Allyson Pollock | ukwatch.net

Sicko II

Mon, 24 Sep 2007 16:38:55 +0000

Viewers of Michael Moore’s new film will come away convinced that the public healthcare system in this country is superior to its privatised American counterpart, where more than 50 million people are without any kind of care at all. But does the government agree? Or has it instead been taking ideas from the very system revealed in Sicko to be so iniquitous?

The film is very much made for a US audience. Moore does not go into the huge changes that are taking place in European healthcare – and the new, privatising project going on here. It might surprise many British people who see the film to know that, for example, the British government has for years been in contact with Kaiser Permanente, one of the big US healthcare corporations, and is actively trying to remodel the NHS along American lines. All the reforms carried out by the government over the past few years have been aimed at that.

In 1995, civil servants from the Department of Health, fresh from visits to the US, thought they had found the future of the NHS. They invited Kaiser Permanente to look at whether it could deliver health services as part of the new Private Finance Initiative in the NHS. The PFI is a building programme of public infrastructure that brings with it a long-term debt that the government takes out from a private company. But as the medical director of Kaiser Permanente, which is both an insurer and healthcare provider, told me at the time in her marbled headquarters in California, the NHS was not yet ready for Kaiser. Such a system, built on public ownership, control and accountability, was closed to commercial companies. And it was the same story for the whole of Europe. But Kaiser Permanente, which, along with the rest of the US healthcare industry, was known as one of the “darlings of Wall Street” because it made so much money, was restless. It wanted to make more, and had its eye on the rich pickings of European tax funds. And where better to begin than by conquering the UK’s “socialised” NHS, so long the model for much of the world?

Kaiser Permanente didn’t have long to wait. In 1997, the Labour administration swept away the last remaining obstacles to PFI and, in so doing, established the laboratory for the great market experiment in public services.

The accumulated neglect and backlog in maintenance and repair became an excuse to sell off NHS land and assets at knockdown prices. The NHS is now a tenant in hospitals it once owned, leasing back buildings and services from private sector landlords at astronomical rents that are currently consuming £500m a year and will increase exponentially. The diversion of scarce funds from hospital revenues to bankers and shareholders has starved the NHS of cash, and the result has been a major downsizing. For almost every PFI hospital built, three hospitals close. Bed closures and staff reductions occur on an unprecedented scale.

Back in 1997, the NHS had major capacity problems. Waiting lists kept rising, accident and emergency wards were overflowing, public discontent was growing and staff morale plummeting. Tony Blair found a solution one night in 2000 as he was leaving the smart River Cafe. He was introduced to Tim Evans, external affairs director of the Independent Health Care Association, the body that represented the private healthcare industry, who convinced him that the private sector had all the answers.

But the Labour government knew that a public sector NHS was close to the heart of most Britons, and a spin operation was required. So, from the start of the Labour government, ministers dismissed the NHS as Stalinist, a 1940s relic of socialism, bureaucratic and rigid. Then, in 2002, the highly respected British Medical Journal published a paper purporting to show that Kaiser Permanente (them again) was more efficient than the NHS. Within hours, hundreds of emails had poured into the BMJ exposing the flaws in the paper, from the misleading nature of the claims to the authors’ links to the company. But the BMJ’s editor, Richard Smith, declined to retract the paper, correct it or publish a proper scientific rebuttal.

The paper had done its work. Its propaganda was cited and repeated everywhere by academics and policy-makers and, most crucially, by the government in its white papers and documents, including the Wanless Report. The much-despised US healthcare industry, of which Kaiser Permanente is a part, was to be the new model for Britain.

Not long after publishing the article, Smith left the BMJ for a lucrative post as chief executive of the UK subsidiary of the US health corporation UnitedHealth. There he joined its new European president, Simon Stevens, formerly adviser to every Labour health secretary, and Tony Blair, since 1997. The flow of ideas, from him and many others like him, was all one-way: from the US to the UK.

As adviser to Alan Milburn, health secretary from 1999 to 2003, Stevens and his American colleagues helped to shape the NHS Plan 2000. It promised to provide more money, doctors, nurses, beds and capacity. But in the event the funds were directed at building a new parallel system that would be owned and operated not by the people but by the private sector on behalf of shareholders.

Using the mantra of choice, the market was thus disguised. In primary care the government negotiated a new GP contract that would allow commercial companies to run GP services. There are now more than 30 corporations running GP services in England.

