Explained: NHS Structure and CCGs

In the inaugural post of ‘Explained’, Will Stent sets out to analyse specific elements of the Conservative’s policy regarding the restructuring of the NHS – beginning with Clinical Commissioning Groups (CCGs).

 

In the run-up to the 2010 General Election, David Cameron pledged that under a Conservative government there would be no more top-down reorganisations of the NHS, stating that previous changes under New Labour had been tiresome and meddlesome. What followed soon after was a complete contradiction of this. Guided by Andrew Lansley, the Conservatives instigated the largest overhaul of NHS structure and management in its history through the 2012 Health and Social Care Act.

We are approaching the fourth anniversary of the Act. Key structural changes have been in place for significant periods of time. What this means is that the practical results of these alterations can now be evaluated against the what they were set out to achieve.

Clinical Commissioning Groups (CCGs)

CCGs represent the single largest change to the existing structure of the NHS. Prior to the 2012 Health and Social Care Act, the planning and commissioning of healthcare was done by primary care trusts, or PCTs on the behalf of regional or local populations. The budgets of PCTs were set by strategic health authorities (SHA), who subsequently answered directly to the Department of Health. However, since April 2013, these have been replaced by Clinical Commissioning Groups, or CCGs. This new structure was argued to streamline and cut down bureaucracy that was limiting practical provisions of care. CCGs were advocated as being more localised in nature, and as having permanent links and representation from GPs, two points the Conservatives argued would lead to a better understanding and a more accurate provision of what care the community required.

So how have CCGs faired in practice in living up these stated aspirations? In short, not very well. CCGs have not and do not reach this status of being ‘local’ for a number of reasons. CCGs in theory are led by GPs; however in practice the daily demands on GPs means that they are simply unable to properly fulfil this role as commissioning administrators. The functioning and operation of CCGs is subsequently left to small, self-elected executive boards, who in reality rarely engage the wider community of GPs and health practitioners before making extensive and broad decisions.

The reason detailed above gives rise to legitimate concerns about accountability over decision-making. However, this concern is dwarfed by a much larger issue. As part of the Conservative’s new NHS structure, CCGs were made accountable to the newly-organised NHS Commissioning Board, labelled as NHS England. Outlined as an independent authority, this NHS Commission effectively polices the actions taken by CCGs.

NHS England has powers to do the following:

  • Vet the constitution of every CCG;
  • Intervene in a CCG’s activities, which can include making changes to CCG executives if the group does not fall in line;
  • Impose financial limits on a CCG;
  • Set guidelines on how a CCG must operate;
  • Define the scope a CCG possesses in making basic decisions, such as, fundamentally, who should provide clinical services – effectively, the exact and central duty CCGs were set up to have.

It’s also worth noting here that the freedom of a CCG to make decisions on its specific services is further restricted by wider provisions in the Health and Social Care Act itself. Section 75 of the Act specifies that CCGs must open health services to tender, or open them up to ‘Any Qualified Provider’. A service provider may include publically-funded NHS departments, or private companies or specialists. What this means in practice is that, from the outset, CCGs have been pressured to open as many of their health services as possible, and to as many providers as possible – even if the existing provider of a service, usually being the NHS itself, is fulfilling these services adequately. Since this is a stated requirement and a provision effectively built into their structure, the NHS Commission thereby has the authority to intervene and rearrange the executive and running of a CCG if it deems that a group is not following a strategy it sees as correct.

Now, let’s remember here: CCGs were designed and implemented as superior to existing NHS structures because they were to have a genuine and clear accountable link to the health needs of local populations, and that they were free to make decisions based on these needs.

In practice, CCGs are unable to meet these touted aims. There are a few reasons for this. The first revolves around the wider structure CCGs form a part of. The emphasis on ‘local’ is ultimately stifled from the outset because of the authority and oversight given to the NHS Commission. Decisions that were once in the hands of doctors in local areas, that were then transferred into the hands of broader CCGs, are in actuality controlled by the NHS Commission. This commissioning executive neither public nor local, and, as defined in the Health and Social Care Act, is no longer accountable to the Department of Health and subsequently Parliament.

