The Multinational Monitor

October 2004 - VOLUME 25 - NUMBER 10


NHS, Inc.

The Accelerating Marketization of the
UK’s National Health Service

An Interview with Allyson Pollock

Allyson Pollock is a public health doctor and professor of health policy and health services research at University College London. She is author of NHS plc: The Privatisation of Our Health Care (Verso, 2004).

There has been a process of attrition in the UK. Increasingly, the least integrated elements of healthcare have been subject to market forces including the privatization of both funding and delivery. MM: What has been the historic mission of the UK’s National Health Service (NHS)?
Allyson Pollock:
The NHS provides service to all citizens free at point of delivery, and made available on the basis of need and not on the ability to pay.

Prior to the creation of the NHS in 1948, half of the population in the UK, including children and older people, had no real access to healthcare — unless of course they could afford to pay for it — and as a result coverage and access was badly distributed.

MM: How has the coverage provided by the NHS changed since the 1970s?
There has been a process of attrition. Increasingly, the least integrated elements of healthcare have been subject to market forces including the privatization of both the funding and the delivery. For example, NHS dental care, optical care and long-term care services have been eroded and removed from overall entitlement — the result is enormous inequities in access and coverage.

Although many of the services were provided in less than ideal forms — for example, the long stay institutions for people with mental illness and people with learning disabilities and the old were relics of the Victorian era — lack of funding for these services combined with lack of political will has resulted in less coverage than there was before and more of the burden and responsibility falling to the individual.

MM: When did the process of privatization and marketization begin?
Prior to 1979, the consensus around state-provided healthcare largely held the main problem was lack of funding. The real privatization thrust began in 1979, when Thatcher’s government came in to power.

MM: What were some of the elements of Thatcher’s privatization?
It was subtle. It wasn’t direct privatization, because you can’t privatize a national health service against the will of the people. It took one act of parliament to usher in a universal NHS; it has taken more than 30 to break it up. People feel much more strongly that the NHS is theirs than, say, British Rail, or the gasoline utilities.

So the process of privatization was undertaken in a much more covert way by politicians. It began with management reforms and management changes in the 1970s. Management was turned over from the health professionals to managers who often had no training in health services, or had no knowledge of the health services. The next phase was the contracting out of the low paid staff, such as cleaning, catering and laundry staff through something called competitive tendering throughout the 1980s. These processes were coupled with a lack of investment in the NHS, so you had growing discontent, and people starting to say that the system is unsustainable or unworkable.

Then in the 1990s, you had something called the Private Finance Initiative, which was about introducing a new form of private ownership of hospital capital (buildings and land).

At the same time, with the introduction of the internal market [requiring market-replicating contracts between components of the NHS] and the purchaser-provider split, the Tories had also begun to transform the hospitals into semi-autonomous provider institutions like corporations. So you moved away from geographic planning, where you were planning services for populations in districts or for an area, and on the basis of their needs, and where you were giving budgets according to their needs. The locus of control moved away from planning authorities to providers, i.e. the big hospitals, and away from communities and family care.

The Labor government has continued in this direction, but with much stronger emphasis. As in the U.S., they have no understanding of planning tiers or planning authorities; they only can think in terms of providers or HMOs or insurers. All universal services are predicated upon geographic planning, i.e. planning for the needs of a population within a given area, and ensuring that there are services to meet those needs. In the market, planning is abolished and devolved to providers who plan around the treatments, conditions and patients. This is why in the U.S. the provision of chronic care, such as mental illness services, is so abysmal — the market does not want to take on catastrophic risks.

What the government in England is doing is wiping out the institutional memory of how planning and services ought to be provided. The 50 years of experience where you always planned on the basis of the geographic population or need is being abandoned in favor of provider-domination. The locus of control has shifted from planning tiers to hospitals and mainly the big teaching hospitals; and they have now been established with all the powers of a corporation, with a corporate body, boards like boards of directors, and their own balance sheet.

