Stewart Player
The state has to actively create a market, they don’t appear of their own account.
Paul Corrigan,
former special health adviser to Tony Blair
In the many debates during the passage of Andrew Lansley’s Health and Social Care Bill, Coalition ministers repeatedly pointed out that there was little substantial difference between the contents of the bill and the policies of the previous government. Labour health spokespeople squirmed but were unable to deny this charge convincingly. In hindsight it is plain that New Labour’s reforms prepared the way for Lansley’s drive to privatise the NHS, but it wasn’t so obvious at the time. A core group of policymakers largely concealed their market-friendly intentions with rhetoric promoting a re-envisioned ‘GP-led’, ‘patient-centred’ NHS based on ‘choice’. The terms ‘contestability’, ‘increased local accountability’ and ‘world class’ standards were in the mix as well.
Lansley’s ‘liberating’ bill was the final step of a campaign, conceived as far back as the 1980s, by individuals closely linked to the private health industry. These visionaries imagined an England in which profits could once again be made through the delivery of health services. They were supported by key figures in Whitehall, not least in the Department of Health (DoH), where market-oriented thinking had become prevalent starting most especially in the Thatcher years. By the turn of the century advocates of instituting a health care market in Britain were increasingly pushing at an open door.
In January 2002 the British Medical Journal (BMJ) published an article claiming that the giant California-based health care corporation Kaiser Permanente achieved higher levels of performance than the NHS at roughly the same cost.1 Patients enrolled in the company’s ‘managed care plans’ were said to experience ‘more comprehensive and convenient primary care services and much more rapid access to specialist services and hospital admissions’ than NHS patients. The article’s authors also claimed that, by giving primary care physicians a tighter ‘gatekeeper’ function and emphasising management of chronic conditions, the corporation was able to limit the number of patients admitted to hospital, one of the more expensive aspects of health care.
Critics immediately pointed out that the article’s statistics were hopelessly flawed – Kaiser’s costs were higher than suggested and the NHS’s patient base was on average older, and that in addition the article overlooked the multitude of functions – from medical education to public health – that the NHS performs but which Kaiser did not. Given that Kaiser’s costs were roughly the same as those of the NHS, it was in reality far more expensive.2
The BMJ article helped to justify the extension of market principles into the NHS while reassuring everyone that Kaiser’s ‘not-for-profit’ highly integrated system had a great deal in common with the NHS. Yet the BMJ authors were actually wrong about Kaiser’s status too. In a letter to the New England Journal of Medicine a doctor at Kaiser pointed out that the physician group was directly linked to the Permanente Medical Group, a privately held, for-profit corporation, with a chief executive officer and a board of directors.3 Yet the DoH’s director of strategy, Chris Ham, defended the article’s claims and Kaiser Permanente emerged as the model for NHS reform. DoH policymakers visited the company’s headquarters in northern California and invited Kaiser staff to give seminars in London.
But behind the DoH’s embrace of the Kaiser model stood a powerful economic fact. Throughout most of the 1990s, US managed care organisations (MCOs), and in particular the format known as health maintenance organisations (HMOs), had reaped huge profits and had become known as the ‘Darlings of Wall Street’. The US government provided considerable support to MCOs in the belief that they would stimulate competition among health plans, increase efficiency and slow the growth in health care expenditures. Lower premiums also proved a considerable incentive for employers to adopt the schemes, and by the mid-1990s MCOs accounted for upwards of 90 per cent of the health care insurance cover in the US.
However, by 1998, these companies faced significant losses, owing to market saturation, government and employer strategies to contain health care costs, and high-profile scandals. To restore profitability, the US health care industry began to lower benefits to patients, increase premium fees and withdraw from selected domestic markets. Crucially, at this juncture a transition from national to multinational managed care began to take place. With the support of the World Bank and other US-led multilateral financial institutions, the industry now aimed to export ‘managed care initiatives that convert public health care institutions and social insurance funds to private management, private ownership, or both’ around the world.4 Not only US but also European multinationals, including pharmaceutical companies and MCOs, began to seek markets abroad, and were particularly interested in the potential of state-funded health care systems. And, as Waitzkin has pointed out:
Corporations exported managed care as the main organisational format, as opposed to other forms of commercial insurance, because managed care had become the dominant form of healthcare organisation in the US and had emerged as a profitable framework for commercial organisations to provide health insurance.5
The DoH’s enthusiasm for the Kaiser model was therefore not simply an abstract fantasy but a response to a global shift towards health care privatisation, and to major influx of health care corporations from other countries interested in the NHS.
