A maths problem to solve: 44 x ACO does not = 1 x NHS

What’s all the fuss about STPs and the ACOs that are being introduced? Isn’t this just another one of the NHS’ endless re-dis-organisations? Is it important how the NHS is run if it’s still there for us ‘free at the point of need’?

In this blog we examine what has happened to the NHS since 2012 and why ACOs and ACSs threaten the integrity of the NHS.

Prior to the Health & Social Care Act (2012) the NHS was a national service with national standards. It was owned and provided by the government mostly through the Department of Health (DoH) but with some responsibilities delegated to local authorities.  Although some services were outsourced to the private sector long before 2012, the private sector could never describe its services as ‘the NHS’.

This is what most people think the NHS still is, barring a few organisational name changes and more privatisation. This is partly because the ‘delivery system’, though tattered round the edges, still looks roughly the same as it always has done.

The Blairitisation of Public Services – privatisation New Labour-style

During the Blair years there was a revolution in what it means for a service to be publicly provided and owned. He saw the NHS as old fashioned and inefficient – despite the fact that it has always been a world leader in clinical research and development. It was also consistently one of the cheapest universal health service in international comparisons by spending per person and as a percentage of GDP.

Blair’s aim was for the NHS to be ‘a kite mark and a funding stream’. His health team set about putting changes in place with the backing of the Treasury who raised the funding to unprecedented levels. They encouraged private sector contracts for clinical service. His Health Secretary Alan Milburn’s team went over to the States to talk with Kaiser Permanente who operated Health Maintenance Organisations (HMOs) which deliver Medicare.

The Health and Social Care Act 2012

In 2010 the Coalition’s Health Secretary, Andrew Lansley, was contacted by McKinsey & Co who had been talking to some of their major global clients about strategy for the NHS. When the extent of McKinsey’s involvement was leaked to the Mail on Sunday they ran a story ‘The firm that hijacked the NHS’.  It was the birth of the Health & Social Care Act (2012).

The Act removed the responsibility for providing the NHS from the government and created Blair’s ‘kite mark and funding stream’. Commissioning of services was handed over from the DoH to a new body separate from government, NHS England (NHSE). This is now the Commissioner in Chief alongside 200+ smaller commissioning groups (CCGS) across the country. CCGs buy in services from Any Qualified Provider who are badged as NHS by NHS Identity, the trademarking division of the NHS.

As the CCGs are not capable of running large, complex tendering exercises, Commissioning Support Units (CSUs), pre-approved by NHSE, are used to manage commissioning for a variety of other services. Notably amongst the top companies approved by NHSE is Optum, the UK subsidiary of UnitedHealth of America.

Crucially, the Act also quietly enabled the DoH to transfer ownership of all NHS land, estates and assets, previously under the control of the Strategic Health Authorities and Primary Care Trusts, to a (DoH-owned) private company, NHS Property Services Ltd, aka ‘The PropCo’. It has since created commercial leases for its properties and has started to charge commercial rents.

Breaking up the NHS

The ‘NHS’, no longer a public body, is now a series of separate entities working under the logo. Effectively all services work in a contractual relationship to NHSE in the way that GPs used to work for the Department of Health. But these services are not under the same restrictions regarding private services they can offer alongside ‘NHS services’ that the public service was.

Shrinking the NHS

In contrast to New Labour’s high funding levels, the Coalition and the Conservative governments put the squeeze on the NHS, increasing funding at less than the rate it needs – despite the huge demands being put on the system by these seismic administrative changes.

Inevitably this has a direct impact on service provision. CCGs have already started to exercise their legal powers to deny services, bringing in ‘lifestyle’ conditionality to a patient’s entitlement to treatment (obesity, smoking, foreigners…). Meanwhile, the new commercial rent has to be paid to Propco, and premises kept up to scratch, either because it is a condition of a PFI contract or because Hospitals and GP surgeries can fail a Care Quality Commission inspection and be closed down. Prior to the 2012 Act, buildings would have been allowed to get a bit scruffy and queues to lengthen rather than actual treatments being denied.

