Spain: Public health care is not for sale!

Direct Action, December 15, 2012

By Nick Everett — A “white tide” swept through central Madrid on December 9, in protest at health sector budget cuts and hospital privatisation plans announced by the right-wing Popular Party (PP) regional government. Seventy thousand people, according to the organisers’ estimates, including health workers, youth, families with children and pensioners, chanted, “Public health care is not for sale!” and “We are doctors, we are patients! We defend public health care!”

The December 9 march was the third “white tide” convened by the Association of Medical Specialists in Madrid (AFEM) and health sector unions. Two previous white tides, on November 9 and November 29, have each demanded the withdrawal of the Madrid regional government’s so-called Sustainability Plan for the Public Health System.

Since the privatisation of six hospitals and numerous health centres was announced on October 31, hospitals have been occupied and health sector workers have taken strike action.

On December 5, 75,000 health workers (90% of health workers in the Madrid region, according to union estimates) struck for the fourth day. Health workers from six unions began their industrial action with a 48-hour strike, on November 26, and began another 48-hour strike on December 4. Further strikes will take place on December 17 and 18.

Meanwhile, medical specialists have begun an indefinite strike, to be repeated every week from Monday to Thursday, in defence of public health care.

At a meeting of more than 500 health care professionals on November 8, AFEM president Pedro Gonzalez declared, “The situation is so drastic that we have to do something, or in a few years we will not have public health for our children and our seniors”. The situation is “extremely serious, especially because behind it there are economic interests beyond cost savings”, he said.

Sweeping privatisation

Under the plan proposed by Madrid regional president, Ignacio Gonzalez, six already partially privatised hospitals, built in 2008 under private finance investment schemes, will be fully privatised, along with 10% of primary health care centres and all regional auxiliary services.

The plan also proposed the transformation of La Princesa, a large specialised hospital, into a “super-specialised” facility for those older than 75, and that the Carlos III Hospital, currently specialising in the treatment of infectious diseases, be transformed into a facility for chronic conditions. In addition, a one euro charge per prescription will be introduced.

In a statement released on November 8, AFEM explained: “The measures announced by the regional government, which seek to dismantle public health care in Madrid, directly affect health care for about 1.3 million people and the employment status of some 8000 professionals”.

The privatisation plans come in the wake of a €7.27 billion cut to public health spending by the Rajoy-led, conservative PP government. A full-scale offensive against public health is now under way across the Spanish state, including privatisation, charges for prescriptions and other services and exclusion of undocumented migrants from the public health care system.

Health care: a profitable industry

For private capital, doing business in public health is highly profitable. While most sectors of the Spanish economy are experiencing declining profit margins, those profiting from the sick have a guaranteed supply of “customers”. In addition, an ageing population is ensuring increasing demand for health services.

Two decades ago, the conservative Thatcher government in Britain began to privatise the National Health Service, pioneering a model known as Private Finance Initiative (PFI). Under this model, private corporations are responsible for outsourced services, such as catering, cleaning and administration, but doctors and nurses remain government employees.

Predictably. these public-private partnerships have turned out to be a boon for investors but not so good for the public. The corporation’s demand for profits increases the costs borne by the taxpayer, while reducing services and making jobs redundant. A 2008 study at the University of Manchester concluded that the the top 12 UK PFI hospitals cost £60 million more a year to run than would be the case if they were publicly funded.

In recent years, the Public Private Partnership (PPP) model has gained traction among governments seeking to further privatise health services. Under this model, some or all hospitals functions are outsourced under a “fee for service” arrangement, the same formula used for toll roads. Contracts, typically 30 years in duration, are signed before the hospital is even constructed.

One such example is the Fiona Stanley Hospital, in the southern suburbs of Perth, in Western Australia. The Barnett state government has contracted British multinational Serco to operate the hospital, under a PPP arrangement that will cost the taxpayer $4.32 billion for non-clinical services.

In Spain, the first fully privatised hospital, La Ribera, opened its doors in 1999. The experiment came to be known as the “Alzira model”, after the Valencian town in which the hospital was built. After four years, the hospital needed a public bailout because of ongoing losses. The administrator responsible for negotiating the hospital’s private contract, Antonio Burgueno, is today general director of Madrid’s public hospitals and the new privatisation plan is his “brain child”.