Kaiser is only one of several different models of commercially managed care in the US. All have the same goal: reducing costs and ensuring profits whilst maintaining quality of care. Before the advent of managed care, Americans mainly received their health services through employment-based insurance schemes, where a person could see any doctor or attend any hospital that had made arrangements to accept the insurance company’s payouts for specific care. This fee-for-service route was proving highly expensive, because doctors and hospitals stood to make more money if they ordered more tests and provided more treatments. Managed care sought to transform this by enabling commercial health care companies to take on the business of financing and insurance and in deciding how service provision would be organised and paid for. Premiums are negotiated between MCOs and both employers and state, as well as individuals, and generally a fixed premium includes all care services provided for in a contract. It is then up to these companies to provide such care packages while making a profit, which is largely achieved through contracts with selected networks of providers, as well as through rigorous control of hospital admissions, chronic disease management programmes and strict utilisation review. The providers themselves are paid by the MCO, primarily on a capitated, fixed-sum basis, and while the scale of the contracts is a strong incentive for these providers to become part of such networks, this form of payment puts a rein on indiscriminate delivery.
In organisational terms, managed care is essentially about the forms of relationship among MCOs (or insurers), and hospitals and physicians, and the extent of integration between these three parts.6 For example, hospitals and physicians can come together into a physician hospital organisation (PHO), which is then well placed to win block contracts from MCOs or government programmes such as Medicare, which provides health care for Americans aged sixty-five or older. A group of doctors might instead decide to organise into an independent practitioner association (IPA), which can serve as both the provider of health care and an insurer for health care coverage, or can operate solely as a provider of services for patients enrolled in an MCO. Kaiser combines all three parts – insurance, hospitals and physicians – in a single integrated entity, where the insurer owns the hospitals and the physicians are salaried employees of the health plan.7
While the DoH was particularly interested in pursuing the Kaiser model, it remained open to other options for converting the NHS into a market. It was clear, however, that two changes were necessary before this could occur. First, the existing structures of the unified NHS had to be dissolved into the separate component parts of insurance and delivery. Second, these parts had to be reassembled into one or other of the managed care formats. Since any immediate proposal to introduce individual health insurance in place of the existing, tax-funded free service would be political suicide, the component of service delivery would be tackled first. In a favourite term used by DoH strategists, hospitals and physicians needed to be ‘decoupled’ from the NHS.
For hospitals such decoupling began in 2002 by making them into largely autonomous businesses called foundation trusts (FTs). These would be supervised not by the DoH but by an independent regulator, Monitor, and rather than offering a full range of health care services to their patients, FTs would receive a licence from Monitor to offer a specified number of services. The FTs were free to borrow on the private financial markets, enter into joint ventures with private companies and set their own terms of service for staff – a new level of financial and managerial freedom. The counterpart to these business freedoms was that the hospitals could no longer turn to the DoH if they ran up unsustainable debts. In other words they could go bust. In such a case Monitor would either step in, remove the management and invite another FT (or a private company) to take over, or simply let the hospital close. Financial viability became the overriding measure of a hospital’s success, rather than whether it was serving the needs of the patients in its catchment area.
This was not the way that FTs were sold to Parliament and the public, however. Labour’s Health Secretary, Alan Milburn, told the House of Commons that the bill introducing the new FT structure was built on three principles: ‘community empowerment, staff involvement and democratisation’. ‘In no way’, he said, could the bill ‘be reasonably described as privatisation, or a step in that direction’.8
The transformation of NHS hospitals into businesses was accelerated with the introduction in 2003 of a funding mechanism known as ‘payment by results’, whereby hospitals were paid per each individual who completed treatment, rather than with a lump sum for a given number of cases. Income now became closely tied to performance, which was measured by ‘throughput’, and payments were based on a national tariff of fixed prices, adjusted for the seriousness of each case category, not on how well patients did after they were treated. ‘Payment by results’ was actually a misleading name for the arrangement – it should have been ‘payment by throughput’. It was another piece of policy bought wholesale from the US.
