After New Labour’s third and final election victory in 2005, a new Health Secretary, Patricia Hewitt, lost no time in cranking up more privatisation. She invited private tenders for a second round of “Independent Sector Treatment Centres,” (ISTCs) to deliver a further 250,000 operations a year, worth an estimated £500 million annually: but NHS hospitals – even Foundation Trusts – were excluded from the bidding process.

In addition another £400m worth of X-rays, scans, blood tests and pathology tests were to be hived off to the private sector.

The Department of Health (DoH) no longer claimed that ISTCs were being brought in to create additional capacity. Instead the establishment of a viable private sector was seen as a means to establish “contestability,” which in theory was supposed to drive up standards and drive down prices.

So waiting list operations would be transferred from NHS hospitals to private providers (leaving under-used NHS departments with inflated costs and a caseload of complex, chronic and costly patients the private sector did not want).

Indeed, because the services were being transferred, the DoH argued that it should also allow the transfer of NHS staff to carry out the work – permitting them to be seconded from NHS hospitals. Publicly-owned NHS Treatment Centres and facilities were also likely to be handed over to private operators, although an effort to do this in Epsom Hospital was successfully blocked at the last minute by campaigners [see box].

The new contracts would almost double the number of private sector operations to be purchased by the NHS, pushing the government ‘s total spend in the ‘independent sector’ up towards £1.5 billion – two thirds of the total £2.3 billion turnover of the private medical industry in 2003.

The plan was no longer an ‘internal’ market – but simply a market, in which NHS Trusts would have to compete not only against other NHS Trusts, but also against private hospitals which have a much more selective – and thus much less complex and costly – caseload, and no emergencies to deal with.

So, bizarrely, NHS hospitals, under the cosh to deliver endless year-on-year ‘efficiency’ savings, were now told they would be allowed to spend taxpayers’ money on advertising to attract patients.

The pace of the competition was to be forced by putting the responsibility on to individual patients, who would be offered a progressively wider ‘choice’ of where to have their treatment, but not made aware that the potential consequences of their decisions could include forcing the closure of their own local NHS hospital.

By the end of 2005 Primary Care Trusts (the local commissioning bodies) would be obliged to offer almost all elective patients a ‘choice’ of providers – including at least one private hospital – from the time they were first referred. PCTs would also be required to ensure at least 10% of elective operations went to private providers.

In early 2006 New Labour plans were suggesting a long list of NHS-owned and run facilities should be handed over to private companies as part of the drive to ensure at least 10% of all NHS elective work was delivered privately, rising to at least 15% in the longer term. They included:

A brand new state of the art NHS Treatment Centre in Birmingham, not even yet open;

A specialist unit in the new PFIfinanced New Forest hospital in Lymington;

A huge renal dialysis contract covering much of the north of England, with dozens of NHS units handed over for private operators to refurbish and run for profit.

NHS catheter laboratories in Rotherham and Barnsley, which could be handed over as part of a cardiology contract:

“Spare surgical capacity” in NHS hospitals in the South West Peninsula could be used by private companies carrying out NHS-funded operations;

Modern NHS treatment centres, including Ravenscourt Park Hospital in NW London and the world-leading SW London Elective Orthopaedic Centre (SWLEOC) in Epsom also faced the threat of privatisation.

None of the planned Treatment Centre projects were put out to public consultation, and patients remained largely unaware of the plans or their implications, making them harder to challenge.

One plan rejected

In summer 2005 Epsom & St Helier hospitals NHS Trust which runs SWLEOC placed an advert in the official EU Journal inviting private companies to bid to take over its management from Spring 2006. This decision was not taken by the Trust, but at national level by the Department of Health.

In September 2005 plans were revealed to hand over SWLEOC to a New York-based Hospital for Special Surgery. The UNISON Branch in Epsom & St Helier Trust worked with pressure group London Health Emergency to mount a challenge to the proposals.

It was finally halted when a small group of noisy local pensioners and LHE organiser Geoff Martin managed to get in to the trust board meeting that was to sign off on the deal, and ask the killer question: where was the business case to show the benefit of the deal to the NHS?

This was met by a constipated silence from trust chair, finance director and board members, none of whom had obviously even asked the question. They adjourned the meeting promising to return with an answer, but in fact returned only to move on to next business – and the privatisation had been abandoned. SWLEOC is still a highly successful NHS-owned and run unit 15 years later.

