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The March of Marketisation
The March of Marketisation
Contents
Executive Summary
1. Introduction
2. The Purpose of the Report
3. Methodology
4. Privatisation, Marketisation and the Out-sourcing of Contracts
5. G4S and NHS Support Services
6. Cygnet Healthcare: Mental Health-related Services
7. ICT Software and Hardware
8. Alliance Boots: Beyond Dispensing Services
9. Agency Staffing Costs
10. Spire and Ramsay Healthcare: Private Hospitals and the NHS
11. NHS Trusts and the Private Finance Initiative (PFI)
12. Labours Zero-based Review: A Party Political Caveat
13. Looking Towards the Future
Notes
References
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Executive Summary
The march of the marketisation of the National Health Service (NHS) was set in motion by the Major
governments first Private Finance Initiative (PFI) of a hospital in 1992. The Blair government oversaw an
expansion of PFI during its period of office and the substantial contracting-out of various ancillary services.
However, a more rapid expansion of marketisation, following the implementation of the Health and Social
Care Act (2012), has been undertaken and there is now a proliferation of private sector contracts in place in
NHS Trusts and Clinical Commissioning Groups facilitated by NHSEngland.
This report represents an attempt to place the marketisation of the NHS in the wider context of the
privatisation of public services. It evaluates the extent of out-sourced contracts agreed by NHS Foundation
Trusts in England and Clinical Commissioning Groups (2013/14) through analysis, examination and
evaluation.
It is the final part of a trilogy of reports on the NHS published in 2015. The first of these reports was The
Transparency of Trusts; the second The Clarity of Commissioning.
It offers an overview of the privatisation, marketisation and the out-sourcing of Contracts. It then examines
a number of private sector organisations and their relationship with the NHS: G4S, Cygnet Heaklthcare, ICT
consultants, Alliance Boots, Spire and Ramsay Healthcare and staffing agencies. The report then evaluates
the NHS current relationship with PFI.
The report goes on to provide a caveat regarding Labours Zero-based Review and its implications for the
NHS if Labour were to form a government or be part of a coalition in 2015.
The report concludes by looking towards the future of the NHS and how the NHS can and should be
returned to the socialist roots envisioned by its founder, Nye Bevan.
1. Introduction
As the post Second World War mainstream party-political consensus, on the economy of the UK, began to
disintegrate in the 1970s (Toye 2013), the door was opened to the neo-liberal marketplace of trade and
barter of public services. Now, political thought is imprisoned by this marketplace (Lindblom 1982; Unger
2009) and politicians appear to be rendered incapable of thinking outside what can only be termed the
closed box of the business model of government. However, numerous economists have pointed out that a
national economy is neither a large corporate organisation nor can it be compared to a household budget
(Blyth 2010). Politicians should take heed of the statement: not everything that is profitable is of social
value and not everything of social value is profitable. The role of government is to protect the
infrastructure for future generations not to sell it off to asset-stripping organisations and individuals whose
only concern is to increase their bottom line. The health of economics has an identifiable and unique
relationship with the economics of health which is compounded by an inappropriate role performed by
successive governments. The globally-renowned statistician, Hans Rosling (2006) has consistently
demonstrated that there is a direct correlation between the wealth of a nation and the health of its
citizens. However, there is little doubt that unhealthy government can counteract this correlation and, in
turn, leads to unhealthy citizens and that is what is happening in peoples daily lives, but, in the future, we
may well not have a National Health Service to combat illness and promote well-being in the way we have
known it until now as it appears that liberal-democracy is no longer fit for the purpose of protecting the
wellbeing of the people it serves when it comes to health.
A recent King's Fund's Quarterly Monitoring Report (2014) paints a depressing picture of the future of the
NHS. There has been an overall growth in the amount spent on health from around 5.5% of GDP in the
1990s to a peak of over 8% in 2009. This has fallen slightly since then, but this report suggests that with
NHSEngland projections of flat cash for the NHS and reasonable assumptions around forecast GDP growth,
spending on healthcare could fall back to around 6% of GDP by 2021, equivalent of 2003's spending levels.
This would result in a 25% reduction in available resources for the NHS.
This should come as no surprise, given the frequently quoted 30bn savings requirement for the NHS upon
its 110bn budget. It is for these reasons that finance directors are voicing their concerns. NHS staff have
worked hard over the past four years to deliver savings more efficiently and effectively while public
finances have been constrained. The challenge of retaining the NHS as fit-for-purpose, however, is
becoming increasingly difficult.
3. Methodology
Freedom of Information requests were made on the number of out-sourced contracts to all 147 NHS
Foundation Trusts. Trusts were also analysed in terms of information they provided in their FoI publication
scheme and the online disclosure logs of FoI requests. Annual Reports for each Trust were examined and
the degree to which Trust exhibited transparency of information online. Monitor (2014) produced an NHS
foundation trust annual reporting manual 2013 to 2014. All Trusts appear to have conformed with the
guidance in this manual. This financial year corresponded with the first financial year of NHS England
(established April 1st, 2013).
87 (59%) of these Trusts replied leaving a significant minority that failed to respond despite having received
reminders (41%).
