Andy Cowper on why the NHS is not being privatised and the consequences of a culture of deliberately incentivising lying

[Author’s note: this week’s column is two columns for the price of one. This is partly because there’s a lot to say this week; and partly because I badly need a holiday, and am having one in August, so at least one forthcoming column will be very succinct, and another will simply be ‘Andy Cowper is out in the field’. Cheers.]

The Financial Times has this story by Gill Plimmer about routine elective surgery being repatriated into the NHS.

“The £5.78bn private hospital market feels the effects of NHS cuts and a relaxation of the rules on patient waiting times. From less than 10 per cent a decade ago, private hospitals in Britain now earn more than a quarter of their revenues from treating NHS patients… a decision two years ago to scrap fines for NHS hospitals that fail to treat patients within 18 weeks has cut the number of referrals to the private sector: NHS hospitals are either waiting for longer before they refer patients or are taking on the work themselves.

“With more private medical facilities set to open, including UK expansion by Germany’s Schön Klinik group and the US Cleveland Clinic opening in 2020, competition will be intense, potentially leaving more vacant beds in private hospital wards.”

Mmmmm. If not actually mmmmmmmmm.

“But they’re privatising the NHS!”

No. They’re not. They’re really not.

The alleged privatisation of the NHS is my favourite bit of health policy nonsense. It beats the classic policy zombies such as health tourism being a big problem, or the alleged magical efficiency of insurance based health systems.

I have had a go at this silliness in this podcast and this one.

It is not only the case that you can’t buy shares in the NHS, which means it is not being privatised.

It is because no shareholders or private equity firms will want to hold an uncapped population wide risk for healthcare. That is what the NHS meaningfully is: it is a population wide risk pool to fund universal healthcare that is free at the point of use, mainly using income tax.

What the left wing unfalsifiable conspiracy theory community forget is that proper capitalists may sometimes be silly, but they are quite rarely stupid (and if they are, they go bust fast).

Some of the biggest fans of the NHS I’ve ever met have been private healthcare investors: they just also want private medical insurance for themselves and their families. As hypocrites go, they’re not the dirtiest ones out there. And hypocristy is, as La Rouchefoucauld memorably observed, the homage that vice pays to virtue.

A farewell to (some) targets

NHS Commissioning Board’s Sun King Supremo Simon Stevens has been very clear that recovering waiting times is not a priority in his latest HSJ interview about what will be in the Ten Year Forward View (Five Year Forward View plus inflation plus Barnett consequentials).

Simon is Telling The NHS Something Big here: there will probably be some emphasis on certain clinical conditions, but non-urgent care is not going to become more urgent any time soon. If I were the NHS, I’d expect heavy manners on a lot more emphasis on weight loss, exercise and pain management for a fair amount of what currently gets orthopaedic surgery.

But fortunately we have resolved this on the perfect medium for complex, nuanced and evidence based debate and discussion conducted in a spirit of intellectually honest enquiry and openness.

I am referring, of course, to Twitter.

The NHS has certainly been underfunded relative to demand and to historic real terms funding growth trend since 2010. It remains so even with the promised 3.4 per cent from 2018-19 – and there is still the coming winter ahead of us.

Mmmmmm. If not mmmmmmmmmmm.

The NHS has absolutely been denationalised by dear old Lord Lansley’s 2012 Act. And more than a few NHS services have been outsourced to the private sector – in the same way that retail pharmacy, dentistry, higher tier mental health services and of course General Medical Service general practice have all been for a long, long time.

The NHS has not in any meaningful sense been privatised.

Services have also been outsourced to the third sector – not for profits and charities. This, ex-British Medical Association Council member and ex-National Health Action Party head honcho (The Ex Files, anyone?) Clive Peedell contends, is privatisation under Conservative Party in house intellectual Oliver “Papers In The Bin” Letwin’s definition.

Oh dear. Oh dear oh dear.

We are likely to have seen the high water mark of private sector provision of NHS funded care for some time to come. For sure, there will be intermittent, media driven panicky waiting list initiatives here and there to fund golf club memberships, private school fees and Twickenham debentures here and there. T’was ever thus.