Choice agenda

From 2008 any patient would be allowed to choose any hospital which could deliver treatment at the NHS reference cost, erecting ‘patient choice’ as a more fundamental principle than maintaining local access to NHS hospital services, with Tony Blair stating: “Choice is not a betrayal of our principles. It is our principles.”

Alongside the privatisation came a renewed financial squeeze on NHS trusts, which began almost as soon as the votes had been counted in the 2005 General Election on May 5. The first cuts in hospital services began to hit the headlines locally and nationally: Lewisham Hospital in SE London revealed an £8.5m deficit and plans for ward closures.

Hewitt clearly believed that the instability her government’s policies had created was good for the NHS. In a June 14 interview with the Financial Times’s Nick Timmins, she admitted that too many NHS staff feel that “change upon change has been done to them, rather than with them”, but spelled out the scenario: “It’s not only inevitable, but essential that payment by results and these other elements create instability and change for the NHS. That is precisely what they are designed to do.”

The logic of Hewitt’s position was simple: any hospital that failed to balance its books must have failed to attract sufficient patients – and patients had therefore exercised their ‘choice’. Since patient choice was the main mantra of New Labour’s NHS policy, those hospitals which were not chosen would be allowed to close.

But there was no equivalent promise to patients whose first choice was to use good services at their local NHS hospital, but who faced being dispatched for private sector treatment to meet new privatisation targets.

Crisp provokes a crunch

July 28 2005, normally the midst of a sleepy holiday period, marked the launch of a round of restructuring and “reforms,” unveiled in a circular to NHS managers by NHS Chief Executive Sir Nigel Crisp. Although Crisp and ministers claimed that the reforms were “to reflect patient choices” and reshaping ‘from the bottom upwards’, the opposite was the case: the reforms were being relentlessly driven from the top, with no heed for critical views from professionals or the public.

Opinion polls and surveys confirmed that the first choice of NHS patients was the opposite of government policy: people wanted continued access to comprehensive local NHS services in the hospitals they knew and loved.

Crisp’s plan meant the Primary Care Trusts (PCTs) which held the purse strings for most health care services, and still directly employed upwards of 250,000 health workers delivering community and mental health services, would have to be broken up, and reduced to commissioning only. Their services were to be hived off to Trusts, handed over to the voluntary sector, or simply contracted out to private firms. Crisp clearly didn’t care which.

The process of restructuring was designed to cut spending on NHS hospital care, diverting more patients to private providers, and encouraging GPs and PCTs to “free up” cash by developing alternative forms of “care outside of hospital”.

Angry trade unionists joined with frustrated and befuddled Labour back-benchers to protest at Crisp’s scheme, which had been hatched up by a few back-room mandarins and health ministers without any wider discussion. After months of protests and pressure some of the more outlandish proposals were toned down, postponed or dropped: Patricia Hewitt even came to a UNISON seminar and apologised for having got it wrong.

In Oxfordshire, a proposal to hand over responsibility for commissioning and control of Oxfordshire’s health budget to a private company (believed to be leading US insurance corporation UnitedHealth) generated such a unanimous tide of local protest that ministers were eventually obliged to step in and call a halt to the experiment.

Fighting back

The situation was clearly serious, and in the Autumn of 2005, in response to this gathering pace and scope of privatisation – which included moves to give contracts to run GP services in the Derbyshire coalfields and in North London to the British subsidiary of UnitedHealth – a new campaigning organisation, Keep Our NHS Public (KONP) was set up.

KONP was the result of an initiative by Professor Allyson Pollock, with resources from the NHS Consultants Association, London Health Emergency and the NHS Support Federation, and backed by many activists and academics.

Its initial statement warned:

“The NHS stands at a crossroads. For nearly 60 years Britain has enjoyed a National Health Service that is comprehensive, locally accessible and exceptional value for money. Now, government reforms threaten both the ethos of the NHS, and the planned and equitable way in which it delivers care to patients.”

As if to vindicate the decision to launch the campaign, the Commons Health Committee, in a hard hitting report in December 2005 expressed itself “appalled” at the lack of clarity over the future of services provided by PCTs.

Ignoring the Committee’s concerns, Hewitt in January 2006 published a new White Paper Our Health, Our Say … seeking to push Primary Care Trusts towards “outsourcing” of all services: it contained a provision for local service users to petition to force their local Primary Care Trust to put any public sector NHS service out to competitive tender from “any willing provider”.

A month later Hewitt went further, and claimed at a press briefing that PCT staff were eager to be privatised!  She asserted there was ‘widespread enthusiasm’ from staff to move out of the NHS and work for social enterprises in primary care and, according to the HSJ:

“called for ‘unions and professional bodies to start to see it as something which their own members are very interested in…’.”