The second reasons stems from the Conservative’s wider ideological commitment to introducing private companies and competition into the NHS service market and, fundamentally, to introduce private interests into the decision-making bodies of the NHS. The requirement and steering of CCGs to put health services out to has resulted in the very-deliberate creation of an internal market, a market where private companies can compete with existing public NHS departments to ‘win’ or be commissioned to fulfil health service contracts. Though David Cameron stated his new structural plan would reduce bureaucracy, the creation of this artificial market has undoubtedly increased bureaucracy, and with it increased costs; estimates of how much it costs to run and maintain this market range from £4.5 billion and £10 billion. The fact that CCGs must operate via this market, and make decisions on providers not based on their own needs but more based on the views of their higher-ups, demonstrates both increased waste and administration and decreased transparency.

Because of wider policy decisions and policy direction, and because of the overarching influence and power of the NHS Commission, CCGs are unable to reach anywhere near expectation. Ideals of CCGs being local and representative healthcare coordinators are rendered void by the power and centralised nature of the NHS Commission. Decision-making and cohesiveness is further limited by this and by the demand for use of the internal market. In practice, CCGs have been used not to increase local accountability and decision-making, but to remove it.

 

 

 

Explained: NHS Structure and CCGs

VAT and the NHS: Assessing the Loophole that Unfairly Advantages Private Companies

Will Stent discusses the longstanding VAT loophole that has allowed private companies an deliberate unfair advantage in bidding for NHS contracts.

Since taking office, the Conservative government has embarked on a commitment to increase the role of private providers and private companies within the NHS. The 2012 Health and Social Care Act broke the door open to private investment. Not only that, but the Act deliberate restructured the management systems of the NHS, and in doing removed these management structures outside the view and scrutiny of parliament. Decisions and information regarding private investment and the processes of competitive bidding have therefore been taken away from the main entity of public accountability and awareness. This has allowed questionable practices and unjust systems, either resulting from deliberate decisions or as inadvertent side-effects, to continue to be exploited and unchecked.

An example of such a fundamentally unfair practice – one that has been allowed to continue, and one that is beneficial to private companies and unfair to public NHS trusts – is the way in which private firms have been able to underbid NHS trusts because of a loophole in VAT. Under current policy, private companies, as businesses, can retrieve the VAT they accumulate whilst buying medicines, effectively eliminating VAT on these purchases. The NHS is not extended this same privilege. This establishes a deliberate competitive advantage for private firms, and means they are able offer services at an apparent ‘cheaper’ price than public providers.

The evidence for this originates from the private healthcare provider Bupa, who posted the following table on their website explaining how they are able to offer chemotherapy treatment at a lower cost than the NHS – though only because of this advantageous arrangement on VAT:

The hypocrisy of having such a clear advantage in favour of private companies embodied in the Conservative’s wider policy of an internal market that is supposedly built on being ‘fair and competitive’ is obvious, and has been called-out by a number of public interest groups. Richard Murphy, policy adviser at the Tax Research UK, said:

 “For some reason the Government has decided private pharmacies can get VAT relief but have not extended it to the NHS. It is an absurd situation that has become a huge issue due to the new situation where the NHS is now an internal market.”

The existence of such unchecked bias in favour of private companies should be a surprise, as should the fact that key government officials knew of its existence and yet did not seek to address it or bring it forward for wider scrutiny. It should be further alarming that, when questioned on the existence of this fact, the Treasury refused to elaborate. But it is not. This is because of the simple reason that, since the passage of the 2012 Health and Social Care Act, government policy has been single-handedly motivated by desire and ideological commitment to privatise the NHS. If achieving this end result means deliberately undermining the NHS and creating a field biased against public providers, then it seems the government are more than willing to exploit opportunities to do so.