But there is not the spare money in the NHS to fund more private sector activity. And as The Financial Times story reports, more of the NHS is noticing that the easy operations are being outsourced. That makes insourcing them again far less challenging – and quite lucrative. The Care Quality Commission’s finding that almost of one third of private sector providers are requiring improvement has focused some ideological minds.

You never give me your money

The Office for Budget Responsibility this week pointed out in no uncertain terms that the government is yet to be honest with the public about how it will fund the NHS increase. In the absence of new taxes, the OBR warns that this risks putting public spending on an unsustainable upwards trajectory.

They also point out that the alleged Brexit bonus is a fiction: something regular readers of this column already know very well indeed.

According to the OBR, “these projections… do incorporate the prime minister’s 18 June announcement of extra funding for the NHS. We asked the Treasury if it wished to provide any further detail about the spending announcement or how it will be financed for inclusion in our long-term projections. On the former, we were directed to publicly available information; on the latter, the Treasury told us that decisions would be announced at future fiscal events. We have therefore incorporated the higher health spending, but no offsetting tax or spending measures.

“Our projections suggest that the public finances are likely to come under significant pressure over the longer term, due to an ageing population and further upward pressure on health spending from factors such as technological advances and the rising prevalence of chronic health conditions. Under our definition of unchanged policy, the government would end up having to spend more as a share of national income on age related items such as pensions and (in particular) healthcare, but the same demographic trends would leave government revenues roughly stable.

“In the absence of offsetting tax rises or spending cuts, this would widen the government’s budget deficit over time and put public sector net debt on an unsustainable upward trajectory. This fiscal challenge from an ageing population and from additional pressures on health spending is common to many developed nations.

“The long term outlook for the public finances is less favourable than at the time of our last FSR in January 2017. This is more than explained by the June health spending announcement, which – in the absence of accompanying offsetting tax or spending measures – increases spending by significantly more than the modest fiscal tightening implied by dropping the Dilnot reforms and accelerating rises in the State Pension age. If the higher health spending were to be fully financed by tax rises or cuts in other spending, the long term outlook for the public finances would be little changed from our 2017 FSR. The latest population projections from the ONS weaken the long term fiscal position, with prospective demographic trends slightly less favourable to the public finances.

“The government has indicated that it will fund at least some of the health package by increasing taxes and/or reducing other spending, but in the absence of firm detail we cannot include this in our projections. It has also said that the announcement will be funded in part by a ‘Brexit dividend’, although our provisional analysis suggests Brexit is more likely to weaken than strengthen the public finances overall.”

Fans of looking at NHS performance will have reviewed the Institute for Government’s excellent performance tracker on health, and seen their useful summary of the issues of Secretary Of State For The Time Being Matt ‘The App’ Hancock’s in tray.

The Heart Asks Pleasure First

The App himself gave his first speech this week.

What can I say about it?

Meh. I mean, it existed. Matt The App hearts the NHS, and he’s going to heart NHS staff, but it’s not clear whether the heart will be requited. As Michael Nyman’s timeless music for The Piano points out in its title, The Heart Asks Pleasure First. There’s not much pleasure about lately.

Oh yes, there will be technology. Mandatory technology, if you want any extra money. And there is just under £500m to get the NHS “massively tech-ed up”, in Jeremy Hunt’s lovely phrase.

The great Nigel Edwards had some good advice for The App: may it be heeded.

I have repeatedly mentioned that NHS organisations have been lying about their financial situation (encouraged by the example of honest former finance directors like Rick Tazzini, who chose to resign rather than to mislead).

My colleague Lawrence Dunhill has been on the case this week. Lawrence points out that it is now screamingly obvious that the 6 per cent interest bearing loans that the Department For Health But Social Care has been making to the most troubled providers (so they can pay their staff and keep the lights on) will never, ever be replaced.

If you see The App, tell him, eh?

A culture of deliberately incentivising lying – financial or otherwise – has consequences: they will be with the NHS for some time to come.