which mean people in England’s poorest areas live an average of seven years less than those in the richest ones, Lansley has unleashed a radical ‘localism’ agenda, an NHS in which competition and creative destruction embraces ever greater inequalities in the range and quality of services.

The reforms come in the form of a devolution of power from health service bureaucrats to your family doctor – after all, who better to commission hospital care than the trusted GP who knows you best? In reality, because of added constraints on their already stretched time, many GP’s will have no option but to contract out their responsibility for commissioning to the same private companies that run the hospitals and treatment centres. In this new market, purchaser and provider become one.

It is important to note that the market is not completely new to the NHS, the NHS has had some sort of internal market since 1990 when the Conservative government introduced a purchaser – provider split into the service. However, the previous Parliament’s Health Select Committee gave an unflattering assessment of the existing commissioning arrangements: “The report noted that witnesses had referred to [the NHS] having the ‘disadvantages of an adversarial system without as yet seeing many benefits from the purchaser/provider split’. It concluded that if ‘reliable figures for the costs of commissioning prove that it is uneconomic and if it does not begin to improve soon, after 20 years of costly failure, the purchaser/provider split may need to be abolished.’” The efficiency of the market in the NHS has not been proven – indeed, markets in healthcare (particularly in the USA) have been shown to increase bureaucratic costs and widen health inequalities.

Nonetheless, on the grounds of improving efficiency, Cameron’s Conservative government is redrawing the boundaries of what patients can expect the NHS to provide. At a time when health outcomes in the UK are improving and satisfaction with the NHS is at an all-time high, cuts are causing trusts around the country to postpone or even axe the provision of dozens of arguably elective operations, like tonsillectomies, cataract removals, or even hip replacements. As a result, there is a future danger that simple operations will, in almost all cases, be given to private health providers, leaving only complex procedures in the hands of the NHS – as is already happening in some parts of the country.

Simple and routine operations are notably more profitable because of their short treatment times and high frequency. When, as a result, more of these low risk, high profit patients will be given to private providers this will severely affect NHS budgets, leading to a withering of the service as it moves to specialise in rare and complex cases. As a result, geographical inequalities in health provision could emerge, disadvantaging those in remote areas or without the means to travel.

While increasing efficiency in healthcare is a laudable aim, there is a question of whether the market will provide this in the health sector. Efficiency is dependent on effective competition and the health sector’s substantial barriers to entry, including the high costs of capital and legal requirements, are unlikely to see any new enterprise emerging in health provision. Rather, services will be provided by a group of already existing companies like Bupa, Circle and United Health UK.

Further, the private sector introduces new costs that are not present in public organisations. The most obvious of these is profit, which will be money lost to the health service. But there are other costs associated with the private sector such as the legal costs of contracts. Contracts themselves represent the loss of integration in the service. High integration is efficient, low integration is inefficient financially, resulting in unnecessary costs, but it also affects patients negatively in a way that supply and demand forces do not take into account. The benefits from tight integration between institutions are manifest: for example, patients are able to be discharged into less intensive, local forms of care faster. The symptoms of poor integration range from patients’ mild irritation to getting entirely lost in the system, the results of which could be catastrophic for the individual.

Finally, the private sector brings with it dangers all too familiar at the present, specifically bankruptcy. The government has stated that it will not step in to save failing health providers, however this may change according to the political situation at the time. The risks resulting from bankruptcy are clear when people’s lives are in question, but to make matters worse the risk of bankrupty in a private health system is great: Demand in the system is effectively constant in that it does not respond to changes in supply, so any expansion in supply will stretch existing demand, threatening providers. With the threat of failure so great, the tendency towards a monopoly in the industry will be strong, which comes with its own risks.

The intrigue surrounding the white paper is concerning. It can hardly be denied that the move is an ideological one when the cost of the changes to the government, bearing in mind the current trend towards austerity, runs to £1.4 billion. But, perhaps more worryingly, the reforms did not feature in the Conservative manifesto, raising questions about whether Lansley actually has a mandate for reform. Much of the pressure for NHS reform has not come from the public but from right-wing policy think tanks equally close to Parliament and private enterprise: 2020 health, Reform and The Adam Smith Institute. Lansley also has interests in private health providers; one company, Care UK, paid £21,000 to him for undisclosed reasons just before the election.

Ultimately, the bill has an underhanded feel to it, shrouded in discouragingly shady dealings it loses credibility before you even engage with the details. An investigation into those details is similarly discouraging as it gives an image of a future NHS, against which the shortcomings of the present one pale into inconsequence.