McKinsey and The National Health Service - Part Two

Before looking at how parts of the McKinsey report have been directly incorporated into Andrew Lansley’s new Health Reform Bill 2011, despite claim to the contrary by the coalition government’s leadership, it is perhaps worth noting a few pertinent details regarding those individuals and companies that are responsible for building the new health and social care bill.

The main architect of the new reforms, the Health Secretary, Andrew Lansley, was a civil servant before entering politics and apart from his father having been employed in a pathology laboratory, Lansley has no more direct experience of healthcare services, other than that which is gained from reading reports, being briefed by lobbyists and civil servants, or through meeting doctors, nurses and patients during one of his many obligatory public visits. Bearing in mind that Lansley only entered Parliament in 1997 and had gained only limited experience through his membership of the Common’s Health Select Committee, before being appointed as Shadow Health Secretary by Conservative Leader, Michael Howard, it seems quite astonishing that anyone would consider him capable of reorganising the entire English NHS system, given his obvious lack of first-hand experience on the subject. However, for the most part his knowledge of the health service seems to be based almost entirely on his own personal political ideology, information gleaned from ministerial briefings, proposals put forward by management consultants such as McKinsey, suggestions put forward by health provider lobby groups and the ideas contained within the book “The Future of the NHS”, a publication edited by Dr Michelle Tempest, which contains the thoughts and opinions of 44 of the leading experts in healthcare, politics and policy making, including Andrew Lansley (although whether or not you would regard him as an “expert” on any of these subjects is highly questionable).

It is also interesting to note that the editor of this particular tome, Dr Michelle Tempest, is not only a former prospective Conservative parliamentary candidate for North West Durham, but is also a dually qualified physician and lawyer, having studied both subjects at Cambridge. She subsequently taught in both of these specialist fields and has even practiced medicine at Addenbrooke’s Hospital, where she is reported to have worked in various departments, including general medicine, the A & E department, infectious diseases and vascular surgery, although nowadays she is said to be specialising in psychiatry at the same hospital. Born in 1976, the Wikipedia blurb on Dr Tempest states that she has not only contributed papers and specialist advice to several public think tanks, but also more importantly to Andrew Lansley, the Health Secretary. Tempest edited the book “The Future of the NHS” following on from her own extensive first hand experience within the organisation; and in particular to show her admiration for the staff and to improve the service for her patients.

Despite the fact that Dr Tempest is clearly an astonishing young woman, to have achieved such a vast amount of experience in her first 36 years of life, one cannot help but be slightly concerned that having spent so many years studying and teaching both medicine and law and then practicing clinical psychiatry, as well as being involved with politics, just how much frontline health experience did she gain during her time at Addenbrooke’s and how exactly does that qualify her to be regarded as any sort of expert in the field, or indeed someone whose opinion is worth more than anyone else’s? From what little you can glean from the advertising blurb relating to the book “The Future of the NHS”, many of its 44 contributors, including the likes of Patricia Hewitt (Labour Health Secretary), Andrew Lansley (Conservative Health Secretary), Professor Steve Webb (Lib Dem Health Spokesman), Derek Draper (Former Political Adviser), Andrew Haldenby (Director of Reform), Daniel Hannan (Euro MEP), Daniel Barnett (Employment Lawyer) and Clare Rayner ( President of the Patients Association) cover a multitude of health related subjects now and in the future. Significantly though, the overriding subject of the book seems to be the problems caused by the politicisation of the NHS by the 3 main political parties and the perceived lack of local accountability caused in no small part by the actions and attitudes of the various Strategic Health Authorities and Primary Care Trusts.

It is perhaps somewhat ironic that there is now an overarching level of criticism regarding these often huge semi-autonomous health bodies being levelled by the very same sorts of politicians, GP’s, Nurses, Doctors, etc. who played their own parts in creating the various SHA’s and PCT’s to begin with, but now find them unsuitable for purpose. It is little surprise either that with so many political and medical luminaries pointing the finger of blame at the 150 plus Strategic Health Authorities and Primary Care Trust’s that the argument has swung towards the idea of more local accountability, by putting healthcare into the hands of locally run health boards and clinical commissioning groups, after all, you can’t get more accountable than that can you? In that particular respect, Lansley and his coalition colleagues might be thought to be following the argument made by the supposedly informed medical directors, GP’s, surgeons and nurses, who almost to a man believe that the current healthcare system is too remote, burdensome and too slow to work effectively. The argument then follows that these bureaucratic monoliths should be replaced by much greater numbers of smaller, more accountable, much more reactive and therefore far more efficient healthcare boards and groups, driven by the people who know the healthcare system inside and out, the doctors, nurses, GP’s and even local councillors. After all, the argument continues, these people, the care-givers and community leaders, are far better placed to know what local communities want and need in terms of health provision; and as members of the local community will be much easier to contact, to bring to account and in the case of councillors, to vote out of office if they ignore the wishes of local people.