Another crucial, complementary step was the introduction of privately owned and operated independent sector treatment centres (ISTCs) to treat NHS patients, ostensibly in order to help tackle the backlog of patients waiting for standard, low-risk elective procedures such as cataract removals and knee and hip replacements. This step broke a long-standing taboo on allowing private companies to provide NHS clinical services, giving them access to significant amounts of NHS monies, attracting new companies from abroad to enter the market and enabling existing British ones to adapt their business structures to the new opportunities. The private health care industry began to transform itself from small-scale, expensive niche-market operators serving private patients to organisations capable of providing higher volumes of care at lower costs – the initial terms they were offered were highly favourable and virtually risk-free. These changes were reinforced by the formation inside the DoH of a Commercial Directorate, tasked with introducing private companies into the health service.9
ISTCs were modelled on American ‘ambulatory care centres’ (also sometimes alarmingly termed ‘focused factories’), in which clinics handling elective procedures are separated from other surgical work, and composed of dedicated surgical teams. While ISTCs were supposed to provide their own staff, in practice NHS surgeons and support staff did most of the work, officially during their non-NHS working hours. This dependence on NHS staff made it clear that getting private providers to compete with NHS providers on a much larger scale would mean the permanent transfer of staff out of the NHS into either employment by private companies, or into companies or clinical networks (much like the American independent practitioner associations) that they would set up themselves.
This process was facilitated by new contracts made with hospital consultants in 2002, and with GPs in 2004. As far as DoH strategists were concerned, the bulk of the NHS workforce – its less formally skilled component – was seen as replaceable and could be transferred to private employers compulsorily; this had already happened on a large scale for cleaning, catering, laundry and portering staff, and would be extended to technical staff in outsourced diagnostic laboratories and other services. The situation was, however, very different for consultants and GPs. Creating the conditions under which they would also have to leave the NHS, or want to, was more of a challenge.
The government’s approach to a new contract for consultants called for the imposition of productivity targets, tighter managerial control of workloads, and strict limits on the amount of private practice they could undertake. While these demands reflected a defensible concern to ensure that the highest-paid members of the workforce gave value for money, the government knew that they were anathema to most consultants, and cut to the heart of their professionalism and autonomy. As the then deputy chair of the BMA Consultants Committee, Jonathan Fielden, put it: the government had ‘made fundamental errors in its understanding of the consultant contract and uses crude measures that focus on fast throughput instead of quality’.10
The clash over the consultants’ contracts could be seen, and was generally seen, as the government trying to take on a privileged section of the workforce in the interests of patients and the taxpayer. But an article that appeared in the Guardian in November 2002, just after the consultants in England had angrily rejected the initial contract, put a very different complexion on the affair. It said that the rejection could ‘have positive and far-reaching implications for the way NHS care is delivered – not least because it may open the door to more private sector provision of healthcare’.11
What was significant about this article is that it was written by Dr Penny Dash, who had been director of strategy at the DoH and a key architect of the 2000 NHS Plan when the new contract was conceived. The article revealed a rather different line of thinking inside the department. It spelled out the various ways in which consultants might escape control by NHS managers and suggested that in reality ministers might ‘want to encourage surgeons, and indeed other groups of doctors, to form their own companies (or join existing private health providers) to sell their services back to the NHS’. ‘Freed from the stifling grip of the NHS’, Dash wrote, such companies could negotiate with the NHS to perform procedures in either NHS or private hospitals, or form businesses of their own, raising capital and investing in new technology, or joining up with suppliers of X-ray machines and scanners and offering a ‘full service solution’ to ailing NHS hospitals. Such a development, she suggested, could be what ‘Messrs Blair and Milburn really wanted’.
