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Round table: party time

Nabarro roundtable March 2015

As the election approaches, all party leaders claim to be ‘devoted’ to the National Health Service. But does any party offer a clear plan of action for the health sector

 Healthcare is at once perhaps the most divisive and unifying matter in UK politics. In the run up to the election, Labour has (reportedly) sought to ‘weaponise’ the NHS as an election issue, and was handed the perfect smoking gun when Circle Health announced in January it was pulling out of its contract to run Hinchingbrooke hospital. The incident sparked countless articles from the Left on the perils of privatisation, with the Right framing the debacle as yet more proof of the NHS’s profound ability to resist reform.  

And yet, there is little to choose between the respective party policies on health – with most leaders falling in line with the points set out in NHS England chief executive’s Simon Steven’s ‘Five year forward view’. Likewise, there are no serious calls to change how healthcare is funded in the UK, with each party primarily concerned with presenting itself as being trustworthy with this ‘national treasure’.

But what does such rhetoric mean to those companies already operating in the health sector? Or to investors looking to plough capital into a market supported by demographics and consumer demand? To consider these questions, HealthInvestor and leading law firm Nabarro invited a number of sector leaders to debate the potential consequences of May’s election.

In social care, everybody blames the private sector as the provider when quality deteriorates, but you can’t have political rhetoric around zero hours, living wage, all those things, when actually the people commissioning the service, all they’re motivated by is price. The joining together of health and social care should prompt a more mature conversation.

Liz Jones

Vernon Baxter: Keith, considering how difficult the 2015 election is to predict, how much time should an organisation like HCA spend worrying about the outcome?

Keith Biddlestone: About 18 months ago, the light bulb went on and how we thought about this changed. Up until that point, we essentially thought of ourselves as running a hospital business. We’d keep our head down and get on with it, and didn’t really want to spend very much time and money and resource on government affairs and reputation management. That changed when we fell foul of the Competition & Markets Authority. I think one of the reasons why we ended up being the only people in our industry facing a draconian remedy of requiring divestment of about £500-600 million worth of our business was because we didn’t see the punch coming. We didn’t hear the noises that were developing in government, so we now invest a lot more in that. It’s unfortunate that companies have to spend that money, but if you don’t do it, you can get caught out.

Liz Jones: Our experience in the last 15 years is that you can get some really nasty shocks and surprises, both good and bad. But what the health system desperately needs is innovation, and that requires people like us to support entrepreneurs to take risks in the sector. At the moment, we find it easier to deploy our capital in areas which are a bit safer, where either the private sector has a very established and uncontroversial presence, or in things like social care. Where the system needs true innovation and capital in is healthcare, and I think it’s quite hard to know where to put your pound note at the moment.

Party time
Party time

Vernon Baxter: Emotions can run high when it comes to healthcare and the private sector. Is it simpler just to keep your head down?

Simon Holden: Looking round this table, I’m probably the new boy on the block in terms of experience of the sector, having only worked really with health and social care in the last three years. But, just in those early days after we acquired Four Seasons, I found it striking how weak and fragile the relationships between the operators were. I don’t mean that in any sort of cartel sense, I just meant in terms of constructive lobbying into government about the pressures the system is under, the structural change, the lack of nursing supply, the way fee rates are not appropriate for different qualities of services, the complete absence of any measurement systems for outcomes.

We’re heading towards a crunch, which will be from the fiscal side, around operators failing, settlements not even covering a fair operating profit, let alone any recovery against the capital investment of operating assets, and the capital tied up in the sector. Whichever way you cut social care, there are very few substitutes for it, and you can play around with numbers and everything else, but ultimately it’s a fiscal challenge.

Louis Warren: What’s crucial is what people actually think the NHS is and what it is there for? It’s certainly turned into something that it wasn’t created to be. I was speaking to one of the top haematology consultants in the country, an educated and experienced individual, but his viewpoint of the NHS and how it should be structured as a business was more akin to a welfare organisation than a functioning business delivering excellent care. It does differ, depending on whether you’re trying to transform an existing market, or get into a new market. The latter is a lot easier, and the former, extremely difficult. We’ve been working in an environment where the discussion is about private and public, when actually the discussion should be about quality and patient-centred care. The political infighting and gaming is more around traditional party politics, really.

Mark Page: In terms of confidence levels, all we basically need is the confidence of tenure and relationship. Hospitals are very expensive things to build, but, from our side, I don’t see any lack of confidence.

Graham Roberts: The complexity of the NHS is a huge hurdle in terms of strategic thinking. In the bricks and mortar world, which I occupy, it’s less politically sensitive, but nonetheless, I’ve got more engaged with talking to NHS England, Department of Health, and government about the long term infrastructure needs in the country, but I don’t see anyone in the centre actually thinking about it.

Warren Taylor: It’s also the inconsistency around the political messages. You go into an election and politicians say there’s not going to be another top-down restructuring, and then there’s another top-down restructuring. There’s no confidence in what they’re saying.