Madrid leads privatisation push

When the former Madrid regional president, Esperanza Aguirre, was elected to office in 2003, all of Madrid Health’s 20 hospitals were state owned and run. Doctors, nurses, orderlies, caterers, cleaners and administrative staff were employed by the regional government.

However, Aguirre soon gained a reputation as a leader of the PP’s neoliberal wing, experimenting with privatisation that was replicated by other regional PP administrations throughout the country. During Aguirre’s nine-year term in office, 11 new hospitals began construction to service the region’s growing population under contracts with private investment firms. Seven hospitals were built under the PFI model, six of which now face complete privatisation; their doctors’ and nurses’ employment will be terminated or transferred to a private corporation. Another four new hospitals, which began to open last year, are wholly owned and operated by private companies under the PPP model.

The new PPP hospitals belong, and will remain so for nearly three decades, under the ownership of construction, real estate and health management companies. In return, private investors receive an annual fee proportionate to the population living in the hospital’s service area. When the contracts expire, the hospitals revert to government administration. However, in the meantime, the regional government is solely a tenant.

Capio: ‘Health Inc’

In March, one of the fully privatised hospitals, King Juan Carlos, opened in Mostoles. The hospital was built and equipped, at a cost of €232 million, by Capio Health, owned by private equity firm CVC Capital Partners. The regional government is now obliged to pay Capio a fee for service for the next 30 years and has already in its 2012 budget allocated €76 million to be paid to Capio for the hospital’s first year of operation.

Another PPP hospital, also to be operated by Capio, will open in Collado Villalba in the next couple of months. When it opens, the health care of 800,000 Madrid region residents will be in the hands of Capio.

Capio, the strongest contender for the management of the six Madrid hospitals facing privatisation, was acquired by CVC Capital Partners in March 2011 from the Swedish health care group of the same name. Based in the tax haven of Luxembourg, CVC is among the five largest investment funds in the world.

According to Capio’s website, “Capio Health is the leading private health care operator in Spain”, with “more than 20 hospitals and health centres, more than 1500 beds in four autonomous regions, and 6500 employees”. With a turnover of €570 million in 2011, a quarter of Capio’s revenue comes from private health care through large insurers, but the remainder comes from public health, “managed by regional governments with which Capio has long-term contracts of 10 to 30 years”, its website explains.

Though it already has the lion’s share of contracts for the operation of public hospitals, Capio is in negotiations to acquire its only major competitor, Ribera Health, which owns Torrejon hospital, in Madrid, and another five hospitals in Valencia. This acquisition would give Capio a virtual monopoly of private contracts in the public health sector.

Kickbacks for contracts

Two of the construction companies that built Madrid’s new regional hospitals under the PFI model, and a services company involved, were cited in the Guertel corruption case, a kickbacks-for-contracts scandal that has involved a number of PP politicians. One of these is the construction company Begar, part of the consortium awarded the contract for Infanta Leonor Hospital, in the working class suburb of Vallecas. Begar’s owner, Jose Luis Ulibarri, was indicted in the Guertel scandal, and the company is now in liquidation.

“One of the risks of the new centres within the context of the crisis is a possible bankruptcy of the [consortium] behind the contracts, which may threaten the provision of health care services to a large chunk of the population”, Marciano Sanchez Bayle, a spokesperson for the Federation of Associations for the Defence of Public Health Care, told the Spanish daily El Pais. “When business is good”, added Bayle, “the profits are private, but when there are losses, public money is used to buy the companies only to have the new profits once again diverted to the private sector”.

Earlier this year, Cameron's conservative UK government approved an emergency fund of £1.5 billion to meet payments to seven PFI hospitals in an attempt to prevent the loss of patient services. “British trusts are having trouble making the backed up payments for PFI facilities”, Jose Ramon Repullo, head of Health Care Planning and Finance for the School of National Health Care, told El Pais. “The size of the financial burden they have inherited has begun to frighten members of parliament there, and now they are wondering if it was worth it.”

More efficient?

The regional health chief for the Madrid region, Javier Fernandez Lasquetty, claims the new privately operated hospitals are more efficient than public hospitals. The cost per capita of the privatised hospitals, according to Lasquetty, averages €437. compared to €734 for the rest of the hospitals.

