Posts Tagged ‘Administration Costs’

Private Eye on the Costs to NHS of Free Market Reforms

January 28, 2015

Some idea of the immense cost to the NHS of various Tory and New Labour reforms to introduce the free market into the NHS can be gained from a piece Private Eye ran about them in their issue for the 15th – 30th May 2009. This commented on the campaign by Labour’s health minister, Lord Darzi, to find further savings in the NHS by pointing out just how much administrative costs had risen. Here it is.

Efficiency Savings
Prize Chump

Health minister Lord Darzi is dangling a financial carrot to encourage NHS staff to help the government find efficiencies and savings of £15bn over the next three years. Rewards of up to £5 each will go to those who most impress the panel of experts in Darzi’s den, which holds a total pot of £240m in prize money.

Darzi cites challenges such as combating the increasing burden of childhood obesity, or dementia in the elderly. But how about tackling the so-called “transaction costs” of healthcare, started by the introduction of the internal market by the Tories and accelerated by Labour’s privatisation agenda?

In the old NHS days, administrative costs were no more than 5 percent of its annual budget. By the mid-90s they accounted for 12 percent. With subsequent wholesale market-based measures such as payments by results, patient choice and self-governing foundation trusts, coupled with the costs of management consultants, private finance initiatives, independent treatment centres etc, administrative costs have soared to 20 percent of the budget about 20bn a year.

Reduce that and Darzi can make his savings in one go. Or how about axing the most disastrous computer project in British history, the NHS National Programme for IT – £12.7bn and rising? Cheques please to Lord Gnome.

So there it is in black and white: £20bn eaten up in administrative costs through the piecemeal privatisation of the NHS initiated by Peter Lilley.

And this is the system that Alan Milburn and the Blairites are so keen to defend.