Dismantling the NHS Internal Market by stealth. The Nationalisation Ninjas

People in the NHS continually complain about re-organisations. The endless churn and change of job titles, letterheads and lanyards.

The reason for this continual mess can be traced back to the original sin of NHS management – the introduction of the internal market – the purchaser/provider split in the 80s. Pretty much ever re-organisation since then has been trying to make sense of something that never made any sense in the first place.

Despite all of the memes you have read on social media about evil capitalists privatising the NHS the reality is the opposite. There is very little appetite for the private sector to get involved in the NHS. That’s because the NHS is complex with unpredictable patterns of patient flows, which makes it hard for private companies to make the stable predictable profits their share holders want.

This lack of enthusiasm meant that the incredibly expensive structures of the internal market are really just used to move money from one bit of the public sector to another at great expense.

The 2012 Health and Social Care Act, often known as the Lansley Act tried to address this by introducing the compulsory tendering of services to the private sector. This was supposed to increase private sector interest by allowing them to take over less volatile services.

I have a fundamental problem with this. I honestly don’t mind the private sector bidding to provide NHS services as long as they invest their own capital and take risk on that capital. That’s why it’s called capitalism

The Lansley Act allowed the private sector to take on services and make profit using the NHS’s own capital. This is fundamentally wrong. This isn’t capitalism, it is some kind of weird state corporatism of the kind we saw in the 1930s in Italy and Japan.

The private sector did indeed take on more work, but the costs of administering the tendering process, the costs of the bureaucracy and the consequent costs of legal challenge made the whole thing uneconomic. I could have told them that at the start.

The current Government has put more money into the NHS. Embarrassingly they are currently putting more in than Labour promised in their 2017 manifesto.

There is a bill being drafted to go to Parliament with the proposals for how the new money will be spent.

Sharp eyed readers of board papers will have spotted that NHS England had a board paper this week called “Building the case for primary legislative change” . I understand that these proposals have Ministerial and Select Committee support and are likely to go through.

https://www.england.nhs.uk/wp-content/uploads/2019/02/02-MiCIE-28-02-2019-building-the-case-for-primary-legislative-change.pdf

The proposals in the paper go way beyond the long term plan and have some very radical proposals:

“We consider that it should be possible for NHS commissioners to arrange for NHS trusts and NHS foundation trusts to provide services without necessarily having to advertise these services and seek expressions of interest from the wider market. We propose that the regulations made under section 75 of the Health and Social Care Act 2012 should be revoked and the powers in primary legislation under which they are made should be repealed”

“we also propose that arrangements between NHS
commissioners and NHS providers are removed from the scope of the
Public Contracts Regulations”

“We are proposing legislative changes that could nonetheless
help provide more flexibility in developing new payment models…. removing the current ability for providers to seek NHS Improvement’s agreement for unilateral local modifications to national tariff prices, so that the onus is on providers and commissioners to agree any local variations to national prices”

“Through the development of ICSs, commissioners and providers are increasingly coming together to plan services in a much more collaborative way. Some local health systems have expressed interest in going further and bringing some services together under the responsibility of a single provider organisation, supported by a single contract and a combined budget….. Where it is difficult for commissioners to identify an existing organisation that could take on responsibility for an integrated care provider contract, we propose the Secretary of State should be given clear powers to establish new NHS trusts for the purposes of providing integrated care. Taken together with the procurement changes we propose, this would support the expectation in the NHS Long Term Plan, and the Health and Social Care Select Committee’s recommendation, that the Integrated Care Provider (ICP) contract should be held by public statutory providers”

“We are therefore suggesting proposals to promote collaboration by removing the legal barriers that limit the ability of CCGs, local authorities and NHS England to work together and take decisions jointly.”

Apologies for the long quotes, but this is radical stuff. This not only takes a sledgehammer to the 2012 Act, it actually starts and unpicks bits of the internal market. There was a brief moment in 1997 when Labour under Frank Dobson proposed this, but this was shelved for being too radical.

I realise that there are some rather misguided concerns about Integrated Care Systems, not helped by hopeless on line campaigns and petitions, but they offer the most immediate prospect of local areas dismantling the entire internal market.

Quietly NHS England are proposing some radical ideas. Hot stuff. Or at least as hot as health policy ever gets

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