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The Development of Private Sector Offers to NHS Patients

Filed Under (Health and Social Care Bill, NHS Providers, Private Sector) by Paul on 23-05-2011

Since this issue has been so much in the news, and since those who are defending the NHS against intrusions from the private sector are all over the media at the moment, I thought I would return to a post I wrote when the White Paper came out last July.

The White Paper was published on July 12th and by chance I was talking to NHS partners the next day. This had been in my diary for some time, but the juxtaposition of the White Paper publication and that talk meant that the audience only wanted to talk about one thing – the consequences for their business relationship with the NHS that the White Paper would deliver.

Most of us had been up half the night reading the White Paper and I was surprised at the private sector response. After all this was the first Conservative White Paper on health for a very long time, and the Government were pledged to challenge the way in which public services were provided by introducing more private sector innovation..

But, as I wrote on 23 July,

“… the audience of private sector organisations on 13th July were far from happy – for two main reasons.

Firstly the immediate next two years. The private sector tries to develop and sell health care services to the NHS all the time. To do this they establish relationships with the people who are buying those services and come to understand the needs of their clients as closely as they can. At the moment PCTs are their clients and they have been coming to terms with what PCTs want to buy for some time.

They recognise that out of the 150 PCTs there were some that were open to new markets and some that were closed. But over time discussion and opportunity were moving more into the first group and more deals were being made. Now the Government are proposing to completely scrap the very people who make a market and to replace them with buyers of services who do not exist. As far as most of the private sector is concerned this closes the market down for the next two years.

The private sector consists of real organisations that need to do deals to stay alive. The top down reorganisation of their market for two whole years (at least) will undermine those deals and will lead to less private sector work in the NHS during that period.

Their second problem was with the overall philosophy of the White Paper. As I have commented the stance of the Government in the White Paper is outlined in the phrase “liberating the NHS”. The Government believes that its role is to get out of the way and that this very move will lead to a growth from the entrepreneurs and activity below. All the Government has to do is remove itself.

Last week most people who commented felt this was naïve in the extreme. Most of the markets that they worked within had come about because of direct central Government intervention and not through too much of it.

In terms of political philosophy, the Government believe that laissez faire – leaving the market alone is doing enough. The people who work in the market believe that this market actually needs to be made in an active way by the Government.

In terms of the history of markets the private sector is correct. The state has to actively create a market – they do not emerge of their own accord. What the private sector recognised in the current NHS was that most commissioners had a cultural allegiance to the NHS which meant that they would not, simply from within their culture, create a market. They do not welcome new entries into this market and look upon new entrants as opportunity. Most buying of health care is based on last year’s contract plus or minus 3%.

This is not a market. For the next few years the private sector recognise that we are in a phase where that market has to be made and  Government that simply steps back will hinder the making of that market – not help it

There was some recognition that GPs, being small business people, might make better commissioners in terms of markets, but also much disappointment that they were to be forced as commissioners into statutory organisations.”

The private sector – in July 2010 – proved remarkably prescient.

I felt at the time that they were unusually anxious about the extent to which a Conservative Government could actually understand and create a market. After all weren’t the Tories much better at this than the Labour Party?

But their anxieties have been proved justified. In the short term it is very difficult, if you have an innovative idea for better services for NHS patients, to find anyone you can talk to on the commissioning side of the equation. Who might actually buy goods and services? Over the last few months PCTs have been abolished and clusters have been created. In many places there is confusion between who has the money and the capacity to buy health care. Is it the PCT cluster – or is the GPs? Just finding out to whom to argue a case is really hard in most of the country.

In addition the laissez faire attitude of the Government between July 2010 and January 2011 meant that no one was going out and making the case for greater private sector involvement in the NHS. So with the Government doing little to make that case others have leapt into the breach and started talking about privatisation.

So during the last 11 months, partly because most of the people buying health care in most localities have moved on, and partly because the DH and the SoS no longer see it as their responsibility to make any markets, some markets are disappearing.

If, last July, you were in the private sector and daft enough to take the Government at its word, you might have invested a lot of money in trying to offer better services to NHS patients, only to see opportunities closed down month by month.

Luckily not many did that. They waited to see what would happen.

Then came the pause in Government policy, and now a retreat from using the private sector. Some private firms are now leaving the pitch.

This is of course what the opponents of private sector innovation would want for the NHS. They want to use the politics of the current situation to raise the price of interfering in the market. The more uncertainty they can create for new entrants to provide NHS services, the less this will be an issue.

The sad thing – for innovation in the NHS – is that the Government have joined in creating that uncertainty.

Comments:

2 Responses to “The Development of Private Sector Offers to NHS Patients”


  1. Some nuances here:

    Private innovation is usually technological. These innovations can be a good thing for patienes, and the NHS – but only if the benefit to patients is commencurate with the cost. This is often difficult to prove – especially when providers sometimes charge Trusts for vastly diferent prices for the same product.

    And in terms of patient benefits and efficiency, the types of innovation that would bear most fruit are not technological, but procedural. It is changes in surgical practices, innovative approaches to discgarging patients, better ward management etc that unlock the real benefits. These innovations cannot be developed in a private workshop and sold to the service – no – they arise through collaboration and co-operation between hospital workers, GPs, Managers and technicians on the job. Does the bill do anything to make this kind of innovation easier?


  2. Paul,
    Lets look at what the private sector were really saying the time:
    http://www.healthinvestor.co.uk/pdfs/HealthInvestor_Barometer10Web.pdf

    “Will the new government accelerate the expansion of the role of the private sector in the NHS?” Yes 85%, No 2%, Don’t Know 13%

    The denial of NHS privatisation doesn’t stand up to scrutiny and fundmentally misunderstands the neoliberal policies of both New Labour and modern Conservatism.

    Privatisation is a key supply side economic policy.
    This Government intends to get us out of the economic mess by private sector growth. This requires a low tax, low inflation and investor friendly environment. This is achieved by rolling back the state, through cuts to public services, jobs and pensions, as well as transfering billions of pounds of taxpayers money to private corporations as public provision of public services is transfered to private provision.

    As for the Big Society, this is just an example of the use of Social Capital. Another neoliberal policy to reduce public expenditure. I’m fully behind the voluntray sector backing up the publci sector. However, it should not be uses to replace the public sector. This will simply result in unpaid workers (mainly the healthy retired) taking jobs and opportunities away form young people desperate to get employment and career opportunities.

    Markets serve society well in many spheres, but not in many of our public services like health.

    Those who deny that the bill will result in privatisation are in denial.

    As a final point the £20 billion QIPP effiency savings/cuts are crucial to the privatisation process. Under the proposed legislation, the QIPP challenge will result in mass hospital closures, mergers, takeovers, rising waiting lists, redefinition of “NHS core services”, and a drive for FTs to increase their income through treating PPs.
    Starving public services of funding is classic Thatcherism, to drive the privatisation process.

    BW,
    Clive

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