THERE is a huge funding crisis in the National Health Service (NHS).

All over the country hospitals are being instructed to close wards and theatres and cut staff in order to reduce so-called ‘overspends’.

For example, St George’s Tooting has debts of £24m and is closing 60 beds and three wards; Leeds Teaching Hospitals are £19.6m in debt and closing 200 beds and four operating theatres; Kings Lynn is £8.5m in debt and closing a ward, Lincolnshire Hospitals NHS Trust has debts of £8.1m and is closing 5 wards and cutting 300 staff; and Stafford a £6m shortfall, axing 180 jobs.

In addition, scores of other hospitals have massive ‘overspends’.

Yet this is a time when the government is pouring unprecedented levels of funding into healthcare.

Annual expenditure is expected to be £70bn by 2007/8 compared to £33bn in 1996/7.

Where is all this money going? The Department of Health (DoH) itself says that the new funds are mainly going into ‘restructuring’ rather than revenue funds, i.e. instead of funding frontline clinical services they are using the money to change the system.

These system changes include:

1. The abolition of District Health Authorities and the giving of 75 per cent of NHS funds to 302 primary care trusts (PCTs ). This has involved the setting up of an expensive new commissioning bureaucracy.

2. A big new hospital building programme, through Private Finance Initiative (PFI) schemes, is estimated to cost £17bn involving large-scale indebtedness for the next 30 years.

Likewise, GP premises buildings are being financed through LIFT (Local Infrastructure Finance Schemes) to the tune of £1bn.

3. £4.5bn is being spent over five years on two waves of private treatment centres to perform elective surgery, endoscopy, etc., so-called Independent Sector Treatment Centres (ISTCs).
£95m was spent on a contract with Alliance Medical to provide MRI scans and a further £1bn is to be allocated.

4. In order to prepare for the market and ‘payments by results’, a national system of electronic patient records is being introduced to facilitate accounting and billing.

With every clinical procedure, or ‘unit of activity’, being bought and sold at a national tariff, hospitals have to be able to accurately cost everything they do.

This will require its own bureaucracy. The new IT facilities have been estimated to cost between £6bn and £31bn.

So-called ‘patient choice’, whereby patients are to be given a ‘choice’ of different hospitals for their operations and a plurality of primary-care providers, requires a system which does not depend on local hospital or GP records.

At the press of a button, a patient’s personal medical data must be transmissible to any hospital or healthcare facility in the country.

5. Management numbers and corporate-type salaries escalate, the more that hospitals and other healthcare institutions are run as businesses.

What is happening here? Everyone saw the big election poster showing a surgeon in an operating theatre, with the slogan ‘If you want it, vote for it’.

The truth is that ‘New’ Labour is destroying the NHS as a provider of universal comprehensive healthcare, but does not dare come out and say so.

Behind the propaganda of ‘patient choice’ and a ‘patient-led NHS’, the government themselves are leading it into the hands of the privateers.

Prime Minister Tony Blair spelled out the thinking behind this when he met up with the chief executives of large multinationals in May 2003.

He said: ‘We are opening up the whole of the NHS supply system so that we end up with a situation where the state is the enabler, the regulator, but it is not always the provider.’

What is being proposed and rapidly implemented is a completely new system of provision of clinical services, in which the state makes funds available to private, for-profit companies to provide the service in preference to in-house public provision.

Does it matter whether provision is public or private? John Reid and Patricia Hewitt say that as long as treatment is free at the point of use, it does not matter.

Yes it does! We have already had experience in the health service of the private contracting of catering, cleaning and CCSD with drastic reductions in staff and standards.

The model being followed is that of the universities or railways.

In the new business-run universities, charges were immediately brought in and good departments in chemistry, languages, architecture, etc, closed down.

The breaking of a national, integrated, publicly funded and provided health service which has been operating for 50 years is not an easy thing.

At the centre of the attack is the publicly owned hospital network, on which two thirds of NHS funding is spent.

The government launches a multifaceted attack.

1. It changes the funding system to one of payment for each procedure at a fixed tariff, payments by results (PBR).

This facilitates the rapid switching of funding, at three monthly intervals, out of NHS hospitals into private providers and out of secondary care and into primary care.

This means the end of stable block funding for NHS hospitals,

2. It invites in the multinational healthcare companies to set up Independent Sector Treatment Centres (ISTCs) to perform elective operations and investigations, with a stipulated ‘trail-blazing’ degree of productivity and low unit costs.

3. It instructs Primary Care Trusts (PCTs) and Strategic Health Authorities (SHAs) to channel set volumes of NHS patients into these ISTCs (‘patient choice’) so guaranteeing them flows of NHS patients.

4. It assists ISTCs financially by giving them higher tariffs to start with, and by giving them block funding up front for five years, so ensuring them profits.

A report in Health Service Journal says: ‘The government will commit itself to footing the bill for a guaranteed volume of operations whether patients are actually treated in wave-two independent treatment centres.

‘The contracts with up to five providers will be based on primary care trust predictions of extra capacity demand to meet waiting-time targets. Crucially PCTs will not be expected to pay if the demand does not materialise.’ (19.5.05.)

5. It uses its central managerial control system, the SHAs, to enforce funding cuts on NHS hospitals, so that they have insufficient capacity to provide operations within waiting time targets.

6. It uses the SHAs to set targets for waiting times.

It is now being said that, by December 2005, if the patient is not offered an outpatient appointment at their local hospital within 13 weeks, then they will be sent elsewhere via the ‘choice’ scheme, and will not be allowed to wait to be admitted to the local hospital. (HD 26.5.05.)

7. It manages the market by setting the tariff price for each procedure. This price is arbitrary and can determine whether a hospital survives or not.

8. There is a long-term strategic plan to take outpatient services out of hospitals and relocate them in the ‘community’. GP commissioning is designed to promote this shift.

The DoH says: ‘Some services which were traditionally provided in secondary care will be delivered in primary care.’ (Creating a patient-led NHS, p15. DoH 2005)

The government is allocating large contracts to private providers of diagnostic services (pathology and imaging ) to provide services for NHS patients, as opposed to giving the money to the traditional high standard departments in NHS hospitals.

9. Competition between hospitals to the point of failure to provide services via PBR.

10. The movement towards Foundation Trust status through financial stringency and ability to survive with PBR and the market.

The NHS hospital then disappears as we have known it and is replaced by a commercial entity whose prime remit is to make a surplus.

The government is using all these weapons at once.

It has clearly decided to open the throttle on SHA-directed funding cuts before December, as it is expecting 34 ISTCs to come on stream this year, and having paid for the operations, it wants the patients to be diverted in their direction.

Hence the insistence of SHAs, in many cases, that hospitals actually cut capacity i.e. theatres and beds.

Payments by results is already causing financial instability so great that its roll-out before the election had to be temporarily held back.

The NHS faces the biggest crisis in its history.

The British Medical Association (BMA), which is holding its Annual Representative Meeting (ARM) in Manchester this week, must take up the challenge to defend the NHS.

Resolution 17 on its agenda states: ‘The BMA should campaign for the restoration of public and planned provision of the NHS as the only way to maintain a universal equitable healthcare system.’

The BMA should link up with the public sector trades unions and the Trades Union Congress to defend the NHS.

• No to the market, ‘payment by results’, the government’s ‘patient choice’ and competition between hospitals!

• No to privatisation of clinical services, fund NHS hospitals! Return ancillary services in house!

• Keep General Practice locally-owned and end the LIFT schemes!

The only way the NHS can be maintained as a comprehensive universal service, based on the needs of the population, is through a publicly-owned and provided NHS.