Feature

Can we afford to go private?

Fifty years on, a consultants’ right to work privately is still jealously guarded and the effect this has on the NHS is still unclear. Laurence Pollock examines New Labour’s uncertain position on private health care

Two long decades ago, a Labour health secretary set out to purge the trappings of wealth and privilege from the NHS. She wanted to cleanse the hospital temples of ‘pay beds’, implementing the party’s manifesto and challenging the idea of treatment based on the cheque book, not need.

The issue was clear cut but Barbara Castle ran up against hospital consultants, the same caste who had made Bevan’s inauguration of free public health so difficult in the postwar years. Determined to launch a national service, he ‘stuffed their mouths’ with gold. The resulting hybrid contract, which employs consultants but also allows them to do private work, has been near the heart of the NHS’s dilemma for 50 years. Attempting to probe it still touches raw nerves.

Mrs Castle had already clashed with the consultants over pay and they were furious about her plans to phase out pay beds and regulate private practice more tightly. Ultimately she lost because Harold Wilson would not back her against a formidable alliance of the BMA, the hospital consultants’ association, the royal colleges and the private insurers. Some private beds were eliminated but, ironically, the debacle resulted in the growth of private hospitals and more people seeking health insurance – the start of a long upward trend.

Between the 1970s and Labour’s return to power in 1997, the NHS showed more resistance to the Conservatives’ wholesale privatisation than most public services and utilities: it was still national (just), still free at the point of delivery (give or take a few prescription, dental and eye test charges), and still provided by a huge medical and nursing profession broadly committed to its ethos (but with questions about consultants’ private work and many GPs operating as fundholders). Perhaps one of the most serious deteriorations was the reduction in NHS dentistry. Nevertheless, the new Labour health secretary, Frank Dobson, inherited a recognisable institution.

But society as a whole has dramatically altered since 1979:

• Improving living standards and better health have extended life and the need for nursing and residential care has grown inexorably. There are now 500,000 people in long-term care.
• Technology and pharmaceuticals have advanced at a frightening and costly pace, raising expectations that many previously fatal conditions can be treated or at least alleviated.
• Private health insurance has mushroomed, fed both by massive advertising campaigns and the drip, drip effect of NHS waiting list scare stories.
• The physical infrastructure, the many hospitals built through public subscription and philanthropy a century ago, were desperately in need of replacement when Labour returned to power. The hospital building programme to be delivered through the Conservative’s Private Finance Initiative is the most high-profile test of Labour’s philosophy. The economic case for PFI is analysed elsewhere in this issue, but politically PFI has attracted sustained and widespread criticism from the unions, the BMA and many Labour backbenchers.

As Labour approaches the halfway mark in this parliament, there are still several questions looming. First, is it still committed to universal, free health care, paid for out of public taxation and allocated according to need? Labour answers ‘yes, of course’, but it has no plans to provided universal free nursing care to elderly people. Second, will it treat public and private health care as separate, marginalising the latter as irrelevant to the public’s health needs but nevertheless subject to strong regulation?

There is a growing public critique of health service delivery. The community health councils, established 25 years ago, and the new Commission for Health Improvement reflect continuing lay and political interest in the quality of service. And the question of official monitoring and pursuit of best practice has crossed the public-private divide, forcing the government to consider regulation of private medicine.

In July, the House of Commons health select committee called for independent regulation of private health care facilities. Its report pinpointed many loopholes, attacked cosmetic surgery clinics and warned about the rights of mental patients detained in private care.

The Department of Health, sharing the same hymn sheet, launched its own consultation which finished in September. Proposals include clear complaints procedures and an annual publication of complaints made available to potential users. But while everyone agrees with the principle, just how tough – and costly – will genuine public regulation be?

Justin Keen, a fellow of the King’s Fund, queries the ability of a new regulator to manage the complex mix of private provision, which includes nursing care, elective surgery and complementary medicine. And he warns: ‘We have no idea what the additional costs of regulation will be on a single session of osteopathy, for example.’

The Association of Community Health Councils, also acknowledges the challenges. ‘The public-private interface is very blurred,’ says Donna Covey, chief executive of the association. ‘The local CHC led the campaign on the malpractice of Rodney Ledward (the Kent gynaecologist accused of damaging many of his patients). But this included both private and NHS sector cases.

