National Health Service (NHS): A study of its Structure, Funding and Regulation, Strengths and Weaknesses


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The National Health Service, which is a government run public health care enterprise, is an important institution in Britain. Both the Tory party and the New Labour Party have competed to claim the NHS as their own and no election campaign in Britain is without numerous references to the benefits offered by the NHS. While some of the claims made by politicians might be overstated and exaggerated, it is indeed true that the NHS is an indispensible and integral part of the lives of British citizens. Several public opinion polls also show that people living in the UK are generally happy and appreciative of the services offered by the NHS. There are good reasons why this is so. For example, the NHS provides free healthcare service to all citizens at ‘point of delivery, and made available on the basis of need and not on the ability to pay” (Stewart, 2008). In the years before its creation, nearly half the general population could not avail of basic healthcare. Back then, access to basic healthcare was a matter of social class and the ability to pay. But all that changed for good with the unveiling of NHS in the year 1948. Going by the popularity and public opinion polls alone, one would be led to believe that it is a flawless system. But the situation is not as clear cut as that, for despite its overall popularity and its penetration into the collective consciousness of people in Britain; the NHS can be further improved. The rest of this essay will delve deeper into such aspects of the NHS as its structure, funding and regulations pertaining to it and make an inference as to its strengths, weaknesses as well as identifying areas for improvement.

Beginning with the organizational structure of the NHS, it is essentially an umbrella organization that comprises four regional branches, namely NHS (England), NHS Scotland, Health and Social Care in Northern Ireland and NHS Wales. The funding for all these organizations comes from a common source, namely the tax-payer money of residents of UK, although they operate to an extent as autonomous institutions. In other words, the top executives of these four organizations take decisions independently for day to day operations although they abide by broader regulatory directives applicable to the UK region as a whole. Regulations are an important aspect of the functioning of the NHS, for without it exploitation by private vested interests is likely to happen. Given that the notion of access to free healthcare is close to the heart of the British and undermining this would prove politically imprudent, both the Tory and New Labour leadership have been very careful in making amendments to the original provisions of the universal healthcare act. For example, during the reign of Margaret Thatcher, there was a push toward greater privatization of erstwhile public services including the NHS, British Rail and Gasoline services (Stewart, 2008). But despite successes in other areas, the Thatcher government could not tinker with core elements of NHS. For example, according to Paul Wilby, an expert on the history and development of NHS, there has been some noticeable changes to the organizational structure to the NHS since the Thatcher era:

“There has been a process of attrition. Increasingly, the least integrated elements of healthcare have been subject to market forces including the privatization of both the funding and the delivery. For example, NHS dental care, optical care and long-term care services have been eroded and removed from overall entitlement the result is enormous inequities in access and coverage. Although many of the services were provided in less than ideal forms – for example, the long stay institutions for people with mental illness and people with learning disabilities and the old were relics of the Victorian era – lack of funding for these services combined with lack of political will has resulted in less coverage than there was before and more of the burden and responsibility falling to the individual.” (Wilby, 2008)

Hence, the widespread popularity of the NHS could actually hide some of its flaws as mentioned above. While prior to the Thatcher era the major problem confronting the organization is funding, the nature of the problem underwent a transformation under the privatization thrust of the Thatcher government. And if not for the popular sentimentality attached to the NHS, greater changes might have come about in the structure and functioning of the organization. Different governments in the last thirty years took care to see to it that their privatization effort does not undermine their electoral prospects. As a result, the generous provisions under the universal healthcare act (which was instituted after the Second World War) could only be dismantled one small step at a time starting in the 1970s. Firstly there were management reforms, which turned over the administration of the NHS from healthcare professionals to specialist managers who had little exposure and understanding of health services. Following this, the number of staff falling under low-pay category were increased and handed contracts as opposed to permanent employment (Wilby, 2008). The contracted staff now included cleaners, caterers and laundry staff. At the same time the budgetary allocation for the NHS was not increased, leading to growing discontent among the staff and general public alike. It was at this juncture that the Private Finance Initiative was introduced, which entailed a new form of private ownership of hospital capital, including such fixed assets as buildings and land. Simultaneously, with the introduction of internal markets that required contracts between components of NHS, the various NHS departments began to display a degree of autonomy in their daily operations. So the NHS dismantled the policy of geographic planning (Baggott, 2007).