Responses to the request were classified, in 4 categories, as follows:
The March of Marketisation - Dr.Geoffrey A. Walker 02/03/2015
Only 24 of the 87 (28%) disclosed their responses to FoI requests online in the form of a disclosure log.
Dudley Group NHS Foundation Trust provided an example of good practice by making all its disclosures
accessible through a clickable webpage.
Due to start in July, the tender has been given pioneer status by NHSEngland because of its scope and
duration and because it involves the use of the private sector in some of the most important and sensitive
medical care provided by the health service.
Ali Parsa, the founder of Circle [4] and ex-Goldman Sachs banker, told a receptive media, in January 2015,
that more business culture could work miracles on our underfunded hospitals. But the Care Quality
Commission (CQC) found that management techniques borrowed from the car industry, such as stop the
line, did not empower staff to halt proceedings and quickly raise concerns about patient safety staff
told the CQC they felt blamed if they used it. And the A&E waiting time management system based on
Argos tills failed too patients in Hinchingbrookes understaffed A&E were twice as likely as the average
NHS A&E patient to wait so long that they gave up and left without being seen.
reveal the value would breach commercial interest. Lewisham was paying between 127,000 and
146,000 a month for these services.
Alliance Boots has a reputation for dispensing but is equally renowned for tax avoidance. One study
estimates that the tax illegitimately avoided by Alliance Boots since 2007 amounts to 1.21 billion enough
to pay for 85,000 new nurses for one year, or to cover the prescription charges for the whole of England for
almost three years.
Although Alliance Boots is not alone in practising legal but illegitimate tax avoidance, it does provide a good
case study of how the NHS is simultaneously being starved of finance whilst being turned into a cash cow
for profit-hungry firms.
But there are other reasons for health professionals to be concerned about Alliance Boots. Far from the
friendly high street chemist we would like to it be, since its amalgamation into a multinational
conglomerate, it appears that the ethos of Alliance Boots has shifted to focusing on profit generation at the
cost of customer health, safety and satisfaction.
In other words, Alliance Boots also provides a good case study of the corporatisation and commercialisation
of health care. Even if the pharmacy retail sector is to be left predominantly in the private sector, it should
function as a proper and fair market not one which profits from both professional pharmacists and the
general public.
10. Spire and Ramsay Healthcare: Private Hospitals and the NHS
Spire Healthcare plc is the second largest provider of private healthcare in the United Kingdom after BMI
Healthcare. Spire Healthcare was formed from the sale of Bupa Hospitals to Cinven in 2007, followed by the
purchase of Classic Hospitals and Thames Valley Hospital in 2008. It is listed on the London Stock Exchange
and is a constituent of the FTSE 250 Index.
It is currently engaged in a significant financial relationship with CCGs in the North East to the value of 7,
096,000.
Its hospitals are displayed as an option in the choose and book scheme. Under choose and book,
patients have the right to choose which hospital provider they are referred to by their GP. This legal right,
which was introduced in April 2009, lets patients choose from any hospital provider in England offering a
suitable treatment that meets NHS standards and costs.
The March of Marketisation - Dr.Geoffrey A. Walker 02/03/2015
Patients can choose which hospital they are seen in accordance with what matters to them most, whether
it is location, waiting times, reputation, clinical performance, visiting policies, parking facilities or other
patients' comments.
A choice of hospital is available for most patients and in most circumstances. Exceptions include emergency
and urgent services, cancer, maternity and mental health services. If you need to be seen urgently by a
specialist (for example, if you have severe chest pain), your GP will send you where you'll be seen most
quickly.
David Gallagher, Chief Officer of Sunderland Clinical Commissioning Group, has said, the provision of
surgical services from Spire and other independent sector providers is essential in helping patients achieve
their constitutional rights of treatment within eighteen weeks.
Ramsay Healthcare was established in 1964 and has grown to become a global hospital group operating
over 100 hospitals and day surgery facilities across Australia, the United Kingdom and Indonesia. In 2007,
Ramsay Health Care realised its offshore expansion plans acquiring Capio UK, the fourth largest operator of
private hospitals in the UK. It is another example of a private sector interest acquiring NHS assets and
services through the manipulation of off-shore hedge funds.
What joint procurement has been undertaken with other departments, or shared between different
organisations?
What are the largest contracts in each departmental group, and how well are these performing in terms
of actual versus planned costs and savings?
This work is being led by Professor Dermot Cahill, head of Bangor University Law School.
Questions being investigated as part of the work on the use of agency staff include:
What is the scale of agency staff and contractor use in this departmental group, and what are they doing?
What are the gaps in skills and capacity that drive the use of agency staff and contractors?
What are the Departmental controls for specifying, monitoring and managing performance of consultants
and agency staff?
This work is being led by Baroness Jeannie Drake, former member of the Turner Commissions on Pensions
and former President of the TUC.
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This should come as no surprise, given the frequently quoted 30bn savings requirement for the NHS upon
its 110bn budget. It is for these reasons that finance directors are voicing their concerns. NHS staff worked
hard over the past four years to deliver savings more efficiently and effectively while public finances have
been constrained. The challenge, however, is becoming increasingly difficult.