 

 

References:

‘Revealed: the VAT loophole driving NHS pharmacy services into hands of private sector’, RT (15 May 2015): https://www.rt.com/uk/258909-nhs-privatization-vat-scandal/

Michael Gold, @radicalmic: https://twitter.com/radicalmic/status/598974578531106817/photo/1?ref_src=twsrc%5Etfw

Jim Armitage, ‘Revealed: the VAT loophole driving NHS pharmacy services into hands of private sector’, The Independent (22 July 2014): http://www.independent.co.uk/news/business/news/revealed-the-vat-loophole-driving-nhs-pharmacy-services-into-hands-of-private-sector-9622064.html

VAT and the NHS: Assessing the Loophole that Unfairly Advantages Private Companies

The NHS and ‘Privatisation by Stealth’ – Part Two

In Part Two of ‘Privatisation by Stealth’, Will Stent assesses the Conservative’s secrecy and deliberate continuous suppression of information in their efforts to privatise the NHS.

The case detailed at the outset of Part One – Alliance Medical’s 10-year, 80 million contract – not only exemplifies the Conservative’s agenda of privatisation, but also the way in which this government implements this agenda. Despite the NHS being ranked number one in a survey of the world’s top healthcare systems – and despite the fact the NHS ranked second lowest in expenditure – the Conservatives have long trumpeted the current nature of the NHS as unsustainable. Though both academic and public opinion do not support the Conservatives’ view, the government has not been dissuaded from stripping down and selling-off the NHS, and doing so without proper public awareness.

In Part One we briefly touched on how opening up NHS services and contracts to a fully competitive market meant that public trusts were now being forced to compete for these very contracts. This constructed competitive market is arguably the single biggest force working to undermine the NHS, both financially and practically. This market is established and maintained by Conservative policy and represents the focal point of the Conservatives’ reforms. Finally, its establishment has been one that is deliberately shrouded as much as possible from full public scrutiny.

The government has not released a figure as to how much actually running and maintaining this marketplace is costing. This is either because they genuinely do not know, or because they are suppressing it. Current estimations vary; the National Health Action party put the cost at £10 billion; the Centre for Health and the Public Interest have put it conservatively at £4.5 billion. Under the current strains of cuts, the NHS must make the avoidance of waste and unnecessary expenditure an imperative; this ‘market’ is a major source of waste, especially when the ‘start-up’ costs attached to each phase of this competitive market have further spiralled without check into the billions.

Statements on this market have further come from inside Westminster. A Health Select Committee revealed that the costs of running the NHS as a competitive market equated to 14% of its total yearly budget, with specific dramatic increases in transaction management and administration costs. Four of the Department of Health’s most senior civil servants, interviewed in the Committee’s proceedings, could not give accurate figures for staffing levels and administration and commissioning costs regarding the internal market arrangement.

There are some fundamental factors that must be remembered in this. First, this emphasis on competition has not led to any actual or tangible improvements in the delivery of patient care. Second, the agenda of privatisation being pushed by the Conservatives has forced important resources and finances away from patient care and toward costly and ultimately unnecessary bidding processes. Third, none of these costs or arrangements have communicated appropriately to the public, nor have they been presented for necessary parliamentary scrutiny and analysis.


 

The construction and empowering of this internal competitive market is the clearest example of the Conservatives implementing a privatised structure across a public service, and doing it with stealth and without proper scrutiny. But it is certainly not the only example.

