Issue 227 of SOCIALIST REVIEW Published February 1999 Copyright © Socialist Review
The current crisis in the NHS is not the result of a major flu epidemic--there certainly is flu, but not on the scale of a major crisis, or epidemic. Why is it that a small or moderate amount of flu is capable of throwing the whole system into chaos?
The fact that things are busier in the winter is increasingly being recognised by governments. Even the Tories came up with 'winter pressures money' where governments put money into the NHS around specific funded initiatives--for example opening up more wards and trying to achieve earlier discharges from hospital. But what is quite clear is that these sorts of special initiatives have been overwhelmed this year.
The other initiative which has received extra funding is the waiting list initiative. One of Labour's five key election manifesto pledges was to reduce waiting lists--they went up after labour was elected, although they are coming down at the moment. But it may well be that both of these two things have caused this rather unhappy conjuncture for the government. Just as it is trying to pull more patients into hospitals to deal with the waiting lists this has used up all the slack in the system so that it can't cope with the moderate amount of flu.
The trouble is that when a sum of money gets allocated by the government which is specifically earmarked around the waiting list initiative, it is very often the case that hospitals are not able to use that money. This is because over the years operating theatres have been closed, beds have gone, staff have been cut and wards have been closed. Hospitals are physically unable to respond to the financial tap being switched on for that amount of time.
One then has to ask the question, why would this not have happened five or ten years ago? This means looking at the number of beds available in the system. It is always difficult to talk about beds because, as health service managers never fail to point out, what is important is the amount of 'activity', that is the number of patients being treated in the hospitals, rather than simply an arithmetical bed count.
There is no doubt that there have been major advances in surgery, so that many illnesses can now be treated as a day case or, at most, an overnight stay. This means one bed can deal with five patients in a fixed period of time whereas previously it would have dealt with only one. However, there is also no doubt that over the years the amount by which beds have been cut far exceeds the gains which have been made by those advances in surgical and medical technology. This trend has carried on under Labour.
One of the key ways in which bed cuts are planned under Labour is linked in with the new method of financing hospitals. This is to continue and further refine the vehicle that the Tories introduced--the Private Finance Initiative (PFI). The PFI is about providing a profitable opportunity for business investment. For this to succeed it has to be able to guarantee high marginal rates of profit--to make sure that each bed is producing the maximum amount of profit. If there is a hospital that has 20 or 30 percent of slack in it to cope with winter pressures then that means a bed occupancy rate of about 80 percent. When I was a medical student this was regarded as being the optimum level that a hospital should operate at in order to be able to deal with fluctuations in admission rates or emergencies. Now most hospitals are operating at 99 or 100 percent bed occupancy rate, or sometimes even 120 or 130 percent occupancy rate.
A good example of this is the patient who came to see me the other day. He had a minor operation on his foot which was performed with new laproscopic keyhole surgery techniques. He arrived on the ward ready for the surgery yet there was no bed available. He then had the operation, and only after the operation did they put him in a bed. He was then immediately sent home. It was clear to him that they were desperate to try and vacate that bed. He then came to see me as his GP because no one had had the time to explain to him the likely effects of the operation, how long it would take before he could resume work, how long the dressing should remain on, if he was due to have an outpatients appointment to come back and see a doctor and so on. He knew none of this information because he had been slung out of hospital so quickly. The result for the hospital was that his bed would have dealt with two people on that day.
Another element of the crisis is the shortage of staff--this is absolutely key. Successive staging of pay awards has produced a general demoralisation in the NHS workforce that has meant a lot of wastage of resources. For example, training any member of staff in the NHS requires a lot of investment. If the health service loses that person, say someone leaves nursing, then it means having to start all over again. Frank Dobson recognises that something has to be done about nurses' pay, and the government is under so much pressure at the moment that there may be a movement to increase nurses' pay above the rate of inflation. But compare that against what has happened in the last two years under Labour and 18 years under the Tories. It is not going to solve the crisis, unless it is sustained over the lifetime of two parliaments--nearly ten years. This I really can't see happening.
I am involved in the new Primary Care Groups, and I have access to the financial figures of the health authority (which are public documents). The 'growth money' that the Labour government has put into the NHS is not really what it appears to be. For example, the Treasury says every year what it thinks inflation will be, and the NHS, education and every other sector is given a budget based on the Treasury forecast. But the actual rate of inflation very often exceeds the Treasury forecast, so to begin with it is starting with a cut. And in the NHS there are what are called 'cost pressures', increases in costs over and above inflation. One cost pressure is the drugs budget. The NHS has to pay the pharmaceutical industry 7 to 8 percent more each year on average for drugs. This goes to fund drug company profits which are fixed at 20 percent and which the government agrees each year with the drug companies with a fixed price deal.
There are also the costs of good new drugs which are expensive. For example there are now new drugs that are available for schizophrenia--these are very expensive, but for a large number of people they are very effective as they allow patients to get a job and have a good quality of life. Yet this is a massive cost pressure, and because the government has made mental health a national priority in its 'healthier nation' strategy, it means these new drugs have to be funded.
The other thing Frank Dobson talks about is the need to introduce 'equity' into the NHS--or the end to 'postcode medicine' as it is called. One of the big political criticisms after the Tory years was that the NHS no longer offered a national level of service. Fundholding practices were getting money thrown at them, whereas non-fundholding GPs were starved of cash and faced long waiting lists. So there has been a commitment to introduce equity. This is a good thing, but the guidance that we get is that none of the moves towards equity should allow any destabilisation of current service patterns--this is jargon for no cuts in the richer areas to achieve equity. All the moves towards equity have to come out of the small amount of growth money that is put into the system. But if you look at spending in the inner city areas or the deprived rural areas it is going to take a good two terms of parliament in order to get some sort of equity.