It was choice that was used to bring in the highly controversial ISTC (independent sector treatment centre) programme, spearheaded by Texan Ken Anderson, which provides mini- factories for elective surgery. Anderson headed the new commercial directorate of the Department of Health and quickly set about awarding £6bn worth of contracts to healthcare corporations, thereby undermining elective surgery, diagnostics, radiology and pathology provision in the NHS.

Local people from Portsmouth to Scarborough have been protesting against ISTCs draining scarce NHS funds, which has led to service closures and staff redundancies to balance the books. There is not an area of the country where services are not being cut and closed. Protests against the closures of accident and emergency departments and hospital services are happening in Surrey, East and West Sussex, Kent, Worcester, Manchester, Leeds, Durham and Huddersfield; and against the 150 community hospitals in places such as Norfolk, Cambridge, Leicester, Devon, Marlborough and Bromley. The NHS, the government says, has had unprecedented levels of funding – so where has all the money gone if it isn’t into services? Is it really all down to bad managers and greedy doctors and nurses?

All markets need systems for pricing, billing and invoicing. Labour has introduced those: the electronic patient record, part of the £1bn IT disaster. The NHS too is being transformed from within. Foundation trusts such as University College London Hospitals Trust have been given new powers to enter joint ventures with commercial companies such as the Hospital Corporation of America and to spend millions of pounds on advertising campaigns, PR agents, mega-departments of finance and accounting, press officers, management consultants and profits. As in the US, billions of pounds, probably approaching 20% of annual NHS funds – estimated to be £20bn in England in a year – are being squandered on what are called the transaction costs of the market.

Earlier this year the US chief executive officer of UnitedHealth, Bill McGuire, was sacked along with other board members for repricing share options. His annual $126m package was not enough for him. Meanwhile more than 50 million Americans, including 10 million children, go without care – in the richest country in the world. Is this what we want?

Allyson Pollock is author of NHS plc: The Privatisation of Our Healthcare, and professor and head of the centre for international public health policy at the University of Edinburgh.

PFI Efficiency?

Alex Doherty — Wed, 11 Apr 2007 12:18:21 +0000

Research published yesterday that seriously undermines Treasury claims for the cost-effectiveness of the private finance initiative be prove a challenge to Gordon Brown, who has placed its success at the heart of his fiscal policy.

Since 1999, government spokesmen have been recycling claims about public-sector inefficiency and private-sector efficiency in building programmes. Chief among these is that PFI projects come in on time and on budget. The Treasury claims that this is true of nearly all PFI projects, whereas most public projects are late and cost more than expected. But researchers at the University of Edinburgh’s Centre for International Public Health found that the evidence the Treasury produces for these assertions is either non-existent or false.

The claim that public-sector schemes have average cost overruns of 73%, and time overruns of 70%, is constantly repeated to support the claim that PFI is value for money. But on closer examination it transpires that the only figures the government is willing to release derive from false data commissioned by the government from the PFI industry.

When a PFI project is contemplated, Treasury rules require it to be compared with a notional non-PFI project, known as the public-service comparator, and to be shown to be “value for money”. But in determining the value of the public-service comparator, the Treasury requires it to include cost and time overruns that it claims are typical in the public sector. On this basis, more than 800 PFI deals have been signed, accounting for around £54bn of investment and more than £200bn of long-term debt repayments.

But of the five studies cited by the Treasury as proof of PFI efficiency, only one contains any data. Two reports by the National Audit Office were based on interviews with managers of PFI projects, and the authors themselves conclude that it is not possible to judge from such evidence how the method of procurement affected the results. A third study by a private company contains no comparative data to support the claim. A fourth, by the Treasury, remains under wraps, and repeated freedom of information requests have been refused on the grounds that “disclosure would be detrimental to the commercial interests of the specific PFI contractors”.

The only report that contains any comparative data was commissioned from a consultancy and engineering firm called Mott Macdonald. This study is very curious. Full cost and time overrun details are provided for just three PFI schemes, although at the time of the study 451 PFI deals had been completed. Mott MacDonald claimed that it had difficulty getting data on other projects. The report then compares these three with 39 public-sector schemes, although very little public procurement was going on at the time. What is more, of the 39 public-sector schemes, 20 are “non standard” – complex and difficult projects – whereas the three PFI projects are all standard. You don’t have to be a statistical genius to conclude that this is hardly comparing like with like.

Mott MacDonald also used different starting points when comparing cases. They counted cost and time overruns for PFI projects from when the case was signed off, but they started counting at a much earlier stage for the public-sector projects. Yet Mott MacDonald well knew, as consultants to the PFI industry, that one of the most striking aspects of PFI was that costs escalated between the initial tendering and the contract being signed off. Take the Paddington hospital PFI scheme for example: the proposed cost rose in real terms from £411m in 2000 to £894m at the time of the scheme’s collapse in May 2005.