Certainly the strategy had its desired effect. By August 2003 a survey found that the vast majority of consultants were considering a change of career, moving abroad or leaving the NHS to establish private ‘chambers’ (on the lines of barristers’ chambers) through which they could sell their services to a variety of commissioning organisations, whether or not that involved the NHS. This last option was precisely what the government seemed to have been hoping for, according to Dr Dash. Only 23 per cent of the doctors surveyed said they were prepared to stay in the NHS till their retirement.12
The new GP contract operated rather differently, though in the context of a similar level of dissatisfaction among GPs at the time. On the surface, the new contract appeared to offer GPs everything they wanted, including significant pay rises and the ability to opt out of providing out-of-hours cover. Within a short time, over 90 per cent of GPs had opted out. But accepting these terms soon proved to be an own goal for doctors. It undermined the legitimacy they had previously enjoyed as the sole providers of primary care, and GPs very soon began to be pictured as an overpaid and outmoded profession, unwilling to respond to changing patient needs by opening their surgeries in the evenings and on Saturdays. This message was taken up and reiterated by the Commons Public Accounts Committee, the National Audit Office, the CBI and the media. From then on, few news stories about GPs would fail to mention their high pay and the question of weekend access.
Moreover, the scale of the opt-out from out-of-hours provision was something that the government fully anticipated and wanted. Out-of-hours provision also proved to be a useful entry point into primary care for private companies, an opening soon exploited on a growing scale by such companies as Serco and Harmoni. Another element in this process was a new Alternative Provider Medical Services (APMS) contract that allowed PCTs to commission primary care services from large private companies such as UnitedHealth Group, Care UK and Atos Origin, as well as from ‘entrepreneurial’ GP consortia and social enterprises, all of which employed GPs on a salary. All APMS contracts made provision for out-of-hours services and were targeted at ‘under-doctored’ areas, thereby further legitimising private sector provision.
These developments were followed, in 2007–08 by a new government initiative to move all GP practices in England into a system of ‘polyclinics’, also known variously as ‘GP-led care centres’, ‘community health centres’, ‘walk-in centres’ or ‘Darzi centres’ (so-named after the surgeon ennobled and made a government minister to front the idea). GPs therefore found themselves threatened with being forced to move into the new centres, while alternative commercial models of primary care were proposed in which the personalised patient care so valued by GPs would be replaced by Asda, Tesco or Virgin-based ‘brands’. Payments to GP practices were also frozen at the 2004 level for three consecutive years, the government arguing that any increase would have to be linked to extended hours of access.
By 2010, 227 GP surgeries and health centres in England were being run by private companies, with nine firms (including Care UK and Assura Medical) each holding ten or more contracts. In March 2010 Virgin bought a majority stake in Assura and subsequently rebranded Assura’s GP provider companies, or ‘GPCos’, as Virgin Care. Not all of these new commercial primary-care companies were small and, following the deal, Virgin Care claimed to administer twenty-five partnerships with over 1,500 GPs catering for over three million patients. However, in October 2012 some 300 of these GPs ended their partnership, owing to possible conflicts of interest with their new commissioning roles, and Virgin took full control over the GPCos.
The process of creating a market could naturally never be linear or tidy. The loosening of consultants’ and GPs’ ties to the NHS, for example, didn’t occur simultaneously but in a seemingly disjointed series of policy developments, including contract adjustments and an ever-growing number of new entry points for private providers. By 2006 however, the policymakers felt confident that the component parts of managed care were sufficiently developed to begin to map out the next phase of transformation – i.e. assembling them into new market-based organisational formats. In that year a body called the National Leadership Network was formed, comprising 150 health policymakers, management consultants, NHS trust and private health care executives, as well as clinicians, professional leaders and regulators, to ‘provide collective leadership for the next phase of transformation, advise ministers on developing policies and promote shared values and behaviours’.13
The National Leadership Network (NLN) soon produced a document entitled ‘Strengthening local services: The future of the acute hospital’,14 which shows how the policymaking community was now envisaging myriad new forms of organisation and contractual relations between ‘networked’ organisations. For example, it thought that clinical staff would no longer be tied to working in particular settings, but would be available to work in whatever places were most appropriate. They would be organised in independent groups, such as multidisciplinary teams and ‘managed clinical networks’, and provide their services on a contractual basis to both NHS and other providers. ‘Large chronic disease management companies’ might consider joint ventures with ‘clusters of GP commissioners’, or possibly commissioners could allocate resources for specific care pathways to a ‘principal provider’, which could either provide such a package of care itself or subcontract elements of this package to other providers.