Vernon Baxter: What sort of impact has Circle’s decision to walk away from Hinchingbrooke had? Has it knocked confidence in the private sector?

Keith Biddlestone: Personally, I think it’s been overdone. It’s a very political thing at the moment, and it will be right up until the middle of May. Then, in June, whoever is sat in the Department of Health, whatever political colour they are, the idea will come back on the table. People are saying the concept of using private sector management to run an NHS Trust hospital is dead for 10 years – I think that’s an overstatement.

Louis Warren: The timing has been unhelpful, and it’s very unfortunate for the likes of Circle and others, because the same thing has been happening, and is happening as we speak, in multiple trusts across the country. It plays into the political narrative of private vs public, which is a non-sensible starting point. Irrespective of who gets into Number 10 later this year, there will be a huge dynamic shift in terms of that emphasis of the private sector. The emphasis now is trying to drive that change from a provider level, rather than an NHS England commissioning level, and try and move towards a traditional national insurance type model for the NHS, rather than a provider model, which it was never invented to do.

Mark Page: If something is put out to the independent sector, there needs to be scope for that provider to run it. Obviously you still regulate; you still have to ensure and achieve quality outcomes but just let them run it. Because there will be a next time, and I wouldn’t be surprised if it was sooner rather than later.

Warren Taylor: It’s a serious concern with coalition politics how much influence minority parties have. How does the group feel about that?

Mark Page: Where I’ve come from, the last two elections have gone that way. Australia’s now used to it, and probably sick of it. All sorts of legislation is being blocked. If the Australian experience is anything to go by, it’s possible any party will join with any other party and they will play on big ticket items. I don’t think anyone can think that the health system here won’t be a major area of policy focus.

Annabel Bentley: If you just look at the numbers rationally, outsourcing or partnering with the private sector is gradually increasing over time anyway, and that trend’s not changing. Healthcare will always be political. It’s a bit of a distraction, but it can actually be an advantage. It brings a tension; it brings new investment, brings greater interest in the sector.

Vernon Baxter: Candice, you’ve been involved in a number of major transactions involving the US REITs. How concerned are they with the political landscape?

Candice Blackwood: Historically it’s been about looking at the real estate, and once they understood rent is supported by government, that was seen as a plus. But it’s definitely changing; they are more attuned to the political agenda than before, as a result of operating in the system.

Vernon Baxter: Staffing seems to be a major issue at the moment. Simon, how concerned is Four Seasons about political pledges around the ‘living wage’?

Simon Holden: The danger with this kind of political landscape is that there will be some loud voices on subjects which aren’t fully understood, in the interests of political gain. If the Conservatives had 100% of the vote and they ran the country for years, it would still be a challenge for them to understand how the entire health and social care landscape works. For parties who have barely a representative in parliament to be contemplating a billion pounds here, there; this is really dangerous territory.

What the politicians should realise is that it’s impossible for them to design a system within Westminster; there should be a step back to say: ‘We’ll design frameworks and infrastructure, and we’ll actually encourage the private sector to come in and help us innovate within that framework to deliver these services’.

Annabel Bentley: Innovation isn’t just about new technology – it is about thinking of being architects of the healthcare system of the future.

Vernon Baxter: Talking about healthcare systems, what does the group think of the decision to devolve Manchester’s health and social care budgets? Is that a step in the right direction?

Annabel Bentley: For me, that’s about healthcare being local, political, devolved, and part of being one of the winning organisations in healthcare in the future is understanding how the new commissioning structures work. I don’t think it’s clear yet, actually. It’s part of the innovation and doing something different.

Simon Holden: What’s great about it is it’s big enough to matter.

Warren Taylor: Manchester’s unusual, though. You have 10 authorities that have very successful experience of working together. It’s a good place to do a pilot like this, to see whether this works, but whether or not that will work around London or the rest of the country remains to be seen.

 

Liz Jones: In social care, everybody blames the private sector as the provider when quality deteriorates, but you can’t have political rhetoric around zero hours, living wage, all those things, when actually the people commissioning the service, all they’re motivated by is price. The joining together of health and social care should prompt a more mature conversation.

Louis Warren: Commissioning at times appears to be just about transferring risk to providers, as opposed to actually delivering the service you’re trying to do in the best way possible. What’s interesting about the Manchester model is that the move toward locality on scale will generate an awful lot of evidence. Furthermore, sharing the health and social care budgets will be helpful in terms of encouraging the private sector to look at process engineering, and it does tie in very much with Simon Steven’s five-year plan.

Simon Holden: The public has, in a way, been kept in the dark about this wider health issue, for some period of time. They are being bought off with big chunks of money for the NHS; it’s not this full system cost of care. It’s not just about people being able to go into the NHS and go to hospital; there’s such a wider system that these changes need to touch.

