The Market Will Kill Private Healthcare

It is quite possible that New Labour may quietly win a leftwing victory that eluded great old Labour heroes of the past. Aneurin Bevan tried his damnedest to found the NHS with doctors devoted entirely to it - but in the end he gave in on surgeons' right to make money on the side in private practice. As a result, waiting lists have often been kept long deliberately by surgeons ensuring a healthy demand for their private services. Barbara Castle was nearly broken by her attempt to keep private practice out of the NHS. But she too failed. Now, by stealth and with no political flag-waving, this may be the end of the rich queue-jumping over the poor.

The consultants have finally agreed a new contract giving them a 15% pay increase in exchange for radical new working patterns. All new consultants or old ones in new jobs will sign contracts giving 40 hours a week to the NHS. Before taking any private work, they must offer the NHS their first four hours of overtime. Job plans agreed with their clinical managers (usually doctors) will give managers more control - they had trouble policing the time consultants spent flitting between their private and their NHS work. Doctors can still do evenings and weekends in private consulting rooms, but here's the big question: will there still be any private patients left?

Caveat: for fear of again offending the majority of doctors who work many more NHS hours than they are paid for, all this only concerns the 30% who have large private practices. Sadly, the BMA has never made a crisp distinction over the years, often defending the indefensible and tarring the majority with the greed of the few. Successive health ministers - Tories too - have long gnashed their teeth over private practice preventing waiting list cuts. John Yates of the NHS orthopaedic waiting list initiative has pointed out the fivefold variation in productivity between orthopaedic surgeons.

But all that may be over soon. As NHS waiting falls in many places, a cold wind is blowing through private health. Despite ever-growing wealth, private insurance is static, with only 7.5 million people insured out of a 60 million population. The number of people paying for one-off operations is falling. Laing and Buisson, the private healthcare analyst, last week warned its clients: "Challenges lie ahead. Plans for the NHS undoubtedly pose a threat to the traditional private hospital sector as we know it." With only 55% of private beds filled, the industry is contemplating meltdown. Here is the private doctors' dilemma: should private clinics cut their prices and do more cheap block-booked NHS operations to fill the gap? Or by helping to cut NHS waiting will they help destroy the private market on which they depend?

Suppose that by 2005 the NHS hits its target and no one waits longer than six months, with an average wait of three months. Patients can shop around for the shortest waiting times anywhere they want. That will look pretty good at election time: the Tory offer of cash vouchers that will only benefit those rich enough to top them up will be irrelevant. By 2008, the maximum wait will be just three months, with an average of only seven weeks. For most patients, that effectively means the end of NHS waiting. Then private practice will shrink back to foreigners and a few of the mega-rich for whom mixing with the masses is just too awful. For the first time since Bevan lost the argument, there will be no two-tier system.

Can it be done? Over the next five years the NHS gets 43% more money. There are already 55,000 more nurses and 55% more medical school places. Training more doctors is another cartel broken: the royal colleges' fierce grip used to limit numbers entering the profession. But all that is the easy part. It is the other plans that cause some in the NHS unease. New treatment centres are being brought in from abroad to gallop through waiting lists, doing 150,000 operations a year, plus new NHS treatment centres doing another 150,000, some already up and running. They can charge 15% more than NHS rates, but far less than private hospitals.

Bupa and the other big private groups were alarmed when they failed to win any of the treatment centre contracts: their costs were too high. Since a "concordat" was signed with the private sector, Bupa and the rest have offered to help clear NHS lists, but they complain only a few more NHS patients are sent to them - usually a sudden rush in March when managers panic over annual targets. Rearguard resistance is being fought by the doctors who do most private practice. They have resisted sending patients from their lists to treatment centres in Cumbria and Lancashire. The health authority had to advertise over consultants' heads to get patients to demand to be sent for quicker treatment. Meanwhile, the British Orthopaedic Association emits dire warnings to patients about the low quality or bad after-care they fear treatment centres will offer. Yet early evaluation in Cumbria suggests higher quality and no deaths, where statistically some were expected.

It is now crystal clear that the government envisions hosts of outside providers and some fragmenting of the NHS. To sound soothing, they talk of the Terrence Higgins Trust offering Aids services or Turning Point's drug clinics. But they really mean more private providers, if the price is right. So strict rules about treatment centres not poaching doctors and nurses from the NHS cannot last long as no one can stop doctors choosing their own jobs.

So what will the NHS look like in 2008? Very different. Nearly a million more operations need to be done every year by these providers to keep waiting times down to rock bottom. With myriad types of provider, things will become diffuse and it will be harder to detect what is private and what is public - though the government claims only 5% of operations will be done outside the NHS. The trade-off for ending private practice is more private providers. If that means quick service and equity, patients might find it a price worth paying.

To hit these ferociously ambitious targets, almost unbearable pressure is felt in some parts of the NHS. Getting to zero waiting is grindingly hard. Doctors are appalled at being told to operate on bunions before broken hips. Where is all this money, they ask? Many feel they have seen nothing yet but harder work and no new equipment. The money goes on invisibles - pay to keep recruiting staff, cash for operations elsewhere. The NHS will always seethe with bad anecdotes. But the big issue is this: if these remarkable targets are achieved, the NHS will be transformed. Even if it is still patchy, it will be immune from future Tory assault. It will defy every prediction that private medicine will win out as people get richer. Private medicine will be all but dead - not through socialist diktat but through good old market forces.