Monday 3rd July 2017

NHS Post Election Reflections

On Monday July 3rd 2017 members of SSTHC attended a public lecture organised by Keep Our NHS Public North East. The lecture was given by Professor Allyson Pollock at the Neville Hall Institute for Mining in Newcastle-upon-Tyne:

The following is an abridged transcription of the main lecture including the slides, but excluding the introduction and the Q&A at the end:

The NHS Reinstatement Bill is a response to the 2012 Health and Social Care Act, which is a privatising and dismantling Act of parliament. It basically abolishes the [NHS]... I think this is part of the purpose of you being here today. It's my one big ask, that you get behind the NHS Reinstatement Bill, it is the solution because it will reinstate the NHS in England.

The breakup and dismantling of the NHS did not happen overnight. As many of you know the story really starts in the 1980s. Until then there is largely a political consensus around the NHS. Including massive constraints on expenditure, because in its first 40 years, expenditure on the NHS never really got above 4 percent of GDP. So that is one of the first myths, the myth of unaffordability. The NHS was put into place post war, at a time when the country was absolutely broke.

The NHS was the most beloved of all the institutions post the Brevridge Report, and it remains so today. The consensus on the NHS did not really start to break down until Mrs Thatcher came to power.


In the 1980s we first had the Griffiths Report (he was a supermarket guru that Thatcher brought in), and he said that what is wrong with the NHS is that it is badly managed, and we need doctors as managers, and we need a new technical managerial tier. So we had big management reforms, but the real big bang came with Kenneth Clarke. In 1989-90 many of you will remember the BMA (British Medical Association) campaign What do you call a man who doesn't listen - Kenneth Clarke. That was a huge struggle because it brought in the 'NHS and Community Care Act' and it brought in the internal market - all the structures for a quasi shadow market. It broke up the NHS into trusts - corporate bodies - providers and purchasers, making the great purchaser/provider split, with billing and pricing. But this is all shadow, there is no commercial contracting at that point. That brought with it a huge tier of management costs. The administration of the NHS had been very very low, just 5 percent of the total budget was spent on all the management. But overnight it doubled because every hospital had to have their own HR department, their own press department, and billing & invoicing, and all the rest of it. They also brought in the mechanism where for the first time ever, hospitals and community services were responsible for their own capital, and that was called the Capital Charging Regime. So for the first time ever, they had to find - out of the income that paid for patient care - some income to pay for their capital charge. That was the forerunner for something called the Private Finance Initiative (PFI) - where the land and buildings are sold off and the government enters into 30-60 year contracts with private contractors.

So the 1990s was a very turbulent period. But contrary to all expectations, when New Labour came to power in 1997, they did not move away from the internal market. They carried on with it, and their very first act was the PFI act. Not a single PFI contact had been signed until New Labour came to power. So what we've had is enormous indebtedness. All across the country, still to this day, hospitals and community trusts are saddled with enormous debt. Private finance is a form of debt, it's a 'sale and leaseback' arrangement. You sell off your buildings and your assets and then rent it back from big multinational corporations at exorbitant interest rates.

So not only do we have huge administration costs, but we also have the very high costs of servicing PFI debts. It's money that is being diverted out of services. This is one of the reasons why hospitals and Trusts are struggling. More than two-thirds of them are in serious financial deficit. You can't lift the 1 percent pay cap [on NHS workers] unless you have more money coming in - and - you address the inefficiencies in the system which are a result of the market and PFI.

The 1990s was a Conservative and Labour period. The Conservatives designed the policies and Labour implemented them. However Frank Dobson [Labour] was quite a good 'Secretary of State for Health', he did his best, we had the National Bed Inquiry, he realised that the bed closures were going too far, but he was followed swiftly by Alan Milburn who came in with the NHS Plan 2000. But the 'NHS Plan' is a plan for privatisation. It heralded a number of things. The first big thing was the privatisation of elective care - the easy bits [to privatise]. So the government took off 4-billion pounds [from the NHS budget]. The idea is that you would have your choice of provider for all the elective surgery (hips and heart etc.), that would be contracted out. We analysed some of these contracts including one in Scotland with a big South African company, and showed what poor value for money they were. This has had knock-on effects. If you take out elective surgery it leaves the more difficult patients behind. So you have the private sector doing risk selection. They pick the treatments and patients that they want, leaving the difficult ones, meaning that the junior doctors were not being trained. That was a very expensive experiment that unfortunately has been rolled out even further.

