The NHS’s internal market is an expensive catastrophe

24 February 2018

9:00 AM

24 February 2018

9:00 AM

The NHS is in dire straits. I never thought I’d say this but as a doctor, and having seen the extent of the current crisis, I’d be scared if a family member had to go into hospital. Despite the best efforts of staff, the pressures are such that it’s all too easy for mistakes to be made. Doctors and nurses are going to work fearful of the situation they will find. They know how unsafe it is, and yet they are utterly powerless to do anything about it.

The predictable response is to call for more money to be hurled at the NHS. It’s all because of cuts, they say. Yet a report last year from the National Institute of Economic and Social Research found that health spending is at its highest level in history, and that Jeremy Corbyn’s accusations that the Tories have presided over ‘deep cuts’ to the NHS budget are simply wrong. The annual spend on the NHS has now reached £2,160 per person and the figure has continued to rise steadily in terms of a fraction of Britain’s total income, increasing from 4.7 per cent in 1997 to 7.4 per cent last year.

What’s really happening is that demand is outstripping supply: the increase in money hasn’t been sufficient to cover the increasing pressures of an ageing population, higher expectations and advances in medicine. There’s no doubt that when compared with other EU countries, we are not spending similar levels as a proportion of GDP. While we spend about 8 per cent of GDP on health, countries such as France and Germany spend nearly 12 per cent. We have fewer beds, fewer nurses and fewer doctors per patient than the rest of Europe.

But rather than throwing more money at the NHS, it makes better sense to ensure the money is being spent wisely. The NHS needs to ensure it is as lean and efficient as possible. Surveys have found that people are wary of yet more money being handed out. While the majority of the public rank healthcare as the top priority for government spending, only about a third are willing to pay more in taxes. If more money is going to be given to the NHS, it first needs to demonstrate that it’s making the most of the money it is getting already.

And here’s the rub. There is crippling, shameful waste in the NHS. The kind we hear about are things like missed appointments or doctors prescribing remedies that could be bought over the counter. Equipment such as walking frames that can’t be returned. Or health tourism or failure to recoup the cost of treating overseas nationals. Of course, all of these are important. But there is a source of inefficiency that eclipses all this, wasting billions every year. It is the internal market.

This was first introduced into the NHS in 1990, when the National Health Service and Community Care Act put health authorities in charge of their own budgets. But the NHS really started to embrace market principles with Gordon Brown’s ‘mixed economy of care’, which saw the health service open up to competition to provide services, creating a ‘purchaser-provider split’. The unintended consequence has been bureaucracy on a gargantuan scale. And the spiralling cost has no discernible benefit to patients. A recent study from the Organisation For Economic Co-operation and Development (OECD) suggests that about one fifth of spending on health makes no or minimal contribution to improved health outcomes.

Even last June’s Conservative manifesto acknowledged this, admitting that the NHS internal market can fail ‘to act in the interests of patients and creates costly bureaucracy’. This demonstrates that many within the party have become disillusioned with the free-marketers. And disillusioned they should be. The introduction of the free market to healthcare was based on ideology and has shown itself to be costly, inefficient and a woefully inadequate system.

We know from other countries, such as the US and Germany, that introducing the market into healthcare results in higher costs. Putting an exact cost on the internal market is tricky, but the Centre for Health and the Public Interest gives a conservative estimate of £4.5 billion. Others have suggested about £10 billion is diverted away from frontline services to administer the complex negotiations and contract monitoring that the market system requires.

What’s more, there are the indirect costs due to inefficiency. In 2010, the select committee on health divulged that even under Labour, the cost of administering the purchaser-provider split was 14 per cent of all NHS spending. Some have now estimated the cost to be in the region of 25 per cent. It’s quite clear that the more providers of healthcare there are, the higher the risk of duplication, confusion and misunderstandings. We were told by the free-marketers that the internal market would push up innovation, reduce costs and result in efficiency savings. The evidence shows this isn’t the case. I see this day in and day out in my own practice because I, like every other doctor, has to collect data that is essential to services competing for contracts.

