Is USA deal (or only the Conservatives on their own) about to privatise the NHS?
How much does the NHS buy from the private sector at present?
Just under a quarter – around 22% of the English health spending goes to organisations that are not NHS trusts or other statutory bodies. This includes many services that the general public would regard as being “within” the health service. Almost all the GPs, dentists, pharmacists and opticians who treat NHS patients are “private” businesses and have been since the inception of the NHS in 1948. In some parts of the country, community-based services such as district nursing and health visiting are now provided by the independent sector – either organisations such as Virgin Care that people would recognise as private companies or not-for-profit social enterprise organisations like Central Surrey Health. In addition, some community-based mental health services like ‘talking therapies’ are provided by the private or voluntary sector. The NHS also commissions charities like the Red Cross to provide additional support when people are discharged from hospital, as it does hospices, which are mostly run by “private” charities.
With respect to hospital care, when patients are referred to a consultant or other specialist they have a right to choose where they are treated. In most if not all parts of the country, the choices available to them since reforms in the 2000s include “private” hospitals, which then invoice the NHS for the treatment. This is not dissimilar to the 100% privatisation of British Telecom but different in that it is only partial. Those of us who remember waiting 6 months to get a telephone line approve of (selective) privatisation. In some cases, particularly where patients have been waiting a long time for treatment, an NHS trust will arrange for a patient to be treated “privately” although this is, admittedly, rare. Much of the in-patient provision for people with a learning disability or mental health problems and high levels of need is “privately” run.
Some patient transport services are delivered by the independent sector. In addition, some ambulance trusts have sub-contracting arrangements with private ambulance services to support them at periods of high demand.
Clinical commissioning groups (CCG), the bodies that plan and fund care at a local level, work closely with local authorities. Where individuals have both health and social care needs, the CCG may provide funding for their care via the local authority. Councils today largely contract out social care to “private” providers.
How has this changed over the last 20 years?
How privatisation has changed under recent governments has been a subject of especially heated election debate. Labour leader Jeremy Corbyn says privatisation has doubled since 2010. At the other end of the spectrum, Conservative Health Secretary Matt Hancock recently announced that the NHS was “not for sale” under the current government. Both “arguments” are fatuous and political. Neither addresses the real issues. Data from Department of Health and Social Care publications makes both claims look dubious.
Lets find some facts.
Adding together all non-NHS providers, looked at as a proportion of spend to adjust for the generally increasing budget, the purchase of private health care has been both significant and relatively stable, at between 20% and 22% for the last nine years. Regardless of whether we include charities or not, private spending is actually proportionately lower in 2018/19 than it was in 2015/16.
Here, Mr Corbyn’s claim that it has doubled is correct in cash terms, although the context is that health spending overall has risen by a third. But even in terms of proportion, we do see a notable expansion in private spending in these areas.
DHSC annual report and accounts.
From the figures he quotes, Mr Corbyn seems to be talking specifically about areas such as hospital and mental health care, shown in blue below, rather than ‘primary care’ areas like GPs and opticians shown in purple. This is not uncommon, with media and the Nuffield Trust having often cited the resulting narrower figure of 7% or 8%, although firm arguments have also been made for the wider view. This expansion mostly happened up to 2015/16.
The available evidence suggests the increase originally began under Labour governments before 2010, who, like the coalition, had multiple health policies orientated around competition. Figures obtained by Full Fact show that spending on private providers rose at a constant rate from 2006/07 to 2015/16.
Do the changes happening in the NHS now make privatisation more likely? What are the facts?
The NHS in England is currently undergoing reform towards uniting commissioning groups, NHS trusts and GPs in ‘integrated care systems’ (ICSs) that aim to plan care together across the whole of England (44 in total), anticipating they will evolve into Integrated Care Providers. (ICP). The King’s Fund, has published a very clear and helpful explainer that sets out to make sense of this often confusing landscape. These changes have been criticised for “dismantling the NHS” and increasing the role of “private” providers. There IS a risk here as the existing powers allow Americans to bid to run the ICPs once they come into existence. They will be able to take a profit share if they can reduce costs overall – and the way that is done in the US is by denying care (well documented), especially hospital care. It will cost less in monetary terms but will the service be the same? Unlikely, but that is where we need to put up barriers and terms in the contracts.