The government declares that it is determined to ensure that “a sound evidence base” is used to inform evaluation of PFI. But the only bit of evidence is false and the audit trail goes cold when public-private partnership deals are signed. It is high time that parliament and the tax-paying public was allowed to examine the evidence base that supports this multibillion-pound policy.

A poll for BBC Scotland last week found that building and running schools and hospitals through public bodies was cited as the top priority by Scottish voters. As the elections draw near, Gordon Brown would do well to recognise that failure to allow scrutiny of PFI has serious implications not only for the future of public services but for the success of his own party.

Allyson Pollock is author of NHS Plc: The Privatisation of our Health Care.

allyson.pollock@ed.ac.uk

The Cost of PFI

Alex Doherty — Thu, 26 Jan 2006 10:32:02 +0000

The government’s controversial private finance initiative is floundering. Patricia Hewitt’s review of the £1.28bn PFI plan for the Barts and The London hospitals trust, prompted by spiralling costs revealed last December, also raises questions about the whole policy. With 39 PFI hospitals signed up for at a capital cost of £3.2bn and another 41 schemes planned, at a cost of £12bn, the policy is out of control.
So why is it that, when the government continually claims that the virtue of PFI is that it “comes in on time and on budget”, runaway costs have suddenly become the most pressing issue? The answer lies in the government’s new “payment by results” pricing regime. The Department of Health’s policy is to privatise NHS clinical services, hence the need for a market-oriented pricing system.

This requires the NHS move from block budgets, based on contracted volumes of planned work, to a system whereby each treatment has a price tag. The price is set to reflect the “average cost” of that treatment across the NHS. And here’s the rub: payment by results has unexpectedly flushed out the true cost of PFI.
Using private finance to build a hospital creates a debt, which must be paid to the private-sector consortium over a 30- to 60-year period. This debt, known as the annual PFI charge, is met from the hospital’s operating budget, which pays for staff and patient care.

Since 1991 every NHS hospital has had to pay the Treasury an annual charge for the use of land and buildings. It is therefore possible for each scheme to compare the cost of capital to the hospital before and after PFI. In the case of Barts and the London, the capital cost in 2005 was £8.62m a year. This is the amount the trust must pay the Treasury, which is then paid to the health department and recycled within the NHS system. But under PFI, the cost of capital at the Barts and the London will rise more than eightfold to £67m. The money flows out of the NHS and into the pockets of shareholders and their bankers in the private-sector consortium Skanska Innisfree.

This higher annual cost – £67m compared with £8.62m – creates what is known in the PFI business as an “affordability gap”. This is the difference between what the private-sector consortium charges and what the trust can afford.

The ways in which hospital trusts and the government have sought to bridge this gap in the past is well documented, ranging from selling off land and buildings to reducing services and closing acute and community hospitals, as in Kidderminster and Norfolk. Since Labour came to power in 1997, more than 12,000 NHS beds in England have been lost as part of this policy, and the closures are continuing apace.

A large chunk of the current NHS trust deficits has been generated by the annual PFI charge and by unrealistic expectations about both the income and the savings that the schemes would generate. In the case of Barts, the trust is expecting a £37m increase in income from additional patient care and at the same time must plan for total savings of £22m, or 4.2% of turnover.

But how can a hospital generate more patient treatments and income when it has to close beds, cut services and lay off staff to pay the PFI charge? Without a large injection of public funds the trust will be forced to divert hospital budgets still further from staffing to paying the exorbitant PFI charges.

Take the Queen Elizabeth hospital trust in Greenwich. It is struggling under the weight of a PFI contract that it cannot afford, and managers there estimate that £9m of its £19m deficit is down to PFI. If it defaults on the PFI charge, the government could be presented with a bill for the full £140m bond used to finance the deal.

To date the government’s response has been to blame trust managers – easy whipping boys. But as the trust’s auditors make clear, the Queen Elizabeth has increased its efficiency over the past five years and, when the excess costs of PFI are removed, it actually outperforms the NHS average.

As more PFI hospitals come on stream these problems will be accelerated, compounded by the new tariff system and more austere funding climate. The simple fact is that in the new marketised NHS, the PFI circle cannot be squared with expenditure.