“Everyone knows these figures are false”, Bayle told El Pais. “The cost per bed of the new hospitals is on average €100,000 more per year than that of conventional hospitals.”

A study carried out by the UGT union federation of government budget estimates found that the cost per bed of the new hospitals was significantly higher than those of public hospitals. Of the partly or fully privatised hospitals, the one with the lowest cost per bed — Henares Hospital, at €335,000 a year per bed — was roughly equal to that of the most expensive publicly managed hospital (the Clinico at €338,000 a year per bed).

Lasquetty’s calculations do not take into account the sophistication of the procedures performed in each case, such as transplants and specialised surgeries. “High specialisation, teaching and research are concentrated in the [public hospitals]”, Repullo told El Pais “While the [privately operated hospitals] support the [public] hospital network, they often drain its resources and transfer the most serious and costly cases the way [of the public hospitals].”

Migrants and people with disabilities disenfranchised

Under a PP government measure that came into effect on August 31, immigrants without residency papers are denied access to public health care. One such immigrant, Julio Basilio Gonzalez, a Cuban who has lived in Madrid since 2009, told El Pais, “This law is my death sentence”.

Gonzalez has a serious heart condition for which he was prescribed medicine by his local doctor, until his health care card expired in September. Under the new law, without residency papers, he cannot renew it; his name was wiped from the government’s medical database.

Gonzalez survives by busking, “but people are leaving less and less, what with things the way they are”, he told El Pais. His subsidised prescriptions cost him about 40 to 50 euros a month, but, says Gonzalez, this amount will now “rise considerably” under the co-payment system.

Also in the firing line are those with disabilities, whose access to public health facilities is threatened by government budget cuts. On December 2, 50,000 people with disabilities, their families and supporters joined demonstrations in Madrid to protest closures of disability centres and the loss of disability care workers’ jobs. Many in wheelchairs or being led by guide dogs marched with the slogan “SOS Disability: Save our Rights, Inclusion and Welfare”.

Luis Cayo, president of the Spanish committee representing the interests of people with disabilities, told Associated Press that regional governments were in arrears of around €300 million to care workers and associations responsible for looking after the needs of disabled people.

Earlier in the day, thousands of people held hands to form human chains around Madrid’s major hospitals in a protest calling on people to “embrace your hospital”.

Government on the defensive

Minister Fernandez Lasquetty responded to the protest by claiming that, although the action showed how much Madrid’s residents cared for their hospitals, government cuts were necessary to save medical institutions from the worst effects of the crisis. But after six weeks of protests with no end in sight, it appears that few are convinced by Lasquetty's claim that privatisation is a necessary ill to keep hospitals alive.

To date more than 20 Madrid hospitals have been occupied by health workers, patients and their families, beginning with La Princesa, on November 1. More than a million Madrid residents have signed a petition opposing the privatisation plan.

In a statement released on November 8, AFEM described the cost cutting measures as “unfair and absurd, lacking technical basis” and noted, “the evidence of international science shows that privatisation of health expenditures and multiplies worsens health outcomes”.

“Some [measures], like the introduction of the one euro prescription, will affect mainly the most vulnerable such as the elderly, chronically ill or people with limited financial resources”, the statement said.

Cristina Diez, an internal medicine specialist at the Gregorio Maranon Hospital, in central Madrid, told El Pais, on November 26, “They are using the crisis as an excuse to do what they have been planning to do for a long time. We want to demonstrate until the Madrid government stops its plan.”

The struggle being waged today by a broad coalition of Madrid residents is taking centre stage in a nationwide movement against the austerity cuts being imposed by the Rajoy government and Spain’s regional governments, responsible for health and education spending. The Madrid region is a test tube for a drastic health privatisation experiment that other regional governments, and capitalist states across Europe, want to replicate.

As Allyson Pollock, Head of the Public Health Policy Unit at University College London, observed in 2003: “There is no country in the world that delivers comprehensive, equitable healthcare through the market and on the back of for-profit providers. Yet governments across the world are rushing to follow the British path and are dismantling their healthcare systems. They and their citizens are in for a shock. When the market comes to health, access to care will be a lottery decided at the local level. The fear and uncertainty of the past are set to reappear.”

[Nick Everett is a teacher and member of the Revolutionary Socialist Party currently living and working in Spain.]