Research conducted by the NHS Confederation shows that clinical staff spend up to ten hours a week collecting or checking data and that more than one third of the work is neither useful nor relevant to patient care. It is estimated that collecting this data alone costs the NHS £500 million. Many people will be shocked that so much time is spent on paperwork rather than caring for the sick but, reflecting on my own work, I’m amazed it is so little. I frequently feel I am drowning in forms that demand to be completed, statistics that need to be gathered and boxes that need to be ticked. It is the least enjoyable part of my job. I trained to be a doctor because I wanted to work with people, not complete forms that have no meaningful impact on the patient.

Every clinician I know feels the same. I work in a hospital providing tertiary care to people with severe mental health problems. I will typically see patients for 30 minutes to an hour. For every patient I see, I have at least one hour of paperwork to do, only a small part of which has a clear benefit to them. I used to take a relatively relaxed approach to paperwork until a manager pulled me aside and explained that if I didn’t complete certain forms, the service didn’t get paid.

I now have to ‘cluster’ patients into diagnostic categories and severity of condition each time I see them to record any improvements. This way, the hospital can demonstrate to GP practices that patients are getting better and therefore can argue that it should be given the contract again when it comes up for renewal. I have to complete risk assessments, forms relating to confidentiality, information sharing and consent to treatment. I generally spend part of my weekend catching up on paperwork, because otherwise I am unable to see as many patients during the week.

If it’s bad for doctors, it’s even worse for nurses. Every admission triggers an avalanche of forms to be filled in. How have we got to the stage where, according to research by the Royal College of Nursing, the amount of time nurses spend away from patients, on non-essential paperwork, has doubled, with 2.5 million hours lost a week? It is in no small part because of the introduction of the market and the resultant commissioning and tendering processes.

Countless research, most notably that by Professor Allyson Pollock, director of the Institute of Health and Society at Newcastle University, has shown that the introduction of the market system into health care does not save money, but rather haemorrhages cash out of the public sphere.

After a Labour government started it, the process was turbo–charged by Andrew Lansley’s Health and Social Care Act 2012, which made it even easier for private companies to bid for contracts. It effectively opened up the NHS to companies that could then cherry-pick the most profitable parts of the health service.

Far from being the saviour of the NHS, the internal market has been an unmitigated, costly and wasteful disaster. Hours of senior managers’ time is spent gathering data to show to commissioners and writing and bidding for contracts. It has resulted in a fractured, chaotic, disorganised system that is costly and inferior.

Quite how ludicrous and wasteful the situation is was demonstrated last month when it was reported that Virgin Care, part of Richard Branson’s empire, threatened to sue the NHS because it lost out on a contract to provide a three-year, £82 million deal covering health visitors, school nurses and occupational therapy services for children in the Surrey area.

It started high court proceedings against six clinical commissioning groups (CCGs), NHS England and Surrey council. The cases have now been settled and are ‘confidential’ but a finance paper from one of the CCGs involved states its liability for the case was £328,000. Surely politicians should feel sick to their stomachs that, while elderly people are being denied cataract operations and crippled pensioners are being told they can’t have a hip replacement, bully-boy companies like Virgin Care are suing and threatening the NHS?

Competition was supposed to be about patient choice, the idea being that people would choose the highest performing providers in a competitive market. Thus those hospitals that were failing would be less popular and standards would be driven up. But this model doesn’t work in socialised healthcare.

When you’re ill, consumer-led choices are simply not practical. If you’re having a heart attack, you don’t whip out your laptop, go to the NHS Choices website and decide where you’re going to go. You dial 999 and keep your fingers crossed that the nearest hospital isn’t falling down, riddled with MRSA or staffed by morons.

Far from uniformly pushing up standards, the market has introduced great variation, with some hospitals far more productive than others, but, as each trust is considered an independent business, there is no way of sharing this. In his review of efficiency in hospitals in 2015, Lord Carter estimated that reducing this could save the NHS £5 billion a year.

Most people simply want a good, efficient healthcare system that is there for them when they need it, and that treats them with dignity and respect. They want a just system that looks after everyone, regardless of ability to pay or the complexity of their needs.

My concern is that the public, seeing the diversion of scarce resources away from patient care, are losing faith. The introduction of the internal market has been a failure and must be abandoned. It is a dangerous festering wound, which may prove fatal to the NHS. We need to excise it now.

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