The creeping privatisation of healthcare

Problematic EU policies and the corporate lobby push

Privatisation in its various guises is “spreading across Europe’s health services like a rash”, writes John Lister of Keep Our NHS Public and Health Campaigns Together. EU member states’ health systems are broadly split between those based on employment-related health insurance and those financed via general taxation.

But both have been subject to political and policy pressures, including from the EU-level, that have created conditions conducive to a growing role for private sector companies in this traditionally public service.

Squeezing profits for shareholders out of health services risks deteriorating working conditions; worse pay, reduced staff levels, greater workloads, more stress, all of which negatively impact on safety and quality of care. Greater health inequality is fostered as private, for-profit providers ‘cherry-pick’ lower-risk and paying patients, whilst higher-risk and poorer patients, or those needing emergency care, remain reliant on under-resourced (thanks to austerity) public health service provision.

A combined set of EU-level pressures appear to have helped create a pro-privatisation environment. Whilst there is no single channel of influence in Brussels of private healthcare interests (e.g. private hospitals, private health insurance, etc), there is evidence of corporate lobbying influence by big business groups, companies and think tanks. This, and a shared underpinning ideology, helps feed the financial and political agenda that encourages more privatised models of healthcare. This article explores the EU policy areas – and the role of corporate lobbying – that help create this pro-privatisation orientation in the field of healthcare: marketisation, trade, public private partnerships, and economic governance.

1. The marketisation of healthcare

Healthcare is a national competence, not the remit of the EU. Right? Yes and No. Rulings from the European Court of Justice, and the European Commission’s policies of recent years, mean that “Services delivered by national health systems are, as a rule, now considered as an economic activity”.1 For a long time, member states argued healthcare is not an economic activity, as most providers do not intend to make a profit.2 But its treatment as one means EU rules on the internal market (free movement of goods, persons, capital and services), public procurement and state aid, in principle apply to healthcare services. TheCommission’s 2011 directive on cross-border health care, partially based on internal market rules promised to expand the choice of patients in Europe.3 More fundamentally, it answers the question of whether healthcare should be publicly planned or subject to market forces. It also opens the door to countries’ exporting their healthcare problems, e.g. richer member states sending patients to poorer ones where treatments are cheaper, potentially depriving locals of medical resources that instead go to well-paying foreign patients – a problematic kind of ‘medical tourism’. There is also an inbuilt inequality around whose choices are increased: patients likely to leave their country for treatment will mainly be those able and accustomed to travel or live abroad, in other words those with higher incomes. Whilst “the choices of those who are not mobile, for language and cultural reasons, and who are dependent on neighbourhood support, may actually shrink as a result of local services becoming increasingly under-funded” ie those on lower incomes.4

According to academic Dr Christoph Hermann, the “public nature of healthcare provision in Europe has been challenged through a series of reforms that amount to what can best be described as the marketisation of health care.”5 The process of marketisation isn’t just the establishment of internal markets in health (ie domestically or via the EU single market); it includes outsourcing, public-private partnerships, competition between different providers, and the sale of public hospitals to private investors. Officially aiming to cut costs and improve efficiency, such reforms, says Hermann, have really helped create healthcare markets that “promote inequality among patients and healthcare workers and erode the public nature of healthcare provision.”6 There is also an obvious limiting factor to a ‘market’ in healthcare: those in most need of healthcare are least able to pay the ‘market price’ for it – “the elderly, very young, people with mental illness or the chronic sick, many of whom are poor”.7 So, for private healthcare to be profitable for more than just the wealthiest minority, it still requires public funding. Despite all of this, the Commission’s enthusiasm for a free market in healthcare has not dampened. When Health Commissioner Vytenis Andriukaitis’ started office in November 2014, Politico reported that the Commissioner envisioned “a single market for health services” that mirrors the logic of a single market for energy.8

Box 1: Professional (privatisation of) services firms

According to Jane Lethbridge, Director of the Public Services International Research Unit (PSIRU), global accounting and consultancy firms have “played a key role in promoting health sector reform by supporting governments to introduce internal markets to public health care systems”.9

