Lies, damned lies, and electioneering statistics: privatising the NHS

Now the election campaign is in full swing, there has been a sharp rise in questionable statistics used in public discourse. This is distressing, as there is a risk people vote on the basis of misinformation. It seems that by using the same bogus assertions repeatedly, politicians of all stripes are able to eventually change the ‘facts’. The debate around the NHS has been the most dishonest.

“Reverse the tide of privatisation in our NHS”

There has NOT been a tide of privatisation in our NHS. Privatisation if the process of transferring ownership of an organisation from government to the private sector. No shares have been issued in the NHS, nor distributed as vouchers to citizens. The NHS remains publically owned and funded, resources have grown in terms of real cash and people, and services are free at the point of the use. They must still provide services to all, whilst a ‘privatised’ company could choose to only serve those who pay.

Outsourcing isn’t privatisation, and is slowing

The government has encouraged competitive tendering of services, and outsourcing has increased, but only from 4.4% under Labour to under 6% with the Coalition. The rate of outsourcing has actually slowed under the Coalition. Regardless, outsourcing isn’t privatisation, maintains free at the point of use access, and can result in better services.

What about Hinchingbrooke Hospital?

Hinchingbrooke Hospital is the closest example to privatisation, as it is now run (though not owned) by a private company. The tender process for the hospital happened in October 2009, under Labour, further exposing their hypocrisy. Regardless, its core assets are publicly owned, and it still delivers NHS services free at the point of use.

An honest debate would consider alternative models that would improve services 

As an aside, it’s worth noting that Hinchingbrooke has gone from one of the worst ranked hospitals, on the verge of shutdown, to one of the best for patient happiness and waiting times.

A proper discourse on health care would focus on ways to improve the quality. We should examine the merits of private (profit and non-profit) providers, rather than being blocked by ideological labelling. We should explore how alternative models that don’t reply on as much government management, like in Germany or Singapore, could deliver better services for all.

Miliband’s attack on profit is an attack on patients

Either Ed Miliband is struggling to understand the basics or his ideology is spiralling out of control.

The latest Labour pledge:

Labour would cap the amount of profit private firms can make from the NHS, Ed Miliband will say as he launches the party’s election campaign.

He will pledge to halt the “drive to privatisation” he claims has taken place in the health service since 2010.

The future of the NHS is “on the ballot paper” and only Labour can guarantee the funding it needs, he will say.

Under his plans, private firms will have to reimburse the NHS if they exceed a 5% profit cap on contracts.

Companies make profit by keeping costs as low as possible while producing a product or service that people want (and ideally choose) to consume. Apologies for the simplicity, but apparently Ed needs it.

Pledging to fix levels of profit that a company can make ruins any motivation for the company to bring costs down. Given the NHS’s current financial situation, Miliband should not be so quick to toss aside the importance of efficiency gains.

Nor should he be ignorant of private firm’s impacts on patient outcomes.

Private firms are hardly private when working for the NHS; they are still under the jurisdiction of NHS bureaucracy and are often dependent on public funds for their operations. But where private firms and independent sector treatment centres do differ from the public sector is in their record on patient outcomes. Research from 2011 showed that ISTC surgery patients are healthier and experience less severe recovery conditions than patients undergoing the same surgeries with NHS providers.

Furthermore, Circle’s management of Hitchingbrooke Hospital turned a failing trust into one of the highest ranked hospitals for patient happiness and cut waiting times drastically; their recent failings were not a result of bad healthcare but rather bad business.

One of the reasons Circle reneged on its government contract is because it’s a struggle to make efficiency gains under NHS regulations as they currently exist; if Labour gets its way, this will become nearly impossible.

Miliband’s attack on privatization and profit is an ideological attack on buzzwords; unfortunately, his crackdown could have real affects on patient outcomes.

Keep Politicians out of the NHS

In the run-up to the election, politicians are trying to out-bribe us with our own money to pay for escalating NHS expectations. Democracy has a dark side. Doctors are telling politicians to: “stop messing with NHS to win votes.” (The Times, 17th February, p.15).

Demand will always outstrip capacity for a free good such as health. The questions are simply two: how much money should be allocated to the NHS and how should those resources be best managed to maximise welfare?  The former question is essentially political but the latter should not be. The budget should be set annually and not agonised over every day.

As every government IT project demonstrates, government does not do management well. One can blame either politicians or civil servants but it is the combination that is fatal. Apparently the present Secretary of State for Health assembles his entire team every Monday morning to micro-manage NHS issues in Darlington, Taunton or wherever. Or rather to attempt to micro-manage. This may improve media coverage but it builds confusion and disheartenment throughout the NHS.

All the best-run large businesses know that those at the top should lead, not manage. The first level of management should be empowered to deal with the micro-stuff and thereafter the next level of management should deal with matters the lower level cannot sensibly address. Because the NHS is so very large, that lesson is the more important.

How can politicians be removed from NHS management? Simple. We have a relatively new, well experienced, NHS England Chief Executive. He seems excellent and a great improvement on his predecessor. NHS England and the other national NHSs should be converted into public corporations, like the BBC, i.e. a stand alone operations funded and responsible to government but managed, day to day, independently. Whether to close, say, a cottage hospital would be a matter for NHS England. Politicians will still, rightly, lobby but they should not be making the decision.

