The NHS Consultants' Association

WHY DO WE NEED A CAMPAIGN TO KEEP OUR NHS PUBLIC?

The NHS is in being dismantled. Its publicly funded system of publicly owned and provided health care with direct accountability to parliament is being replaced by a market where public, not-for-profit and for-profit private sector providers compete for NHS funds, and where legal contracts and external regulation substitute for direct political control and accountability. The rate and pace of change is dramatic and rapid.

In 1948, Bevan famously decreed that he should be able to hear a bed pan drop in Westminster, alluding to the strong system of political accountability which had been established. But just as the enduring fabric of steel bedpans has been replaced by disposable grey cardboard, the NHS has become a shadow of itself, its direct political accountability stripped away and replaced by a market nexus of competing services and hospital boards where shareholders, liquidity, assets and solvency take priority over service planning and patient care.

At the heart of the market is the notion that services can be translated into goods and separated out and priced accordingly. Integration, which is a core feature of the NHS and the rationale for public provision, has been abandoned. The argument is made that if IT, catering, cleaning and land, buildings and asset management, can all be out-sourced then why not radiology, pathology and all clinical services? The model the politicians appear to have in mind is of the NHS as a holding company where health services are franchised out to different companies which in turn lease or rent space in return for a share of income and profits.

Foundation trusts are now in discussion with large US health care corporations and US medical schools, including Alliance Medical, United Health Group, Kaiser Permanente and Harvard Medical School inc , developing proposals for profit-sharing arrangements in the provision of clinical services like radiology, pathology and cardiac and cancer services, through joint ventures. The vision of the future is a Debenhams, where health care is delivered as boutique surgery franchised to hundreds of companies.

But health care is not a standard off-the-shelf product; rather it has to be tailor-made for every patient to take account of their different health care needs. This makes it difficult to specify and break down into component parts, it also makes it unpredictable to price. There is, too, the problem of NHS staff currently employed under national terms and conditions of service - how are they to be encouraged to move from the security of the public sector into flexible labour markets? And finally there is the incentive structure. Why should any hospital or service wish to subcontract out services when it is not in the interests of patients or integrated care? The answer lies in the new powers and functions given to former public authorities in the 2000 legislation which laid the foundations for the New Market in NHS health care.

The new NHS is radically different from the old. The role of the NHS will be government funder and payer but not provider. Publicly owned and publicly accountable services are being turned into hundreds of competing businesses, each using the NHS logo. Competition policy and trade law will increasingly govern the way in which health services are supplied and distributed. The market brings new costs to providing care: the costs of marketing services, billing and invoicing and of course the costs of the market dividends to shareholders and bankers and legal and management consultancy fees. But there are less visible costs, service disintegration and fragmentation, the loss of risk pooling and the erosion of entitlements. As health care providers pick and choose the profitable treatments and patients, services and NHS money are diverted to the private sector.

The new market system is being introduced in the following ways:

1) The commissioning process:

The NHS and Community Care Act 2000 gave primary care trusts and SHAs the power to commission, or rather subcontract out, NHS clinical services to the private sector. For example the Department of Health Department of commerce and department of strategy, headed by individuals from Price Waterhouse Coopers, Kingfisher plc and Amey FM company, is giving contracts to the private sector through the independent treatment sector programme for elective care, the LIFT programme for GP services, "book and choose", the award of large NHS central contracts to the private sector for radiology and diagnostics, and the approaching 40 billion pound IT strategy.

2) The new financial framework:

The legislation allows for the establishment of all NHS hospitals and primary care and community services as independent business entities known as 'foundation trusts' with the freedom to borrow on the markets and enter into joint ventures with, or subcontract to, the private sector clinical services. Foundation trusts can use former public assets and anticipated income as liquidity, to raise credit or overdrafts with major Banks. But the pressure to reduce liabilities means that foundation trusts have a vested interest in outsourcing as much of the clinical service as they can to increase their liquidity. The need to maximise the surplus for new investment means that income is the key priority. The incentive system is so structured that NHS trusts must now compete for income and patients and find new ways of generating income. Competition means that trusts must now spend scarce resources on marketing and branding their products but also position themselves to ensure they have winning treatments and services. The down side to this is that some treatments and services and patients will of course be deemed unprofitable.

3) Price and reimbursement - payment by results

Markets need price signals and the government is refining the price mechanisms and formalising it through legally binding contracts. The contracts of the internal market were not sophisticated enough to act as price signals. As a result the government has turned to the most market-wise system in the world - the US, adopting its pricing system. Payment by results, or financial flows as it is known in the UK, is a deeply flawed system and has been shown to be subject to manipulation and fraud in the US. As with the internal market, money is supposed to follow patients and services are supposed to compete for income.

4) Renegotiating the contracts of NHS Staff to allow flexible labour markets

The contracting out of clinical work to the private sector has serious implications for NHS staff. The government anticipated this when it renegotiated the consultant and GP contracts in 2003 and when it introduced Agenda for Change. The GP contract ended the GP monopoly over primary care and provided mechanisms to break up some elements of GP services and repackage them as goods. The consultant contract and Agenda for Change will allow foundation trusts to use local freedom to change terms and conditions of service and also to direct staff to work in the private sector. Some staff operating in lucrative but shortage treatment areas and services will do very well whereas others will not, thereby generating new inequalities.

5) Performance management and incentives

The DH can no longer direct NHS provision by executive letter or planning guidance, it must now enter into expensive legal contracts for the provision of care. The emergence of the contract culture means that a new regulatory framework is required based on standards, monitoring, enforcement and sanctions. The problem is that health care is very complex and liability may be very difficult to establish when much of it is outsourced to different providers. Many of the contracts are not in the public domain because the contents are deemed commercial in confidence.

6) Regulatory bodies

For NHS providers, the route to independence and the market place is through two new regulatory bodies, the Health Care Commission and the Regulator or Monitor. Each of these bodies determines entry and exit to the market and the pace of change. Currently both bodies straddle the interface between the two regulatory systems. The Health Care Commission performance manages NHS bodies using an incentive scheme, the star rating system, which allows trusts to become independent and financially autonomous. Foundation Trusts apply to the Monitor for a license to operate and when granted move from direct DH control to the authority of the Regulator or Monitor, which is an arms length body with no direct accountability to parliament. The Monitor is known as the economic regulator with the power to determine the range and level of services to be provided, the degree of competition and the price within the market - but planning and population needs are not on their list of priorities.

There is no evidence anywhere in the world, that markets in health care will deliver universal health care, free at the point of delivery. The NHS is being dismantled and our rights and entitlements withdrawn by the State with no parliamentary or democratic debate. That is why a campaign is needed to defend our rights to keep our NHS public.