The words NHS and privatisation, coupled together, were hot press in 2019. However, the reality behind what privatisation really entails, and the differences it will make, were often forgotten. Talk of a future trade deal with America ‘selling the NHS’ was misleading and left much of the electorate in the dark.
So, what is privatisation?
Currently, most NHS services are provided by NHS departments (state-owned). (There is a weird mechanism as to how this works, but we will ignore it for the sake of simplicity) The NHS, however, may decide to outsource a service to a private company.
In short: The NHS pays someone else to do a job for them.
Why would the NHS want to privatise a service?
Private companies say they can provide the service for less than the NHS can itself. (There are a variety of reasons as to why this is possible). So, the NHS may pay a private company to provide a service slightly below what it usually costs them in order to save money.
In short: It can save money.
THE NHS IS FACING A HUGE FINANCIAL BURDEN AND IT NEEDS TO FIND A WAY TO CUT COSTS.
Why do a lot of people dislike the thought of privatisation?
The NHS is facing a huge financial burden and it needs to find a way to cut costs.
But those in opposition fear that more and more privatisation of NHS services could result in government insurance-based healthcare, as opposed to state provided healthcare. They see this as a ‘slippery slope’ towards a ‘US style’, entirely private-insurance-based healthcare system.
There have been accusations made that some right-wing individuals in politics are slowly sabotaging the NHS with the goal of pushing the nation into a private insurance healthcare system.
This is denied by those in favour of using privatisation. They argue that the NHS needs privatisation in order to save money before it becomes economically unviable.
In short: Some fear privatisation opens up the possibility of losing the NHS to a private system; others argue it will help to save the NHS from financial ruin and keep healthcare free at the point of use.
Does privatisation of the NHS work?
There are many caveats surrounding the debate as to whether privatisation of NHS services is beneficial, with views differing widely among politicians.
One of the most common arguments in favour of privatisation is that it can save the NHS money. A simplified, hypothetical model will be used to demonstrate this:
An old NHS department in a hospital used to receive £100 to do ‘Procedure A.’ A private company now does Procedure A for £90. In this case, privatisation saves money: £10 is saved.
However, privatisation is not always this simple—many departments do more than one procedure.
A similar NHS department at a different hospital, as well as doing Procedure A, also does ‘Procedure B’.
Procedure B costs £105 to perform, but the NHS department only gets £100 to do it. Before, the department may have actually been spending £95 on Procedure A and using the leftover £5 to fund the more expensive Procedure B. Yet, with ‘Procedure A’ now operated by a private company, the department now does not have enough money to perform ‘Procedure B’. This NHS department is losing money. (NHS departments are expected to break-even).
(It should be noted that privatisation is not the only explanation as to why a department loses money. However, this example explains why a department can fail following a loss of funding due to privatisation).
WHILE THE NHS WOULD TYPICALLY BREAK EVEN, PRIVATE COMPANIES DESIRE PROFIT.
There are three clear proposals to solve this scenario and all, arguably, have issues.
The first is to provide the right amount of money for each service and, in doing so, end privatisation.
Technically speaking, this is possible, and if complete public ownership were to lead to universally positive outcomes for an affordable price, it would mean that privatisation would not be necessary.
In practice, however, it could be a difficult and expensive task to execute, in part due to the level of research required to find the correct pricing for every single procedure that the NHS carries out.
The second is to only privatise procedures which can be cost-effectively privatised. But working out definitively what can and what ought not to be privatised requires costly and extensive research, or controversial trial and error.
The third is to simply privatise the entire department.
The first issue is that companies would, likely, be unwilling to take on ‘Procedure B’ and cut into their profits. (The NHS could refuse to re-contract Procedure A without Procedure B in the future. However, this opens up a whole new ‘can of worms’, so to speak, from conflicts of interest to potential legal and practical issues).
But, perhaps most notably, private companies may find it difficult to turn profits in this scenario. While the NHS would typically break even, private companies desire profit. So, they are left with two options: walk away, or take the contract and find a way to make money.
This introduces a second potential issue with privatisation: ‘Cutting corners’.
2 IN 5 PRIVATE HOSPITALS WERE FOUND BY THE CQC (CARE QUALITY COMMISSION) TO BE FAILING TO PROVIDE SAFE STANDARDS.
Some health professionals claim that private companies who perform small-turnover procedures put patient safety at risk and have a poor quality of care in order to minimise costs and maximise potential profit. There is no way to definitively prove or disprove these claims, but other sources of private healthcare in the UK can be drawn upon.