This is the backdrop that leads up to the prevailing structure and operation of the NHS. In this context, it is an accurate assessment to state that the core values and principles adopted by the NHS leadership today is quite different from the stated founding values when it was first instituted in 1948. From being a totally public sector funded and managed enterprise, the NHS has today is integrated into the private capitalist economy. While this transition has made the NHS more efficient and streamlined, it has lost its humane and caring touch. When one studies the structure and funding of the NHS today, it is obvious that terms such as ‘partnership’, ‘private finance’ and ‘efficiency’ have come to replace erstwhile core values of ‘service’, ‘care’ and ‘compassion’ (Simmons, 2009). Both the Tory leadership under Margaret Thatcher and later the New Labour policies under Tony Blair have brought about a new feel and perspective to this important institution. But this transformation has not been an insulated process, for it is just one manifestation of a broader shift in domestic policy adopted by both the Tory and New Labour parties. This emphasis on ‘partnership’ and ‘private finance’ is furthered by parallel initiative pertaining to capital investment by state bodies in the UK. The existing channels of funding and the structure of the organization is very much a product of such initiatives as the Private Finance Initiative (PFI) and Public Private Partnerships (PPP). According to the UK Treasury (2000) PFI/PPP offers modern governance and modern procurement and has made the NHS a more efficient organization. Further,

“PPP involves the introduction of private sector ownership in state activities–ranging from partnership agreements to full transfer of assets–co-operation of private sector firms in ‘exploiting the commercial potential of government assets’ and the PFI. PFI refers to the contracting by state bodies with private sector firms or consortia for the construction and maintenance of capital assets. Examples of PFI include infrastructure projects, such as the projected extensions to the London underground and recent hospital and school building programs. PFI contracts can be characterized by the acronym DBOO–design, build, own, and operate. Private firms raise the necessary finance to construct the contracted capital project, retain possession of property rights to those assets on the completion of construction, and responsibility for maintaining those assets. This represents a more significant incursion by the private sector into those activities than occurred under the competitive tendering initiative of the 1980s, where many tendered services remained in-house.” (Simmons, 2009)

Even the funding of NHS has undergone remarkable change from the institution’s early days. The infusion of private funds has accelerated in the last decade, and since the inception of the New Labour government in the year 1997, 85 percent of major NHS capital projects have been funded through the PFI mechanism. This situation might distort the priorities of the NHS “towards large-scale ventures, such as the construction and maintenance of new acute hospitals, at the expense of smaller schemes in the primary and mental health sectors, since the latter may be less attractive to private financiers than the former” (Mcmaster, 2002). Clearly the combination of PPP/PFI and further reform to the structure and procedures of health care provision in the NHS would lead to significant change within the institution. This change is triggered in part by the greater prominence of health economics within the corpus of mainstream economic theory that also underpins the economics of the so-called ‘third way’”. (Mcmaster, 2002)

In the last twenty odd years, the NHS has also become a more equitable employer, in terms of hiring people from various nationalities and ethnic backgrounds, which should count as a big positive for the institution’s image. For example, in recent decades, skilled immigrant labour has become the backbone of the National Health Services organization. Each year, the number of skilled and experienced doctors, nurses and other specialist hospital staff that join the NHS and contribute to its success come from abroad. Although politicians of all parties claim the NHS to be a uniquely British institution, its persistent success is made possible by its multi-ethnic and multi-cultural staff members. Many of the emigre healthcare professionals that join the NHS eventually take British citizenship and eventually start to recognize themselves as British. To elaborate further, doctors from India constitute a major chunk of foreign nationals in NHS. And their growing presence in Britain has only enriched the existing traditions and introduced newer ones. Hence it is accurate to say that changes made to the immigration policy, especially under the Labour rule of last 13 years has only enhanced the multi-cultural and egalitarian image of the NHS, boosting its overall appeal. (Merali, 2006)

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