CCGs are structured as insurance groups. Their job is not only to put services out to competitive tender in order to get the best price from Any Qualified Provider, but to ensure that any referrals made via their members (all GPs have to be a member of a CCG) adhere to their individual rules. CCGs are not obliged to provide comprehensive services other than a core obligation for emergency, maternity and ambulance services; the rest is up to them.

The discrepancy between what CCGs provide gives rise to situations where private clinics situated within NHS hospitals can ask NHS patients to check with their funding body (CCG) whether the treatment they need is covered by them, as their service covers several different CCG referral areas. Otherwise self-pay and insurance payment is available. Bedford 3 Counties Laser Clinic explicitly states this on the home page of their website.

This isn’t a matter of cuts, this is a question of the integrity of the NHS as a public service.

ACOs – An American Import with a 5 Year Plan

In 2014, NHS England CEO, Simon Stevens, produced a 5 Year Plan, The Five Year Forward View. In it he talks about a growing and ageing population, whose care needs aren’t being properly catered for. He argues that the NHS must be reshaped to meet this ‘challenge’ with a ‘joined-up strategy’ to integrate health and social care.

The 5 Year Plan promotes a voucher system and ‘choice’. Maternity vouchers are being trialled across the country allowing women to decide where they want to spend their ‘NHS’ money – in the public or private sector. Midwives have been encouraged to create midwife-led maternity businesses outside the NHS.

Stevens also says that A&E is expensive and overused. He has revived Professor Sir Bruce Keogh’s plan to reduce them in England, replacing them with a significantly smaller number of huge centralised Major Trauma Hospitals. District Generals will become Multi Speciality Community Providers providing urgent care only, sending patients for consultant-led, high-dependency care to centralised Major Trauma Hospitals if necessary.

To speed up the implementation of the 5 Year Plan, Stevens announced the Sustainability and Transformation Plans (STPs) and their 44 footprints to run combined health and social care in which a variety of organisations including Foundation Trusts, Local Authorities and private sector providers will participate. Some have championed the Plans claiming that they will end competition and restore the Strategic or Regional Health model with the added bonus of integrating health and social care.

In reality this is the end of nearly 70 years of the NHS.

The STPs take the N out of the NHS. The 44 footprints represent 44 Local ‘Health economies’ – soon to include ACOs – each with different configurations and services.

What are Accountable Care Organisations? Where do they come from?

To answer this question let’s take a trip to America and consider the Health Maintenance Organisation (HMO).

There is much speculation at the moment as to whether President Trump will stay in post or be impeached or removed. In the 1970s another president, President Richard Nixon, was impeached and left office. His advisor, John Erlichmann, also served a prison term as a consequence. The scandal was focused on the Watergate Tapes – an event so significant that the word ‘gate’ is now tagged onto other scandals. In the Watergate tapes, at the centre of the scandal, there was a conversation between Nixon and Erlichmann, both friends of Edgar Kaiser. Kaiser had made a proposal to extend Medicare through his company’s system of HMOs.

Nixon didn’t like the proposal because he questioned where the profit was and was reluctant for the state to pay for the roll out of HMOs to provide healthcare for the poor. It was explained to him: “All the incentives are toward less medical care, because the less care they give them, the more money they make.” Nixon made a speech shortly after in which he said how proud he was that the US was finally going to offer essential healthcare to all its citizens.

However, HMOs suffered increasingly bad press with allegations of fraud and denial of care to those enrolled on its lists. HMOs were superseded by Accountable Care Organisations as part of Obama’s Affordable Care Act, relaunched and rebranded to remove the bad smell they had developed. And for good reason, because at least three of the leading eight insurance companies have had 18 month-bans from the US government at times for refusing to allow expensive patients to register. UnitedHealth is currently being investigated for fraud associated with Medicare. They are investigating cases in which the global corporation charged the government for care that never happened.