The NLN strategists clearly had in view the creation of an English version of ‘managed care’, and the range of organisational relationships that are typical of that system. Also belonging to this framework was the emphasis on dealing with chronic care and keeping hospital admissions to a minimum and with different forms of integration between hospitals, primary care providers, out-of-hours services, and social and domiciliary care providers and networks.
One early attempt to realise something of this approach was seen in the ‘polyclinics’ programme. Not only would this involve a radical redistribution of work away from hospitals, and the relocation to the polyclinics of most GPs and many hospital consultants, but also these new ‘supersurgeries’ would, like most new NHS hospitals, be privately financed, and quite likely privately owned and even operated. In October 2007 dispensing with any consultation, the DoH announced that it was providing £250 million to support the development of 152 polyclinics, one for each primary care trust (PCT) in England. The debt crisis of 2008, however, largely put paid to the programme. Although 140 polyclinics were established, in one form or another – of which over one-third were run by private companies or joint ventures with private companies – few, if any, resembled the bustling, high-tech, multipurpose facilities foreshadowed by the DoH and many were closed eventually. It is a fair bet, however, that similar institutions will resurface if the post-Lansley market evolves as intended.
Despite this setback, significant inroads were being made in transforming service delivery. It was always anticipated that the ISTC programme would serve as a precursor for a much wider range of clinical activity to be procured from private hospital providers. With the new business models put in place by local companies under the stimulus of the ISTC programme, private hospital chains such as Nuffield, BMI, Spire and Ramsay were now far better placed to pursue and expand their returns from NHS work. As Paul Corrigan, one of Labour’s special health care advisers put it: ‘the idea behind ISTCs was always something much bigger. We were always looking beyond the capacity hump. We never saw it as one big push and then waving goodbye to the private sector.’15
By 2011 private hospitals and clinics were doing almost £1 billion worth of NHS treatments. And by 2010 the deficit problems of many NHS trusts were also providing an entry point for such companies to take over NHS hospitals. One solution to the problem of trusts being unable to pass the financial survivability tests allowing them to become foundation trusts was that they could be either merged with an existing FT, or be taken over by private companies in franchise deals. In 2011 some sixty NHS hospitals run by twenty trusts were said to be in serious financial trouble and facing possible takeover, potentially by a private sector company such as Circle, which is already running Hinchingbrooke NHS hospital in Cambridgeshire. In June 2012 Candace Imison, deputy policy director of The King’s Fund and a prominent member of the National Leadership Network, said in a King’s Fund ‘breakfast seminar’ that ‘evidence from McKinsey, using international examples, suggests that takeovers by hospital chains might be among the most successful approaches, particularly if they reconfigure services’.16 One can only assume that McKinsey and Imison had the hospital chains of Spire, Ramsay, BMI and others in mind.17
In October 2012 the House of Commons Public Accounts Committee reported that one in five NHS trusts were in serious financial difficulties, and that there was ‘a real concern that some would fail’.18 The report came as administrators appointed to oversee the crisis-hit South London Healthcare NHS Trust recommended that it be broken up and run by neighbouring NHS trusts, or offered to private companies. Thirty-nine organisations expressed interest in running parts of the trust, including Circle, Care UK, Serco and Virgin Care.19
A considerable number of more entrepreneurially minded GPs began to form their own private companies. While many of these were modest affairs, by 2010 the trend was already towards amalgamation and a search for wider geographical reach. For example, in November 2010 one of the early market leaders, Chilvers McCrea, was bought by The Practice plc, which itself held a range of public sector contracts, including twenty-three NHS Local Improvement Finance Trust (LIFT) schemes, six GP walk-in centres and seven contracts for prison health services. Perhaps to fit in with NLN’s vision of provider networks, the new combined company initially called itself Practice Networks, and with large private equity backing it was able to boast in 2013 that it had ‘contracts for over 50 GP surgeries and GP-led Health Centres, regularly delivers over 120 community outpatient clinics per week, and sees in excess of one million patients per year’.20
Getting rid of the whole idea of paying for people’s health care out of general taxation, and restoring the principle of people paying individually for health insurance (with some government help for those too poor to pay for insurance), has long been the aim of the far Right. But actually shifting to it is fraught with political danger, so this final, and indeed critical, part of the American managed care model has been approached with extreme caution. The most obvious way to begin introducing private insurers into the NHS was through commissioning.