NHS England has already published two versions of proposals for legislative change to support these changes. These include removing the presumption of automatic tendering of NHS health care services over a specific value. This approach explicitly reverses the models adopted by the Labour and Coalition governments to encourage an ‘internal market’ where private firms could bid against NHS trusts. ICSs are partnerships involving many different local bodies. Any proposals to hand over the running of them to private companies would, therefore, face a difficult task in getting universal consent. Indeed, David Hare, the chief executive of the main lobby group for private providers working with the NHS, has said that he does not expect his members to take on contracts like this. In short, these reforms appear, if anything, to reduce the scope for private firms to compete for contracts.
Will any US trade deal increase privatisation?
No. A trade deal would not have the powers to stop the NHS being a free, universal service. Trade deals focus on removing barriers to companies accessing markets already available in other countries and protecting the interests of investors in other countries. They do not redesign the funding of public services. Trade agreements that the USA has already concluded with smaller countries with publicly funded health systems, like Australia, do not contain anything like this. See also fro Canada and Singapore . and this link.
Labour’s expressed concern is that a trade deal would allow US companies to bid to provide clinical services funded by the NHS competing with NHS trusts. This is plausible because government procurement of services is frequently covered by trade deals but US companies already have these rights. The English NHS has increased the role of competition and private companies over the last 15 years, (firstly under Labour!) and that has included laws that guarantee private companies the right to compete for contracts.
Rhetoric around the so-called threat of privatisation in the NHS has also focused on the terms of a potential trade deal with the US after Brexit.
The Nuffield Trust, an independent health think tank, does not believe that a trade deal could stop the NHS being publicly funded and free at the point of use. There is also limited scope to increase the rights of private companies to bid for English health care contracts because these rights have already been granted by successive UK governments.
Even a EU directive supports this! The EU’s Public Procurement Directive states that is the case as long as the private company has a branch or subsidiary in the EU – and they are unlikely to try treating patients without one.
Only 7% of English NHS spending goes to private companies, and this figure hasn’t been rising recently. That is equivalent to around £9 billion each year. (The rules do not apply to the Scottish or Welsh health services in the same way because they do not run their health services on the basis of contracts.) If the Government to be ever decided to start outsourcing, EU law – which will stay on the statute books by default after Brexit – would kick in to guarantee companies the same rights. It is unlikely that this default would be changed by a new Conservative Government for lack of conservative back benchers willing to vote for it.
This is a timely issue in England today, where NHS England themselves have been discussing plans to reduce the level of legal rights companies might have to access contracts.
There are hyped up so-called “concerns“ about the US trying to weaken the health service’s ability to control drug costs which are more firmly rooted as this has been a recurrent objective of the US Trade Representative. It is also possible that an over-generous trade deal could hamper a future British government from reducing the current level of private provision. I believe that the NHS is such a political hot potato that there would be no future Conservative MPs’ majority to sacrifice NHS drug pricing for a USA deal and, moreover, that is incompatible with an EU deal which clearly is what Boris is after, at least in the next 5 years.
Recent EU trade deals with Canada and Singapore include a “right to regulate”, making clear that legal changes that reduce profits do not necessarily breach a proposed agreement and can be justified on the grounds of public health. The UK could demand something similar and I believe that that would get a majority in the new Parliament if the Conservatives win.
The NHS and Department of Health initiatives to bargain down medicines prices or recoup costs are a major reason why the UK tends to get the same medicines more cheaply than the USA. Conversely, it is probably the lack of such initiatives in the USA – where national bargaining is actually banned following pharmaceutical lobbying – that accounts for high prices, rather than this being to do with European countries paying less. There is no reason to suppose that a USA trade deal (which is unlikely for reasons cited earlier) will alter the current state of affairs.
Under current law there is nothing to stop US or any corporation demanding the right to bid to run a hospital – they are not doing that at present because the sums don’t add up. The Hinchingbrooke example shows how risky that would be, especially with an underfunded NHS.
The higher involvement of private companies and charities in the English NHS has been a significant shift in the last 20 years. Working out its impact on the things we care about is important. But claiming it didn’t happen, or worse still, alleging that it only happened recently, or that it is about to increase due to the USA and Boris, won’t help.
To save the NHS you need to lobby your MP to spend more money more efficiently and what a shame that Mr Brown took advice from political advisers instead of doctors’ representatives when for a paltry £6000 a year he allowed GPs to opt out of the contract for providing night time service and forced a new contract on consultants. OK Labour put in more money but they if the contract ain’t broke why change it and waste it?