The dead end road of health care as a business

Julian Tudor Hart says the Welsh NHS alternative can become a model for the rest of the UK

In 1983, Margaret Thatcher was fed up with the NHS as an anomalous gift economy in a country she wished would be dedicated to profit. However, open attack was not possible because the NHS was loved by the people. So who better than the chairman of Sainsbury’s to put his foot in the door?

Sir Roy Griffiths soon reached his conclusion. As he put it, “If Florence Nightingale were carrying her lamp through NHS hospitals today she would be searching for anyone in charge.” Though the NHS seemed to him to have customers in much the same way as his supermarkets, its staffing structures, relationships with patients, and measures of output all defied what his common commercial sense expected to find.

Since then, UK governments have tried to reshape the NHS toward Sir Roy’s perception of common sense. Driven by growing competition, a new generation of managers has tried to define and standardise NHS products, to deliver them faster and more efficiently to consumers, knowing that their own jobs and earnings, and the solvency of their hospitals, would depend on success. This has been going on now for 30 years. Yet hardly a day now passes without some newly discovered disgrace at every level of the service.  It is surely time to question the simplistic assumption that thoughtful, efficient and compassionate healthcare must follow the provider-consumer model of trade, or that no other model is possible.

The foundation of this reform programme was the NHS and Community Care Act of 1990 which created a purchaser-provider split. The NHS, the largest single workforce in Europe after the Red Army, was planned through central strategies, and implemented through locally devised tactics, to meet perceived population needs.  Competitive trade requires clearly defined products available for consumer choice, so providers must be separated from consumers. But in a free public service funded from taxes, the state pays, not the patient.  So the NHS should become the purchaser on the patients’ behalf, and patients should get their free care from whomsoever they prefer. The likely effect of the purchaser-provider split was predicted by Andrew Wall in 1993:

“Organisations need to have the capacity to learn if they are to be flexible and adapt to circumstances. At a very fundamental level of work, anyone at any level of the hierarchy will have ideas about how their job could be done differently and better. The purchaser-provider split introduces something inherently unnatural because there is a forced division between those who do the job and those who plan the job… People and organisations are motivated by the prospect of being able to have a significant say in their futures. Rob them of that, and they become lacklustre, unimaginative, and in the end obstructive, if only to attempt to recover some sense of power.”

After almost ten years’ experience, Wall added a corollary:

“Behaviourally, [the split] is unsound in that people (if they are to learn from experience) need to live with the consequences of their own actions.”

To see consequences, there must be continuity. That means knowing and respecting patient’s personal stories and circumstances, so that medical and surgical decisions are not taken in isolation from each other, or from their personal and social contexts.  But that is not how providers or consumers operate in the marketplace.

I think most experienced health workers would recognise Wall’s forecasts as central to all the problems facing the NHS today. There never was any golden age, but the pre-reform NHS was at least open to progress. Doctors were paid by the public, so they should be accountable to the public, or at least to its elected representatives.  That was the path which most of us, staff and patients, expected to follow. Because of compromises Aneurin Bevan was compelled to make simply to get the NHS born, power was still concentrated in the hands of senior consultants and self-employed GPs.  Both groups were able to define what they actually did pretty much at their own discretion and in their own interest, but slowly – too slowly – progress in medical science was compelling them to cede that power.

The medical profession has always suffered an internal struggle between interests in personal trade, and interests in humane science. Aneurin Bevan believed that interest in science was already gaining ground over interest in trade. History proved him right. Science grew as practice came increasingly to depend on teamwork including many more skills, and as patients became required to participate intelligently in their own care rather than simply endure as passive consumers.

Successive NHS reforms, each forcing public service further down the path to care as a business, slammed the door on progress of this kind. The results have been summed up by the disgraceful events at Mid-Staffordshire Foundation Trust, resulting in excess deaths estimated between 400 and 1,200 compared with average rates for all hospitals, taking differences in case-mix into account.  The independent inquiry by Robert Francis QC into this scandal fully confirmed its immediate cause: reduction of an already depleted nursing establishment to build up a financial war chest in preparation for its application for foundation trust status.