Under Labour this was to be achieved through a Framework for Procuring External Support for Commissioners (FESC), and a programme called World Class Commissioning. The idea was that major health care insurers from both the US and UK, as well as global consultancy companies with health care divisions, would be centrally involved in decisions by PCTs as to where, when, how and by whom services would be provided.21 Service planning and ‘reconfiguration’ (which in this context all too often means cutting services) and the control of referrals, as well as explicitly market-oriented tasks such as marketing, would be increasingly farmed out to companies such as UnitedHealth, McKinsey, Aetna and BUPA.22
The incoming Coalition Government’s decision to shift commissioning from PCTs to GPs organised in clinical commissioning groups was driven by a variety of motives, not least the growing impatience of the FESC companies with the level of business they actually got from the programme. Joint ventures were few and far between and small-scale, and there was resistance to outsourcing all commissioning work to the FESC companies, partly because of the continuing allegiance of many senior PCT staff to the public service concept of the NHS. GPs were seen as more pliable, whether because of a latent entrepreneurialism among an influential minority, or because of their ‘independent contractor’ relationship to the NHS, or simply because they had enough on their hands taking care of patients and so would be ready to hand over effective control of commissioning (and hence control of the bulk of the NHS budget) to private companies.
In practice, long before the Health and Social Care Act 2012 had completed its parliamentary passage, the government was already assigning far bigger commissioning roles to private companies. In October 2011, for example, NHS London announced that thirty-one out of thirty-eight of the capital’s clinical commissioning groups (CCGs) were to sign contracts with private firms for a programme of ‘intensive organisational support’ for a range of activities including governance, organisational development and strategy, finance, market analysis, leadership plans, resources, how-to guides, and self-assessment tools – which, it has to be said, covers pretty much everything.23 They also took responsibility for QIPP (quality, innovation, productivity and prevention) – a quintessential example of management consultant phrasing. After the passage of the act, these arrangements were to be formalised in the shape of commissioning support organisations, which would compete with each other to do the commissioning on behalf of CCGs.
The installation of private health insurers at the heart of NHS commissioning seems bound to advance the time when private insurance begins to complement, if not displace, public funding for NHS care. If patients are encouraged to take out insurance to ‘top up’ an increasingly narrowing range of free services, or services of declining quality, insurance ‘products’ or packages custom-made for the purpose will be ready and available, designed by insurers close to the scene of action. PCTs are already restricting access to some treatments, such as cataract removals, hernia operations, and hip and knee replacements, by raising the threshold of how ill or disabled a patient has to be, with a corresponding rise in self-pay products offered by insurers.
Another route to private insurance that seems likely to expand is personal care budgets, which are being rolled out for NHS patients with complex ongoing conditions. Like all budgets, these are likely to prove finite, with the invitation to ‘top them up’ for needs that the budgets won’t cover, but which can be insured for. These were initially piloted in June 2009 with provisional status awarded to sixty-eight personal-health-budget projects in seventy-five PCTs, but even before this the private health insurance sector was anticipating their impact and preparing new products to cover the top-ups for which a demand could sooner or later be expected.24 In March 2009 AXA PPP’s commercial director said: ‘We welcome the DH’s decision to allow patients to complement their NHS treatment with privately funded care. It’s a big step in the right direction of giving patients greater choice over their healthcare provision.’25 The Coalition Government has made it clear that personal budgets should be offered to other patients in due course.