The Commission outsourced an ‘evaluative study’ on its cross-border healthcare directive to professional services giant KPMG.10 KPMG is a “committed Corporate Partner” of right-wing UK think tank Reform,11 which, writes The Independent, is “at the forefront of controversial calls for ever more private sector involvement in the delivery of health care”.12 Apparently, Britain’s ex-European Commissioner for Financial Services, Lord Hill, once sat on Reform’s board, and was expected to “be very successful indeed” at “bringing that reform to Europe”.13

Price Waterhouse Coopers (PwC) has drawn flack over its revolving door with UK health policy decision-makers, and for cashing in on ‘restructuring’ of the UK’s National Health Service (NHS), including the notorious PFIs14 (see box 4). Lethbridge also notes that firms like KPMG and PWC specialise in refining the language of privatisation reforms into more palatable rhetoric about ‘patients choice’ and a ‘safer, sustainable future of healthcare’.15

McKinsey plays an integral role in the creeping privatisation of the UK NHS, which it has firmly embedded itself in.16 Despite clients including health insurance companies and hospital chains,17 McKinsey says in its EU lobby register entry, “We are independent advisors to EU institutions”.18

Another EU-level influencer is Brussels-based think tank Health Consumer Powerhouse, run by former Burson-Marsteller and KPMG men.19 Branding itself as a neutral monitor of healthcare systems, it is in fact deeply partisan: it told the Commission the EU must build “a well functioning healthcare service market”, and make healthcare “a competitive European service industry.”20

Spotlight on the European Union of Private Hospitals (UEHP)

No doubt having an office just a few hundred meters from the Commission’s Berlaymont headquarters helps lobby association UEHP in its mission to promote private hospitals in Europe and an “internal market in the field of healthcare”.21 The private hospital lobby’s reported €200,000 – €299,999 lobby expenditure (2015) probably doesn’t hurt either, nor its presence in multiple Commission advisory structures,22 and regular invitations to Commission seminars and conferences.23 Released documents reveal that Commission health directorate DG SANTE sent officials all the way to Madrid and Monaco for UEHP’s 2015 and 2016 council meetings, and to Milan for a 2015 conference covering the role of private hospitals in healthcare ‘modernization’.24 And that’s not all. In November 2016, UEHP met with Health Commissioner Andriukaitis to discuss ‘patient mobility’, ‘modernisation of health systems’ and ‘sustainability of healthcare’25 friendly sounding rhetoric for marketisation and more private-sector service provision. UEHP’s President described the Commissioner’s “interest and consideration”, with the meeting confirming that UEHP’s “voice is important”.26 Meeting minutes show Andriukaitis’ emphasis on “the need to cooperate” and to consider how private and public health sector “cooperation” can be “rationalised so as to counter unfair competition”.27 In this context, ‘unfair competition’ means not letting public healthcare providers receive public money unless private firms get their hands on it too.

UEHP’s voice not only reverberates down the corridors of the Commission; it also makes sure to be heard in the European Parliament. In March 2017, UEHP presented its vision at a conference in the Parliament,28 assuring MEPs that “private hospitals in Europe promote patients’ freedom of choice”, which stimulates “fair competition in healthcare” among EU member states, and so contributes to the “sustainability” of national healthcare systems! It also called for greater private sector involvement in the implementation of the cross-border healthcare directive.29 Writing in the Parliament Magazine in 2016, UEHP noted its “long term cooperation” with policy makers, “working on new financing rules, integrating public and private insurances reforms”.30 And, it emphasised its work at national levels, with ministries “connected with health policy reforms”. A disturbing indicator of its national level agenda is given by a news story on UEHP’s website about its German member. The German Association of Private Clinics (BDPK) is suing a district council for subsidising a local public hospital.31BDPK’s complaint against the District of Calw is that subsidising only local municipal clinics with taxpayers’ money is unfair, and discriminates against e.g. other hospitals in the vicinity that are operated by private companies. Put simply, no public money for public hospitals unless it also goes to private ones. The application to healthcare of the principles behind EU internal market rules, like non-discrimination, underpins this claim.