Whatever their initial intentions, anyone can learn to work badly if staff/patient ratios make it impossible to work well. Francis recommended that evidence-based norms be established for staff/patient ratios and staff skills, so that in future managements would be unable to reduce staff time or staff skills to levels known to reduce the quality of care. Government has refused to accept that key recommendation.

The Mid-Staffs scandal was not caused by moral collapse of staff, but by pursuit of efficiency in commercial rather than healthcare terms. Production of material commodities can be measured by dividing items produced by hours of labour required to produce them. That is not a rational way to measure efficiency in healthcare, which unlike commodity production becomes more labour-intensive as medical science advances, not less.

Rational healthcare is a new mode of production of value, fundamentally different from commodity production. Health gain cannot be produced optimally as a commodity. It requires that patients to learn to become active co-producers rather than passive consumers. Equally, staff have to learn to regard patients as potentially productive colleagues in shared pursuit of health gain.

The Foundation Trust status to which Mid-Staffordshire hospital aspired was driven through parliament in 2003 by New Labour Health Secretary Alan Milburn.  Such status freed hospitals from virtually all central regulation. They were encouraged to raise money like any other business in a new situation where hospitals had to compete just to survive. This meant borrowing in the commercial market, selling off surplus land, expanding or reducing their own fields of work, or delegating it to subcontractors, and managing, increasing or reducing their workforce in whatever ways might offer them advantage over other competing providers.

They could spend what they liked on advertising, even including celebrity sponsorship.  By 2011 they were allowed to derive up to half their income from sales of care to private patients. The aim of both New Labour and the present coalition governments was to encourage competition within public service, which all major parties saw as the fundamental solution to declining NHS productivity. This was measured not in terms of health gain, happiness, or extended lives, but as in business, by cash balance and solvency. Accountability to elected government was replaced by consumer choice between rival providers. Promises of NHS transparency were strangled at birth by commercial secrecy.

Only once have voters been offered a choice in a general election between the NHS either as co-operative public service (as it began in 1948), or as competitive business.  Approaching the general election in 1997, the New Labour Manifesto, contained the following promise:

“Our fundamental purpose is simple but hugely important: to restore the NHS as a public service working cooperatively for patients not a commercial business driven by competition.”

The largest majority since 1945 voted for that. But within its first year Blair’s government was pursuing commercial business driven by competition even harder than its Conservative predecessors. First it imposed the Private Finance Initiative rather than Treasury funding for all new NHS building, imposing unsustainable costs through a Conservative device which Labour had rejected in opposition. Then it imposed Foundation Trusts, against 45 courageous MPs from its own party and with Conservative support.

Then Alan Milburn negotiated his concordat with private sector providers for contracts to undertake NHS care for profit. And finally, in 2008, in an attempt to divide the NHS workforce, Alan Johnson opened regional pay talks for all NHS staff behind the backs of the three devolved governments. Their cup brimming over, Health Ministers from Scotland, Wales and Northern Ireland, hosted by Scottish Minister Nicola Sturgeon, issued a joint communiqué declaring their support for an NHS entirely in the public sector, opposing the purchaser-provider split, and insisting that they be involved in any future negotiations on regional staff pay.

In the same year, Wales Health Minister Edwina Hart formally ended the purchaser-provider split, rejected private sector involvement in Wales NHS, and confirmed forward planning of healthcare as an integrated whole, rather than leaving market demand to determine priorities.

This time the doctors were on board unlike in 1948. All these steps were welcomed by 86 per cent of 5,000 doctors surveyed by BMA Cymru. In the Assembly Welsh Labour has steadily moved toward a principled position fundamentally opposed to the commercialising policies of New Labour. Of all members of the present Assembly Cabinet, the new Health Minister Mark Drakeford has shown greatest clarity on this.  By developing NHS Wales as a visible model for what could and should be done in England, he could make it extremely difficult for the still powerful residue of New Labour at Westminster to resist demands for a renationalised NHS throughout the UK after the next general election.

This won’t be easy, and many will say it’s impossible. At the very least, NHS Wales will get less funding per head of population than any other part of the UK. The Barnett Formula that determines spending in Wales, Scotland and Northern Ireland is derived from net public spending in England. If this falls because of patient charges, or rising NHS income from private patients, or more NHS functions ceded to commercial contractors, then NHS income will fall correspondingly in Wales, Scotland and Northern Ireland, though they may do none of those things.