While Labour constructed the building blocks of managed care, assembling them into a coherent whole has certainly accelerated under the Coalition Government. The linked ‘policy community’ of think tanks and management consultancies has been increasingly emboldened to propose a range of possible formats, including integrated care organisations (ICOs), local clinical partnerships, GP federations, the Circle model and accountable lead organisations. All have direct counterparts in the US system. The leading think tanks, The King’s Fund and Nuffield Trust in particular, have advocated all of these formats, drawing on seminars with executives from US organisations such as Geisinger, Hill Physicians, Ford Health Systems and of course Kaiser. The content of such meetings often concerns ‘clinical leadership’ within such organisations, though ‘mentoring doctors for the market’ would be a more accurate description of what they have to offer. In England, the channels for this have been growing: the National Association for Primary Care is linked with UnitedHealth; the Royal College of General Practitioners, with McKinsey (and previously with Aetna); and the NHS Alliance opened a commissioning college with Humana.
The GP federations and integrated care organisations (ICOs) deserve a closer look. The federation model of physician groupings was developed between 2007 and 2011 under the aegis of the Royal College of General Practitioners (RCGP) during the chairmanship of Professor Steve Field. In the college’s original ‘roadmap’, produced in 2007, federations were described as ‘group[s] of practices and primary care teams working together, sharing responsibility for developing high quality, patient focused services for their local communities’.26 The future of GP federations is fairly unclear, particularly in terms of whether they should adopt both commissioning and service delivery functions, or simply act as providers of care, but they are still under active consideration. Federations can indeed act as commissioning consortia, and at least six were chosen in the first two waves of clinical commissioning pathfinders. Through the assumption of financial and performance risk, and adoption of economies of scale, there is the possibility that these can act in the same way as American IPAs, which contract with insurance plans to manage the care of patients within a fixed annual budget.27
But a ‘toolkit’, produced in 2010 jointly by the RCGP, The King’s Fund and the Nuffield Trust, put more flesh on the federation model, suggesting various formats, ranging from private companies limited by shares or guarantees to community interest companies and limited liability partnerships. When the toolkit was produced, 15 per cent of federations were already working with an external partner, including Virgin Assura and Aetna. The Leeds-based Leodis organisation, for example, comprises a commissioning arm; 121 member GPs from 27 practices; and, with public and private partners, including Barclays Private Equity, a joint venture company whose ‘mission’ is to ‘build enhanced health care centres and clinics for general practices, locally based diagnostic and outpatient services’. Despite this, the RCGP toolkit favoured separating commissioning from the provision of care; a federation, the RCGP maintained, should be a ‘provider entity that can tender for services offered by a future GP commissioning consortium’.
The integrated care organisation model might better fulfil the yearnings of The King’s Fund and Nuffield Trust crowd. The aim of integration is widely supported – on the assumption that it means reducing fragmentation of patient services and enabling better co-ordinated care.28 It remained for the influential pro-market Policy Exchange think tank, in a report published in November 2012, to make clear what ‘integrated care’ actually means to leading policymakers.29 It called for a pilot programme of ten full-scale NHS ICOs, each covering a population of around 250,000, bringing together primary, community and acute services into one organisation with a single budget for the purchase and provision of services. The report thought the impetus for the model would come from the financial failure of some NHS hospital trusts, which would make ICOs a palatable alternative to service closure. It envisaged GPs being offered £160,000 each for the goodwill of their practices and becoming salaried employees, and thought that private sector management ‘should not be controversial in principle’. Monitor officials have also suggested that the organisations should house a range of private providers offering, for example, diabetes care and orthopaedics, and all ‘sharing their excellence’.30
The Policy Exchange’s model is a close equivalent of the Kaiser organisation, only with (it assumed) continued funding from taxes rather than private health insurance. Just weeks after the publication of the report, however, the chair of Monitor, Dr David Bennett, announced that private companies could become the ‘lead’ contractors to commission services on behalf of clinical commissioning groups, and no doubt this option will be extended to ICOs if the Policy Exchange’s proposal is taken up. The idea is very much alive in policymaking circles. Shortly after the publication of his book, Never Again?, on the passage of the health bill, Nicholas Timmins, the former Financial Times health correspondent and part-time fellow at The King’s Fund, foresaw ‘patients choosing between competing integrated care organizations; a choice, so to speak, between a set of NHS Kaiser Permanentes’.31
A recent paper has argued that the drive by US and multinational corporations from the end of the 1990s onwards to export managed care proved largely unsuccessful in Europe, with the popularity of public sector health care acting as ‘a powerful disincentive to privatization’, and that ‘countries such as the UK, the Netherlands and Sweden reversed some (but not all) policies that attempted to privatize their national health programmes’. Although debates continued in recent years about both privatisation and marketisation, these ‘did not lead to basic changes in the systems’ fundamentally public character’. Instead US-based MCOs turned to less developed countries, in Latin America in particular, which, the authors continue:
[E]xperienced strong pressure to accept managed care as the organisational framework for the privatization of their health systems. MCOs and investment funds rapidly entered the Latin American market, and this experience served as a model for the export of managed care to Africa and Asia.32
As far as the UK, or more accurately England, is concerned, we can only argue that the authors are mistaken. The processes involved have just been more covert. The seemingly disjointed series of policy developments, such as the formation of foundation trusts, new consultant and GP contracts, and the centrality of the commissioning function, as well as the ways in which these have been presented as being about increased efficiency, greater choice, a more plural range of providers, and increased local accountability, simply masked a largely coherent long-term strategy.
