Public anxiety about access to healthcare is increasing. Time to learn from past experience?

If we want to reduce the numbers of people having to seek access to private sector health it makes sense for the NHS to use that sector to shorten waits and lower public pressure for its growth.

Famously, to cut long waits, the last Labour Government used the private health sector to treat more many more NHS patients. As I shall show next week this was not the only way in which it worked with the NHS to cut long waits. It may not even have been the most important way. But it was done, and it was very controversial.

The policy to use the private sector to cut NHS waiting lists was initially outlined in the NHS Plan,

“11.21 A closer working relationship between the NHS and the private and voluntary sector will be mutually beneficial. By putting the relationship on a new footing NHS patients will benefit. It will, in particular, contribute to winning the war on waiting for treatment in the NHS”

Page 100 NHS Plan July 2000

It continued into the 2001 Labour Manifesto and, (for full disclosure) I became Alan Milburn’s special adviser in the Department of Health in July 2001 and helped to implement the policy.

However, this is more than an interesting historical policy and political detail.

Given the fact that the Labour Party have made it clear that if they win the next election, they will return to using the private sector, we will be returning to this as a policy and as a political matter.

“To end the threat of a two-tier health system, we will use spare capacity in the independent sector to ensure patients are treated quicker.”

Keir Starmer, May 2023 –  Five missions for a better Britain

Looking a bit more carefully at this policy promise it is not only about ‘using the private sector for NHS patients to bring down waits’  – which is what people usually think the policy is about. What it promises is to reduce public dependence on private medicine by using the spare capacity of that sector to reduce NHS long waits.

This policy aim recognises that the main driver for people to seek private health insurance is long NHS waits. Reduce NHS waits, and you reduce the anxiety that forces more people to seek private insurance (so much is common agreement). But that is one aim and method of this policy. There is another.

The method is to use the private sector to bring down long NHS waits to reduce the anxiety of NHS patients by giving them treatment. The aim of the policy is to reduce the numbers of people so worried about waits that they take out private medical insurance. The secondary aim is to reduce pressure on better-off members of the public to bolster a two-tier health system.

Yes. In short, you use the private sector to treat NHS patients in order to reduce the public anxiety that otherwise would increase its size.

To make this policy work the Labour Government, between 2002-7, increased the size of the independent sector by creating a new form of provider – the Independent Sector Treatment Centre. (ISTC) At the time these were imported providers from South Africa, Australia, Germany and other countries together with imported staff. These were primarily organisations that provided a single form of operation. They also had high productivity to provide an many NHS patients as possible with treatment. It recognised that the problem for the NHS at that time was a lack of capacity and we needed to import both staff and organisation. From 2024 it will take some time for newly trained staff to come through. We will need new capacity.

This policy, along with all the others, worked. Long waits came down, and by 2010 70% of the public were satisfied with the NHS.

But the question to ask is why the private sector should play a role in treating NHS patients when they know that by reducing waiting lists they will also reduce the size of a sector that grows precisely because of those long waits?

Why should they, in the short term, do something that cuts the need for them in the long term?

To answer this question, I refer you to the Financial Times of 23 April 2004. They had an editorial that explained this.

“The government is demonstrating that it can create a market in healthcare. It is bringing in US, Canadian and South African heath care companies to provide new treatment facilities for NHS patients which will deliver care in a far more efficient way……Existing private hospital groups are thus left with the choice of entering the new NHS market, or defending the existing one as NHS waiting times fall.

Nothing was being done in secret, so the FT is not demonstrating great detective skills here. What they appreciated is that it is possible for governments to MAKE a market rather than simply accept the market that existed at the time.

This is key to how any Government needs to work with the private health sector. Don’t just accept what is there but use the power of market making to create something new.

A report in the FT on the same day stated that,

“Private practice could disappear in parts of the country as the NHS cuts waiting times and overseas entrants to the private hospital market drive down surgeons and anaesthetists’ fees, the chairman of the BMAs private practice committee warned.

The government is investing more in this area (diagnostics) and is likely to set a target of maximum wait from GP to operation of four months by 2009. Were hat to be achieved, demand for private practice would fall, hitting insurers. Special treatment centres would be doing work for the NHS but offering consultant fees well below traditional payments.”

Part of the controversy about ‘using the private sector’ is caused by a belief that government should not help develop an existing market in private heath care. What the FT understood (and supported) was something very different. It was government making a new market in healthcare and using that new market for the overall aims of the NHS – to cut waits for NHS patients.

An activist government seeking to meet its social goals, doesn’t just work with existing markets – it creates new ones that are organised to meet those goals.