1. BMA ARM debate
“Market forces are good for
the NHS”
The case against
Dr Clive Peedell
Consultant Clinical Oncologist
James Cook University Hospital
BMA Council/BMA Political Board

2. Before the NHS
• NHS Pre 1948 – market system.
Fragmented care. (see Geoffrey Rivett nhshistory.net)
“People did not trouble GPs without good
cause. Most had to pay for the doctor and
the medicines.”
“Pain and discomfort were accepted as
part of life to be endured with stoicism”

3. Purpose of the NHS
• Central part of the Welfare State (Beveridge/Bevan)
• To sweep away the failed “market” of voluntary
sector, private and municipal hospitals, through
nationalisation
• Pooling of risks. Everyone covered -
“Universality” by a “Single payer” system
• Based on importance of healthy society, social
solidarity and social contract between doctors
and patients
• “A unique example of the collectivist provision of
healthcare in a market society” (Rudolph Klein)

4. Political consensus for financing
the NHS
• All 3 political parties signed up to a single payer publicly
funded system
• Major evidence to support this:
Guillebaud report 1951, The Commons Expenditure
Committee report 1973, Wanless review 2001
• £267 billion underspend 1972-1998 – “The surprise may
be that the gap in many measured outcomes is not
bigger, given the size of the cumulative spending gap”
• No wonder that the NHS had problems!

5. Political consensus in England
for market based policies
• All 3 main parties support the use of
market based policies in the provision of
healthcare
• Greater efficiency and innovation
• Less meddling by Government
• Increased responsiveness to patients

6. What are the English NHS market policies?
• Purchaser-Provider split between primary
(PCTs) and secondary care (FTs)
• “Commissioning” of care by PCTs, GPs and
private sector
• Patient Choice to promote competition (Choose
and Book, Extended Choice Network)
• Pleurality of providers (FTs, Private companies,
“Third sector”)
• Payment by Results (PbR) using a tariff system
(e.g HRG4)
• Patient held budgets

7. Why oppose market based
policies?

8. Market Failure in healthcare -
Theory
• Market failure in healthcare is a well recognised problem in theory and practice (Arrow,
Brown)
• 1. Patients are not well enough informed to make choices (“Information Asymmetry”)
2. Healthcare is difficult to commodify. Contracts are complex.
3. Risk of supplier induced demand
4. Excess capacity is needed for market choice to work i.e a plurality of providers
5. Exit is very difficult ie Hospital closures are a political hot potato
6. Expensive to enter market – e.g ISTCs
7. Insurance systems will give the cheapest and best coverage to the well, and the
most expensive and least coverage to the sick
8. Doctors control access to the healthcare market. Professionalism is a problem
9. Markets provide for wants rather than needs.
10. Price signals don't work.
11. Need for specialty clusters and high volume workload
12. First duty of investor owned firms is to their shareholders, not patients – “cream
skimming”

9. Speech by the Chancellor of
the Exchequer, Gordon
Brown, to the Social Market
Foundation at the Cass
Business School on Monday
3 February 2003
“Indeed, the case I have made and experience
elsewhere leads us to conclude that if we were
to go down the road of introducing markets
wholesale into British health care we would be
paying a very heavy price in efficiency and
equity and be unable to deliver a Britain of
opportunity and security for all”
“The very same reasoning which leads us to
the case for the public funding of health care
on efficiency as well as equity grounds also
leads us to the case for public provision of
healthcare”.

10. Market failure in practice:
USA
• $2.3 trillion dollar system - “Medical Industrial Complex”
• 50 million uninsured. Upto 100million underinsured
• Massive costs to employers e.g GM
• 62% of all personal bankruptcies (900,000/year) due to
medical expenses. 78% had “insurance” (User fees/Top
ups)
• 30% budget on transaction costs
• Massive CEO pay. Healthcare fraud
• Poorer outcomes for life expectancy and infant/maternal
mortality rates
• Plagued by undertreatment and overtreatment – “islands
of excellence in a sea of misery”

