As Tories Approve Private Takeover of Hospital, Lords Challenge Plans to Let NHS Be Run By An Unaccountable Quango

As David Cameron continues to cling to his health secretary Andrew Lansley’s widely criticised healthcare reforms, which are generally — and accurately — regarded by defenders of our universal healthcare service as an attempt to destroy the NHS through enforced privatisation, the New Statesman has weighed with an editorial calling on the Prime Minister to scrap the bill. Styled as a letter to David Cameron, the editorial criticises him for imposing £20 billion in cuts while “implement[ing] the biggest organisational change” in the history of the NHS, “a reform that rips up established structures for managing resources and fundamentally changes the service’s founding ethos.”

The editorial states, “You must realise that this is a huge error,” but there is no evidence that this is the case, as Cameron’s entire drive is towards privatisation, and savagely cutting the state, and he has demonstrated, time and again, that, despite claiming to care about the health service, he was lying disgracefully when he promised no “top-down reorganisations” of the NHS, and also promised that the NHS budget would rise every year.

The editorial also notes that, although Lansley’s Health and Social Care Bill “was originally styled as a liberalising reform,” and there is “a case for reforming NHS commissioning, with more GP involvement, and for slimming down PCTs [Primary Care Trusts],” all of this reform “could have been done without legislation.” The editors add, pointedly, “The real purpose of this reform is to transform the NHS from a system where care is mostly provided by the state to one where it is largely provided by private companies,” and, in words addressed specifically to David Cameron, state, “You say that this is not the ‘privatisation’ of the health service. There is no better word” — to which I would only add that there is, in fact, no other word for what is planned, and what, to an alarming degree, is already taking place.

The editorial continues: “The kind of free-for-all that Mr. Lansley envisages would not share best practice or increase efficiency, however. It would sow mistrust and confusion. It would undermine the collaborative process that is vital for the treatment of chronic conditions. It would turn ill-health into a commodity, with some problems more lucrative to solve than others. Cataract operations might thrive in the free market; long-term treatment of mental health disorders would be forgotten.”

The Tories privatise the first hospital in the history of the NHS

The timing is appropriate, of course, because yesterday David Cameron’s government handed over control of an NHS hospital to a private company, for the first time in the history of the NHS. Circle Healthcare, which describes itself as “Europe’s largest healthcare partnership, building and operating a network of UK hospitals co-owned by the clinicians and staff who work in them,” was given the go-ahead to run Hinchingbrooke hospital in Huntingdon, Cambridgeshire, from February next year, in a deal worth £1 billion over ten years, even though the company actually has no experience of running a complete hospital service, despite its grand-sounding claims.

As the Independent explained, “Until now the only experience Circle has had of the NHS is running two private treatment centres, carrying out specific routine procedures for a fixed price. Circle’s other hospitals, such as Bath [a private hospital designed by Sir Norman Foster], are primarily focused on the private healthcare sector which pays far more than the NHS per patient and still provides most of the company’s revenues.”

For those who are concerned about the government’s plans to privatise the NHS, the takeover is indeed troubling. Although the Guardian explained that the takeover “is not considered a full privatisation as the buildings will remain in public hands and the employees retain their pay and pension on existing terms,” and because, although Circle “will be given a free hand to cut staff, any major changes to services will need the agreement of local health chiefs, and the A&E and maternity units must be retained,” there are other troubling signs.

Firstly, Circle Healthcare, run by Ali Parsa, a former Goldman Sachs executive, is at least 40 percent owned by two companies that are donors to the Conservative Party — Lansdowne UK, which owns 18.9%, and is run by Paul Ruddock, described by the Guardian as “one of the Conservative party’s most generous donors,” and Odey Asset Management, which owns 21.4% share, whose founder, Crispin Odey, “also funds the Tories.”

Just as significantly, Ali Parsa’s explanation for why he thinks he can run a hospital better than the NHS hinges on an alarming belief that those who work for Circle, a “mutual” company that is 49 percent owned by its staff, are not fundamentally driven by a desire for public service, but, apparently, by being involved in a business that is only interested in profits. The Guardian explained that the takeover deal “allows doctors to take a slice of the profits,” and Ali Parsa then explained his philosophy. “That’s how we will get people to do more, by giving them a stake in the system,” he said.

In the Independent, Ali Parsa further explained how his business model for running hospitals was the airline industry. The Independent noted that “Circle’s operating system is based on delegating power down,” with staff “divided into clinical teams that meet each month and analyse four sets of data: clinical outcomes, a patient questionnaire, staff feedback and productivity data.” Ali Parsa defended this by saying that it empowered “everyone in the team” to “change things if they believe they can improve the operation.” This sounds good, of course, but his follow-on comments were not so reassuring. “There are not the same incentives or disincentives to deal with problems at other hospitals,” he said. “We model ourselves on the airline industry where safety and service — or in our case patients’ outcome and satisfaction with care — are the key to profitability.”