MM: So the providers have become established as something similar to what would be an independent non-profit entity in the United States.
Yes, but one shouldn’t be fooled by the notion of a not-for-profit status. In reality, the powers these corporations have are very similar to the powers of a for-profit organization, including the ability to break up and subcontract services to the for-profit sector.

As in the U.S., the not-for-profits are quite free to contract with the for-profits if they want. The hospitals are allowed to subcontract clinical services like cancer or cardiac care to the for-profit sector, including to big American corporations like United HealthCare or Kaiser. The American and other transnational corporations are not only waiting in the wings, they are getting into bed with British companies to contract for NHS services.

The key difference between the U.S. and the UK is that in the UK doctors and nurses providing all the services under public ownership and control are salaried; that’s now changing rapidly as a result of the new contracts.

MM: Who pays the providers?
At the moment, it is all publicly funded. In a way, it’s the HMOs’ dream scenario. In the U.S., everybody hates the HMOs and they want a single-payer system which the government funds, but so does big business. Big business can think of nothing more that it would like than to have the government acting as the tax collector on behalf of business, so the government is simply collecting the rents and then giving it back to the private sector. That’s the model that is currently being put in place in England, where the government is the tax collector and redistributing those taxes through the broken up, fragmented NHS to a mixture of providers, for-profits and not-for-profits. What the government wants to do is move very much more to a single-payer system, which is exactly what big business wants in the States, but keeping a role for the for-profit providers so the shareholders can be happy.

MM: When you talk about segmenting markets, what does that mean in practical terms for people’s care?
With universal healthcare, you are trying to pool the risk from rich to poor, from unhealthy to well, and with treatments as well, ranging from a relatively simple and inexpensive-to-treat condition like varicose veins to chronic cancer. The idea of risk pooling is that no individual provider or individual patient or individual service should have to bear the risk and cost of catastrophic treatments. There should also be maximum separation between the clinical decision-making and the funding — something that we forget at our peril.

The market doesn’t like that. It likes to segment the risk pool into winners and losers so that it can cherry pick. It wants to take the profits from the low-cost treatments and healthy patients.

That is exactly what has happened with the U.S. HMOs. Although they do provide some coverage for the poor and the working poor in Medicaid, there are 50 million people that are uninsured. If you look at the very profitable HMOs, the population they serve is not representative of the population of the whole. If you look at Kaiser, it is under-represented in terms of the poor, the old and the chronically sick and the range of services provided.

These big HMOs engage in very selective practices in terms of the population they serve. This is a key difference between the U.S. and countries that have put in place universal healthcare systems; they don’t have the luxury of being able to select out of the population and treat who they want to.

In the UK, the problem is that the government is now putting in place a system which will ultimately mean that the private sector will cherry pick the better patients and leave the public sector with the rump service.

MM: Is that a future-oriented concern or is it happening now?
It is beginning to happen now. And we’ll see that happening much more in the next five or 10 years as the strategy is put in place.

MM: You explain in NHS plc that restraints on the NHS mean that certain kinds of care – dentistry, care for the elderly — that once were in the public sector are now handled almost exclusively in the private sector.
Yes, they are. The care is paid for with public funding, but the providers are increasingly in the for-profit sector. Especially with long-term care, the public authority has actually not been allowed to own and operate their own facilities and services; they are being forced into contracting out with the for-profit private sector. And that is how the private long-term care industry has grown from nothing to being the majority provider.

MM: Generally, what is the quality of care in these privatized areas, as opposed to the public sector?
Long-term care has always been a major problem. But we know from the very few studies that have been done that, in the public sector, 75 percent of the costs are spent on staffing; and in the private sector, in the U.S., we know it can be between 30 and 40 percent of total revenue spent on staffing — with profits, marketing and administration taking up to 40 percent. And we know that staffing is the most important aspect for quality of care.

As we move into the private sphere, there is less and less monitoring for vulnerable groups. We do know that long-term care is especially abysmal, but the government has no interest in improving it or putting in place proper monitoring systems to improve long-term care. And we also know from the U.S. that the monitoring systems that might be put in place in any case are worth almost nothing because the private providers learn how to game them so well.