In phase 4 we had the Health and Social Care (Community Standards Act) 2003 - this was Milburn's baby. Hospital Trusts (hospitals like Newcastle etc.) had previously had a 'break even duty'. They were now given more and more entrepreneurial powers, so they could get into joint ventures with foreign investors, and above all they were given powers to raise up to half of their income privately... Foundation Trusts are set up as structurally 49 percent private. That means that a Foundation Trust's primary purpose is no longer the care of patients. It's about income generation... This has implications for the Foundation Trusts because the more income you are generating privately, it means more of your beds, services and staff are being redirected away from the NHS. This is at a time when beds are closing and community services are closing and being slashed. Of course Foundation Trusts were given powers to sell off their buildings and their land and to keep the profits.

Phase 5 is really the dismantling phase. The first act of parliament in 1948 [the act that created the NHS] is tiny. It's beautifully simple, beautifully elegant, and it put in place a national health service. It took 20 years to pave the way for the '2012 Health and Social Care Act' (HSCA) with incremental changes because the government never told us what the real purpose was. The HSCA is the dismantling act. It is the act of parliament that abolishes our NHS. This is very difficult for people to understand because you have your NHS trusts, you have Newcastle hospital etc. You have to keep in your head the fact that the NHS has been abolished, but there is still 140-billion worth of NHS funds flowing into services. But the new act (which is 457 pages long), is putting new systems in place which are modelled on the American health care system. The language of ACSs (Accountable Care Services / Accountable Care Organisations) come directly from the U.S. Those words were not previously in the NHS lexicon at all. The HSCA also carved out public health, many children's services and mental health services [from the NHS] and gave them to local authorities. That money is not badged any more as NHS funding, but rather local authority funding. So a who swath of services has now been lost from the NHS in a rerun of the 1980s and 90s when long-term care was carved out of the NHS.

The Local Government Devolution Act 2016 is a really important act. It enabled the devolution, giving local authorities far reaching powers to actually run and operate health services. In addition to that, the government gave new powers to local authorities to make new regulations for charging.

The HSCA was followed by the 'Five Year Forward View', which sets out STPs (Sustainability and Transformation Plans). The STPs divide the country into 44 geographic areas (footprints), and say that 26-billion worth of savings have to be made. That is accompanied by enormous cuts and closures. Every STP footprint is accompanied by cuts and closures of hospitals, A&E departments, many local community services all across the country.


In my talk, I am talking about England, because interestingly enough Scotland reversed the internal market, and it did it without a murmur. It passed an act of parliament and it reversed all of the 1990 changes. It did it by removing all the disruptive effects of the market. The second thing your going to hear from people (after the first myth that we can't afford the NHS), the second myth is that we don't want another reorganisation, that we are exhausted by reorganisations. And we are, as we have had one market orientated reorganisation after another. The thing to remember though is that if we don't have another reorganisation were going to continue with the status quo of dismantling and privatisation. Remember that Scotland did it, and removed all the disruptive elements of the market, but the people working on the ground didn't notice a thing, just that there was less admin, no contracting meetings, no commissioning meetings, services did not have to go out to tender, they did not have to compete for tender, there were no rooms full of lawyers and management consultants, all of that is just gone. So Northern Ireland, Wales and Scotland still have integrated health services. Scotland has gone even further because it really is trying to integrate health and social care, and it's made personal care free at the point of delivery, even though Scotland has still been squeezed because of the Barnet Formula as the settlement comes from the treasury. So if the NHS is being squeezed in England, then so is Scotland, but not one single hospital is in deficit. It's a very different feeling because they have integrated health services. And that is an argument for STPs... The government will tell you that it is all about integrating health and social care, but how can you integrate health and social care when social care is means-tested and charged for, and NHS care is free at the point of delivery? You can't! It works in Scotland because personal care is free.

Scotland, Wales and Northern Ireland still have a commitment to all the principles: free at the point of delivery, universal, publicly-funded and accountable.


Unfortunately NHS England abandoned universality, and by universality I mean coverage. So the duty to provide key universal services for mental health, learning disabilities, acute hospitals, maternity care etc. has been lost throughout England, and has been designated to area based authorities. Because the duty to provide went, it made commercial contracting virtually compulsory. It's why in nearly every area of the country CCGs (Clinical Commissioning Groups) are going out to tender - very expensive! We know from the U.S. that the costs of the market are around 30-33 percent. That's what the administration costs. Markets bring costs that the public sector doesn't have; with no bidding, no invoicing, no advertising, no big press departments etc. The government has not replied truthfully in the Hansard, saying that it's only a very small percentage, but they've only looked at some of the contracting that is done by NHS England and CCGs, they have not looked at the full scale of all the contracting that is happening.