If Labour wins the next election, renationalisation of the NHS in England will face huge compensation costs to all the commercial providers with contracts for work gained through the open competition guaranteed by Lansley’s Health and Social Services Act. All the material needed for New Labour advocates to accept commercialised service will be there. On 17 November 2011 this report appeared on the Guardian website: 

“Labour pledges to repeal NHS bill: all provisions that turn health and social care services into a market-based system will be removed, says Andy Burnham”

Burnham had made the following pledge, speaking as Shadow Minister for Health to the annual conference of the Royal College of Midwives in Brighton:

“…let me make it clear – if the [Health and Social Care] bill in parliament goes through, we will repeal it. We will return the NHS to a national system based on the principle of collaboration on which it was founded in 1948.”

This report was never printed in the Guardian, nor was it ever carried in any BBC news radio or TV broadcasts.  There were 104 comments from readers in its first 24 hours, overwhelmingly in enthusiastic support, but further responses were refused.  Not only the Shadow Cabinet, but the entire UK Establishment had apparently rallied to a common cause. Don’t rock the boat, we’re all in it together. If we let them, that’s how many powerful people in all the major parties will pretend to fight the next general election.

Of all social institutions in our post-industrial society, health care remains least subordinated to business ethics, most open to imaginative advance towards participative and egalitarian democracy, and most loved by the immense majority of people, whichever party they vote for. Its roots lie in Welsh coal, steel, copper and tinplate communities, which developed the mutual aid societies that shared risks and shared costs. The Welsh NHS still provides a space in which we can all learn to live and think differently, to produce value for needs in a real economy rather than profit from wants in an imaginary economy, to develop the idea of democratic socialism in practice.

If we look only at increasing concentration of wealth and power in society, pessimism will continue to paralyse rational action, and even this last space will be lost. But with concentration of power and wealth comes concentration of ignorance and stupidity, albeit of most sophisticated kinds. The proportion of people who live from what they own and control is diminishing, ever further detached from global reality. The proportion of people who must live from what they themselves make, imagine and do is expanding, and they have fewer illusions than ever before. Is this a new century with no big ideas? You must be joking.

Dr Julian Tudor Hart is a research fellow at Swansea University Medical School. He was a GP and researcher for the Medical Research Council at Glyncorrwg for 30 years. The second edition of his book Political Economy of Healthcare was published by Policy Press in 2010. This article appears in the current issue of the IWA’s journal the welsh agenda.

9 thoughts on “The dead end road of health care as a business

  1. “Julian Tudor Hart says the Welsh NHS alternative can become a model for the rest of the UK”

    We’ve just gone a whole year without hitting ambulance response targets that are 10% lower than in England and Scotland. Response times in Scotland are around 20% higher. Labour in Wales is systematically downgraded and closing hospitals all over Wales. Half the A&E workers in Wales signed a strongly worded letter questioning Labours health policies and yet this guy claims we can be an alternative model?

    If I was to look for a model to base the rest of ours on I would probably start in Scotland. At least they have realised how vile Labour are.

  2. Five months ago a relative in the centre of Carmarthen fell and fractured his hip. Somebody called the police as they could hear him shouting from his bedroom. The police broke in and the ambulance was called. A health worker had turned up and she telephone the hospital and told them in no uncertain terms that an ambulance was required immediately. It took 2 hours for the ambulance to arrive from Glangwili which is I would say 2 miles away. Once at Glangwili, there were no beds available and he had to spend a further 3 hours in the ambulance. Other patients were having the same experience and it’s little wonder that ambulances weren’t available for accident and emergency duties. He passed away after a few days. Is this the model the rest of the UK should aspire to? As the earlier commenter stated…..Scotland seems to be a better model to follow.

  3. We can all be proud that Wales is the birthplace of the NHS and that it enjoys great popularity here. But, as pointed out above, until deliverance and performance issues are sorted out, we’re hardly in a position to offer ourselves as a role model.

    Mention has been made of Scotland’s performance in this. Does anyone have any facts or figures that could elucidate this point?