MM: A common criticism voiced in the United States of the UK system is that it is characterized by long lines and inadequate care. How would you respond to that claim?
Well, people need to look at the evidence. You could say that the UK system constitutes a fair rationing device, as opposed to having 50 million people with no healthcare coverage at all. In the U.S., even many of those with insurance are covered by insurers with exclusion clauses. Waiting is an expression of unmet need, which is just concealed in the U.S.

The UK government has had an unhealthy focus on waiting lists to the detriment of everything else. You’ll find in England that waiting lists are falling, because government has encouraged the manipulation of the waiting lists targets but to the detriment of other vital services. And waiting lists in any case are a particular instrument for the high-tech therapies; they don’t tell you anything about the rest of the system. How do you get on waiting lists for long-term or chronic care?

MM: As the system now exists in England, to what extent are people in higher income groups able to just work around these limitations?
They have always been able to. They have private health insurance, and they use the NHS as a provider of last resort, because private health insurance coverage is always restricted in its range of services and coverage.

There is huge variation across the country as to who has and doesn’t have private health insurance. But in the south, in London, you have a tradition of people using the private sector which doesn’t exist in the North and in Scotland and the northeast of England, where there is a much more egalitarian process at work.

MM: Scotland has sought to follow different policies than England?
Scotland has gone a very different route, Scotland has tried to go back much more to the traditions of the NHS, but it has been opposed by Westminster.

Scotland has tried to reverse the worst of effects of the market. It has gone back to administrative tiers and geographic planning. However, the Scottish Minister for Health Malcolm Chisholm was recently pushed out. This is a source for great concern, because he was actually reversing the work of the English excesses. Now there is going to be huge pressure on Scotland to “reform.”

MM: What has been the public response to marketization and privatization of healthcare?
Complete ignorance. They’ve been sold it under the banner of choice and diversity and competition, and they have not a clue as to what is going on.

Unlike in 1948, when the NHS was brought in one night to the parliament and reflected the will of the people, the destruction of the NHS has been occurring over 25 years, with more than 30 acts of parliament and without the knowledge and will of the people. That is the only way you can do these things.

MM: In the United States, it would be fair to say that there is overwhelming hatred for the existing healthcare system, but there is great awareness of the problems of the healthcare system. Is the problem felt acutely in the UK?
People don’t hate the NHS, they love it. Government is trying to make them hate it by talking about waiting lists and unmet need and patient expectations. The government has to use very destructive language in order to get people to denigrate their NHS. But people are very loyal; on the whole people’s individual experiences are good in the NHS; and they know it is very important.

MM: But what about in terms of the changes that you’ve documented? Haven’t they seen a decline in quality of care as a result of those changes?
Well, they don’t understand them. They just know that they are getting less. It’s symptoms they feel — they’re not being told the causes, and that’s what NHS plc is about. It’s about explaining the causes of the symptoms that people feel, so they don’t rush to the wrong conclusions.

MM: Are these sets of policies contested within the Labor party?
Not enough. The back benchers are absolutely spineless and those that aren’t spineless are very marginalized. We have a new generation of MPs who really don’t care. They had it all — have it all — and now they’re pulling the ladder up behind them. We’re the generation that had it all, and we’re destroying it all.

MM: Do you see a prospect for reversing the situation?
Of course. All of this could be reversed. These are all political decisions ultimately, which is why healthcare has to be political, as does education or transport or power or any public service. The measure of a good and fair society has to be how it decides to treat the homeless, refugees, asylum seekers and the old. These are the groups with the greatest healthcare needs and the groups that the market will not want to care for.

The Labor government has continued in this direction, but with much stronger emphasis. As in the U.S., they have no understanding of planning tiers or planning authorities; they only can think in terms of providers or HMOs or insurers.
In the UK, the problem is that the government is now putting in place a system which will ultimately mean that the private sector will cherry pick the better patients and leave the public sector with the rump service.
The measure of a good and fair society has to be how it decides to treat the homeless, refugees, asylum seekers and the old. These are the groups with the greatest healthcare needs and the groups that the market will not want to care for.