Prime Minister David Cameron has personally quietly promoted the idea of paying upfront for the NHS, as a means of addressing its apparent-but-unsubstantiated ‘unsustainable’ nature. This cost would be through additional charges and insurance, not through an increase in tax. An enquiry into bringing this about was launched, not through party leadership, but through the recently-appointed – and barely-visible – Under Secretary of State for NHS Productivity, Lord David Prior. These discussions were downplayed and given fractional coverage, considering the potential consequence of such a policy. Not only does such a policy contradict the fundamental founding principles on which the NHS was established, but the idea of a pay-for-use NHS has already been discussed and subsequently dismissed by a number of top think tanks[8]. Nevertheless, the fact that those Tory Peers who did discuss this concept moved for an enquiry demonstrates the willingness to push forward with an unpopular and unsupported agenda purely out of an ideological commitment to competition and profit.


 

The three founding principles of the NHS, as laid out by its founder Aneurin Bevan on July 5th 1948, were broad yet simple: it would meet the needs of everyone; it would be free on the point of delivery; and it would be based on need, not ability to pay. Tied into this and repeated since its inception was a commitment that this health institution belonged to the public. It was a right.

In a short space of time government policy has moved the NHS to a place distant from these founding ideas. If the public decided such a move should happen, or at least gave the vaguest nod of approval at such decisions, the direction of current government policy could claim some justification. But it simply can’t. Opinion polls since 2000 have consistently shown the public’s overwhelming rejection of any privatising or corporatising of NHS services9. The subsequent secrecy and deliberate shrouding of decisions made by this government show that they are aware of this, but have chosen to ignore and disregard. It seems clear that the current Conservative government will continue such a policy of stealth until the NHS resembles the organism they want. It will be an entity the public neither wants nor deserves, and though the title of ‘NHS’ will still be used, it will not resemble or share anything of the NHS established and admired in 1948.

 

 

 

References

Denis Campbell & Nicholas Watt, ‘NHS comes top in healthcare survey’, the Guardian (17 June 2014).

‘Government is failing in its ethical duty to prevent NHS waste’, NHA (6 November 2014): http://nhap.org/if-you-push-too-hard-nhs-efficiencies-become-inefficiencies/

Calum Patton, ‘At what cost? Paying the price for the market in the English NHS’, Centre for Health and the Public Interest (February 2014): http://www.chpi.org.uk/wp-content/uploads/2014/02/At-what-cost-paying-the-price-for-the-market-in-the-English-NHS-by-Calum-Paton.pdf

Vincent Moss & Nicola Fifield, ‘Savage Tory cuts and privatization have left NHS in critical condition’, The Mirror (3 May 2015): http://www.mirror.co.uk/news/uk-news/savage-tory-cuts-privatisation-left-5626911

Richard Grimes, ‘Government proposes inquiry into moving to a ‘pay NHS”, openDemocracy (15 July 2015): https://www.opendemocracy.net/ournhs/richard-grimes/government-moves-to-consider-nhs-user-charges

Colin Leys & Stewart Player, ‘The Plot Against the NHS’, Renewal: http://www.renewal.org.uk/articles/the-plot-against-the-nhs/

The NHS and ‘Privatisation by Stealth’ – Part Two

The NHS and ‘Privatisation by Stealth’ – Part One

The Conservative government recently awarded an 10-year, eighty million pound NHS hospital scanning contract to private firm Alliance Medical – despite a competing bid being offered by an NHS trust that was £7 million cheaper.

The bid entered by the NHS Trust of Royal Stoke Hospital, Staffordshire was rejected in favour of Alliance Medical by health service’s head office, despite the private company charging £7 million more for the contract. Alliance Medical’s board members include Conservative MP Malcolm Rifkind, who earns £60,000 by sitting on the panel.

Neither the government nor the private firm itself have said as to why the contract was awarded at a greater expense, or what the extra expenditure will bring. Negotiations and reasoning behind the decision have been kept secret.

Ian Syme, the coordinator of North Staffordshire Healthwatch, uncovered the public health services’ cheaper bid and its subsequent denial only by ‘digging through 150 board papers’.

‘There’s little or no openness or transparency in these tendering processes, no public debate, no meaningful public scrutiny… The evidence is stacking up that NHS England have a privatisation agenda… [they] are at the moment privatizing the NHS by stealth’ 1.