The glossy world of private healthcare business conferences

UEHP was a media partner of Healthcare Business International’s 2017 conference, the private healthcare networking event of the year (tickets around £2000 a pop!).32 Held in the political heart of London, “governmental relations” was an over-arching theme, and sponsors included Siemens Healthineers, Abbott Diagnostics, private equity firm Advent International and healthcare real estate investor Medical Properties Trust. KPMG co-hosted the awards for ‘business model innovation’.33

2. Trading health for profit

There is great concern across Europe that the EU’s international trade and investment deals “could further open up healthcare for competition and hand a bigger role to private commercial providers, financial investors and insurance companies” – as put by the European Public Service Union (EPSU).34 Trade deals of the ilk of EU-US deal TTIP and Canadian sister deal CETA, may pose a threat by treating healthcare as part of the services sector, opening it up to competition from global healthcare companies. The devil is in the details: public services are defined as being “supplied neither on a commercial basis, nor in competition with one or more service suppliers” (GATS Article 1.3). But, as PSIRU has pointed out, after “twenty years of public sector reform and the marketization of public services, very few public services operate on a completely non-commercial basis without any form of competition”.35 The negotiations on the Trade in Services Agreement (TiSA) are also of concern, as “semi-public services” like healthcare are covered by the negotiations. These do not fall under TiSA’s narrow definition, and henceforth could be privatised at the drop of a hat”, warns Transnational Institute.36

Another major worry is that investor protection mechanisms (private courts in which companies can sue governments for policy changes that reduce their ‘anticipated’ profits) in trade deals make it very difficult for governments to reverse healthcare privatisations without facing hefty lawsuits.37 And unfortunately, the Commission is (re-)negotiating many trade deals, including with Japan, the Philippines and Mexico,38 in which services’ market access and investor protection provisions are standard. As are other features designed to give corporate actors more influence, like so-called ‘regulatory cooperation’ (based on the wishes of corporate stakeholders, ironing out differences in regulation that create ‘barriers to trade’, even if such ‘barriers’ provide important social or environmental protections). Or features intended to make it difficult to roll back existing levels of liberalisation, like ratchet clauses.

Pro-trade deal lobbying

German private healthcare company Fresenius, the largest private hospital provider in Europe (as of March 2015), has been a vocal promoter of TTIP. Notes from a meeting with DG Trade in December 2015 refer to “strong support for TTIP and active communication work being carried out by Fresenius CEO across Germany”, with a “list of press articles/public statements” supporting TTIP provided.39 Fresenius has also hired EU lobby consultancies Brunswick Group LLP and Avisa Partners.40 The company is moreover active in “international healthcare consultancy involving public-private partnerships”41 (see part 3).

The European Services Forum (ESF), a member of the Commission’s TTIP Advisory Group,42came out explicitly against efforts to protect public health services in TTIP. ESF’s members include national business lobbies like the Confederation of Swedish Enterprise, professional services giants like KPMG, and insurance industry players like Insurance Europe and Prudential. In response to the European Parliament’s Trade Committee drafting a TTIP resolution for a carve-out of public services including health, ESF recommend maintaining “the possibility of European private investors to invest in ‘privately funded’ education and health services.”43Combined with DG Trade meeting notes documenting ESF’s concern that an “excess of transparency” around TTIP might constrain negotiators’ “room for manoeuvre”,44 ESF’s hopes for such trade deals are clear: circumvent transparent, democratic process to further wrench open healthcare services to the private sector. Yet ESF and the Commission have a well-documented shared agenda on trade and services’ liberalisation. High-level Commission officials have, over the years, described ESF’s contribution to trade negotiations as “absolutely decisive”, claiming they need “a constant link” to ESF “or we simply cannot negotiate.”45 The EU’s negotiation agenda for TTIP often appeared a copycat of ESF’s demands, which not only encompass healthcare services’ liberalisation, but also ‘investor protection’ (e.g. investor-state dispute settlement (ISDS).

There are already clear precedents showing how private companies have used ISDS mechanisms to successfully seek colossal sums of money from governments that have attempted to reverse previous healthcare privatisation policies. For example, in 2008, Dutch insurer Achmea(formerly Eureko) sued Slovakia via its bilateral investment treaty with the Netherlands because the Slovak government had required health insurers to operate on a not-for-profit basis.46Achmea complained of t48he “systematic reversal of the previous liberalisation of the Slovak health insurance market that had prompted the claimant to invest”.47 The ISDS tribunal decided in favour of Achmea, awarding the company €22 million in compensation from Slovakia.48 Achmea, it is worth noting, spent €100,000 – €199,999 lobbying the EU in 2015, with ‘public health’ a policy target,49 and hired Brussels lobby firm Dr2 Consultants50. It is also a member of (re)insurance industry association Insurance Europe, which spent nearly €7 million lobbying Brussels in 2016,51 with multiple high-level Commission meetings.52 ESF member Insurance Europe welcomes TTIP and the “deeper integration” of EU-US economies from “trade, investment and regulatory cooperation”.53

