Health Care in England: Not Your Cup of Tea: Part 3

Published April 1, 2002

Britain’s National Health Service (NHS) was once highly regarded. It was described as “second to none,” even “the envy of mankind.” Unfortunately, people continued to believe this long after it had ceased to be true, and because they believed it, reform has been difficult. Political parties and individual politicians alike have had to promise to “protect” the NHS like some historical treasure; they compete with each other on the basis of who can offer it the most money.

Stuck in a Time Warp

Nobody outside Britain praises the NHS anymore. The country is out of step, clinging to central government control and management of health care while other countries move away from a single-payer model towards some mixture of free enterprise and government health care. Even in Britain, the NHS may no longer be sacrosanct. The situation has gotten so bad people now feel their last hope may be to swallow hard, admit its shortcomings, and embrace changes that recognize consumers have rights and should be allowed to exercise choice.

A recent poll commissioned for the Adam Smith Institute (ASI), the highly regarded London-based think-tank, asked the English about the future of their health care system. Large majorities predicted the publicly funded services will be gone within half a century. Nearly 60 percent think health services will be private “for all or nearly all of the population.”

Opinion polls have also established that 82 percent of NHS patients are quite content to receive their NHS treatment in a private hospital. They are satisfied so long as the treatment is “free,” and so long as it is good.

This suggests people in Britain might be prepared to see major changes in the ways their health care is offered … provided it is improved, and provided the principle of universal free access is maintained.

Set the System Free

The Adam Smith Institute has called for privatization of the NHS. Specifically, it wants hospitals and clinics, now government-owned, to become free-standing, independent, and self-owned. It wants all consultants, doctors, nurses, and hospital maintenance staff to be employed privately or self-employed. It wants government’s role to be limited to the financial side at first, then perhaps phased out altogether.

Plainly, according to ASI, “the NHS has not managed to deliver the high standards expected of it. It is the size itself, and the inability to control all of its parts, which has proved the biggest stumbling block to efficiency.”

The break-up of the Soviet Union and its massive army has left the NHS as Europe’s largest employer. But although the NHS costs a great deal of public money, national spending on health care is lower in Britain than in any other advanced country. In other countries, citizens spend more of their own money.

General practitioners (GPs) in Britain are already private, in that they are self-employed, performing contract work for the NHS. They were the biggest success of the 1990 health reforms, proving innovative and adaptable in securing improved facilities and better care for their patients. Before the Labour Government changes, the GPs contracting with NHS represented more than 60 percent of patients. Indeed, the reorganization was a recognition of that success, because the Primary Care Groups (PCGs) represent an extension of the autonomy that has worked so well with the GPs.

According to experts at ASI, the problem with the PCGs is that they are too large. It would not be difficult, however, to bring them down to a more manageable size, to act as force behind a redesigned NHS.

The hospitals and clinics could be given the status of independent trusts. They would employ nurses and maintenance staffs, enter into contracts with consultants, and provide care for patients sent to them. This would achieve two objectives. It would make them largely independent of government, and it would offer opportunities for management efficiencies.

Funding Reform

Even if NHS were privatized along the lines proposed by ASI, medical care would remain free, in the sense that it would be paid for by taxpayers rather than patients. In effect, government would be the national insurer (not unlike our own Medicare), collecting money from people in the form of taxes. An outsourced health care provider service, financed out of public funds, would provide much better health care than is available at present, according to ASI.

A further and more liberating stage in the reform plan would include allowing people to choose insurers other than government. Even the government health insurance activity could be separated out and made into an independent national body, working at arm’s length from government and in competition with the private sector.

Such changes would result in a new health service, more responsive and offering more opportunity for choice. It would probably cost more, judging by the fact people in other countries seem ready to spend more on health care when they pay part of it themselves. It would certainly provide opportunities to test in Britain the best practices found here and in other nations.

After 50 years of state control, outsourcing promises to take the NHS out of the hands of the politicians and return it to the people.

It is highly unlikely private hospitals would keep patients waiting for 18 months, park them on trolleys in hospital corridors, or even suggest, except in the most unusual cases, they leave the country for medical care. Consumers with purchasing power would seek out the best hospitals. The free market would tell the residents of 10 Downing Street which hospitals are up to par, long before any government study could reach its conclusions.

A Promising Start

In what may have been his most important speech as Health Secretary, Alan Milburn announced on January 15 he intends to give good NHS managers greater autonomy within the system by creating “foundation hospitals.”

According to Milburn, successful hospitals will be “liberated” from Whitehall control, while charities and the private sector will be given the chance to take over facilities that fail. NHS managers of designated “three-star” hospitals will be invited to set up not-for-profit companies to run their trusts free from government interference. Although they would still be subject to national standards and external inspections, managers would otherwise be given complete independence in all other areas, including staff pay and conditions.

In an interview with The London Times, Milburn described the NHS as Britain’s last socialized industry, “where patients must be grateful for what they receive.”

“That model,” says Milburn, “is untenable for the twenty-first century. The NHS has to grow up and be part of this century rather than the last. The job of government should not be to run the system but to oversee it. We want greater community ownership and less state ownership, leading to greater diversity and plurality in local services.”

Milburn’s speech to the New Health Network in London reflects the thinking of public policy analysts from ASI and the Centre for the New Europe in Brussels. Milburn says the idea came from the chief executives of the best hospitals, who told him they wanted greater freedom than proposed under the “earned autonomy” reform devised by the Blair administration.

“We must redefine the NHS from a centrally run, monopoly provider of services and give people the freedom to provide better standards of care for NHS patients,” Milburn said. “We now have a clear set of frameworks and standards in place, it is time to let go.”

“They put it to me very forcibly,” said Milburn. “If they are as good as we all agree they are, why couldn’t they become independent not-for-profit institutions with an annual cash performance contract and face no further forms of management from the center?”

No Slam-Dunk

Milburn’s proposals will inevitably infuriate trade unions and some socialists. “I recognize that in some quarters this will be extremely controversial. But people should take a small step back and realize that in any other European country this would be regarded as the norm, not the exception. I cannot run a million-strong health service from my office in Whitehall, nor should I.”

“Star ratings” were introduced for NHS trusts last September. Only 35 hospitals won a three-star top rating, while 12 were zero-rated. Five of the 12 were given three months to show clear signs of improvement. If they do not, their management and ownership could be taken over by charities or the private sector.

The proposal for “foundation hospitals,” which may require enabling legislation, is also likely to be extended to primary care trusts, the new GP-led groups, set to take control of 75 percent of the NHS budget. The model will be similar to our own Independent Practice Associations/Organizations (IPAs/IPOs), which are independent of tight-fisted managed-care control.

Milburn says his officials are examining a legal and financial framework for the new system. Draft proposals are expected to be published this month.

Achilles Heels

The Health Secretary has made a point of stating the foundation trusts would remain within the NHS and denies any suggestions they would lead to the creation of a “two-tier” health care system.

“In some cases you will have old-style hospitals,” said Milburn, failing to note “old-style” means long waits and rationing. “Elsewhere, he says, “you will have the private sector coming in to run NHS services for NHS patients.”

All of this NHS reform, when and if implemented, is supposed to be held together by a common set of values about care being offered under a “common set of standards”—some would say “one-size-fits-all”—and “largely free of direct consumer cost”—some would say “we still believe in free lunches.”

Next in the series: Summary, conclusions … and it can happen here!

For more information …

on the Adam Smith Institute and its plans for NHS reform, contact the group by email at [email protected].