 


 

This Conservative government’s agenda for the NHS can be aptly summarized in Mr. Syme’s own words; ‘privatisation by stealth.’

The government is steadily building on its agenda of privatization for the NHS, without proper public scrutiny, without appropriate critical assessment, and without the necessary public profile.

This agenda of privatisation should not come as a surprise, and neither should the government’s actions to ensure such an agenda is implemented with as little noise as possible. After all, what better way for the government to implement a policy – motivated by ideology, in contradiction with their initial promises, and against public opinion – than by stealth…?

David Cameron, in the run-up to the 2010 general elections, promised that under a Conservative government there would no cuts to front-line services and, most infamously, “no more of the tiresome, meddlesome, top-down re-structures” of the NHS.
image

On the wider issue of public transparency in government affairs, Cameron had previously stated politicians would have to “let go of the information that we’ve guarded so jealously.

These promises have long been brushed aside; the Tories have even engaged in a furious quest to erase these statements – as well as all pre-May 2010 press releases and speeches – from the internet. The Conservative government has and continues to demonstrate a complete abandonment of these election promises, and an actual commitment to a policy program for the NHS based on creating profit. This program truly only serves private interests and themselves.

 


 

The Conservative’s disregard of its promises to protect the NHS and the subsequent implementation of its privatised agenda have been seemingly continuous since the party’s success in the 2010 election. A month after promising to stop any wasteful reorganisation, Andrew Lansley put forward a proposal for the biggest reorganization of the NHS, based on years of extensive development. This formed the basis of arguably the crowning achievement in the party’s first term in office; the 2012 Health and Social Care Act.

Representing the single greatest action in changing the NHS since its inception in 1946, the Act removed any barrier to – and actively encouraged – the breaking-up and selling-off of the NHS and its various limbs. It lifted the cap on how much trusts could earn from PPI – Private Patient Income – from 2% to a staggering 49%, effectively establishing a two-tier NHS and encouraging the perception and identity of the public health service as a potentially-profitable institution.

The Conservative’s hefty reforms of the NHS have subsequently opened the public service to competitive markets. Again, these have been implemented by a government that promised the following: first, that no reforms would be even be introduced; and second, that any wider privatisation would be minimal, and that the NHS would be largely insulated from full economic competition.

The practical effects of the 2012 Health and Social Care Act have already been felt. The NHS Support Federation showed that private firms were awarded £3.54 billion of an available £9.63 billion of NHS contracts in England in 2014, a 36.8% win rate. The 3.54 billion worth of healthcare contracts is five times the value of contracts that were awarded to private firms in 2013.

Similarly, a report on GP-led clinical commissioning groups (CCGs) revealed that private firms won 40% of the medical contracts these CCGs have put out to tender, worth £2.3 billion.

The clear commitment the Conservatives have to extending the role of private companies in the NHS – and the Tory leadership’s emphasis on competition over contracts – has added to the already extensive financial difficulties faced by many individual NHS trusts. By extending the role of private services and ultimately increasing the total number of bidding processes and arrangements, publically-funded NHS trusts are having to spend valuable resources on bidding and competing for contracts, many of which they have already been fulfilling. Private companies do not also face the same public scrutiny and checks on the services they provide. And because they are private, the are only accountable to their board members and investors, whose majority interest is in making a profit. Such an business ideology and focus may work in some sectors, but not in a public service, whose ultimate priority is patients and their health – not profits.

This first post has covered exactly what direction the Conservatives have taken and are currently following in regards to privatizing the NHS. The practical ramifications detailed above of the Conservatives’ reforms is just one side of the coin; the level of secrecy, the hidden costs of this policy, and the deliberate suppression of information with which this has been done together form the other side.

”Privatisation by Stealth’ – Part Two’ deals with this second side to the Conservative’s program of NHS privatization.

The NHS and ‘Privatisation by Stealth’ – Part One