Once you've abandoned that duty to provide for everyone, and you've moved to a market, the most important thing to remember about a market system apart from the cherry picking and the cream skimming is risk. How do you handle risk? Some of you will be driving a car and aged over 70, so you will know how your car insurance companies handle your risk. Some of you know that insurers are all about risk selection and avoidance, and that is exactly what begins to happen. If you set up hospitals and services so that they have to make surpluses, no longer just concerned with breaking even, then they're always worried about the balance-sheet and they're going to get into risk avoidance strategies. That will lead to the denial of care, and it will also lead to over-treatment and over diagnosis. Because as we know from the U.S., insurance companies look for the people who need to pay. HCA (Hospital Corporation of America) - which is already over here, has been indited for fraud for giving people heart surgery who didn't need it. United Health (where Simon Stevens the head of NHS England worked), had been fined 100s of millions of dollars in the U.S. for fraud, for both the denial of care and for over-treatment and for claiming from the government for treatments that they had not given. There is a whole department of justice in the U.S. that is set up to deal with that.


I can't labour this enough. What your going to hear from Simon Stevens and from the new directors of the STPs who are being paid a lot of money, is that they are abandoning the internal market and getting rid of the purchaser provider split. That may be so, but they are doing it within a market context. Markets are all about integration. Vertical integration and horizontal integration. They want to merge because monopoly is their natural tendency - the end of the market. That's why there are only 5 big food companies etc... So it's really important that when you think about this word 'integration', what the government is really talking about is the integration of providers and not area-based health systems. So under the old system we had integrated health systems, where the area health authority was responsible for ensuring and providing services for everybody in that area, and they directly managed those services. In the new system of STPs what they mean is provider integration, but that does not mean there is a duty to provide services for everybody living in an area. What the government is doing, is it's trying to move us towards insurance pools, rather than area based populations. It's done that by making every single one of us members of our CCG, by virtue of belonging to a GP practice. So we're not automatically covered if we live say in Newcastle and our GP is somewhere else. Which means your not automatically covered by the CCG except for emergency care. So I would have to go where my GP is if that does not fall into the CCG area in which I am living.


In the old days we had contiguous areas and everybody was covered.


Before STPs the Strategic Health Authority and the Primary Care Trusts were responsible for everybody in their area.


Now that is completely dissolved and GP practice boundaries have gone. Now you have CCGs where people become members.


Insurance pools and membership based organisations are not geographic, and people can be excluded. You can see how this whole system is moving towards the ACO (Accountable Care Organisation).


Coming back to the market, just remember that they operate on the basis of risk selection, and it's the providers that choose, not the patients. The admin costs are high, and especially now that we are bringing in BUPA, Hospital Corporation of America, United Health etc. you have their profits and their shareholders as their primary purpose, no the NHS and patients. You've got the constant marketing and legal costs, and all these other costs.


[The above slide is from the U.S. and shows how less than 64 percent of the budget is going on medical care.]


[In reference to the above slide] Of 2.9 trillion, 790 billion is wasted, and these figures are from the 'Instutute of Medicine', which is a very august body.

So this is the warning we have, but the American health care model is being imported by zealots who really believe in the market.

I thought I'd show you some slides about what has been happening to beds and the rise of the private sector which [as previously suggested] goes back to the 1990s with the transfer of long-term care and other services out of the NHS and into local authorities.


[In reference to the above slide] What you can see on the top line is the rise of the private sector beds. There were less than 100-thousand, and they have gone up to 450-thousand, privately owned by 5 or 6 very large multinational global corporations. And you can see what has been happening to NHS beds. Interestingly, if you went back to 1948, there were 450-thousand NHS beds in 1948 [this graph does not go back that far], by 1972 there were about half that number, but you can see how the NHS beds are almost disappearing. In a country where the population has almost doubled, with an ageing population, yet we have hardly any beds - the lowest number of beds in Europe. So you can see how catastrophic the decrease has been. That has been driven in large part by PFI, massive cuts and closures, and it's just a simple myth that we don't need hospital beds any more. What we do need of course is community services, such as those that were in small cottage hospitals, small intermediate care beds, all of those beds have been completely cut. Mental health is the worst. Every week some people are having to travel 500 miles or more to get a mental health bed. Last week I had a tweet from a friend who is a psychiatrist who said "there is not a single bed in my area in Birmingham".