In recent months, the trend of government policy has been to directly privatise clinical services. The halfway house of foundation trusts and PFI hospitals leaves policy too exposed. Once hospitals are fully privatised, the true costs can be hidden under the guise of commercial confidentiality, with the decisions about cuts and closures left to “market forces” and merely endorsed by the independent regulator.

The problems with the Barts and the London PFI scheme are symptomatic of a much wider market-induced healthcare crisis. It is time to commission the full, independent review of PFI that successive Labour party conferences have called for.

Professor Allyson Pollock is head of the Centre for International Public Health Policy at the University of Edinburgh, and the author of NHS plc; additional research by Mark Hellowell

allyson.pollock@ed.ac.uk

NHS Privatisation is Accelerating

Tue, 24 May 2005 11:32:29 +0000

When Malcolm Glazer took over Manchester United, fans reacted with horror. Some wore black at the FA Cup final, while others are boycotting the club’s merchandising and demanding the resignation of those board members they hold responsible.

Glazer took over United on May 10 – the day the Adam Smith Institute hosted a conference in the Commons for 100 of the country’s most senior NHS and private healthcare executives. Patricia Hewitt was represented by Stephen O’Brien, the NHS strategy director, who used to run the corporation that owns B&Q, and the Texan Ken Anderson, the NHS commercial director and formerly an employee of Amey, a PFI company that specialises in private finance initiative business.

“We created a market place,” a senior NHS official told the gathering. “It’s up to you now … Together we’ve created a new era of healthcare provision which can only get wider.”

Much has been made of the fact that the Department of Health has set aside £3bn to buy 1.7m operations from the private sector over the next five years; the emphasis has been on patient choice and extra capacity. But corporate representatives at the meeting were given a frank account of New Labour’s plans to privatise NHS services.

A transfer market is now emerging in doctors, clinical services and even patients (healthier ones are worth more than sick ones). As in football, there will be a premier league of foundation trusts and independent sector treatment centres (ISTCs) lording it over the rest. And as in football, commercial interests will prevail over all others.

Consider first the ISTCs, which will cream off £3bn of taxpayers’ money. At present the Department of Health does not require the same level of training for doctors working in ISTCs as in NHS units. Six surgeons working for the private sector on NHS cases have already been suspended for what are termed serious surgical errors.

ISTCs create incentives to direct care to the comparatively well at the expense of the comparatively less well. There have been reductions in waiting times for cataract surgery, but there have been dramatic increases for chronic eye conditions such as glaucoma, diabetic eye disease and age-related macular degeneration. Easy, cheap operations such as cataract procedures are what the ISTCs want to focus on. If the easy cases and trained NHS staff get swallowed up by the private sector then the market will indeed get “wider”, as more and more NHS providers get squeezed out by rising costs.

As for primary care, Department of Health officials told the businessmen on May 10 that private-sector involvement in elective surgery – the diagnostic and treatment centres – was “very much the starting point for the direction we now want to travel in primary care”. Under the Health and Social Care Act 2003, primary care trusts can contract out all aspects of primary medical services: from cancer screening and family planning to maternity services and minor surgery. By the end of 2004, 55% of GP out-of-hours services are expected to be delivered by companies like GP Plus and Asda.

Meanwhile, the government is creating opportunities to hand over services for multiple sclerosis, alcohol and drug misuse and depression, intermediate care, diagnostics and radiology. Much of this will be accomplished through local improvement finance trusts (Lifts) – the counterpart of PFI in primary care. According to the department: “Lifts transfer ownership of primary care premises from the public sector or GP practices to private investors.” At present Lift partnerships own only GP premises, but health corporations are being encouraged to find new medical-service niche markets to link into Lifts. A Department of Health official reassured the industry that it would be “ringfencing 10% of primary care trust budgets for innovative programmes”. Drawing a parallel with the BBC’s requirement to commission around 20% of its programming from independent producers, the official said this would promote creativity across the NHS.

Doctors are now being offered golden hellos of several hundred thousand pounds to abandon their patients and leave the NHS for life as a salaried employee of a transnational healthcare corporation.

If this were football, the media would full of it. But, to paraphrase Bill Shankly, it’s only life and death. Supporters of the NHS should take a leaf out of the Manchester United fans’ book. Patients should insist on being treated in NHS hospitals; NHS staff should refuse to work in the newly privatised sector; journalists and academics should monitor the impact of the private sector on entitlements to healthcare. And they should be willing to depose the board members – such as Blair and Hewitt – who brought in the hundreds of Malcolm Glazers who will bestride British healthcare like colossi.

Allyson Pollock is professor of public health policy at University College London and the author of NHS plc.