For example, 2 in 5 private hospitals were found by the CQC (Care Quality Commission) to be failing to provide safe standards. Though not all private care occurs in private hospitals and this is not universally applicable, the campaign group ‘Keep Our NHS Public’ use these stats to demonstrate how, they believe, private healthcare providers will ‘cut corners’ and put patients at risk for the sake of profit.
There is not a comparable statistic for NHS hospitals from the CQC, however, recent headlines do not paint a much better story for them either. 25% of NHS wards are said to be understaffed and, as a consequence, unsafe.
Unlike private hospitals, however, the shortage of funding is not necessarily the fault of NHS hospitals.
To fund a fully public NHS that meets these CQC standards, it is likely that national insurance tax would have to rise, meaning less take-home pay for most earners in the country. Or, the government would have to find a different group to tax, such as a clamp down on business and billionaires. Doing this has other potentially harmful implications.
Conversely, it is also of note that studies have shown that many private care services, outsourced by the NHS, have resulted in better outcomes* for patients than those treated by the NHS itself. (*Quality of care and outcomes are not the same).
This is, in part, due to the fact that many private hospitals are better equipped (although potentially lacking in the facilities required to deal with any emergencies that may occur), less crowded, and have shorter wait times.
Yet, shorter waitlists may come at a cost.
PRIVATE COMPANIES WORK TO CONTRACT; THEY DO NO MORE WORK THAN WHAT THEY ARE OBLIGED TO.
Nurses and other healthcare professionals, who feel as though they have been forced to move into working in the contracted private sector, have complained that, in order to maximise profit, private companies are always trying to push too many patients through the system. This all leads to putting patients at increased risk and may decrease the quality of care.
Privatising could result in poorer continuity of care. Private companies work to contract; they do no more than what they are obliged to.
If the agreed contract does not safe-keep continuity of care (a company may even refuse to sign a contract holding them accountable and the contract writer may not have known the procedure well enough to understand what continuity is required), this may make the overall experience frustrating and disjointed for patients.
They may be asked the same questions over and over, or have multiple tests repeated, all because there was no formalised hand-over between the healthcare professionals under different providers.
Careful planning and creating competition for contracts (the NHS can do so because it is the gatekeeper to a huge number of patients), thus forcing companies to agree to providing the best care, has the capability to resolve this issue if executed effectively. Moreover, it is also important to consider how some medical treatments do not necessarily require continuity of care.
Charities (e.g. Macmillan cancer nurses) also privately provide healthcare and, yet, private care is widely regarded as a positive in this respect.
However, it can be argued that the non-profit motive of charities is to explain for their good service. Instead of trying to turn a profit, they use all of the money they have available to them to provide and improve the delivery of care (working similar to how an NHS department would).
The King’s Fund, a healthcare think tank, holds the view that they do not mind who is the provider behind NHS services, so long as it is timely, free, and good in quality.
There are many arguments surrounding NHS privatisation, but this article aims to provide the main few.
In short: Sometimes it saves money (and may improve care), sometimes it does not (and may worsen care). And sometimes it saves money but also makes care worse.
Are NHS failings entirely the fault of privatisation?
The NHS faces many issues beyond the cases where privatisation has yielded undesirable outcomes.
First and foremost, underfunding from last decade’s austerity is widely accepted to have stretched the NHS—though proposed new spending could help to alleviate some of these symptoms.
Secondly, there is a lack of doctors, nurses and other healthcare professionals, reducing healthcare quality and efficiency.
Thirdly, the UK’s ageing population, in combination with ineffective preventative social care, is leading to an increase in A&E demand and primary healthcare (e.g. GP) use, which already lacks capacity.
There are other less talked about causes, too.
STUDENTS’ MENTAL HEALTH IS NOW ONE OF THE BIGGEST CHALLENGES FACING THE NHS
The widening definition of medicine in the twenty-first century can be attributed to increasing costs.
Students’ mental health is now one of the biggest challenges facing the NHS and the news frequently discusses how more must be done to provide care; this was not the case just a few decades ago. And, on top of that, most hospitals continue to run on inefficient, old IT systems.
The case of an increased population, generally leading to a stretched NHS, is a more difficult one to quantify.
An increased population logically equates to requiring more funding, however, there are other considerations that ought to be taken into account (the fiscal impact of these extra people; the demographics of this new population. For example, migrants only use expensive, inpatient, secondary NHS services, around half as much as UK-born individuals).
The NHS has quite a few questions to answer over the coming decades.
In short: No.
Simeon Lee
Featured image courtesy of Diego Sideburns via FLICKR. No changes made to this image. Image license found here.
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