The solid line on the graph shows that local government owned beds are also in decline. They began to dispose and privatise under enormous pressure from the government to sell off their buildings. They were financially incentivised to do so. So that now there is almost no public provision whatsoever. Unless you see the big picture you don't see what's been lost. This is the whole system approach of the way in which NHS beds and services have been transferred to local authorities and then in turn to private for-profit corporations. Now the NHS is renting back beds from the private for-profit sector at one thousand to two thousand pounds per night.


[In reference to the above slide] This is what's been happening to local authority supported adults in residential care. The red is the enormous expansion in independent residential homes, and the way in which local authority homes have almost completely disappeared. The same thing has happened to 'meals on wheels', and all the home help services. Once all these home help services would employ on decent terms and conditions, not high pay, but good holidays, sick pay etc. They've now been completely transferred. Instead of being 90-95 percent provided by the local authority, they have all been outsourced to companies like Virgin. And now Virgin has increasing numbers of contracts for some of the most vulnerable people. People with learning disabilities, adolescents with mental health problems, in Surrey, in Sussex, and all over the country. Never fly with Virgin, that's all I can say!


[In the above slide you can see the 'great disposal']


I think this is the important story. Part of the real pressure is the enormous decrease in local authority expenditure that has taken place over time.


What we have seen is not just mass privatisation of services, but now only the very vulnerable are now receiving services at all.

Another problem is that many staff are now being transferred out. Not just cleaning, catering and portering, but also mental health nurses, disabilities, OTs, Physios (which have almost disappeared and are setting up as private companies). So not only are they not being counted as staff, but raising the public sector pay cap will not benefit them.

I have not had time to go into the corporations, but I have tried to give you a quick history and overview of where this is going. STPs are presented as a very positive thing, but they have no legal or statutory basis, they are predicated upon 26-billion pounds worth of cuts, major closures, and major shifts of health services away from the centre to local government.


The other thing that I have not had time to go into is local government funding. Local government used to receive 80 percent of its funding from a central grant. That was redistribution. So the money was collected in and paid to local governments. The government moved that to the revenue support grant, and its plan is to phase out the revenue support grant completely by 2019, along with the public health budget and the better care fund.


[In reference to the above slide] You can see how the revenue support grant is going to be chopped. They want to raise more and more on business rates to keep the spending the same. But the problem with business rates is that it is all very well if your living in a rich area, but poor areas like the North East? So you can see that local authorities are selling, disposing and getting rid of what they can. Then finally they say we can't manage any more, were going to have to change are entitlement criteria, so they will bring in entitlements, you'll not have universal entitlement, and well ask the government to allow us to use the secondary regulations to bring in charging - because they are the new powers that the local government has been given.

You can begin to see this huge vicious circle. You have STPs and you also have big things like devo-max going on. It's all about devolving, denationalising and making the rump health service the responsibility of local government, and those who can afford to pay will end up going privately. That is our governments vision. That is what the U.S. health care system is predicated on. It has Medicare for the very old, it's got Medicaid at state level with varying eligibility of entitlement for the very poor, and the vast majority 60-70 million people with no health insurance at all are the working poor.

You might say that it has always been a lottery within the NHS, but we have always strived to have a National Health Service. Now we've just got dismantling, disruption and privatisation.


You can see how the government has planned [and implemented] that the centrally distributed income is falling dramatically from 85 percent. That is regressive... You should raise at the centre and distribute to where it's needed. You don't raise locally, and charging is the most regressive policy of all.

Now we have the government saying that [the NHS] is unaffordable and unsustainable, but of course it is neither of these things. There is no demographic time bomb. All of this is deeply political, and is about the decisions that government CHOOSE to take. It's important that we continue to get this message out. The NHS is the thing that is dearest to everybody. People say that 'it's the nearest thing the British have to a religion'. We have a battle on our hands. It's not just about more money, it's about reinstating our NHS.


I should probably have mentioned 'Project Phoenix'. We've had PFI, the Private Finance Initiative in the 90s and 00s, though what a disaster that was, the government is now planning a return to PFI. Their doing that through something called 'Project Phoenix', where I think it's setting up six regional public private partnerships, and that is accompanied by the Naylor Report. Robert Naylor was the chief executive at UCLH (University College London Hospitals), - he loved playing Monopoly - and he was put in charge of the state strategy. His report is key because it is about disposals. And we have seen mass disposals. What the government wants to do is use more debt finance. Land and buildings will sold off again to 'help' the public expenditure, and instead we'll be getting into more and more onerous 'sale and leaseback' arrangements.


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