Keith Biddlestone: There’s a devolution trend, where you’ve got Manchester, but you also have a political environment where parties like the Northern Irish parties and the Scottish parties might say, ‘Yes, I’ll collaborate if you give me more power’. It also seems to fit with the way Simon Stevens is talking about the NHS. When he talks about it, he doesn’t talk about it in a David Nicholson, monolithic kind of fashion; he talks about it as a system, where you have to create frameworks, and try different things. It’s quite an exciting phase.

Annabel Bentley: To be effective, healthcare needs to be designed with local populations in mind, so for me, designing something that covers the UK as a whole is not the appropriate unit of comparison.

Vernon Baxter: It’s obviously impossible to predict where we’ll be after 7 May, but what would the group like to see from the next government?

Candice Blackwood: I think a new government should do what New Labour did with the Bank of England, and just deregulate the NHS.

Mark Page: It seems there are many things that need to change, and many areas where they actually just have to be allowed to get on and do it. They need to make sure that people are empowered and enabled to do what needs to happen, and not restrain people from doing the right thing.

Liz Jones: There needs to be a politician who is brave enough to start an honest conversation with the UK population, and I think that’s on two levels – it’s firstly that the money is going to run out, so we need to do something very radical, and then I think there is another honest conversation about taking personal responsibility for your health.

Louis Warren: There’s not going to be any great shift or change in the next two to three years. What I would like to see is that Simon Stevens is allowed to continue. It’s slow progress, but I think there’s a lot of support across parties, and within the NHS and private sector, for what he’s trying to do and the direction he’s going in.

Annabel Bentley: That any party that gets into power really does stand behind its promise to put patients first. It’s the argument that Michael Porter makes; define value around the customer, not the supplier. For me that would be real progress, and it would put patients first.

Warren Taylor: Ideally, I don’t think we would want a coalition, because I think that will keep politics much more on the agenda than it should otherwise be.

Brian Sher: I’d like to see de-politicisation, and allowing for long term structural change, taking it out of the political football arena. I agree with the point about a coalition government probably not going to be helpful, but I’m afraid, I think, that’s what we’re going to get. I also think we should be allowing Simon Stevens to drive innovation and change, and in particular, in those areas of the NHS where we all know accountability is an issue. For politicians to tinker with structures, you actually allow people to get away with it, and he’s got an opportunity to drive that change through and make positive progress.

Graham Roberts: It certainly seems to me that we’ve been on a very positive trajectory of change for the last two to three years. It’s great to see as much of Norman Lamb as Jeremy Hunt. You’re starting to see two ministers driving this combined health argument forward. Now, I guess from an idealist perspective, it’s a very important five-year period, in which you could really consolidate, depoliticise, and bring some of these changes through; but it doesn’t feel like it’s the right time for health to make big, wholesale changes again, just as we’ve started to get going. So, continue as we are.

Keith Biddlestone: A successful outcome for the election would be a fragmentation of central control, which then allows a number of these different blends of social democratic models to emerge. What you’ll see is a more Scandinavian type system beginning to emerge in Scotland, and a less Scandinavian system in places like Marylebone. And, I think that would be a good outcome for us around this table, and I think it would be a good outcome for the NHS. You’d see more innovation, you’d see more change, and you’d see people happier with the kind of care they were getting locally.

THE FINAL WORD

Though held in high regard by the British public, the NHS is facing a funding crisis against the backdrop of an ageing population and an ever-tightening public purse. This is a key issue in the 2015 General Election.

As Annabel Bentley reminded us, innovation in funding and delivering health and social care is not just about new technology, it’s about being architects of the healthcare system of the future.

The withdrawal by Circle from Hinchingbrooke, due to mounting cost pressures, is a disappointing outcome and lessons must be learned. As Louis Warren pointed out, it plays into the political narrative of private v public – but the debate should remain focused on who is best placed to provide cost effective services to the right standard.

George Osborne recently announced plans to devolve many NHS spending powers to Greater Manchester. Ten councils will gain control of £6 billion a year of NHS spending, with the aim of improving health and social services integration.

The challenge for the next Government will be the financing and evolution of this health and social care service fit for the demands of the 21st century. How will they fund the increasing cost of health and social care, where an ageing population and greater innovations have led to higher costs and expectations around the quality of care? Whatever the colour(s) of our next government, UK health and social care will continue to present a most difficult (and possibly insurmountable) challenge.

 

 

For information on Nabarro, please call Warren Taylor on

020 7524 6392 or email w.taylor@nabarro.com

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Dr Louis Warren

Medical director, Serco


Dr Annabel Bentley

Group executive medical director, InHealth


Candice Blackwood

Partner, Nabarro


Keith Biddlestone

Commercial director, HCA International


Simon Holden

Partner, Terra Firma


Liz Jones

Partner, Livingbridge


Mark Page

Chief executive, Ramsay Health Care UK


Graham Roberts

Chief executive, Assura


Brian Sher

Partner, Nabarro


Warren Taylor

 Partner, Nabarro


Vernon Baxter


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