The NHS: A fantastic business for Britain?

In was reading an article in the Guardian about Circle Health taking over the running of Hinchingbrooke hospital. Personally I think this is very dangerous thing to do and, as far as I can tell, there’s no real evidence to suggest that private companies do a significantly better job at this kind of thing than the public sector. What has confused me is that this is reported as a £1 billion, ten-year deal. An earlier article had claimed that Hinchingbrooke hospital was projected to have a £5 million loss this year and revenues of £90 million. Their total debt would then be £40 million. Instead of giving £100 million a year to Circle Health, why not simply give £100 million a year to the existing trust. They appear to be able to run the hospital for £95 million a year, so in eight years will have paid of their debt and over then next two years would make a £10 million surplus. I appreciate that it is probably more complicated than this, but probably not by as much as might be expected.

What really got me wound up was David Cameron’s quote that he wanted the “NHS to be a fantastic business for Britain”. Quite how he expects this to be the case is beyond me. My gut feeling is that he thinks that if a private company gets involved and makes a profit, then that is good for Britain. I would argue that this, in itself, is generally not true. Firstly, the more we spend on healthcare, the less we have to spend on other things. As far as I’m concerned wealth creation involves creating efficiencies and freeing up income to be spend on other things. If private healthcare could provide the same quality and level of service as the NHS currently does, for the same or less, that would be fine. Given that they fundamentally need to make a profit, it seems unlikely. They also have no real incentive to provide it for the same or less. The more money they can get, the better for them. They want (and in a sense should be allowed) to optimise for profit, not for efficiency. Furthermore, a large chunk of the companies bidding for NHS work are not even UK-based companies. Why giving money to US companies or others that are – for tax purposes – based overseas is good for Britain seems nonsensical.

Essentially, I think this quote of David Cameron’s illustrates the fundamental problem with the current ideology. The basic message seems to be “private good, public bad” and is – in my view at least – extremely misguided.

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