11. CEO pay in the USA
Humana
Current CEO: Michael.B.Mccallister
Compensation 2009: $5 million and has $50 million stock options
UnitedHealth
CEO: Stephen J Helmsley
Compensation 2009: $3 million and stock options worth $660 million
n.b previous CEO, Bill McGuire involved in $1.5 billion stock
options scandal
Aetna
CEO: Ronald A Williams
Compensation 2009: $24 million and stock options worth $170 million
n.b Former Aetna CEO John Rowe earned $175 million in 65 months
($225,000 per day!!)
(Forbes)

12. Why do insurance systems fail
patients?
• Poorest have greatest burden of ill health
• Insurance premiums highest for the least
well
• Human genome project

13. Market Failure in practice:
England
• “All evidence and analysis shows that the actually existing market
created by New Labour is likely to exacerbate the terrible social
injustices of unequal access to healthcare and unequal health
outcomes” (Raine, McIvor, Lancet 2006)
• Ed Balls: “On public services, the Government talked a technocratic
language, using words like “contestability”, and seemed sometimes
to suggest that private sector solutions were always better – when
public services users just wanted guarantees of good schools,
hospitals and policing”

14. Evidence for market failure:
• Transaction costs: University of York (15% NHS budget
versus 5%)
Commissioning contracts, Commodification (HRG coding),
Managerialism (91% increase in NHS managers, consulting),
NHS IT system to provide information for “consumers”
• Excess capacity – e.g ISTCs, Polyclinics, CATS, Third sector
• High regulatory costs – CQC, CCP, Monitor
• Primary care versus secondary care
• Marketing costs - branding
• Attack on professionalism and public service ethos
• .............And I’ve not even mentioned the PFI!

19. Deprofessionalisation
• Market systems reject medical
professionalism and the public service
ethos
• BMA Campaign!

20. Doctors and NHS market
reforms
• Doctors control access the healthcare system –
an obstacle to the market
“Professionals are in a profound sense not just
non-market, but antimarket” (Professor David
Marquand, Decline of the Public)
• Hence the BMA LAON campaign!
• Attack on the medical profession ever since the
Griffiths report,1983 – managerialism (NPM)
• Working for Patients white paper - End of the
“Double Bed” of policy making (Klein, BMJ)

21. “Knights and Knaves”
• Le Grand’s “Knights and Knaves” metaphor. Public
Choice Theory. Public servants are “self interested
rent-seekers”. He argued that “public policy should be
designed so as to empower individuals: turn pawns
into queens”.
• Public Services are best delivered through consumer
choice and the market. Rejection of “Trust” model
• “American medical profession has lost public support
faster than any other professional group”. (Blendon. JAMA
1989)
• Knights become Knaves - “Le Grand Paradox”
(Peedell. BMA ARM 2010)

22. PMETB
• Government took control of training through PMETB
• British Journal of General Practice editorial described how the proposals for
the establishment of the Medical Education Standards Board (which later
became PMETB):
“…. are clearly intended to enable the Secretary of State of the day to direct
that standards can be lowered to meet the manpower demands of the
NHS
• President of the RCA, Peter Hutton, pointed out:
“For a Government dedicated to a quality service, I found it surprising to see
the statement: ‘The competent authorities (e.g the STA) typically apply
considerably higher standards than the minima specified by law’. Quite
frankly, thank goodness they do”.
• Clear agenda for a drive towards minimal standards rather than excellence

23. MMC
• MMC – competency based, minimal standards, tick box culture.
Tooke report: “Aspiring to excellence” cited MMC for aspiring to
mediocrity.
• MMC designed to produce a “fit for purpose” medical workforce :
“...most importantly, (MMC) will deliver a modern training scheme
and career structure that will allow clinical professionals to support
real patient choice” (DH Website)
• Recent briefing from NHS Employers stated:
“The future NHS will not require all doctors to progress to the
current role of
consultant. New roles and structures must be developed that will
meet the needs of employers....”

