Public vs private: is there a third way for the NHS?

Public vs private: is there a third way for the NHS?

Social enterprises are taking on the private sector to compete for business and bring new ideas to the health service. By Jennifer Veitch.

The Herald

When the political football also known as the NHS is being kicked around, there are usually two camps in the debate. One fights to uphold the founding principles of the health service, with any involvement of the private sector seen as anathema, while the other argues that, with rising costs and an ageing population, the status quo is simply not an option.

But could there be an alternative to public and private sector delivery of healthcare?

Campaigners warn that the polarised debate about the state of the health service may be missing an opportunity, arguing that social enterprises – or businesses with a social purpose – could deliver many health services while reinvesting profits for the benefit of stakeholders, not shareholders.

With growing concern about private sector involvement in the NHS, social firms are being billed as more f lexible than the public sector, more business-like than the traditional voluntary sector and more ethical than the private sector – with so-called double or even triple ‘bottom lines’ of financial, social and environmental missions.

The potential seems to have caught the imagination of the famously prudent Chancellor, who recently described the not-for-profit sector as ‘a new frontier for enterprise’.

Yet, while Gordon Brown has hinted at tax relief benefits to come in the next Budget, he has not yet put much money where his mouth is: his much-vaunted social enterprise action plan unveiled last month had a fund of just GBP10m. The Executive has yet to publish its own social enterprise strategy for Scotland.

So is the government really willing to support social enterprise? And, for those concerned about the impact of private sector deals with the NHS, can it ever provide a realistic alternative?

With the Scottish Parliament elections coming up next May, the lobbying for more investment in social enterprise models has begun in earnest, with the Scottish Social Enterprise Coalition calling for 10-per cent of all public procurement spending to be invested in social enterprise by 2012, and for community benefit clauses to be used in such contracts.

Antonia Swinson, chief executive of the coalition, says social enterprise models should play a major part in the future of healthcare. ‘They bring the innovative, flexible and community-based approaches needed to meet modern demands, but, crucially, they maintain a core motivation to maximise benefits to the community, not profits to shareholders, ‘ she says.

‘If services are to be externalised from the NHS, and because of changing expectations and financial pressures that will increasingly be the case, then surely it is better to use organisations who share a public service ethos and will use every penny of public money for social benefit?

‘The Executive’s forthcoming Social Enterprise Strategy aims to open up public services to social enterprises – and that must include effort from within NHS Scotland.’

Swinson adds that social enterprise is increasingly a reality for healthcare in England, with projects such as Cuckoo Lane, a nurse-run general practice in London, attracting interest from north of the border.

She adds: ‘There has been huge progress made in England and Wales in the last 12 months with a dedicated Social Enterprise Unit set up within the Department of Health.

‘It is piloting new ideas, helping create new health-focused social enterprises and building the capacity of existing ones. It is going to take many years to develop but it is a very important start and one we want to see replicated in Scotland.’

According to official statistics, there are 1100 social enterprise firms in Scotland, many of them providing health or social care services, although the true number may be higher.

One of the very first was Cornerstone Community Care, which started out by taking over the care of people with learning disabilities from the NHS in the early 1980s. From its headquarters in Aberdeen, Cornerstone now delivers GBP26m of services across Scotland, while retaining its social mission and charitable fundraising potential.

‘It is a big business and we have a very business-like approach, but that is the best way that we can support people, ‘ says a Cornerstone spokesman.

‘We are also a charity, so we have the opportunity to generate income from sources that wouldn’t be available to a local council to enhance the services we provide.’

Declan Jones, director of the Social Enterprise Institute at Heriot Watt University in Edinburgh, believes social enterprise could provide a viable alternative for the future delivery of health services. But he warns that a ‘sterile debate’, between those who see it as the best defence against the private sector involvement in healthcare and those who fear it is thinly-veiled privatisation, could hamper its development.

‘Public services need not be equated with state-provided public services and involving social enterprises is most definitely not privatisation by the back door – we need to extend the debate to what works best and not just on the financial bottom line, ‘ he says.

‘The option of social enterprise – despite its current small scale – is that is has the potential to grow because social entrepreneurs are driven by social mission but want to run successful sustainable businesses as well. Public servants do not have that motivation. He adds: ‘Reform and innovation are stifled by NHS stakeholders who see it as a threat, ‘ he says. ‘Social enterprise and the wider social economy sector are actually good at innovation because they are less bureaucratic and more flexible in their management structures. They come up with good ideas which often – years later – become part of the mainstream way of thinking.’

‘Think of the hospice movement as an example and the recent expansion of the Maggie’s Centre services for cancer patients and their families. Does anyone seriously believe that the state could have created the Maggie’s Centre phenomenon?’

And Jones argues that social enterprises would be a safer bet for the future of healthcare delivery. ‘The private sector enter and leave markets based on their financial interests. Our health and social work services in Scotland would collapse if it were not for the wider social economy sector, which is a major provider of care services, particularly for the elderly, people with disabilities and for people with mental health problems.

‘These organisations do not wish to leave this ‘market’. They want to grow their businesses so that they have a genuine commercial relationship with the NHS and local authorities.’

But the current system of contracting out services leaves social enterprise companies at a disadvantage, he says. ‘In Scotland we have some way to go to get social enterprise taken seriously as an economic as well as a social matter. This is most prevalent in public procurement markets.

‘However, they also have to contend with procurement officials who see the terms charity or ‘not for profit’ and think that means that these are not real businesses.

‘The private sector can make profit out of government expenditure – in fact, it would not act otherwise. Social enterprises are told by the state to keep their prices at the same level as their costs [this is known as Full Economic Costing] – this is not only insulting but it places unsustainability at the heart of these commercial relationships. This has to change.

‘For many social enterprises and traditional voluntary organisations, the reality is that they subsidise the state by providing services at less than full economic cost.

‘This has to change, and one suggestion of mine is that the state should enter into long-term contracts with social enterprises and recognise that if a commercial subsidy is required then that is not necessarily a bad thing.’

An executive spokesman says that ministers are open to a ‘broad spectrum’ of delivery approaches, ‘if these are efficient, meet the required objectives and offer value for money in terms of any contribution from public funds’.

He adds: ‘We are open to any suitable new proposals which might contribute to the development of public services and growth in the Scottish economy.’