Our political leaders should lead, not second guess local NHS doctors and managers. In addition to setting the budget, politicians should agree the budget and the strategy, i.e. what, overall, we should expect for our money. Then they should get out of the operating theatre.

Rules and recipes are different things Mr. Burnham

We tend to think that there must be some special dictionary out there, one hidden from us mere mortals, that allows politicians to say whatever they damn well please and yet not use the words that we all do. Almost as if there’s some other foreign language they use to speak to us mere voters.

Take this from Andy Burnham for example:

As Burnham correctly said last week: “For change to work in a market context, all players need to be following the same rules.”

This is in the course of The Observer managing to get absolutely everything about obesity, sugar and fatty lardbuckets entirely wrong. We all consume fewer calories than our grandparents did, sugar is not addictive (we consume less of it than in the past) said fatty lardbuckets do not cost the NHS money (dying young saves the NHS money) and so on and so on throughout the entire litany. And, of course, they’re entirely wrong in the basic theory of what they are talking about for the role of government is not to tell us how to live our lives but to enable us to live our lives as we would wish.

But specifically what Burnham is talking about there is that manufacturers should be forced, whether by taxation or by regulation, to put less sugar, less salt, in our food. And no doubt to throw some organic lentils in there at some point as well.

Which is where that special dictionary comes in of course. Because that’s not “rules” that’s “recipes”.

Is it too much to hope that one who would rule the country actually speaks the language of it? Sure, Willie the Conq and George I didn’t do so well on this basis but aren’t we supposed to have moved on?

Hinchingbrooke Hospital isn’t an example of bad privatisation; just an example of bad business

The first private healthcare provider to take over an NHS hospital just over three years ago is pulling out of its contract today, claiming it is “‘no longer sustainable under current terms’ because of rising demand and falling funding.”

You can picture the foam forming around the mouths of hungry public-sector supporters and Burnhamites; in this ultimate battle to keep UK healthcare not only free at the point of use, but in public sector control, they’ve been craving a golden piece of evidence against the private-sector.

But Circle’s contract termination isn’t quite that.

Circle’s involvement with Hinchingbrooke Hospital is far from a traditional private sector model. Hinchingbrooke did not become a private hospital, but rather a privately managed hospital, that was still under the jurisdiction of NHS bureaucracy and, more importantly, dependent on public funds for its operations. Furthermore, there was nothing particularly competitive about the market, and while Circle did have an incentive to make some profit if it made a surplus, not much of its own money was at risk.

Circle’s contract with the government dictated that the hospital would be supported with public funds, give or take up to £5m worth of payments from Circle if public funds weren’t sufficient to provide necessary support for Hinchingbrooke.

Within a few years of taking over Hinchingbrooke Hospital, Circle Holdings took a failing hospital that “consistently ranked near the bottom of the 46 trusts for waiting times” – and that would have been shut down if it hadn’t been sold – and turned it into “one of the highest (ranked hospitals) for patient happiness”. Circle also corrected waiting time failures, leading the hospital to “(top) the list for short waiting times, seeing 98.2 per cent of patients within the required window”.

From ASI Fellow, Tim Evans:

Circle massively improved this hospital and the government should now do two things –
1. Recognise what a good job they have done and re-negotiate the contract to keep them on board – barring another company taking it over.
2. The government should announce that is wants more – not less – private and employee ownership of hospitals, clinics and other care facilities.

It is definitely the case that Circle brought to the table a much better management system and improved healthcare significantly for the hospital’s patients. But these triumphs for both the hospital and its patients didn’t necessarily reflect a sensible business strategy. In fact, choosing to muddy the waters between public and private care under NHS supervision was a risky decision indeed.

From the ASI’s Dr Eamonn Butler:

I was very surprised that any private firm took on an NHS hospital. I spoke to private providers throughout the 90s and they all rejected the idea. An existing hospital comes with current buildings, equipment, procedures, personnel and above all culture. In schools a new head teacher can turn around a school, though there will be a lot of redundancies and redeployments along the way. In the NHS that is even more unthinkable, given the strength of the employee unions, including the doctors’ trade unions, and the ease with which any changes can be dramatised as ‘cuts’.

“Hinchingbrooke’s funding has been cut 10.1pc this financial year”, and having already spent £4.84m of the required £5m of its own funds, Circle claims it can no longer run the hospital in a successful, effective way.

More from Eamonn:

What we need is more private, voluntary or charitable groups providing healthcare services on their own terms, in facilities that they themselves create and with staff that they pick by hand because of their skill, dedication and commitment to the enterprise.

Circle’s improvements to Hinchingbrooke Hospital should not go overlooked, and the Circle experiment should not be dubbed an example of private healthcare gone awry. Real privatisation puts the risk and responsibility on healthcare providers and those who hold equity – ideally including doctors, nurses, and hospital staff members – and then allows for public choice to dictate the winners and losers in the field. It’s not backed up or heavily regulated by public funds.

If Circle’s experiment has shown us anything, it’s that private healthcare providers need more stake and control in their endeavours to produce good results.

More from Tim:

We have to move to 100% independent provision of hospitals through genuine ownership and property – not time bound and counterproductive government contracts.

In reality, Circle’s flirtation with public healthcare was not an experiment in the privatisation of the NHS, but rather an experiment to determine if public funds and oversight were compatible with private sector management. And in the case of healthcare, it looks to be a bust.