Is Portugal pursuing privatisation of the National Health System by the back door?
Last week a leading light in Portugal’s conservative centre-right Social Democratic Party (PSD) expounded the view that while Portugal’s SNS National Health Service is “safe in our hands”, the party would be wise to explore a Public Private Partnership model.
Paulo Mota Pinto, a PSD MP in Portugal’s parliament, suggested it would not “work out more expensive” would “improve efficiency” and “actually be cheaper” by making efficiency costs in the long term.
But we know from the United Kingdom’s decentralisation and PPP experiences of its National Health Service during the John Major and Tony Blair years that this proved a disaster with services running over budget, some health authority regions getting into severe financial pressure.
And while creating speciality centres of excellence in key fields of medicine (read cost-cutting) in some regions, the policy left other parts of the country bereft of specialist services, surgeons and doctors, forcing patients to be sent half away around the country to be operated on or treated for conditions, and all the attendant costs involved.
Now Portugal’s National Federation of Doctors has indeed warned what I had suspected at the lunch organised by the International Club of Portugal at which Mr. Mota Pinto spoke: that Portugal’s SNS was at risk of privatisation by the back door, and dismemberment and decentralisation which would lead inevitably to asymmetries in quality of service and care depending on what part of the country you happen to live and how well that local authority manages its accounts.
The UK was the first country in the world to develop the concept of Public Private Partnerships (PPPs) for public services projects. Through partnership with the private sector, PPPs are supposed to “enable the delivery of efficient, cost-effective and measurable public services within modern facilities whilst minimising the financial risk”. That is the theory.
The Government in the UK continues to argue and insist that for “more than 20 years since the UK launched its first private finance initiative (PFI), the benefits of healthy citizens to a nation’s economy and growth are even clearer. Many countries are experiencing a rising demand for healthcare services, whilst continuing to have constraints on public resources available to fund such developments.
PPPs offer innovative and entrepreneurial approaches to providing the services and facilities demanded of 21st century healthcare. The emphasis is on generating quality service outputs rather than treating building infrastructure as an end in itself. Also, the creation of strong partnerships is moving service delivery away from a project-by-project approach to one that includes strategic and policy developments for long-term results”.
But a report published in 2017 entitled ‘The UK’s PPPs Disaster – Lessons for the Rest of the World’ mirrored what the Mayor of London, Sadiq Khan thought: “PPPs are “a millstone round the necks” of London’s hospitals.
His words were borne up by an IMF paper on the subject which found “large fiscal costs and fiscal risk have arisen from PPPs in both developing and advanced countries … government bias and possible manipulation of PPPs add an important layer to the common project risks. An inadequate budgetary and/or statistical treatment may allow governments to ignore the impact of PPPs on public debt and deficit. In practice, governments often end up bearing more fiscal costs and risks than expected in the medium and longer term.” (IMF Working Paper, Fiscal Affairs Department).
And the UK 2018 report (and this was before the Covid-19 pandemic which nearly brought about a collapse in the NHS) sets out the major problems and risks the UK has encountered through its extensive experiment with PPPs, including how: 1) they have cost the government more than if it had funded the public infrastructure by borrowing money itself. 2) Led to large windfall gains for the private companies involved, at public expense. 3) Enabled tax avoidance through offshore ownership. 4) Led to declining service standards and staffing levels 5) Hollowed out state capacity to design, build, finance and operate infrastructure 6) Eroded democratic accountability – PPPs are hugely unpopular in the UK, with 68% of respondents to a survey in England saying PPPs should be banned. 7) In Scotland, which has a higher proportion of projects per person, 76% of respondents say they should be banned. This unpopularity has led to PFI being rebranded in both England and Scotland.
The number and value of new projects has been falling since 2008, reaching its lowest level since the mid-1990s in 2014 (the latest year with figures available). However, the UK government and companies are now heavily promoting PPPs around the world.
So if the UK experience with PPPs has been so divisive and disastrous why are Portugal’s politicians both on the centre left and right so hell-bent on exploring it in a country where high corruption levels, white envelopes and poor supervision abound and which seems to spell disaster from the outset.
The Portuguese FNAM has issued a warning: “Should the government advance with decentralisation within the framework foreseen, making local authorities (responsible for healthcare) will turn will turn the county into a patchwork blanket, creating asymmetries regarding access to primary healthcare,” says the President of the organisation, Noel Carrilho.
“The FNAM also denounces the possibility of starting a process that could lead to the privatisation of Primary Health Care Services which has been desired by private health groups for some time”, says the surgeon in an interview with ECO.
Carrilho stresses that the federation does not “oppose” decentralisation per say, but rather “giving municipal councils a number of key competencies for primary health care provision”.
According to the Imperial College Business School “decentralisation was one the factors at the heart of the UK’s confused approach to the coronavirus epidemic”.
In common with Portugal, healthcare funding in the UK comes from the public purse. Primary Health Care in different regions of the UK were sorely tested during Covid-19 and part of the reason was that key parts of the system were organised at the wrong level.
The first example is the organisation of procurement within the UK’s NHS. While the NHS often stresses that it is a single organisation, with common “NHS values” and a single pay structure that applies to all front-line clinical staff across the country, NHS care is delivered, and procurement done, at a local municipal level.
This means the NHS misses out on the opportunity to use its bargaining power with respect to suppliers of key inputs: a point clearly stated in a recent high-profile review of efficiency in the NHS. It also means the purchase of personal protective equipment (PPE), vital to protecting clinicians treating patients in the NHS, is done at the local hospital level.
The most obvious outcome was a severe lack of PPE and unprotected staff. Less obvious was the fact that key clinicians often spent their time sourcing PPE for their own hospitals, diverting their time from providing patient care. This was clearly not only a waste of time and resources but also had devastating consequences for NHS front line staff.
And whereas power has been decentralised in the UK to regional health authorities, some of which are more efficient at using financial resources than others, in Portugal primary healthcare services would be placed in the hands of local municipal authorities “and this we would never accept”, says Noel Carrilho, adding that this would bring financial pressure to bear on local councils, providing the final excuse to “privatise Portugal’s National Health System with professionals too bring transferred to the municipal council or even private domain.”
This has become partly true in the UK where there have been many structural changes over the years. Many private companies and charities have become involved in running services in recent years, and while the services are publicly funded and the government is ultimately accountable, in reality it is more of a Public-Private Partnership in terms of delivery.
And to give jut one example where ‘localism’ of primary health care can fail, you only have to look at Sheffield in the north of England which had already overspent around €25 million in the first month of the 2022 financial year and with low reserves now hoping for a government lifeline to cover soaring inflationary costs.
That local authority, which managed to balance 2021’s budget with a one-off NHS funding, is expecting a €25 million overspend this year because of cost/demand pressures.
Now with 20 Portuguese municipal councils exceeding their maximum debt caps in 2020, just imagine how well they will be able to finance and deliver some primary care services if the Portuguese government devolves service delivery and funding allocation responsibility to the regions and local authorities within them.