  4. Wales might be the birthplace of the NHS but that man would be turning in his grave if he was to see how the party which still maintains the “Labour” brand treats the electorate today. They are not the party our parents and grandparents voted for. The sooner we realise this (as they have in Scotland) the sooner we can get on with rebuilding our country.

    Bevan once claimed the Tories were lower than vermin. What would he say about his own party?

  5. @ Welsh not British

    Times change and parties with it. What are your suggestions for improving the NHS in Wales?

  6. It is well known that Wales is being used as a dumping ground for the unemployed and other various disadvantaged groups. The Labour run government is complicit in this. Our country, is already one of the poorest regions of northern Europe yet we are taking in people with a range of problems from wealthier areas of the UK including London. The unemployed tend to have more health problems than those in employment. We already have a level of unemployment which is higher than the UK average and some of our communities such as Ebbw Vale have 1 in 6 on anti-depressants due to a lack of opportunities and meaningful employment. This is linked to the Welsh economy. Yet, where was Labour during it’s thirteen years in government that it didn’t give the Assembly taxation powers and borrowing including the power to vary corporation tax? These powers could have begun to get our economy moving our people into employment. There’s so much more which could be said. But I’ll finish with saying that Labour are to a large degree responsible for our economy being a basket case and therefore largely responsible for our people being unhealthy and also, the allowing and probably encouraging the relocation of large numbers of other people with medical problems to Wales. This is adding additional strain to our already under pressure Welsh NHS.

  7. David is right in what he says, but he needs to go back further to unearth the causes of the social difficulties confronting Wales today. They begin with the industrial revolution itself, when,along with the English “north”, Wales was a hive of economic activity, the benefits of which were not distributed evenly between the financial capital and human muscle moblised to deliver it, as the former grasped a hugely disproportionate share. In the case of Wales, as a country, matters were made worse as a lot of the financial wealth was siphoned off across Offa’s Dyke.

    The working class’ response to the unequal distribution of the wealth that depended on its efforts was to set up its own organisations. These were financed by contributions out of the wages earned by their members, the modesty of which on an individual basis, was made up for by the sheer numbers making the contributions. Julian Tudor Hart reminds us that the roots of the NHS lie in the Welsh coal,steel, copper and tinplate communities which developed the mutual aid societies that shared risks and costs. The source of finance to meet the shared costs was the aggregated contributions made by of their members from their earnings.

    Possibly ,a mistake Aneurin Bevan (who was revered on the hearth were I grew up) made was not explaining clearly enough to the wider populace that ,although the NHS (as set up throughout Britain and Northern Ireland) was free at the point of delivery, it had to be paid for like everything else today, and, of course, the source for doing so was taxation. For the most part that remains the same today, but even where it is not payment must still be made for the services it provides.

    Unfortunately, in Wales in particular, the tax base was decimated by Thatcherite policies that oversaw the precipitate demise of the heavy industries that provided the income from which much of the financing was raised by being taxed and much of the earning power that would be needed to pay at the point of delvery if it comes to that.

    The economic and social consequences of that policy are still with us as we lurch from one crisis to another in what appears to be 20 to 30 years of governance by Conservative and Labour politicians whose ideological differences are paper thin, if they are different at all.

    Admittedly, as far as the NHS viewed as one institution is concerned, the Labour party policy in Wales is more akin to that of its founding Welsh missionary, but, absent taxation powers, one must ask how we can continue to run it something along the same compassionate lines, let alone improve it, without developing an economic powerhouse akin to what we had to provide the income that will allow us to pay in one form or another.

    It is this kind of practical work that our politicians need to do more of and less political speechifying with nothing much to show for it other than incoherence . An example is the purchase of Cardiff Airport for which Carwyn Jones was first criticised by Andrew RT Davies, only for him to climb into the cockpit and advocate spending more of the money that Whitehall sees fit to give us year on year, before selling it back to the private sector from which it has been rescued!!

  8. The responder above is right, the future is not in the hands of the people of north Wales, and its time for a change. Change does not happen quickly, and those looking to get into healthcare merely for financial purposes should look elsewhere.

Comments are closed.

Also within Uncategorised