This strategy was, and continues to be, steadily pursued by the policy community both inside and outside the NHS, with no discernible difference of approach between the public and private sectors. Each step towards market formation has been consolidated by the formation of a new institution. Inside the NHS, for example, a Foundation Trust Network was formed in 2004, and an NHS Partners Network for private companies doing NHS work soon joined it. And outside – though not very far away, in practice – there was a group of well-funded think tanks, above all The King’s Fund and the Nuffield Trust, which have been consistent, though seemingly cautious, advocates of managed care models. And then there is a wide range of interest groups, such as the PPP Forum, set up in 2001, ‘the industry body for public private partnerships delivering UK infrastructure’ (the largest part of which is for the NHS). One can also add the large, often global, management consultancies such as KPMG, PwC and Ernst & Young, whose staff have occupied, and often still occupy, pivotal positions within the DoH.
But in promoting the import of the US managed care framework, the most influential outside organisation by far has been the US consultancy giant McKinsey, whose clients include at least ninety of the Fortune 100 corporations. McKinsey’s hand in drafting the health bill is now widely acknowledged, and the scale and range of the company’s penetration of the corridors of governmental power in the interests of these clients is impossible to ignore. Following Dr Penny Dash’s spell as head of strategy in the DoH, she became a McKinsey partner and played the leading role in producing Labour’s two ‘Darzi’ reports, the first of which sought to radically restrict levels of provision and staffing in London, while the second envisaged the privately run polyclinic system. In 2004 Dash became a non-executive director of Monitor and also set up the Cambridge Health Network, a McKinsey front that brings together DoH policymakers with private company officials at meetings sponsored by some of the biggest names in US capital, from Halliburton to General Electric – hardly household names in health care, but all with a shared interest in replacing public services by private enterprise.
While David Bennett and two other former McKinsey partners occupy the leading positions in Monitor, the company’s influence extends into many other key parts of the policy community. Dash is vice chair of The King’s Fund, while another McKinsey partner, Nicolaus Henke, is vice chair of the second biggest health-policy think tank, the Nuffield Trust. Following the publication of the Policy Exchange report on ICOs, Bennett has shown considerable urgency in pushing the programme through; and ministers have shown themselves keen to avoid any unnecessary piloting and evaluation. Indeed at a recent meeting at The King’s Fund with Monitor and the NHS Commissioning Board, the consensus was that the programme be ‘allowed to suspend rules that got in the way of progress’. In January 2013 the Health Service Journal reported that while the programme might not progress quite as quickly as anticipated it had a strong supporter in David Cameron’s chief policy adviser, Paul Bate – yet another former McKinsey staffer.
Everything looks to be in place for the increasing domination of the market over the NHS. The preparations have largely been hidden from view, and for good reason – there is not, and never has been, a political mandate for this momentous change, and certainly not for importing the US model of health care. And worse, the market mentality is ready to destroy the very public service ethos that has made the NHS so effective over the past sixty-five years.