The airline analogy — and how it leads to profits — may work in Circle’s private sector work, but it is impossible to fathom how the company will make money out of a hospital that has a £40 million debt, unless it drastically cuts services. As the Independent noted, “Successive managements and government intervention have failed to make a dent in its £2.6m-a-year deficit,” and all Ali Parsa seems able to offer is a good incentive and a profit-sharing scheme in a specialised market (private healthcare) where the whole purpose is to run a business for profit, and not to care for everyone, regardless of their income.

Parsa told the Guardian that he planned to turn the hospital’s finances around by attracting more patients and hope that no one would interrogate too closely his claim that profits could be conjured up if his staff  were to be “freed from bureaucracy.” He described “£5m in lost patient income every year” from the 5,000 patients living within a “few miles of the hospital that do not use us,” neglecting to mention that, if he were to attract these people, some other hospital would lose out, and inadvertently, therefore, providing a glimpse into how precarious a butchered, privatised NHS would be.

Unison’s head of health, Christina McAnea, told the Guardian that she worried about Circle’s finances, and also criticised the government for turning to a private company instead of keeping it in the hands of the NHS. “We just don’t accept there is no expertise within an organisation the size of the NHS,” she said, adding that  turning to the private sector, “which has a very patchy record in delivering these kind of services, is an accident waiting to happen.”

The ongoing struggle to stop the Tories from abdicating all responsibility for running the NHS

If it is alarming that one hospital has been handed over to a private company that will, essentially, be able to do what it likes for the next ten years, imagine what this abdication of central responsibility looks like when rolled out across the whole of the NHS. This may sound like alarmist rhetoric, but it is not. Abdicating government responsibility for the NHS is at the heart of the Tories’ plans, as was made clear in  a legal analysis of Lansley’s bill that was commissioned by the campaigning group 38 Degrees, and summarised in the Guardian (in July) by Jacqueline Davis, a consultant radiologist in north London, the co-chair of the NHS Consultants’ Association, and a founder member of Keep Our NHS Public. Davis wrote:

They [the legal experts] found that the bill does indeed “remove the duty of the secretary of state to provide or secure the provision of health services which has been a common and critical feature of all previous NHS legislation since 1946.″ Furthermore, a “hands-off clause” will “severely curtail the secretary of state’s ability to influence the delivery of NHS care to ensure everyone receives the best healthcare possible.” They conclude the government can now wash its hands of the NHS, while the likelihood of a postcode lottery increases and local accountability decreases.

They also conclude that the bill “will increase competition within the NHS at the expense of collaboration and integration and/or make it almost inevitable that UK and EU competition law will apply as if it were a utility like gas or telecoms.” So despite the coalition’s repeated denials, this legal opinion believes that “these plans will lead to a system geared heavily in favour of private companies.”

Moreover, just two weeks ago, in the Observer, Randeep Ramesh revealed how leaked documents obtained by the Guardian revealed that Andrew Lansley is indeed planning to remove the government’s responsibility for the NHS, and intends to “franchise” its running to a quango for up to three years at a time — a move that, as Ramesh put it, “will result in an unelected academic and the nation’s 38,000 family doctors, rather than ministers, being accountable for the day-to-day running of the health service.”

That unelected official, Malcolm Grant, the President and Provost of UCL (University College London), who is “the government’s choice to run the powerful NHS commissioning board,” outlined (in “unpublished evidence” submitted to the Health Select Committee three weeks ago) “an extraordinary transformation of responsibility,” which “appears to undermine claims by ministers that the proposed legislation will not dilute the government’s constitutional responsibilities to the health service.”

In contrast to the government’s “duty to provide a national health service” in England, which has existed since the NHS was founded, Grant told MPs that, “under the new system, the secretary of state ‘mandates’ the commissioning board to run the NHS every ‘two … possibly three years’ and then retreats into the shadows,” as the Observer put it, and he also “admitted there would be ‘a fundamental change of responsibility and accountability under the bill,'” because the commissioning board and GPs will have control of the NHS’s £80bn budget, and “these two groups — not politicians — would run the NHS and ensure patients received an adequate level of health provision.”

As Grant also explained, “If [GPs] are dissatisfied with what happens in a hospital, they need to deal with it and not simply complain to a secretary of state who no longer has this responsibility, nor to the commissioning board which has given them the responsibility, but to complain to the hospital and get it sorted, and, if it is not sorted, to use their commissioning power to ensure that it is.”

In what the Observer described as “a remarkable admission,” Grant also told MPs that, from April 2013, “in the event of a ‘crisis’ in the health service. either he, nurses, GPs or hospital medical directors would be taking to the airwaves as the health secretary would not have responsibility for the daily running of the NHS.”

“It is no longer going to be the case that the secretary of state is wheeled in front of the TV cameras,” he said. “Responsibility has to go back to where it is. It has to go back to within those hospitals. Who is the chief nurse? Who is the medical director. Where is the CEO?” As the Observer explained, “Parliamentary scrutiny will also become a thing of the past,” because, if the bill is passed, “the health secretary will no longer have to answer MPs’ questions every month but will just put forward an annual report on how the board is doing once a year.”

