The Internal Market

One of the great things about Jeremy Corbyn’s election victory is that it is exposing a whole host of people to new ideas shaped by the left. Most of these are new activists. But it includes a layer of younger people who’s experience of the labour party is New Labour heavy.

Over the coming months there is an unprecedented opportunity to discuss and debate ideas with all kinds of people. This led to a friend of mine who had been talking to some younger labour activists asking me about the internal market in the NHS. So I thought this would be a good opportunity to lay out the basics of a debate that is probably going to come to the fore at some point soon within the Labour Party.

What is the internal market? #

For the last 30 years there has been a process of increased ‘marketisation’ of our National Health Service. This process has mainly been undertaken under internal market conditions. No politician prior to Andrew Lansley believed that they could privatise the National Health Service and get away with it. Instead they created a system where they would create a market economy inside the NHS. The idea was that this model would increase competition, create efficiency savings and prevent the bloated bureaucratic infrastructures associated with large state run monopolies.

Currently the NHS has what is known as a purchaser-provider split. The purchaser is either NHS England (for niche services such as Children’s Heart Surgery) or Clinical Commissioning Groups. (CCGs are made up of GPs and other local health leaders) The CCGs do the commissioning of more common or garden services that everybody needs.

On the other side of this artificial divide is the providers, these are traditionally also NHS operations such as acute hospital trusts, mental health services and some services offered by General Practice like minor surgery. This side is increasingly populated by private providers of healthcare who have been encouraged into the marketised National Health Service by the Health and Social Care Act (2012).

NHS England and the CCGs commission services from the providers through often very complicated tendering processes.

Any one who doubts how complicated this can get should cast their mind back to the Children’s Heart Surgery fiasco’s of the past decade. Which still show’s no clear outcome.

So what is all the fuss about? #

So far, we have a fairly complicated system for providing healthcare. But that’s not a surprise. Healthcare on a national scale isn’t that easy to provide. What’s problematic is we have allowed a dogma around markets to blind our thinking. They are defended even when they are not working and we refuse to accept there might be a better way of doing things.

1. The market costs money too run. #

Administration costs within the NHS have risen from about 5% prior to the 1980’s to around 14% in 2005 and are probably higher still today. A market makes less sense if the only person you are selling to is yourself. Advertising, marketing, invoicing, billing, monitoring all these ‘transaction costs’ add up and make little sense when you realise that effectively all we are doing is selling healthcare back to ourselves.

Take this report from October 2014, where an NHS led consortium had to spend £1 million convincing another part of the NHS it should keep doing to job it was already doing. Surely this is money that would be better spend on patient care?

There is loads more about this here in this excellent report: At what cost? Paying the Price for the Market in the NHS by Calum Paton (CHPI)

2. Private Companies are here to make money they are not here to play nice. #

Private companies who are traded on the stock market have a legal obligation to try and make as much money for their shareholders as possible. There are a number of ways they can go about doing this, but fundamentally they are required to make a profit, which in this case means taking money away from patient care and giving it to shareholders. Sometimes this can be huge amounts of money legally and or fraudulently taken out of the health economy and but into the hands of big business. Such as when SERCO overcharged the NHS by millions.

3. The market puts barriers between the best people to run our healthcare system. #

There is no market in Scotland, and while that doesn’t make everything perfect I bet it makes things a damn site easier. The problem with the purchaser/provider split is it puts a financial barrier between the people who should all be sitting around the table trying to provide the best healthcare for the region. If GPs, Council, and Hospitals get too close they are accused of anti-competitive behaviour and can be sued by private healthcare providers worried that they are getting cut out of the deal.

Not to mention the increasing legal costs of these increasing numbers of legal challenges the potential collaboration between health experts with the best knowledge of the health of a population is exactly what the NHS was set up to provide. Competition strangles the potential for a joined up collaborative workforce at source.

We consistently hamstring ourselves with the demands of the market. From weakening our bargaining power with transnational pharmaceutical companies, reducing the collective purchasing power in the supply chain and preventing the NHS working together in the interest of patients we hold ourselves back from providing the quality of care we all want to see.

The creation of the NHS is one of the defining moments of the Labour Party. Its revival and reshaping into a collective, collaberative healthcare system fit for the modern age could become a new blueprint for healthcare services around the developed world. First we must rid ourselves of our fascination and fetisishisation of market forces.


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