‘There must be some sort of levy on the private sector to pay for the regulation. CHCs are struggling at the moment because they have had their budgets cut.’

The government’s answer to the second question, therefore, appears to be ‘Yes, public and private are separate and we will protect private patients’. Yet experience elsewhere has shown that a commitment to monitoring is useless without powers and resources. This detail is not yet forthcoming.

The third even more critical question is will the government probe how far the private sector feeds off the NHS – providing emergency treatment, for instance, or offering discreet use of facilities to consultants doing private work?

In opposition Labour put down a serious marker for tackling the problem. In a policy document (not included in its 1997 manifesto) it pledged to act on the 1991 Health Committee recommendation that: ‘The Department of Health carry out a study to determine the influence, either positive or negative that private practice in the same unit or specialty has on waiting lists.’

In 1994 Labour published evidence that in 1992 the median earnings of a consultant from a part-time NHS contract were £42,000, topped up by £17,000 from private practice – nearly 30 per cent. But healthmatters is aware of Inland Revenue evidence that consultants are now, on average, deriving more than 50 per cent of their income from private work – calling into question the commitment of some consultants to their NHS contracts. And a recent Pay and Workforce Research publication showed two-fifths of trusts were docking consultants’ pay because they were carrying out excessive private work.

David Hinchliffe, chair of the Commons health select committee, is pessimistic about a possible ‘Third Way’ on the NHS and the private sector and wants the two provisions separated.

‘I have seen a substantial amount of evidence of the way waiting lists are higher in areas where consultants have an interest in private practice,’ he says. ‘I believe there has to be some action taken to address this. The select committee was concerned at the way patients frequently pass between the NHS and private sector and back again, abusing the state system.’

The select committee’s deliberations are just part of a growing call for a more precise and transparent contractual relationship between consultants and taxpayers. Four years ago, Channel 4’s Despatches programme, ‘Serving Two Masters’, highlighted the anomalies in the system.

But what are the prospects for more control of consultants’ working arrangements?

The DoH confirms that it is renegotiating consultants’ contracts. ‘This will give us a chance to tackle the minority of consultants who do not co-operate in working productively for the NHS and put private practice before their NHS work,’ a spokesperson said.

But are trusts themselves dependent on private patients using their pay beds? It is an issue which worries Unison, which represents 500,000 health staff working for the NHS. Steven Weeks, a Unison national officer, says the union believed that ‘as far as possible, private health provision should be removed from NHS facilities’.

The difficulty is that, under present funding, many trusts are dependent on their private sector beds. Unison is concerned at developments that might jeopardise the position of its members working for the trusts. ‘You have the ironic situation where people are being treated privately in NHS facilities by NHS staff who are moonlighting,’ says Mr Weeks. He also pointed to figures that show most PFI schemes planning to expand private health care wings.

These underlying tensions are not addressed in Labour’s health blueprint for its next term – the report of the National Policy Commission. In an extensive document, approved at the recent party conference, there is no hint of tackling consultants’ contracts. It cites the Royal Commission on care of the elderly, saying ‘there are no easy solutions’. There is some recognition, however, of the need for more NHS dentistry. But the support is mostly for ad hoc schemes rather than an overarching NHS framework.

The party is also unapologetic about proceeding with 25 PFI projects, claiming they will be tested for ‘value for money’. It does stress its opposition to the privatisation of clinical services, and promises to end the transfer of ancillary staff to the PFI consortium. This may well take the sting out of union-led opposition but does not answer questions about PFI’s overall costs.

It is pretty certain that no matter how fully the free health care principle is diluted, governments will insist that the NHS is still true to its founding principles. Yet Labour is committed to the principle, throughout government, that good outcomes are ultimately more important than ownership and source of provision. The health debate will involve asking if the means, including PFI and staff who mix public and private work, have an effect on the outcomes.

The DoH insists that the existence of pay beds must not compromise the NHS performance of a trust. An apparent rise in the number of pay beds in the first 15 PFI schemes was attributed by a spokesperson to a skew in a single project in Calderdale.

The issue of public and private provision promises to be a lengthy, complex and emotive debate. The life chances of a whole generation may depend on the outcome.