ACOs – who benefits?

ACOs, like their predecessors the HMO, work on the basis of a population in a defined geographical area registering for care to be provided by them. People eligible for Medicare can sign up to a healthcare insurance plan provided by an insurer like Edgar Kaiser’s company, Kaiser Permanente, but paid or part-paid (depending on benefit eligibility) by the government. The US government pays for about 52% of all the healthcare costs in the US either via Medicare and Medicaid or through tax relief on company employee health plans. That means government funding goes directly or indirectly into insurance groups’ pockets. And eligible services through Medicare and Medicaid are ‘free at the point of delivery’.

But this is not a universal, comprehensive or accessible service.

By receiving the money and controlling where, how and on what conditions the money is spent the insurance industry organises its care delivery to ensure as little is spent as possible on patients. Health insurance bosses are some of the highest paid people in the US and the businesses are extremely profitable (despite Kaiser Permanente, like Eton College School, having ‘not-for-profit’ status). The people who cost the most in healthcare are the elderly and the very young which has always been the case. These are the costs – births, maternity care, mental health, long-term care or the elderly and disabled, along with Acute and Emergency services – which tend to be covered by ACOs.

In England’s NHS eight ACOs are expected to be in place by April 2018 with others to follow. The government will pay the ACO to look after its registered members through its own providers. Greater Manchester has already put out a contract for ‘expressions of interest’ worth £6,000,000,000 over ten years. And in Dudley a contract worth £5,000,000,000 over 15 years.


  • The local GP family practice is seen as unsuited to modern demands. They are being replaced by multi-speciality clinics staffed by nurses, Physician Associates and prescribing pharmacists run by GP management or super-clinics.
  • GP/patient relationships are seen as out-of-date. Instead an electronic shared record is preferred. There have already been security issues arising from the privatisation and sharing of records.
  • No more district general hospitals designed for easy access to A&E or community hospitals with in-patient beds offering real local care. Instead there will be ‘Urgent Care’, promoted as being just a different kind of A&E, but in reality a transfer station with few or no major consultant-led services in the hospital to back it up.
  • Specialist care and A&E will be centralised in rich metropolitan areas where additional private services will find a market while there will be a reduction of services in rural and poor areas.

How is it being put in place?

  • Foundation Trusts and GPs alike are being ‘incentivised’ by being given extra funding if they comply with the changes and denied it or threatened with closure if they don’t. The Naylor Report describes one method of achieving this.
  • Kaiser Permanente is ‘buddied’ with NHS Foundation Trusts to teach them how to run their systems.
  • US computer systems for clinical records, based on commercial invoicing, are already in use in many NHS hospitals.
  • The CCGs already provide an insurance style set-up, with limited core responsibilities and choice over what else is offered. In Lincolnshire three CCGs are run by Optum, the UK subsidiary of UnitedHealth of America. Optum are also vetting GP referrals in West London.
  • New grades of clinical staff are already being recruited from the States or trained-up here to run the new models of care.
  • NHS hospitals are already able to earn up to 49% of their income from private patients and are already offering not just ‘fast track’ but additional services no longer available on the NHS for those who can self-fund or have insurance.

It’s not much of a step a couple of years down the line to find that NHS is synonymous with Medicare/Medicaid – still state funded, still ‘free at the point of need’ but alongside a much larger private sector with private insurance plans available through the ACO.

Just like Kaiser Permanente and all the other health insurance companies.

This isn’t simply another reorganisation of the NHS. This is the murder of the NHS dressed up to look like suicide.

3 Comments on “A maths problem to solve: 44 x ACO does not = 1 x NHS”

  1. this is murder of our NHS this decline must be stopped who is gaining by this murder if this government and friends are doing it they should all get out now

  2. Excellent account of Tory NHS-destruction. Profit before people all the way (of course). This has been a right-wing ideologically-blinkered government’s greatest single crime against its people (or plebs): a continuing covert policy.

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