Another influential group that merits attention is free trade and corporate-backed think tank the European Centre for International Political Economy (ECIPE).54 Together with US healthcare lobby the Alliance for Healthcare Competitiveness (AHC),55 ECIPE (represented by lobby consultancy Edelman) invited Trade Commissioner Malmström to a healthcare and TTIP roundtable in March 2015.56 ECIPE met with the Commissioner later in March.57 The invitation promised to present the ECIPE report ‘The Health of Nations: A Transatlantic Trade and Investment Agenda for Better Healthcare.’ This report makes the grandiose claim that: “Just like Adam Smith helped Europe to move away from the shackles of manufacturing mercantilism several hundred years ago, there is now a great need to do the same in services, especially healthcare.”58 It dismissed the “myth” that expanding trade in healthcare is a Trojan horse to undermine public healthcare, whilst at the same time setting out how it would help do just that. Where healthcare services are open to competition, it says, (and remember, few national health services are entirely public anymore) foreign suppliers (think giant US for-profit healthcare firms) should face no restrictions, nor be disadvantaged by public-sector health services receiving public subsidies (ie they should get EU taxpayers money too). And the cherry on the cake: the “direct gains” to be reaped by deregulating trade and investment in healthcare should be a model for trade policy with other countries.

The Commission commissions its own echo chamber: Despite concerns repeated widely by public health and legal experts, unions, and civil society, the Commission insists its trade deals cannot fuel healthcare privatisation. “TTIP has no influence” on the structure of health financing systems, says DG Trade.59 There is “no reason to fear” for the UK’s NHS now or in future “as a result of TTIP or indeed EU trade policy more broadly”, writes Commissioner Malmström.60 Luckily for the Commission, its view was confirmed in the Trade Sustainability Impact Assessment it commissioned from economic consultancy Ecorys.61 Ecorys concluded that civil society’s concerns “seem unfounded fears”, worries over the definition of public services in TTIP “are unnecessary”, and that EU trade deals “provide guarantees for the protection of public services”. These conclusions provide DG Trade with the echo chamber it desires. One might wonder if the breakdown of stakeholders Ecorys consulted impacted its conclusions: 373 business/industry, 98 social/consumers, 43 environmental, etc (and some corporate groups listed under ‘environmental’ or ‘social’!)62 Or note that Ecorys’ clients include companies and “Health (care) institutions”,63 and that it assists both “public and private decision makers in shaping health (care) systems and markets”.64 Or worry over its claim that its “privileged presence” in the EU market improves its offer to clients, to make the “best use of its substantial business opportunities”.65

Brexit, Trade and the NHS

Public campaigns spread across the UK concerned that TTIP could open up public services like the NHS to competition from multinational companies, resulting in “a wave of privatisations.”66 Legal advice prepared for trade union Unite concluded TTIP posed “a real and serious risk” to future UK government decision making on the NHS.67 But UK officials insisted TTIP was no threat to the NHS, nor any other trade and investment deal, which “cannot force the UK to privatise public services”. Suggestions to the contrary, they said, are “irresponsible and false”. Yet they refused to back this up with evidence, denying access to their own legal advice on TTIP’s potential impacts. And the risks for the NHS are real: procurement rules that force it to contract out services, ‘investor protection’ a barrier to rolling back privatisations, and more. Brexit and Trump may have shifted the debate away from TTIP, but the threat to the NHS from such trade deals is no less real. The UK government was always a vocal supporter of TTIP (in its most extreme form), refusing to exempt the NHS, and routinely promoted corporate interests in EU trade policy. This doesn’t bode well for future trade deals it will seek with the US and other countries. Nor does a 2017 government advisory committee report on the revolving door, which found “plenty of scope” for “patient safety regulators to move to companies in the health sector”.68 Brexit is no protection from the interests driving NHS privatisation.