On February 16 2006 – hard on the heels of a major contract failure (the shambolic hand-over of the supply of bottled oxygen to vulnerable patients at home to four profit-seeking companies, with predictably disastrous consequences) – Tony Blair personally staged a formal “welcome” into the “NHS family” … for eleven profit-hungry private companies.

Blair gleefully predicted that the NHS would soon be purchasing up to 40 percent of private operations. In some areas and specialties this would mean private providers creaming off a majority of routine surgical cases from NHS Trusts: this would not only have a financial impact, but would strike a body blow at the training of junior doctors, and at medical research which is only carried out in major NHS University hospitals.

Rationing NHS care

The summer of 2006 saw panic measures in London to ration numbers of patients referred by GPs to hospital consultants. News of the privately-run, cash-led rationing scheme, which would process each GP referral through a team of bureaucrats in “referral management centres” broke with the publication of a leaked document, in which managers discussed measures that would arbitrarily  restrict Londoners to the lowest 10% of hospital referral rates anywhere in England.

A critical article in the British Medical Journal argued that the principal aim of the new centres was to “curtail demand” and underlined the lack of any evidence that the new system, which had “appeared overnight in an evidence-free zone” could deliver any positive benefit for patients.

It was obvious some of the patients denied NHS elective care would “choose” to go private.

Also in the summer of 2006 ministers provoked fury by inviting private insurance companies to take over control of a large slice of the £64 billion NHS commissioning budget controlled by PCTs.  The first inkling of this proposal came in a front page article in the Financial Times, headlined ‘Insurers invited into NHS economy’. FT correspondent Nick Timmins concluded that:

“The move is likely to attract interest from the big US insurers such as United Health and Kaiser Permanente, Discovery of South Africa, BUPA, PPP and Norwich Union in the UK, and possibly German and Dutch insurance funds.”

These insurance companies specialise in screening out and excluding potential subscribers with pre-existing illnesses and chronic conditions – and have no relevant expertise that could inform the commissioning of a comprehensive health care service for the whole resident population of a PCT.

It seemed the whole story was a ‘kite-flying’ exercise to test out public response … until it was revealed that an advert had indeed been placed that week in the Official Journal of the EU, inviting companies to bid for ‘framework contracts’ to deliver commissioning and management services to PCTs. Virtually all aspects of the PCTs’ role were to be offered out to private bidders:

“This will include, but not be limited to, responsibility for population health improvement, the purchasing of hospital and community care, supporting local GPs develop practice-based commissioning [sic], the management and development of community health services for the PCT resident population ….”

The new arrangement would leave the PCTs with next to nothing to do other than brew the tea and open the biscuits for occasional board meetings.

However once again, as it had been the previous autumn, the advert was suddenly withdrawn, with claims of unexplained “drafting errors”, and a letter from Hewitt was hastily published, attempting once again to assure an even more confused and sceptical public that there was no plan to privatise the NHS. But the very next month ministers gave the go-ahead to a fresh advert, identical in all essentials.

Also in 2006 a high court judge rejected local appeals and rubber-stamped a bizarre tendering process which had allowed UnitedHealth Europe to secure a contract to deliver primary care services in rural Derbyshire, despite having no staff, track record, expertise, or local links. The primary care market was already estimated to be worth upwards of £150m a year to the independent sector, with almost a third of Primary Care Trusts planning to put services out to tender.

To cap it all ministers were forcing through the biggest and one of the craziest privatisations of the lot, the carve-up of the award-winning (and profitable) NHS Logistics, the public sector organisation that was in charge of more than £4 billion of NHS procurement budgets – handing the contract to Texas-based Novation, a company under investigation for overcharging the US federal government for health supplies.

In October 2006 the Department of Health implementation document Making it Happen stressed the need for “better partnership working with third and independent sectors”. In July a policy paper from the “Third Sector Commissioning Taskforce” emphasised that:

“delivering health and social care services is no longer the preserve of the public sector … third sector as well as private providers have a valuable role to play ….”

Health minister Lord Warner warned that local NHS hospitals would have to “face up to the need to reconfigure services” to enable new “independent sector providers” to enter the NHS market.

The logic was simple enough: to make room for the development of a brand new private sector, Hewitt, Warner and Blair had to slash back existing NHS services.

Next instalment: Putting private sector in charge 2007-2009.

Abridged and updated from The NHS After 60, for Patients or Profits? Libri Press

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