Originally posted as an opinion piece on the History and Policy website
as Paying for Health: Lansley’s woes and pre-NHS healthcare
in February 2012
The Coalition has found few, if any, of its policies to be as controversial as the NHS reforms contained in the Health and Social Care Bill. The pressure has increased in recent weeks, with both British Medical Journal and public polls showing overwhelming opposition, another Lords defeat, reported cabinet concerns and speculation over the future of Health Secretary Andrew Lansley. It was rumoured that former Labour Health Secretary Alan Milburn could be ennobled to take over the role, which would fit an analysis of the government’s problems as essentially political, rather policy-based. If Julian Le Grand is right that the Coalition’s reforms are a ‘sensible evolution of previous strategies’, then who better to see them through than Milburn, who introduced foundation trusts in 2003?
Nearly a decade earlier, Milburn had to assure Parliament of his own reforms: ‘This is not privatisation, it is democratisation.’ The proposed GP consortia look rather different from the membership communities of foundation hospitals, which Milburn and colleagues were keen to justify by harking back to a largely mythical pre-NHS culture of mutualism and working-class governance. An ‘evolution’ is evident, however, in the increase of the private income cap to as much as 49 per cent for NHS trusts, an extension of the financial freedoms awarded by Milburn. Shadow Health Secretary, Andy Burnham, claims this would be a return to ‘the bad old days in the NHS when people were told to wait longer or go private’. However, the fear of private practice in hospitals ‘squeezing out’ those with the greatest need has a longer history than the NHS itself.
There are both significant parallels and important differences between the current proposals and the situation that existed before Nye Bevan created the NHS in 1948. Prior to this, there were voluntary hospitals run by volunteer governors with honorary medical staff, some dating back to the early eighteenth century. They provided around one-third of hospital beds in both small cottage hospitals and all the major teaching hospitals of the day. Meanwhile, local authorities ran a public hospital system, largely inherited from the poor law. Across both, there was a two-tier system in place. The vast majority of hospital patients were working-class (four-fifths of the population) and were treated in the ordinary dormitory-style wards. Meanwhile, private one- and two-bed rooms for middle-class patients gradually became more common over the first half of the twentieth century.
By the time the NHS was born, over 40 per cent of voluntary hospital income would often come from patients, but not in the form of extensive private practice, rather through near-universal means-testing. This income came primarily from the nominal and heavily-subsidised contributions of working-class patients towards the cost of their maintenance. There is little chance of such a means-tested system of hospital boarding charges being reintroduced today, although this would not be ideologically inconsistent for current ministers, such as Vince Cable, who have led the charge against universal benefits in other areas.
Pre-NHS private patients could pay up to ten times more than their ‘sick poor’ counterparts, covering both the full cost of their maintenance and an additional fee for treatment. Yet the percentage of private beds never hit double figures in the voluntary hospitals and was virtually non-existent in the public hospitals, only totalling around three per cent of all English hospital beds. If we could separate income from those publicly- or charitably-subsidised patients, we would find voluntary hospital income from private patients was dramatically below what would be allowed under the current proposals. As this was the only profitable part of hospital provision, why did it remain so marginal?
From my own recent examination of pre-NHS private hospital practice, it seems that the desire of the medical profession to keep private practice and hospital work separate was crucial. Anne Digby has shown that Victorian doctors used philanthropic hospital work to enhance their prospects for lucrative private practice. Keeping the two separate was important to maintain an image of respectability, which may explain their eagerness to use hospital administrators and social workers as intermediaries in collecting payment. This system was subject to parliamentary oversight until 1936, when the responsibility for ensuring voluntary hospitals did not breach their charitable trusts by providing private services was transferred to the Charity Commissioner. The parliamentary debates on this change foreshadowed today’s dilemma. King’s Fund supporter Lord Greville argued that greater private practice would ‘enable the hospitals to do more good’. While a familiar concern was expressed by the trade unionist and Labour peer Lord Sanderson: ‘we do not want the provision of paying beds to be the means of cutting down services for poor people’.
The description of private practice as ‘activity at the margins within the hospital’ could refer to the pre-NHS hospital system, but was in fact Andy Burnham’s characterisation of its expansion under New Labour. But could it really remain marginal if the cap is raised as high as 49%, as is currently proposed? Might the current pressure from medical and health professionals to uphold the principles of the NHS then be redirected to limiting private provision at the institutional level? If so, they would be playing a similar role to their counterparts 80 years before. If, alternatively, the proposal is scuppered, we might even see foundation trusts becoming charities in order to evade the cap on private provision. They could then find it is no longer the pro-competition Monitor deciding how much private practice should be allowed, but once again the Charity Commission.
Despite the current rhetoric, there is little evidence that private practice did squeeze other patients out of hospital care before the NHS. However, if we are to ensure it does not do so in the future, we would do well to ask more questions about the balance of public and private practice in our hospitals in the past.