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UK Health Chief Quits as System Plunges into Financial Crisis

'Reformed' system faces $1.6 billion shortfall.

By Tom Sandborn 8 Mar 2006 | TheTyee.ca

Tom Sandborn was born in Alaska and raised in the wilderness by wolves. Later, Jesuits at the University of San Francisco and radical feminists in Vancouver generously gave time and energy to the difficult task of educating and humanizing him. Tom has a formal education, too: a BA from UBC. He has been practicing the dark arts of journalism off and on ever since university, and now also has about five decades of social justice, peace and environmental campaigning under his belt.

Tom's goal is to live up to the classic definition of a journalist's job from H. L. Menken - to comfort the afflicted and afflict the comfortable.

Reporting Beat: Labour and social justice, health policy, and occasionally environmental issues.

What is the most important issue facing British Columbians?: Two key issues face BC residents (and they're both so compelling and complex that Tom refuses to rank them): income equality and environmental degradation. Both desperately need solutions.

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[Editor's note: This is the second in a series on health care reform issues in European countries Premier Campbell has visited.]

Only a day after Gordon Campbell celebrated the British health care delivery system as a source of model reforms for BC, the UK’s top health administrator has resigned amidst claims the system he shifted toward privatization and for-profit care over the last half decade was sinking into financial crisis.

Timing is everything in life and politics, and Gordon Campbell may already regret the timing of an interview he gave on Monday, March 6. Speaking to Vancouver Sun reporter Jeff Lee in London, Campbell expressed his interest in bringing British ideas back for possible application to the BC health care delivery system. He singled out for special mention the use of private-public partnerships in building and operating hospitals and in delivery of medical services.

Even before yesterday’s Sun was fish-wrap, the news out of the UK’s National Health Service had turned ugly. A headline in today’s Guardian trumpeted “NHS Chief Quits amid Worsening Cash Crisis.

Sudden resignation

Yesterday the system’s chief executive, Sir Nigel Crisp, unexpectedly tendered his resignation. Angry critics www.keepournhspublic.com in the UK say that years of privatization have balkanized the NHS into a chaotic and inefficient patchwork of hospitals, trusts and specialized clinics pitted against each other in a needlessly elaborate scheme of internal markets and price competition.

An anonymous government source identified as a “senior Blairite” told the Guardian that NHS trusts would have to “swallow their own smoke next year” and cut services in response to the funding crisis.

The current crisis, which has British papers like the Guardian and the Independent predicting that the year-end deficit for the NHS could run as high as $1.6 billion dollars (Cdn.), is viewed as a political quagmire for the Blair government. Labour has poured record sums of money into the NHS during Crisp’s five-year term in power.

A health policy expert in the UK, interviewed by the Tyee last night says that the real lesson Campbell should bring back from his European tour is that it is impossible to deliver affordable and universal health care through market mechanisms.

Successes claimed

The government was eager to put Crisp’s departure in a different light. His retirement was attended by an announcement that the long time civil servant would be granted a life peerage, one of only 10 life Lords that Blair is entitled to name during this Parliament.

Patricia Hewitt, the UK’s health secretary, accused by the Tory opposition of making Crisp pay the price for her policy failures, told the Guardian that Crisp had served the NHS with great distinction.

“He has successfully led the health service through the first half of the government’s ambitious programme of investment and reform. This has secured the shortest waitng times in a generation, with more beds, more hospitals, more doctors and more nurses than ever before,” she said.


Dr. Allyson Pollock is a researcher at University College London, and the Tyee reached her by phone last night in Edinburgh. She says that Crisp’s retirement is symptomatic of a system in terminal disarray.

“Under Blair,” she said, “the system has been loaded with more and more market mechanisms. Despite an unprecedented injection of funds, the NHS is now experiencing the same kind of meltdown that a disastrous privatization process brought to British railroads.”

Niall Dickson, chief executive of the British think tank the Kings Fund, agreed that the NHS was in real financial difficulties, although he pointed to some causes not tied to market style reforms.

“Sir Nigel has acknowledged that he shares responsibility for this as much as the real successes he helped deliver…But if he is responsible, so too are the politicians who oversaw the expensive new pay deals and the other changes that have helped to create the current pressures,” he told the Guardian.

‘Inherently destabilizing’

Pollock claims that the government has broken up the British public health system into hundreds of “mini-corporations” that have to compete with each other for patients and funds while servicing high cost debt created by the public-private partnerships favoured by the Campbell government .

British health care, she says, is being increasingly invaded by international for-profit health care delivery firms, and much of the new money Labour poured into the NHS in the last half decade has gone straight to the bottom line of these for-profit companies. For example, she said, the government chose to invest in the largest and most expensive computer system anywhere in the world outside of military installations, and still can’t get the new system to work to deliver clinical data doctors and administrators need to serve their patients.

“This privatization is inherently de-stabilizing,” she said. “Adding market mechanisms drives up administration costs. In the old NHS system, administration costs ran about 6 percent of budget. Earlier so-called reforms in the system doubled that cost to 12 percent. By now, in the wake of the creation of so many PFIs (Private Finance Initiatives- called P3s in North America) it is highly likely the administration costs are close to 20 percent of budget.

“The deficits and chaos at the top we’re seeing today is a direct result of the government’s disastrous decisions,” added Pollock. “Your government shouldn’t look to the current situation in the UK for models for change.”

Hospital construction stopped

Only a couple of weeks ago, the British government had suspended any further work on the controversial PFI hospitals pending a review on questions of affordability, according to Pollock.

“There is no evidence anywhere in the world, she said, “that universal health care can be delivered by the market. The real driver in all these changes is coming from American corporations who need new markets in order to survive profitably. This system is unraveling.”

Tom Sandborn is writing a series on European health care reforms with a focus on information the Premier may not have received on his recent visit. The series to date includes: The UK Health Care Briefing Gordon Campbell Isn't Getting  [Tyee]

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