3. A shared ideology: PPPs and public spending cuts

There is a shared ideological underpinning of (much of) the European Commission and the corporate lobbies it has a close relationship with: business knows and does best. In the context of the Commission’s promotion of public private partnerships in healthcare, and its use of economic governance to cut public expenditure on health, the Commission’s actions appear to be less a result of corporate lobbying than a consequence of this shared ideology.

Can nothing put the Commission off public private partnerships (PPPs)?

The Commission promotes PPPs as a way to reduce government spending. Its 2014 Investment Plan for Europe uses public investments and guarantees to “engage” private capital,69 with its main instrument (the European Fund for Strategic Investments) happy to hand public money to corporations for health infrastructure and services.70 Back in 2003, Commission guidelines for successful PPPs noted “growing acceptance” of their use in healthcare, suggesting they’re not only cheaper, but better: raising finance in times of “budgetary restrictions” and using “private sector operational efficiencies” to reduce costs and increase quality.71 Alas, experience contrasts with these assumptions (see box 4). But that hasn’t stopped growing support for healthcare PPPs “through policy, EU legislation and financial assistance”, says Jan Willem Goudriaan, of the European public services trade union federarion EPSU.72

Not PFIt for purpose

Nicknamed the “Great PFI Swindle” by pro-NHS campaigners, Private Finance Initiatives (PFIs) – widely used in the UK since the early 1990s – involve private companies building NHS hospitals and leasing them back to the NHS.73 Immensely profitable for the companies, the interest lands government with billions in PFI debts (£222bn, calculated the Independent in April 2015).74 Barts Health NHS Trust in London, for example, is tied to a 43-year PFI that will see it pay back £7bn on contracts worth only £1.1bn. It would be cheaper for government to borrow money directly.75 UK academics have described PFIs as “an enormous financial disaster” which “no rational government” would do, and noted that the diversion of funds from other budgets to PFI payments make them “an engine for closure of public services and further privatisation”.76 Many UK examples show how PFI hospitals face “loss of bed capacity, loss of staff, and loss of other services” to pay the increasing contract costs.77 The UK’s PFI model, now being rolled out across Europe with “gleeful encouragement” from the Commission, says EPSU, has, over 25 years, shown “no evidence of being a cheaper, more efficient or innovative method of providing public services.”78

Even in light of the dire results of some PPPs (see box 4), the Commission seems reluctant to draw negative conclusions. For example, DG SANTE commissioned a study to evaluate healthcare PPPs, which found a sparsity of reliable evidence on their performance. But it did recognise that UK PFIs haven’t performed “as well as promoted or expected”, and “strong evidence” that restrictive PFI contracts can “have an adverse effect on patient quality and financial performance”.79 The Commission then requested an opinion from its Expert Panel on Effective Ways of Investing in Health (EXPH). EXPH “did not find scientific evidence” that PPPs are cost-effective compared to public healthcare provision, “no generalized evidence” that PPPs are more efficient than a public provider, and various reports showing they’ve been more expensive.80 Yet from this, EXPH merely concluded further research is needed! It did however advise that EU Structural Funds not be used for healthcare PPPs until the Commission has got “evidence of their comparative advantages”. But in response to this, the Health Commissioner simply stated that the panel’s advice isn’t binding, and that the Commission isn’t planning any recommendations to member states as follow-up to it.81

4. How ‘economic governance’ strengthened the Commission’s hand on health

There is a complex landscape of post-crisis EU ‘economic governance’, introduced after the 2008 financial crisis spilled over into a government debt crisis. Ideologically-driven austerity policies have forced the public to suffer for the profligacy and greed of the financial sector. National healthcare reform is often a target of EU economic governance, which ranges from macro-economic surveillance and policy recommendations (e.g. via the ‘European Semester’ annual economic policy cycle) to more coercive instruction.82 The crisis, notes the European Trade Union Institute, “radically altered the nature of EU intervention in domestic healthcare reforms” from a ‘soft law’ and best-practice-sharing role to increasingly binding calls for major healthcare reforms as a means to cut public spending.83 The potential to issue sanctions for non-complying Eurozone countries under the so-called ‘Six Pack’, ‘Two Pack’, and macroeconomic conditionality linked to European Structural and Investment Funds, means Commission ‘recommendations’ are “increasingly tantamount” to ‘instructions’.84 And the Commission’s new powers to enforce budgetary austerity are inseparable from the fact that “austerity measures have reduced access to care for the most vulnerable patients in many EU Member States (WHO 2014)”.85 Brute implementation of austerity “in Greece, Ireland, Latvia, Portugal and Spain, where mass cuts and hospital privatisations have taken place, has resulted in an upsurge in infectious diseases, including HIV, and suicides.”86

