Covid laid bare the weakness of a partially privatised NHS

When Jeremy Corbyn’s Labour Party lost the 2019 UK general election to the Conservatives, his attempt to place the future of the National Health Service at the heart of the election was foiled by Boris Johnson’s simple narrative around Brexit. But neither man could have imagined that merely months later, ‘protect the NHS’ would have replaced ‘get Brexit done’ as the national mantra. Indeed Corbyn may wonder wistfully about his party’s fortunes had he managed to delay the election till the following Spring, when the NHS was under a pressure never seen before in its history. Thanks to the deadly combination of a hollowed-out public health service and bad government decisions, the UK recorded the worst Covid death rate in Europe in the first Covid wave; a record only to be surpassed in the second. But it was decisions that were taken in the decades before that left the NHS ill-prepared in the face of a pandemic and the Government at the mercy of private extortion.

‘A starting pistol for private involvement’

The fragile state of the NHS isn’t a recent phenomenon, but a result of continued government policy to starve the NHS of funds and undermine its core principles of being publicly run and free at the point of use. This began with the use of private finance initiatives (PFIs) to build hospitals; first by John Major’s government but greatly expanded under Tony Blair. The theory behind PFIs was to let the private sector shoulder the short term cost of delivering and managing infrastructure projects, with local NHS trusts paying them back over a long period. But decades later, many NHS trusts are still paying back these loans, with spiralling costs due to high interest rates. A National Audit Office (NAO) report in 2018 found that the taxpayer would pay an eye-watering £199bn more for PFIs, with repayments lasting until 2050. The same report found that the cost of building a hospital with a PFI was 70% higher than using the public sector. Nowhere has this had a worse impact than in Barts Health Trust in London, which spends 7.66% servicing its debt; money that would be better spent on patient care.

But if PFIs were the starting pistol for private involvement in the NHS, it was the Health and Social Care Act 2012 (HSCA) that allowed the expansion of the private sector to steam ahead. A pillar of this legislation was the replacement of Primary Care Trusts (PCTs) with Clinical Commissioning Groups (CCGs) as the bodies to run the procurement and provision of healthcare services for local populations. CCGs are GP-led, which meant that GPs were turned into part-time administrators, distracting them from their responsibility as clinicians and directly involving them in decisions relating to the cost of services. It also created the potential for conflict of interests to occur, with GPs awarding contracts to their own practices.

‘An artificial market’

The most damaging element of CCGs was the requirement for them to put contracts out to tender, with the regulator Monitor set up to promote competition. There are multiple problems that arise from this. Because private companies are primarily driven by profit- not quality of care- it incentivises cost cutting and, when profits are still not forthcoming, abandonment of contracts; an example being when Circle prematurely ended their contract to run Hinchingbrooke hospital. In this case and others, it then causes further disruption to patients with a change of management and additional costs for the CCG to rerun the tendering process. Tendering contracts can also create problems where none existed, with well-run services potentially having to make way for inexperienced private providers if they are outbid. This was the case when Bath and North East Somerset CCG awarded Virgin Care a £700m contract, only for a ‘contract performance notice’ to be issued to Virgin Care within a year, despite the services previously having a high level of patient satisfaction.

The effect of the HSCA was therefore to create an artificial market within health and social care, with the NHS bidding against private companies for contracts, but with no greater ‘choice’ for patients as was promised. It led to private companies winning 42% of the total value of contracts in the 2017/18 financial year and an average of 15% of the NHS budget being spent on non-NHS providers in 2016/17.

But despite this rush for contracts, private providers currently appear to not be making regular profits. Indeed Virgin Care claims they have “never made a profit from NHS services”. Upon first glance this may seem puzzling, but their strategy is long term. They first hope to gain experience in providing health and social care services above their competitors to put them in prime position when services become more profitable. In the case of companies like Virgin Care, they aim to expand until they have a monopoly over particular services and then hike up prices. For companies not seeking a monopoly, their strategy is to cherry-pick the most profitable services and discard contracts that don’t turn a profit after cost-cutting. The long-term goal is to push NHS trusts out of providing services altogether, causing them to lose the skills and experience needed to return services to public ownership and eventually collapse, leaving CCGs with little choice but to pay for extortionate private contracts.

‘A crucial step along the road to privatisation’

Speculation like this has been labelled ‘privatisation scaremongering’ by critics, but key decisionmakers have been caught on the record with these intentions. One of those is Mark Britnell, the then head of health policy at KPMG, who was one of a number of advisors hand-picked by David Cameron to advise on health reform. Britnell said, in anticipation of the bill, “In future, the NHS will be a state insurance provider not a state deliverer… The NHS will be shown no mercy and the best time to take advantage of this will be in the next couple of years.” It is against this backdrop that the HSCA must be viewed; not as full-scale privatisation, but as a crucial step along the road to privatisation. The plan to fragment the NHS, burden it with spiralling costs coupled with a decrease in funding and a steady increase in the role of the private sector will allow future politicians to convince the British public that they have no choice but to turn to an insurance-based system. The extreme popularity of the NHS means no government can launch wholescale privatisation without the risk of mass civil unrest, which has forced their approach to be incremental.

Though the words of Britnell are chilling, revelations which emerged in 2014 from a ‘senior Conservative minister’ that David Cameron didn’t even understand the reforms should compound fears that it is figures like Britnell that really guide government policy- not those that we elect. Another of Cameron’s advisors was the head of global health systems at the consultancy firm McKinsey. In an extraordinary conflict of interests, McKinsey and KPMG were allowed to advise the Government on GP reforms, whilst simultaneously signing a £7.1m contract with GP groups to provide advice on how to deal with these same reforms. They also held discussions with international private healthcare companies on how to enter the UK market, which was only possible because of the reforms they had advised on.

This close relationship between ministers and business, where ministers care more about fostering good relationships for lucrative post-government jobs than they do about helping the people they were elected to serve, means the needs of the NHS take a backseat. Successive governments’ policies have left the NHS fragmented, underfunded and at the mercy of the private sector; its weaknesses exposed like never before during the Covid pandemic. The result of reducing the role of the public sector was that the NHS was ripped off through largescale outsourcing and past government corruption has spurred on Boris Johnson’s cabinet to act in ever more brazen ways. It is clear that this NHS crisis has been a long time in the making and privatisation is the root cause.

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