The Observer also explained that the government will “lose ‘powers of direction’ over the health service, depriving the minister of the power to order NHS services to improve,” which would make it “difficult to repeat Labour’s 2007 act of ordering a ‘deep clean’ of NHS hospitals to tackle a rising tide of MRSA infections.” In the case of a national crisis — some sort of epidemic, for example — it is not even worth thinking about what would happen with such a broken chain of command.

Lady Thornton, Labour’s shadow health minister in the Lords, responded by saying, “This completely undermines the 1948 and 2006 acts. The whole point of the debate we’ve been having is that the secretary of state has to be accountable to parliament for the provision of a national health service, and you can’t just start franchising out that role.”

Last week, the uproar over the government’s responsibility for the NHS — which had already been flagged up extensively in the House of Lords by Shirley Williams and David Owen — resurfaced during the Lords’ analysis of the bill in a manner that will give some hope to its many critics, when, as Randeep Ramesh reported in the Guardian, the government “‘paused’ a key part of its NHS bill to stave off an embarrassing rebellion from key Liberal Democrats in the House of Lords.”

In what was described as “a move that ensures peers will now debate the controversial legislation until Christmas,” the government’s “plan to hand over its ‘constitutional responsibility’ to provide NHS services to a quango” came under fire, following Malcolm Grant’s performance, and the findings of the lawyers on the Lords’ constitutional committee, who warned last month about the “extent to which the chain of constitutional responsibility as regard to the NHS [will be] severed” if the government’s plans go ahead.

Led by Lady Williams, a number of Lib Dem peers “insisted the health secretary should be responsible for the provision of health services,” and Williams and the former Lord Chancellor James Mackay (a Tory) “tabled a fresh amendment seeking to accommodate Lib Dem and Tory visions,” but they “agreed to drop their proposals once the government announced it would have a further ‘period of reflection.'”

As the Guardian noted, “This means the issue about political control of the NHS will not be resolved by a vote until January at the earliest,” and it “could also see the constitution committee and other lawyers re-examine the issue again, ahead of the bill’s scrutiny at report stage next month.” Hopefully, it also means it will fail to be passed before the end of the Parliamentary session in April, and its many opponents may still succeed in having it scrapped entirely.

As Labour’s health spokesman, Andy Burnham, said, “After 10 months of debate on the health bill, it is an indictment that the government does not know what it thinks on a question as basic as the responsibilities of the secretary of state. It is yet more evidence that this Tory-led government has failed to establish a consensus on this bill. They should drop the bill and focus on the financial challenges facing our NHS.”

The Guardian also noted that it was “unlikely” that the Lib Dem rebels would back down, noting that Shirley Williams was maintaining the importance of having “an absolutely solid basis on which the whole of the house will understand about exactly what are the accountabilities and responsibilities of the secretary of state,” even while she was still hoping for “a broad political consensus on the issue.”

Although this respite is to be welcomed, it still remains of huge importance to those who oppose the Tories’ plans to carve up the NHS for the benefit of private companies to keep up the pressure to scrap the bill. 38 Degrees’ petition to save the NHS, which I wrote about here, has nearly reached 500,000 signatures, so please, if you haven’t yet signed it, do so now, and tell everyone you know to sign it as well. The NHS is too important to become another aspect of British society to be damaged — and, perhaps, fatally wounded — by the foolish and arrogant ministers of the Tory-led government, who, while floundering out of their depth (and destined to sink without a shred of glory), are still engaged in a seemingly implacable rush to take the whole of the country down with them.

For further information, see: Battle for Britain: Resisting the Privatization of the NHS and the Loss of 100,000 Jobs, Save the NHS! Will the BMA Do the Right Thing, and Reject the Coalition Government’s Privatization Bill?, BMA Emergency Meeting Calls on Government to Drop NHS Privatization, Act Now to Save the NHS, as Government Advisor Claims Reforms Will Show “No Mercy” and Allow “Big Opportunity” for Profiteering, Save the NHS: Make No Mistake, the Government Plans to Privatise Our Precious Health Service, Save the NHS: As Lib Dems Vote to Support Tory Privatisation Plans, The Last Hope is the House of Lords, NHS Privatisation: Protest on Sunday, as 400 Doctors Accuse Government of Planning “Irreparable Harm,” and Lords Prepare Opposition and Save the NHS: The Battle is Not Over, Despite the Lords’ Capitulation on the Privatisation Bill’s Second Reading.

Andy Worthington is the author of The Guantánamo Files: The Stories of the 774 Detainees in America’s Illegal Prison (published by Pluto Press, distributed by Macmillan in the US, and available from Amazon — click on the following for the US and the UK) and of two other books: Stonehenge: Celebration and Subversion and The Battle of the Beanfield. To receive new articles in your inbox, please subscribe to my RSS feed (and I can also be found on Facebook, Twitter, Digg and YouTube). Also see my definitive Guantánamo prisoner list, updated in June 2011, “The Complete Guantánamo Files,” a 70-part, million-word series drawing on files released by WikiLeaks in April 2011, and details about the documentary film, “Outside the Law: Stories from Guantánamo” (co-directed by Polly Nash and Andy Worthington, and available on DVD here — or here for the US). Also see my definitive Guantánamo habeas list and the chronological list of all my articles, and, if you appreciate my work, feel free to make a donation.