Researchers from European Social Observatory (OSE) have expounded “how the Eurozone crisis created a policy ‘window of opportunity’ to push through fiscal surveillance of health systems as part of the solution to the crisis”.87 So whilst lobbying by private healthcare actors may not be directly responsible, the shared “cognitive frameworks”, to borrow OSE’s term, of neoliberal elites like the Commission and the big business world lead to “the primacy of an economic perspective over health objectives.”88 That said, corporate lobbies don’t miss a potential lever for influence. This is shown in comments from BusinessEurope’s Swedish member on Sweden’s 2016 European Semester cycle. Swedish Enterprise’s ‘reform priorities’ include increasing “competition in education and health care to improve efficiency and productivity.”89 And business groups have a clear ally in the Commission’s economic and financial directorate (DG ECFIN), whose 2016 report on ‘healthcare and fiscal sustainability’ sings the praises of competition. Competition “between public and private can improve quality”, it says, promote “better outcomes” and “greater efficiency and cost containment”.90 And a key issue in driving “the incentive to compete to attract patients is the possibility to retain profits”! These are not neutral facts but ideological assertions; shared by the private healthcare sector, but not by vast swathes of the European public(s).

The European Semester has not been used as a blunt tool to push privatisation, but rather to push for cutting public expenditure on healthcare. ‘Cost-efficiency’ is the name of the game, reforming healthcare systems to “enhance the quality of public finances”.91 The diversity of EU member states’ national health systems however has tended to mean that impact on public budgets is the only criteria the Commission can easily compare. Thus, healthcare reforms are seen as successful if they reduce costs or shift them from public to private funding “no matter what the consequences may be for the quality and accessibility of health care.”92 Cutting public health spending may mean pushing more healthcare provision into the arms of the private sector (though it is a myth this necessarily costs the public sector less; see box 4). Or, lead to shifting healthcare expenditure from the public purse to patients (out-of-pocket payments). And when public cuts lead to a worsening public healthcare sector, those who can afford it are more likely to seek private healthcare alternatives.

Conclusion

The combined effect of EU-level policy pressures has been the incremental encroachment of an increasingly privatised model of healthcare provision across Europe. These pressures come from marketisation, trade policy, public private partnerships and ‘economic governance’. To avoid a system that puts “profits before patients and competition before cooperation” at the expense of patient care,93 there is a pressing need for public campaigns to safeguard health as a universal right, not a commodity for business to profit from. The good news is that resistance has already begun: on 7 April 2017, the European Network Against Privatization and Commercialization of Health and Social Protection, together with EPSU, held its second European Day of Action.94Coinciding with World Health Day, mobilisations from India to Brazil, and Brussels to Barcelona, spread the messages that our health is not for sale, and that health is for all, not just those who can pay.95 Shoring up these messages are more concrete demands: an end to austerity policies; public and collective financing of healthcare; massive investments in public health, with “not a single euro of public money” going to the commercial health services sector.96 Ensuring health is protected from EU market rules is another important demand; some propose specific EU treaty changes to exclude public services like healthcare from EU liberalization.97 Trade unions highlight the need to keep fighting trade deals like TTIP, CETA and TISA, which push the commercialisation of health.98 Ultimately, it is in all our interests to confront and challenge the interests, and ideology, that seek to incrementally co-opt universal public healthcare into private, for-profit, hands.

As part of her research for this article, Rachel Tansey did background interviews with, and would like to thank, Jan Willem Goudriaan and Mathias Maucher (European Federation of Public Service Unions), Jane Lethbridge (Public Services International Research Unit, University of Greenwich), Rita Baeten (European Social Observatory), Zoltán Massay-Kosubek (European Public eHealth Alliance) and Sonia Roschnik (Health Care Without Harm Europe). Views in this article do not necessarily reflect those of interviewees.

Author: Rachel Tansey for Corporate Europe Observatory.

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