It is clear that there is a need to redesign and adapt services in order for quality not to be compromised.
Many finance directors are calling for the pace of service transformation to be quickened to help with
delivering high quality, safe care in an efficient and appropriate manner. It is unmistakable that the future
success of the NHS depends on the clinically-led transformation of services, utilising the expertise and skills
of NHS staff to help this to happen as effectively as possible but not at the cost of asset-stripping of core
services by private sector predators.
It is crucial that there is an open and honest debate with politicians, the public and service users about the
quality and scope of services that is available to ensure the NHS is fit-for-purpose and the future.
Ultimately, there needs to be a clear focus on obtaining the maximum value for every pound spent and
available to the NHS but this is only achievable if the will of the people to have a healthy economy
supporting the economics of health is recognised as essential by future governments.
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Notes
1. NHS England is an executive non-departmental public body of the Department of Health. It oversees the
budget, planning, delivery and day-to-day operation of the commissioning side of the NHS in England as set
out in the Health and Social Care Act 2012. It also holds the contracts for GPs and NHS dentists. It comprises
of approximately 6,500 staff in 50 sites around England. The bulk of its staff previously worked for the
decommissioned Primary Care Trusts and Strategic Health Authorities.
2. Virgin Care is a private provider of services to the National Health Service in England. It owns 24 GP-led
provider companies that provide NHS services through networks of GP surgeries and community-based
NHS services.
3. Serco Group plc is a British outsourcing company based in Hook, Hampshire. It operates public and
private transport and traffic control, aviation, military weapons, detention centres, prisons and schools on
behalf of its customers. There has been a history of problems, failures, fatal errors and overcharging. It is
listed on the London Stock Exchange and is a constituent of the FTSE 250 Index. Serco operates in
Continental Europe, the Middle East, the Asia Pacific region and North America but the majority of its
turnover comes from the UK.
4. Circle Health is 49.9% owned by its staff and 50.1% owned by private investment funds. The 49.9%
owned by employees is via the company Circle Partnership registered in the British Virgin Islands. Majority
ownership (50.1%) of Circle is in the hands of large private equity companies. As of April 2013, the leading
institutional shareholders are as follows: Lansdowne Partners 29.1%; Invesco Perpetual 23.2%; Odey Asset
Management 21.5%; Balderton Capital 9.8%; BlueCrest Capital 7.1%; and BlackRock 5.4%. (7,13)
Lansdowne Partners is a hedge fund with $16 billion under management, co-founded by Paul Ruddock, a
generous donor to the Conservative Party. Ruddock and co-financier David Craigen have donated more
than 300,000 to the Conservative Party, most of it since David Cameron became leader. Lansdowne made
12 million by exploiting the collapse of Barclays shares in 2009.
Invesco Perpetual is an independent asset management company and part of the US company
Invesco Ltd, which is incorporated in Bermuda, but headquartered in Atlanta, Georgia, USA. Invesco
is incorporated in Bermuda as a means to reduce the amount of tax the company pays in the USA.
Odey Asset Management is a 3 billion hedge fund, run by Crispin Odey, a donor to the
Conservative Partyand to the Christian Party, whose slogan is "Proclaiming Christ's Lordship". In
addition, he has donated 18,000 to Libertas EU.
Balderton Capital is an early-stage venture firm founded by Benchmark Capital in 2000. Balderton
manages approx $1.9 billion in venture capital. The bulk of the capital comes from university
endowments, charitable foundations and pension funds.
BlackRock is the giant money-management firm established 23 years ago by Larry Fink, which
controls or monitors more than $12 trillion worldwide. BlackRock has around $3.56 trillion in assets
under its direct management.
BlueCrest Capital Management LLP is Europes third largest hedge fund or alternative asset
management company based in Guernsey.
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References
Blyth, M. (2010) Austerity Accessed at:
http://www.youtube.com/watch?v=go2bVGi0ReE&feature=youtu.be&a&safe=active
Kings Fund (2014) How is the NHS Performing? Available at:
http://www.kingsfund.org.uk/publications/how-nhs-performing-july-2014
Labour (2014) Zero-Based Review London: The Labour Party
Lindblom, C.E. (1982) The Market as Prison The Journal of Politics Vol. 44, No. 2 , pp. 324-336 Cambridge
University Press Accessed at: http://www.jstor.org/stable/2130588
Milne, S. (2014) The Enemy Within London: Verso
Monitor (2014) NHS Foundation Trust Annual Reporting Manual 2013 to 2014 Accessed at:
https://www.gov.uk/government/publications/nhs-foundation-trusts-annual-reporting-manual-2013-to2014
NHSEngland (2013) Everyone Counts: Planning for Patients 2013/14
Rosling, H. (Ed.)(2006) Global Health Stockholm: StudentLiteratur
Toye, R. (2013) From 'Consensus' to 'Common Ground': The Rhetoric of the Postwar Settlement and its
Collapse, Journal of Contemporary History 48#1 pp 3-23.
Unger, R. (2009) The Left Alternative New York: Verso
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