Private sector reforms don’t spell the end of the NHS

A strong health system can balance public and private care – just look at Australia. AAP

After a long, painful political and legislative process, the United Kingdom’s Conservative/Liberal Democrat Coalition government has finally been given the green light to proceed with its National Health Service (NHS) reforms. The Health and Social Care Act 2012 passed through parliament on March 20.

Back in March 2011, Prime Minister David Cameron promised the new-look NHS would abolish bureaucracy. But in reality, the bill includes many costly reorganisations, including replacing local health-care organisations with “clinical commissioning groups” led by doctors.

Many of these proposals have been met with grumbles from the medical profession. And rightly so – the structural changes to the local health-care organisations seem unnecessary.

Public vs private care

But the real controversy with these reforms is the new role of market forces and the private sector. The reforms have prompted fears that the key tenet of the NHS – universal access to health care – is being eroded.

The first concern is that the reforms will significantly increase the number of privately-funded patients that can be treated in NHS (public) hospitals. NHS hospitals will be able to treat more privately-funded patients – up to 49% of their caseload. At the moment, private patients make up less than 3% of volume in most NHS hospitals.

Secondly, private operators will be given the opportunity to provide hospital care to public patients, if they can meet NHS costs and standards. This, in effect, repositions the NHS as a giant tax-funded insurer, by offering public funding for private services.

So the two reforms amount to opening up the market for public (NHS) patients to private providers, and opening up the market for private patients to public (NHS) hospitals.

Political pain

These key structural changes were accompanied by a great deal of rhetoric on promoting patient choice and competition within the health service.

The bill has undergone a tortuous process of parliamentary scrutiny: it was first introduced to parliament in January 2011 and took 15 months to pass. Throughout this process, the health minister, Andrew Lansley, was forced to backtrack on some of the ruthless free-market language in the original version of the bill.

Lansley was forced to clarify: that the “competition” he was encouraging was on quality, not on price; that he, as health minister, would still have overall responsibility for providing a comprehensive health service; and that Monitor, the new hospital regulator, would be responsible for promoting patients’ interests and not just competition.

These backdowns followed criticism from media commentators, the Labour opposition, and professional bodies such as the royal colleges and the British Medical Association, about the influence of the private sector in a new NHS.

So is this fear of the private sector warranted?

Judging by the success of Australia’s health system, the answer seems to be no. We have substantial private sector involvement, but still retain universal access.

Despite protesters’ concerns, it is possible for a healthy NHS to balance public and private care. Loz Flowers

A new NHS?

So what consequences can we expect when Britain’s two reforms push ahead? There are three widely held (but often misunderstood) expectations:

1) There will be an exodus of public sector doctors into the private sector.

This is unlikely. While it’s true that doctors’ decisions about whether to work in the public or private sector are influenced by remuneration (which is generally higher in the private sector), they are also shaped by other factors. Reputation, opportunities for research and teaching, the variety of patients, professional norms and a desire to give back to the community also motivate doctors to work in the public sector.

New research from the Medicine in Australia: Balancing Employment and Life (MABEL) study shows 60% of specialists in private practice engage in some form of public sector work.

2) Channelling public hospitals resources to private patients will deteriorate the quality of public services.

To get a sense of whether standards will deteriorate, let’s look at the most significant recent policy experiment in health financing in Australia: the introduction of incentives (Medicare Levy Surcharge, premium rebates and Lifetime Health Cover) for private health insurance from 1998 to 2001.

There was a significant increase (up from 30% to 45%) in the proportion of the population with private health insurance, followed by an expansion in private hospital admissions nationally. We also saw a modest increase in public hospital admissions. But there has been no change in waiting times for public hospitals.

The treatment of private patients in public hospitals does not necessarily imply a deterioration of public service quality. A factor that influences public hospital throughput is the productivity of physicians. And evidence from the NHS itself shows surgeons in private practice are more productive than full-time NHS consultants.

3) A greater reliance on payments from consumers (known as co-payments) will reduce equity and could compromise the principles of universal health coverage.

Out-of-pocket payments would be expected to rise with the increase in use of private services, which are largely financed through direct user fees and health insurance (which usually involves a co-payment). This has been the experience in Australia following the reforms on private health insurance.

These payments have been shown to contribute to some variations in access to specialists’ services and private hospital care in Australia. But broadly speaking, the Australian health-care system, even with its unique public and private mix, does a relatively good job in maintaining equitable access, balancing individuals’ choice with universal coverage.

Two OECD reports have demonstrated Australia’s relatively good record in equity both in access to health care and in health outcomes.

Australia provides a strong model for Britain in the health reform process. It is possible to have a functioning private sector alongside a universal public system.

How the implementation of the reform plays out in Britain amid continuing opposition, is another story.

Expert Database

Want to write?

Write an article and join a growing community of more than 54,600 academics and researchers from 2,118 institutions.

Register now