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Is marketisation ‘the wrong medicine’ for the NHS?

A new study from independent think tank New Economics Foundation (NEF) warns against further ‘marketisation’ of the NHS, saying that the majority of global evidence shows markets fail to deliver cost effective, high quality healthcare and are expensive to maintain: £4.5bn a year is needed to prop up markets within the NHS – the equivalent of 174,798 extra nurses, 39,473,684 extra patient visits to A&E or 10 new specialist hospitals.

The new study, ‘The wrong medicine’, was launched at an event at the King’s Fund, London on 26th November.

Anna Coote, Head of Social Policy at the NEF said: “The drive to turn the NHS into a competitive marketplace flies in the face of clear evidence that markets in healthcare fail taxpayers, citizens and patients. It’s the wrong medicine and it is proving to be lethal. Yet as things get worse for the NHS, the Government prescribes more of the same. This is ideology gone mad. ”

NEF’s research, looking at more than 30 years of UK reform and international comparisons, highlights both the vast sums of money needed to maintain markets in the NHS and their failure to deliver either cost efficient or high quality healthcare.

UK healthcare marketisation began in the 1980s but the speed of change has intensified since 2010. The 2012 Health and Social Care Act introduced the biggest set of changes ever imposed on the NHS.

Forthcoming change, including the implications of the Transatlantic Trade and Investment Partnership (TTIP), risks a permanent transformation in the NHS: from a public service to an open, competitive marketplace – akin to a US-style healthcare system. This rapid marketisation is not supported by evidence, practical experience or public opinion, said NEF.

Since the 1980s, successive governments have introduced market-based reforms in response to the perceived problem of an underperforming public institution - from contracting-out support services in the 1980s and the first internal market for clinical services in the 1990s, to patient choice and a massive programme of privately financed hospital building in the 2000s.

The NHS has come under mounting financial pressure since 2010. Faced with the challenge to find £20bn-worth of efficiency savings by 2015, there is increased urgency behind calls for change. The pace of NHS reform has intensified, particularly with the 2012 Health and Social Care Act. Large commercial organisations are winning an increasing share of contracts within the new healthcare marketplace.

Such changes are justified by claims that market mechanisms can improve efficiency and quality of care – but, according to the NEF study, there is no evidence to support this.

Academic studies on both sides of the Atlantic have consistently found the effects of markets and privatisation in healthcare systems to be inconclusive or negative. International comparative studies rank the privatised US system far below the NHS in terms of both quality of care and efficiency – even though the US has more than double the UK’s per capita healthcare expenditure ($8,508 compared to $3,405).

If increasing competition and commercial involvement continue, the report concludes, within a few years the NHS in England will exist as a fragmented and privatised service rather than a public institution.