For over 20 years now health system policy makers in developing countries around the world have had to endure a relentless sales pitch from advocates of market-style reforms.
Their menu of routine suggestions will be grimly familiar. These are not the painful measures which are clearly intended to contain spending (cash limits, centralisation of services, rationing and exclusions, “essential packages of care”, and of course user fees – which cut demand for services while seldom raising any significant resources).
The menu of market-style reforms can sound relatively harmless: the purchaser-provider split and “internal markets”; provider payment reforms (maybe even “payment by results”); provider autonomy; competition; outsourcing or privatisation of services; “partnership” with the private sector – even “Public-Private Partnerships”. But the same policies in the UK, have all cost more, not less.
And while it may seem that some of these proposals are to meet specific problems or to rescue failing public health care systems, beware: these are not tailored solutions, but off the peg “one size fits all” policies – which in practice are equally inappropriate everywhere.
They are the rote learning of academics in wealthy northern countries, who have swallowed whole the illusion that health care can somehow be delivered efficiently, equitably, or economically through a competitive market.
Look at Britain, one of the few wealthy countries to adopt most of these ideas – despite the lack of any evidence that they could deliver improvements or efficiencies. Since 1991, the National Health Service, which for decades had management overhead costs of 5%, has been increasingly subject to a “purchaser-provider split”, initially in the “internal market” created by Margaret Thatcher, then, under Tony Blair, a market involving high cost private providers.
The additional costs of this market split in England have increased overheads to over 14% of NHS spending – an extra £10 billion per year . Yet still there is no evidence that all the extra cost and bureaucracy have improved the quality of health care.
Tony Blair’s government also introduced highly complex provider payment reforms, the “payment by results” system – nothing to do with results, since it simply imposes a national tariff (cost per case). This makes it possible to drain money out of the NHS budget to pay private providers.
Are private providers cheaper or better value? No, and no.
In England Independent Sector Treatment Centres set up by Labour to create a new private sector provider network, charge an average 11.2% above the standard NHS cost. But they cherry-picked only the easiest cases – leaving the rest to the NHS. And they were given generous 5-year contracts, which paid them for a fixed number of operations, regardless of how few patients chose to use the service. Millions were wasted on this, taking resources from NHS hospitals.
England has experimented with provider autonomy in the form of Foundation Trusts – providers which run outside the main managerial structures of the NHS and are responsible not to the government but an independent regulator.
The first Foundations were set up from the wealthiest, most successful hospitals, and have accumulated surpluses of £2 billion – while NHS hospitals which are not foundations face mounting financial problems. Now ministers want to let them make unlimited money from private medicine, while funding for NHS patients is being sharply reduced.
Competition, outsourcing and privatisation are best assessed by looking at the damage done to hospital cleaning standards by Margaret Thatcher’s government putting cleaning and other support services out to tender in the 1980s, forcing health bosses to accept the cheapest bid. Two decades later hospitals are still struggling with the rising tide of infections and hygiene problems caused.
And as for partnerships with the private sector – the English experience again shows that it’s like sharing a house with a lion. Your ‘partner’ sees you as his lunch.
100 hospitals have been built since 1997 using the “private finance initiative” – in which the private sector has scooped up massive guaranteed long-term profits paid from the public purse. £11 billion worth of new hospitals are set to cost £65 billion – far more than just borrowing the capital. Some early PFI hospitals have already paid back double the cost of the hospitals, but still have 15-20 years to pay. Many PFI hospitals are closing beds and wards in the new hospitals and sacking staff to cut costs: some need rescuing by government.
Now services in the English NHS could be opened up by the new government to competitive bids by “any qualified provider”. But the private sector will only bid for services where it is certain of a profit. So if NHS and non-profit providers are all expected to behave like businesses in a market, who will bid for services which can’t be profitable – like emergency care, mental health or care of the elderly?
The policies only sound tempting until you investigate their consequences. Markets are OK for fruit and vegetables, but they don’t deliver equity – and are not good for health care, where those with the greatest needs have the least ability to pay – and the least political power.
Don’t copy the costly mistakes made in England.
John Lister is a freelance journalist with over 27 years’ experience in analysing health policy for pressure group London Health Emergency, and now senior lecturer in Health Journalism at Coventry University. His PhD is in global health policy, and his books include Health Policy Reform, Driving the Wrong Way? (2005) and The NHS After 60, for patients or profits? (2008).