In the area of east London where I work, although we have had an above average amount of growth money allocated to us, it is nearly all swallowed up. So while the government may put money into bringing waiting lists down, it will do so at the expense of producing pressures elsewhere in the system--this is what is happening with the so called flu epidemic. The system is under so much pressure that the government diverts resources to deal with one crisis but then another develops elsewhere. This is going to continue to happen.
Another important cost pressure for a health authority is capital charges. These were introduced in 1990 by the Tories with the introduction of the internal market. Every hospital trust gets its building valued commercially by the district valuer, and it has to pay 6 percent back to the Treasury out of the money it receives as a kind of notional rent. The Tories did this as another pressure to force health authorities and trusts to look carefully at what building stock they possess and to ask, 'Do we need as many hospitals as this, and wouldn't it be better if we concentrated all of our services from two hospitals into one?' So there is a financial motivation to pursue a cuts strategy.
In many areas property prices are going up by more than 2.5 percent per year. So the capital charges that go back to the Treasury have gone up by more than 2.5 percent. This is another cost pressure that eats up the growth money.
The Tories put in place the internal market--this means that every operation or any procedure that happened in the health service was costed and priced, and there was a purchaser and a provider. There was a lot of exchange of paperwork and a lot of bureaucracy. Labour is already moving much faster on this than was expected and the internal market has now virtually gone. But now the real danger of privatisation in the NHS comes from another source and that is the Blairite 'third way'--neither private nor public but a partnership between the two.
For example, under PFI, any new hospital has to be built with private money, so it is owned by the private sector and leased back to the health trust. That private company will employ all the staff within that hospital except for the clinical staff--so there will be pressure to force wages down as a consequence of transferring the workers into the private sector. This has already started on a piecemeal basis with competitive tendering. There can be very few hospitals now which directly employ their own cleaners.
Once you have a situation where private companies own hospitals they then stand to make a profit, and increase their profit, out of providing so called 'premium' services. The corporate interest will suddenly become more powerful. As far as the health trust is concerned it will want to make money and it won't care where it comes from. This will fatally undermine the NHS. It is not a very large step to imagine that this could extend to the clinical staff. That was certainly part of the Tories' intention and it may happen under Labour. It's similar to what we have seen with Education Action Zones whereby a private company virtually takes over running a school.
The new Primary Care Groups set up under Labour are being established in each locality to take over from health authorities and start commissioning services from hospitals and from community health services. But if you look into the future and apply the third way strategy, what would happen if these Primary Care Groups fail? What if the cost pressures that I have been talking about overwhelm them? The probable answer is that they will not want to make the cuts because at the moment they are controlled by local GPs and nurses. But just as the argument now is that schools are failing, or education authorities are failing and will be taken over by private companies, in health there could be a private finance company, which by this time has developed an expertise in health service management, taking over the Primary Care Groups. This means both wings of the health service, the commissioning side and the delivery side, coming into private hands. The government has no firm ideological commitment to keep the NHS in the public sector. Its commitment is to provide a service that is free at the point of use for patients which doesn't necessarily mean it is publicly run.
The chances of further privatisation happening depend on the real balance of class forces both inside the NHS and outside. The extent to which there are successful fights against PFI or workers in the NHS gain confidence in going for above inflation pay awards will be the extent to which workers' defence organisations like the trade unions will be more confident to take on the arguments over these other sorts of issues. None of this is inevitable but it depends on the activity of socialists and trade unionists inside the hospitals and outside in not only making the arguments against privatisation but also winning much more straightforward day to day battles over their own terms and conditions. It is important to shift the ideological climate away from the inevitability of privatisation.
After years of pay squeeze and rises, nurses are likely to get special treatment this year. Labour is trying to steer its way through the immediate crisis in the NHS by relaxing the pay squeeze sufficiently to recruit more trainees and prevent senior staff leaving. So the recommendation of the independent pay review body for an 11 percent rise for the most junior nurses should be accepted, along with an increase of nearly 5 percent on the total pay bill.
But no new money will be provided to fund this. Moreover, hospitals are still paying off the debts accumulated during the past few years and have yet to meet the full cost of last year's delayed pay award. So although the nurse recruitment crisis will be eased in the summer, when most hospitals take on new staff, other groups of staff are likely to suffer.
The real scandal of NHS pay is that hospitals are having to spend a fortune to employ temporary staff brought in to cover for vacancies. Of course, there is always going to be a need for some temporary cover. But hospitals have been spending millions because of permanent staff shortages.
Taking one outer London hospital as an example; last September Northwick Park NHS Trust in Harrow was having to cope with a shortage of 141 nurses. In total there were vacancies for 283 staff. In that one month the trust spent £2.2 million on casual staff to cover for the shortages. Assuming the government was to allow a 5 percent rise on the NHS pay bill (not just for nurses), this would release a total of £4.6 million a year for this hospital--barely enough to cover two months' spending on temporary staff.
No amount of tinkering at the margins and reallocation of funds is going to deal with the long term crisis of NHS funding. Of course the NHS is facing the consequences of 18 years of Tory health policies. But Labour was elected because millions of people hoped for a complete break from the Tory past. Instead we have a policy which on current trends will see an average real increase of 3.8 percent in NHS spending under Labour compared to 3.1 percent under the Tories.