The establishment of the internal market signalled the beginning of the end of the NHS as we have known it. The independent sector treatment centres and more recently the awards of NHS contracts to any qualified providers have ensured even more that the NHS will never have enough funds to provide treatment, free at the point of delivery.
An indirect route of channelling the NHS £ to private accounts
There was a time that the NHS funds were distributed among the NHS hospitals, other NHS services and GPs. The turning point in the history of the NHS £ came with the introduction of the internal market by Kenneth Clark in the late 1980s.
From there on, GPs that joined fundholding were able to manage a budget, purchase services from different providers, negotiate prices, show innovation. Many GP practices made a profit but they were not allowed to keep the profit; it had to be spent on approved projects that would benefit patients.
This was an indirect route of channelling the NHS £ to private accounts as the GP did not have to finance new desks, new chairs, the extension of the surgery building, or resurfacing the surgery car park he owned and would benefit him later in his retirement when it came to selling his share of the surgery building.
The GP could apply and get permission to improve his surgery building for the benefit of the patients but only partly using his own funds. For the first time, the NHS £ was not strictly speaking staying wholly within the NHS but was indirectly slipping into private accounts. This was the beginning of a very costly NHS.
Independent sector treatment centres only performed 85% of the work for which they were paid
The major diversion of the NHS £ to private individuals and businesses came with Tony Blair in December 2002, with the publication of his government’s Growing capacity: Independent Sector Treatment Centres" (ISTCs), promoting greater capacity in the NHS, not by supporting and extending the NHS capacity but by turning to the private sector, allowing the private companies to enter the NHS market.
The ISTCs only performed 85% of the work for which they were paid in advance and in full, but could keep the money, whether they reached 100% of the contract or not.
Under the terms of the ISTC contracts, NHS services already in place could still be cut, eventually to be replaced by private provider clinics. This was a direct threat to the provision of services by NHS hospitals. Characteristically, I was told that if I refer my patient to the NHS hospital for his hip operation, I would pay twice because the ISTC had already been paid for that hip operation and the NHS hospital will have to be paid too.
At the time, I refused the formation of an ISTC in my town because I saw this as a direct threat to our local NHS hospitals (I was the chairman of the PCT’s professional executive committee). My colleagues and I were made to use the ISTC in another town, about an hour plus drive from our town on a motorway.
When patients protested about the long drive, we were made to finance taxis for them, as long as we used the private sector and not the NHS facilities. We were witnessing a year-on-year increase in the NHS budget with year-on-year diversion of the NHS £ into private accounts in the UK and around the world.
Where are we now?
Under the coalition government there is a plethora of qualified providers to the point that GPs find it difficult, if not impossible, to know who provides what. When a patient needed a hearing aid, I used to refer the patient to my local hospital’s audiology unit. They would be fitted with one and any profit kept within the hospital to help run other departments.
Now, I have a choice of a number of qualified providers, including local opticians who have diversified in order to catch that NHS £. Many providers give a range of services to patients. They employ and pay staff with the profits going to the owners of the companies.
Some of these companies are owned by NHS staff and GPs, most are private companies. The NHS £ again slips away into private bank accounts.
Where does this leave the NHS hospitals? In an increasingly competitive market, the hospitals are trying to provide services that can compete with the private sector. The only difference is that the private sector does not (at the moment) have to provide obstetrics, paediatrics, A&E etc.
It can just fit hearing aids, perform ultrasound scans, MRIs, and see patients with musculoskeletal problems, eye or skin problems and so many other conditions that require just a consultation or a simple procedure.
The funds that the CCGs pay them leave the NHS for good. When GPs refer patients to the NHS hospitals, the funds remain in the NHS and help provide other services, which are (currently) not attractive to the private sector. Some say, it is a matter of time before private providers replace our NHS hospitals.
The NHS £ is recirculated within the NHS when the CCG/NHS pays the NHS hospital
First, NHS hospitals have to be weakened financially until they can be taken over by the private sector. Then, there can be strong demands for higher hospital fees. Where will it end for the NHS?
The NHS has a defined budget with which to provide health to its population, free at the point of delivery. There is no excess of funds, only a call to save funds.
The CCGs are called to at least balance their budgets at the end of the financial year. In doing so, they are looking to award contracts that are provided at an acceptable quality level and at as low cost as they can get it.
When these providers are private companies, the NHS £ the CCG/NHS pays is lost to the private sector. When the CCG/NHS pays the NHS hospital, the NHS £ is recirculated within the NHS, it is kept by the NHS. The hospital uses that NHS £ to fund other departments that, as a NHS hospital, must also provide. In this case, the NHS £ keeps on recirculating and stays within the NHS.
The question we all face is whether we let the NHS £ slip away to the private sector or whether we invest the NHS £ in our NHS hospitals. Can the CCGs answer this question? Or is the government (the politicians) that must do?
The only way forward is for the NHS treatment profit to remain within the NHS and not disappear into private accounts of any qualified provider in the UK or around the world.
* Dr Kassianos is a GP in Bracknell, Berkshire, and former chairman of Bracknell Forest PCT.