Unfortunately, the coalition government’s strategy is not so much driven by the idea of localism, as it is about central government’s withdrawal from the wider public sector, where smaller government naturally equates to less public spending; and the supposed benefits of local control, is simply a political bonus, not a specific objective. By tapping into what was already a significant level of dissatisfaction felt towards the various Strategic Health Authorities and Primary Care Trust’s, the coalition has tried to bundle those misgivings, with a demand for more local accountability, along with the necessary spending cuts that the country’s economic situation demands, creating a package of health and social care reforms that purport to be all things to all men. Added into this mix, is the Conservative Party’s increasingly failed argument that the country gets more bang for its buck, when the buck in question happens to come from private investors, an unconvincing argument given the country’s previous experience with manufacturing industries generally, our railway network, communications industry and our utility providers.

The old adage of being careful what you ask for might be especially appropriate for all of those different healthcare professionals who were quick to condemn the inefficiencies and inadequacies of the various SHA’s and PCT’s, but now find themselves facing the prospect of having to do the same job better themselves. Even the much talked about McKinsey report avoided suggesting that these large scale administrative bodies should be abolished, possibly because they saw any alternative as being an even more bureaucratic and wasteful system that the one it might hope to replace. That is not to say however, that management consultants such as McKinsey and KPMG, etc. are unwelcoming of the newly proposed Clinical Commissioning Groups, as clearly such clinical led creations will by their very nature require the sorts of administrative, accountancy and managerial services that McKinsey, its clients and its competitors will be more than willing to provide at a price.

It is perhaps unfair to paint McKinsey as the main villain of the piece, with regard to the coalition’s proposed reform of the English National Health Service; even though there is no doubt that they are more than happy to exploit whatever commercial opportunities might arise from the wholesale reorganisation of the system. What is clear, is that rather than the reforms being the result of some radical thinking exercise by Andrew Lansley and his political advisers, to create a better, more efficient national health service, it is purely an amalgam of other people’s ideas that have been roughly stitched together to create an administrative monster that undoubtedly contains a high degree of risk, both to the public purse, but more importantly to people’s lives. As a result, for these reforms to actually work, it will not only require a great deal of good luck, but a certain amount of faith that those being tasked with identifying and implementing the changes; the GP’s, Nurses, Commissioning Groups, Politicians and even consultants like McKinsey are behaving as honest brokers in the process, which given past experiences does not exactly bode well for the future.

When GP’s renegotiated their working contracts with the Labour government in 2006, the outcome very much worked in the medic’s favour, with more money and less working hours being the result, which tends to make a lie of the myth that GP’s put their patient’s health and wellbeing before everything else. Remembering that these are the same people that agreed to work around 44 hours per week for an average salary of around £100,000 per year, one has to wonder why they’re likely to take on even more work, for no additional financial reward? The likelihood is that they’re not and given that we already have large numbers of GP’s significantly reducing their clinical hours in order to concentrate on establishing the proposed Clinical Commissioning Groups (a management job); and employing salaried locums to fill in at their surgeries, the taxpayer is essentially being forced to pay two people to do one job. In the McKinsey report it was proposed that GP’s should be undertaking more clinical work, not less, so how exactly are the current arrangements going to help reduce spending in the NHS?

Even though McKinsey prides itself on its ethical standards and is one of the world’s foremost management consultancies, boasting numerous multi-nationals and even national governments amongst its clientele that is not to say that they are infallible, or their proposals right on every occasion. Critics of the company have accused them of producing sometimes highly questionable surveys, reports and outcomes, almost as if they have deliberately managed the results in order to confirm an already pre-determined answer. Because of their international reputation for client confidentiality and the company’s often rigid reluctance to address, or even acknowledge such public criticisms, it is sometimes only when their recommended strategies fail to deliver that their corporate failures finally come to light, as in high profile cases such as Enron and Swissair. The company has also been accused of blatant partisanship in some of its dealings and reporting, with a lack of objectivity being cited in the company’s working relationships with and for certain clients. This is a common complaint made with regard to McKinsey’s continuing involvement in the coalition’s proposed reforms of the English NHS, with critics accusing the company of having an obvious conflict of interest, by not only strategising changes to the health service, but also standing to benefit directly from such changes should they be adopted by the Conservative led government, which they have been.

