04 August 2006
The proposal to open NHS commissioning to private companies envisages that primary care trusts will be able to choose whether or not to use these services. But PCTs look likely to be pressed to do so
'There is no question whatever of “privatising” the NHS,' was Health Secretary Patricia Hewitt's fairly predictable response to press stories suggesting the contrary at the end of June. The Department of Health had just run an advert in the Official Journal of the European Union inviting companies to take part in a 'competitive dialogue' about commissioning NHS health care; the Guardian's headline was '£64bn NHS privatisation plan revealed'.
Of course, it depends on what you understand by the p-word. Former health secretary Frank Dobson commented: 'If this is not privatisation of the health service, I don't know what is. It is about putting multinational companies in the driving seat of the NHS.' And so it is. An invitation to steer NHS commissioning represents major new growth for private sector firms.
So why is this initiative different? Why is it important? And why should anyone outside the NHS care?
Since 2001, primary care trusts have led commissioning within the English NHS. Despite accusations of conflicts of interest, PCTs combine health care provision and health care commissioning within the same organisation. Typically, their provider function extends from employing nurses and therapists to the management of community hospitals.
In accounting terms, the provider and commissioner functions are kept strictly separate. Nevertheless, a PCT has a clear incentive to commission from itself and its GPs. And what was a justifiable expedient five years ago no longer fits the Department of Health's vision of the NHS.
The 'step change from a service provider to a commissioning-led organisation' mentioned in the advert took place some time ago in the minds of policy-makers. They envisage a mixed-provider economy in health care, encouraging competition between commercial firms, charities, various forms of social enterprise, and direct NHS provision within the foundation trust financial model. The familiar blue NHS logo becomes a token of who is paying the bill, not who is applying the bandage.
The same broad model of provider diversity, competition and choice, with a commissioner holding the public purse strings, has been taking root across the English public sector. In education, social care and the prison service the public discourse is similar. And they face the same dilemma: where are those with the commissioning skills, the 'smart payers' the system depends on?
Strategically this vision, applied across the public sector, is the key in the medium term to 'small government' and reducing the public sector pension liability. There is also a belief (or fear) that before long any deviation from competition will be challenged under EU law by one of the multinationals that dominate the commercial health care sector.
Last summer's Commissioning a patient-led NHS guidance accordingly urged PCTs to divest themselves of their provider functions by 2008, despite the absence of viable alternative providers in most parts of England. The consternation that followed — which led to the Royal College of Nursing applying for a judicial review — suggested that ministers either did not fully appreciate the implications or were not properly briefed. Last November, Hewitt issued an apology.
Meanwhile, although PCTs are barely five years old, the mutterings in the NHS, fuelled by mounting financial deficits, are that they have 'failed' as commissioners.
In truth, all commissioners in this environment are on a hiding to nothing. Commissioning skills and techniques have received a negligible share of the billions invested elsewhere in the NHS since 2001, and the combination of a national tariff, targets for reduced waits and a system lubricated by patient choice removes much of the leverage they once had.
So an approach proposed by Thames Valley Strategic Health Authority in 2005 is being revitalised. The DoH, in its advert, seeks to outsource the management and support services on which effective commissioning depends. It envisages that big companies will provide these — health minister Lord Warner has confirmed that the government is looking for companies with experience of managing large health budgets. Strictly, these firms will be advisers; PCTs, which retain statutory accountability, will have no obligation to use them. But recent history suggests that contracts will be let nationally and the NHS locally will be pressed to draw on these companies' services, or obliged to pay anyway.
The move might prove immensely significant; £64bn is not a small share of the UK economy to entrust to large US firms such as United Health and Kaiser Permanente and their EU counterparts, which are likely to dominate the bidding. Conflicts of interest might again rear their head. And how real is the accountability of local primary care trusts in such an environment?
Noel Plumridge is an independent health care consultant and author of CIPFA's Payment by results: new financial flows in the NHS in England
PFaug2006
