The Business Model and the NHS

Does the NHS need to learn anything from successful private companies, as Tony Blair seems to believe? Are we moving from a welfare to a market state? And what, under New Labour, exactly, is the National Health Service? Is it just a brand name, with a series of franchised operations, or is the NHS something different from United Healthcare?

One of the characteristics of the public service ethos is the feeling that staff, from consultants to cleaners, are working for the public and not in order to enrich someone else. Junior staff get very angry when they discover, as they sometimes do, that unscrupulous doctors are exploiting them by claiming large fees for work done by someone else and keeping the money for their private benefit. This is what makes GPs feel threatened by the introduction of large corporations into primary care.

In general doctors’ motivation is not driven by money – apart from a few surgeons. That is why putting so much extra money into doctors’ pay was a mistake. Doctors care about what other doctors think of them and most of them care about their patients. From a patient’s point of view that seems to be a good thing. A more commercial attitude, where a doctor is influenced more by their own bank balance than their concern for our welfare seems undesirable.

Is the public service ethos just an illusion? We want to preserve a sense of vocation and enthusiasm – while perhaps letting go of the notion that a job in the public service is always a job for life. The sense of vocation and security has enabled the NHS to pay out less in wages for the last 40 years than it might otherwise have had to, but the idea that people get job satisfaction from the knowledge that what they do is of public benefit is clearly not restricted to the public sector.

Health is not a commodity that can be produced by means of the investment and deployment of capital and labour resources. If it was then the United States, which devotes immense resources to health, would be the healthiest place in the world. Health can only be produced by engaging people and encouraging them to take active control of their own health. Our experience of engaging the poorest communities is poor, and so is the health of the people in those communities. It is difficult to see that there is much to be learned from the private sector about engagement with poor communities. Their record is generally even worse than that of the public sector. There might be something to be learned from the voluntary sector, which has a better record precisely because it is less driven by money.

Of course the production of health care can be seen as a business. A business in which capital is invested and from which people earn their living. Has this business anything to learn from the private sector? At the level of the individual concern there must be skills and approaches which would improve efficiency. But the discipline of the market is not going to work in the NHS. The fundamental reason is that market discipline is centred around growth and failure. Selling more goods and services more profitably than your competitors is the only criteria for success in the market. But in public services success is more complicated. A successful health system would produce less health care, not more. There is a more immediate political reason too. The market works well when firms can set up and go out of business in response to customer’s demands. The Government has failed to produce any explanation of what will happen if a Foundation Trust fails. As Sir Michael Lyons told the NHS Confederation last week, a market based system would generate “waves of extinction sweeping through public services” and such a wave of closures would not be tolerated in a system which remained “collectively funded and publicly controlled”. Put more bluntly: political careers will not survive a wave of hospital closures. NHS managers are regularly told that political support is available when they are encouraged to take “difficult decisions”. Support will be available only until the next election approaches. After the election any politician who is seen to support the closure of their local hospital will not be around to provide political support.

What are the problems of the health service? According to Derek Wanless’s second report:

“Numerous policy statements and initiatives in the field of public health have not resulted in a rebalancing of policy away from health care (a ‘national sickness service’) to health (‘a national health service’). This will not happen until there is a realignment of incentives in the system to focus on reducing the burden of disease and tackling the key lifestyle and environmental risks.”

The Labour Party’s latest policy paper (National Policy Forum 2006) poses two key questions: How do we do more to empower patients? And How do we help people lead healthier lives?

Do commercial organisations offer any answers here? For commercial organisations empowerment is about individual choice, and this features strongly in the NPF document. But in reality choice – particularly choice of provider – will never be very important in the NHS because elective surgery is only a small part of what the NHS does. For people who are acutely or chronically ill – that is most hospital patients – choice is irrelevant. That is not to say that some lessons could not be learned from commercial providers. Just because they are not paying customers there is no reason why patients should be made to feel, as they often are, that their time is of no importance and that their comfort and convenience has to take second place to that of the staff. But most patients, most of the time, do not want to feel that their local hospital is in competition with the hospital down the road, especially if that road is fifty miles long. There are only a few urban areas where there is a choice of convenient providers. The vast majority of the population has only one hospital which is convenient.

And can commercial organisations help us to lead healthier lives? Given that much of our unhealthiness is directly attributable to our poor diet and lack of exercise, both of which are encouraged by unscrupulous firms who make a lot of money out of exploiting our weaknesses, it is hard to see how they could help with the three central tasks of public health:

  • combating health inequalities
  • promoting sustainable development
  • challenging anti-health forces.

The central difference between the NHS and commercial organisations is surely that the NHS is, or should be, under democratic control and operates primarily for public benefit not private gain. Pat Hewitt, and her recent predecessors, have made it clear that they would rather not take responsibility for every dropped bed pan, but sadly, despite spending record sums on the NHS they are still blamed for every problem, to the extent that other political parties are now said to be more trusted to run the NHS than Labour. The challenge for reform – if we really must have more reform – is to establish systems for local and regional decision making under democratic control which are robust enough to actually enable devolution of power and responsibility. Giving the commissioning responsibilities of PCTs to democratically elected unitary local authorities seems like a good first step.