Whether or not any actual commercial impropriety has taken place between McKinsey executives and members of the coalition government or their supporters is often not as important as the actual perception or public belief that some sort of secret deals have taken place. The fact that members of the government, including William Hague, is a former employee of McKinsey’s and that a number of the management consultant’s other clients are involved with the provision of private healthcare; and therefore might benefit from McKinsey’s working relationship with the coalition, simply helps to strengthen the belief that the company is not acting as an honest broker in this matter, whether they are or not. However, McKinsey’s position and its reputation has not been helped by reports that confidential emails between company executives, members of the coalition government and a number of private healthcare providers, who might benefit directly from the proposed reforms, appear to indicate that all three parties are in fact colluding with one another over the running of between 10-20 NHS hospitals, making McKinsey’s stated position as an independent arbiter highly debatable.

Any concerns about partisanship or allegations of inappropriate corporate behaviour might perhaps be understandable when one considers some of the close working relationships that active members of the British political establishment have previously enjoyed with companies like McKinsey. William Hague aside, a former McKinsey employee, David Barnett is reported to be actively involved with the new English health regulatory body, Monitor, which is tasked with authorising and monitoring NHS Foundation Trusts and identifying any potential problems with these new bodies. According to a number of sources, while he was employed by McKinsey, Mr Barnett was said to have been personally involved in persuading the British government to purchase one of McKinsey’s clients IT systems for use within the NHS. This now infamous system was said to have cost billions to develop, but ultimately proved to be little more than a hugely expensive “white elephant”, which many doubted would ever have been suitable to purpose in the first place, let alone at the price that it would have cost the British taxpayer, had the contract not been eventually cancelled. Extraordinarily, this same McKinsey client, despite its failure to deliver on this first unworkable system, is now thought to be in line to receive further valuable IT contracts from the coalition government, at an estimated cost of around £1 billion, as part of the government’s purported money saving health reforms.

It is precisely because of McKinsey’s existing business links to some of the world’s leading and most acquisitive private service providers that the company generates a great deal of suspicion within the UK, a country where public sector services are commonly provided by the state. However, with England now governed once again by a traditional Conservative party, albeit one supported by the increasingly irrelevant Liberal Democrats, large parts of the public sector are now being put at risk of being sold off to private enterprise. Given that some within the Conservative Party have described the NHS as a “millstone” around the country’s neck, it should come as little surprise that there are some within the party who would quite happily see that particular millstone smashed into a million pieces, or at least sold off to private companies that can use it to grind out a profit from the English electorate. None of us should be under any illusions that the current coalition’s small governance policy will undoubtedly result in all parts of the public sector being sold off, with health, education and social care just being the first of many. For the Conservative coalition the result of a successful “fire-sale” would be obvious, in that direct taxes could be cut for high-end earners (their traditional supporters), whilst indirect taxes, such as private health, education, road tax, fuel duty, etc could be levied on those less able to afford them, in order that the wealthy could keep more of their incomes.

Despite any assurances offered by the likes of Cameron, Clegg and Lansley, it is clear that elements of the McKinsey report are already being implemented, even before the coalition’s Health and Social Care Reform Bill 2011 has reached the statute books. Although some sources suggest that McKinsey proposed cuts of between 6-7% across the board in order to achieve its recommended savings within the NHS, reductions of around 10-15% are far more likely. If anyone was in any doubt about the level of cuts being demanded by central government, it is worth noting that an estimated 31,000 NHS posts were cut in a single year, which does not include the tens of thousands of other public sector workers who were made redundant as part of the coalition’s wider spending cuts. Those lost NHS jobs included hospital consultants, registrars, nurses and healthcare assistants who were in the frontline of patient care, but who were surplus to requirements as hospital, after hospital is forced to live within their much reduced budgets, despite what the likes of David Cameron, Nick Clegg or Andrew Lansley might say in public. Even those who have been charged with safeguarding public health have not been spared, with an estimated 1500 medical specialists, including dentists, dieticians, psychologists, psychiatrists and nutritionists all being made redundant at the Department of Health’s offices in London. Other large-scale redundancies are reported to have taken place at the Heart of England NHS Trust (1600), Manchester (1400), Staffordshire (1300), Devon and Exeter (1100), East Lancashire (1000), Salford (750), Morecambe Bay (700), County Durham (700), Wirral (680), Cornwall (650), London (635) and so the list goes on, implying that a possible figure of around 140,000 job losses, as suggested by McKinsey’s own report (if 10% is taken as the likely target) is not so fanciful after all and is a great deal higher than the 50,000 job losses estimated by some commentators.