24. Academia
• Cuts in University funding
• Academic redundancy
• Tick box culture
• SPA time
• Bureaucracy
• “Spirit of inquiry”

25. Clinical leadership in the NHS
market
• “Without doctors, attempts at radical large-
scale change were doomed to fail.”
(Ham/Dickinson. Engaging Doctors in Leadership: A review of the literature
2007).
• Strong “Clinical Leadership” (Darzi
reforms).
• “Service Line Management” (business
units) - Doctors to become more
entrepreneurial
• “Change Agents” to deliver market based
reforms

26. If market failure is such a
problem in healthcare then why
have so many countries,
including England, gone down
this route?
It’s the economy, stupid!
(And some politics and philosophy)

27. Global neoliberalism and the
consequences for healthcare policy in the
English NHS
(Presented at IAHPE 2009)

28. Neoliberalism in a nutshell (see Steger and Roy)
• The dominant political, economic and
philosophical doctrine of the past 30 years
• Liberalisation and deregulation of trade and
finance. Maximum market freedom with
minimal Government intervention
• “Efficient market hypothesis” - Self correcting
• Markets and market practices are the solution to
all our problems!
• “No more boom and bust”, “The end of history”
• Basis of Thatcherism, Reaganomics, Blairism,
Brownism and CamCleggism

29. Margaret Thatcher, 1975:
“This is what we believe”

31. The demands of markets on
nation states
• Prudent fiscal policy
• Low taxation
• Low inflation
• Marketisation and privatisation of public
services, property, PFI/PPPs
• Use of private sector management
practices
• “TINA” because of risk of “capital flight”
• Erosion of sovereignty of nation states

32. “New Labour”
• 4 successive election defeats (‘79, ’83, ‘87, ‘92)
• “In economic management, we accept the global economy as a
reality and reject the isolationism and ‘go-it-alone’ policies of the
past” (Labour Party Election Manifesto 1997)
• In his Mansion House Speech in 1997, Gordon Brown said that for a
government to succeed it has no option but to, “convince the
markets that they have the policies in place for long term stability.”
• Blair’s Chicago Speech 2004: ‘Every day about $1 trillion moves
across the foreign exchanges, most of it in London. Any government
that thinks it can go it alone is wrong. If the markets don’t like your
polices, they will punish you.’ “New Reality”
• Social democratic model abandoned in favour of a variant of
neoliberal Thatcherism (Eric Shaw. Losing Labour’s Soul. 2007)
• “We are all Thatcherites, now” (Peter Mandelson, The Guardian 2001)

33. A succinct summary of New Labour’s
political position by 2 Labour MPs
• “After years in opposition and
with the political and economic
dominance of neoliberalism,
New Labour essentially raised
the white flag and inverted the
principle of social democracy.
Society was no longer to be
master of the market, but its
servant. Labour was to offer a
more humane version of
Thatcherism, in that the state
would be actively used to help
people survive as individuals in
the global economy - but
economic interests would
always call all the shots”
(John Cruddas MP and Jon Tricket MP –
New Statesman, 2007)

34. Opening up public services
• “Services are coming to dominate the economic activities of countries at virtually every stage of
development, making services trade liberalisation a necessity for the integration of the World
economy” International Chamber of Commerce
• “Unless Labour made public services more like the market first, the Tories would just do it on
their own terms” (Alan Milburn, quoted in the Guardian)
• “The commodification of public space has now become an aggressive Blairite objective”
Roy Hattersley, Labour MP (quoted in the Guardian, 7th November 2005)
• Gordon Brown leaked letter to CBI in response to one of it’s documents;
“A reform agenda of choice and the use of competition and greater contestability , involving the
independent sector, must be driven forward for public services” (Timmins BMJ 2007)
• “All public services have to be based on a diversity of independent providers who compete for
business in a market governed by Consumer choice. All across Whitehall, any policy option now
has to be dressed up as “choice”, “diversity”, and “contestablity”. These are the hallmarks of the
“new model public service”
John Denham MP, former Health Minister quoted in 2006

35. • “In this environment of greater choice, increased
contestability and competition driving improvements in
services, there is a greater need to ensure rules
and guidance exist to encourage competition and
the effective operation of markets.”
• Professor Chris Ham stated that the CCP rules were
written by a “Neoliberal economist on speed” (Ham,
HSJ 2009)

37. Conclusions
• The NHS is the most popular institution in Britain
• Little evidence to support market forces in the
organisation and provision of healthcare
• Market in a single payer system makes no
sense
• Erosion of professionalism
• The fear of “capital flight” in globalised
unregulated financial markets has eroded
sovereignty of nation states.
• The NHS is now open for business with the
international healthcare industry poised to profit
• The BMA should be proud of the LAON
campaign.
• What is best for patients also is best for doctors