Elsewhere in the capital there is some evidence of individual hospital trust’s having to make significant cutbacks in services in order to achieve the reduced levels of spending ordered by the Department of Health. According to the Guardian newspaper, in Islington, vital speech therapy services are being cut, whilst child and adolescent mental health services are being shut down completely. Mental charities in Kent are having to close due to lack of funding, while elsewhere in the country hundreds of routine operations and procedures are being postponed or cancelled indefinitely, with hernia, cataract, back, hip and knee operations being cut back; and certain non-emergency dental procedures being refused by local health providers. In some places financial resources are thought to be so limited that even procedures that the McKinsey report recommended retaining are being cut back, with anti-smoking, anti-obesity and pro-breastfeeding programmes being withdrawn or severely reduced by local health authorities, despite the fact that they’re proven to have a highly beneficial effect in helping to reduce the occurrence of later health problems, such as cancer, emphysema, diabetes and immune system deficiencies.

It has also been reported that a large number of PCT’s are either stopping or significantly reducing the numbers of IVF treatments being offered to childless couples; and in some areas of the country local health authorities are withdrawing funding from specialist dementia care centres, despite the fact that they have a proven record of successfully maintaining those suffering from a variety of degenerative diseases, who may now have to rely on conventional healthcare services to help manage their conditions, which will undoubtedly reflect an additional and unexpected cost to the local health authorities anyway. Perhaps less radically, but just as importantly, a number of these same health authorities are beginning to ration, if not stop providing entirely, psychotherapy and psychiatric services, even for those patients suffering from a range of debilitating diseases, including MS, arthritis and cystic fibrosis, as well as alcohol and drug addiction, all of which in their turn have a highly negative effect on the social life of the country; and often prevents sufferers from taking up or holding onto full-time employment, thereby denying the government of much needed tax receipts.

It has been estimated that to date the reforms being enacted by the coalition, even before the measures have been brought into law, has cost the British taxpayer something in the order of £3-4 billion, which is between 15-25% of the total amount of the money that the new round of health spending cuts was designed to save in the first place. Bearing in mind that we’re only two years into the process and there’s likely to be at least another 2 or 3 years of similar expenditure, before the reforms are finally completed, then it is entirely possible that the final bill for implementing the “money saving” programme will actually amount to £6-8 billion, which obviously begs the question, what is, was, the point of the exercise in the first place? That said however, it has been alleged that even before the bill has received royal assent, or been put on the statute books, members of the coalition have already been rushing through several different healthcare contracts that have been agreed with a number of private providers, not on the basis of best value-for-money, but purely on the basis of cost. What is more worrying though, is that it has been suggested that many of these same contracts have been awarded to privately owned, entirely profit driven companies whose owners have very close personal or political relationships with the Department of Health and/or the Conservative Party itself.

Whatever happens in the coming months and years within the English NHS, it is clear that rather than being a positive and well thought out reorganisation of the country’s healthcare services, the coalition’s planned reforms are, at best, an ideological experiment that just might address many of the problems that have affected the NHS over the past few decades, but could just as easily destroy the system completely, leaving it more fractured and inefficient than it ever was before, only time will tell. However, the undue haste of the coalition, not only to push through these largely undisclosed reforms, but also to allocate and appoint outside personnel and providers, often at the cheapest price possible and in the most questionable circumstances, must at least be investigated by an independent body, to ensure that no impropriety has taken place, on the part of individual ministers, the coalition, outside management consultants, or indeed the numerous private providers who have suddenly found themselves on the cusp of gaining access to what should always be a fully accountable, publicly funded English National Health Service.