On Kungsholmen, one of the islands on which the Swedish capital
Stockholm is built, stands what some consider to be the future of
National Health Service under David Cameron: St Göran, a six-storey
redbrick hospital that makes profits from the state by treating
patients.
Emblazoned with the name of
its corporate manager, Capio
– rather than the Swedish state, which constructed it – the hospital
has for a decade been the mascot of pro-market Scandinavian policies
that are widely admired by the coalition in Westminster.
Despite its reputation as a leftwing utopia,
Sweden
is now a laboratory for rightwing radicalism. Over the past 15 years a
coalition of liberals and conservatives has brought in for-profit free
schools in education, has sliced welfare to pay off the deficit and has
privatised large parts of the health service.
Their success is
envied by the centre right in Britain. Despite predictions of doom,
Sweden's economy continues to grow and its pro-business coalition has
remained in power since 2006.
The last election was the first time since the war that a centre-right government had been re-elected after serving a full term.
As
the state has been shrunk, the private sector has moved in. Göran
Dahlgren, a former head civil servant at the Swedish department of
health and a visiting professor at the University of Liverpool, says
that "almost all welfare services are now owned by private equity
firms".
Thanks in part to the outsourcing of the state, Sweden's private equity industry has grown into the largest in
Europe
relative to the size of its economy, with deals worth almost £3bn
agreed last year. The key to this takeover was allowing private firms to
enter the healthcare market, introducing competition into what had been
one of the world's most "socialised" medical systems.
Business-backed
medical chains have sprung up: patients can see a GP in a centre owned
by Capio, be sent to a physician in the community employed by Capio, and
if their medical condition is serious enough end up being treated by a
consultant in a hospital bed in St Göran, run by Capio. For every visit
Capio, owned by venture capitalists based in London and Stockholm, is
paid with Swedish taxpayers' cash.
The company's Swedish operation
now has 4,500 employees, with a turnover of about £500m. Westminster
wonks have monitored Capio's success closely ever since St Göran was
allowed to be taken over in 2000. There are now six private hospitals
funded by the taxpayer in Sweden, about 8% of the total.
In Britain the coalition has mimicked this approach.
Circle, backed by private equity firms, runs Hinchingbrooke hospital
in Cambridge. Serco, a FTSE 100 company, is eyeing the George Eliot
hospital in Nuneaton, and two hospitals may be privatised in south
London as a result of bankruptcy.
Dahlgren says: "The difference between Sweden and England is that
privatisation
of a hospital was only considered when you had big financial problems.
St Göran was considered one of the best when it was sold."
Capio's
executives dispute that they have simply "made the best better". They
say they focus on improving standards, arguing that only by attracting
more patients and managing costs can they make money from healthcare.
During
an hour-long presentation to the Guardian, St Göran's chief executive,
Britta Wallgren, says the 310-bed hospital, serving 430,000 people,
outperforms state-owned rivals inside and outside the country.
She says emergency patients see a doctor within half an hour, compared with A&E waits of up to four hours in the
NHS.
"We took an A&E department that dealt with 35,000 patients a year
and now treats 75,000," Wallgren says. "As admissions grow and we have
an increasingly elderly population so must our performance improve."
Capio
stresses that St Göran has low levels of hospital-acquired infections,
and patient surveys record high levels of public satisfaction. It has
also produced year-on-year productivity gains – something the state
cannot match. Thomas Berglund, Capio's president, says the "profit
motive works in healthcare" and companies run on "capitalism, not
altruism".
He adds: "We have just won the right to run the
hospital again and will have to reduce costs by 120m Swedish krona
[£11.2m] over 10 years. That's our profit gone unless we keep reducing
costs here."
At the busy entrance to the hospital, Swedish
patients appear resigned to the end of state ownership in health, once a
cornerstone of the country's generous welfare system.
"I am one
of those Swedes who do not agree that private hospitals should exist,"
says Christina Rigert, 62, who used to work as an administrator in the
hospital but resigned "on principle" when it was privatised a decade
ago.
Now back as a patient after gastric band surgery, she says:
"The experience was very good. I had no complaints. There's less waiting
than other hospitals. I still do not think there should be private
hospitals in Sweden but it's happening."
Since 2010 private
companies have had the right to set up large GP-style services anywhere
in the country – and to be paid for it out of taxpayers' money.
Corporates have set up 200 healthcare centres in two years, although
critics point out that the majority have been in wealthier urban areas.
Dahlgren
says that inequalities are growing, adding that the law is
"fundamentally antidemocratic". Sweden, he explains, has a long history
of local governments deciding where GPs should be sited to ensure poor
or rural areas do not lose out.
"The local councils can now
neither determine the number of for-profit providers to be financed by
taxes nor where these tax-financed services are to be located," he says.
"This is determined by the private providers on the basis of
profitability rather than the health need for these tax-financed
services. It is remarkably antidemocratic."
There are distinct
differences between Sweden and Britain. Swedish political culture is
much more consensual than in Britain, and strongly centred on people
choosing where to get healthcare.
Leftwing governments in Sweden,
who ran the country for 65 of the last 80 years, promoted patient choice
between state-owned hospitals. The real shock was when centre-right
governments argued in the 1990s that for patient choice to work,
competition and privatisation in healthcare were needed.
The
Social Democrats, the main Swedish opposition party, have given up the
idea of renationalising the health service and instead argue that
profits should be capped and quality of care more tightly regulated.
With hardline opposition to private healthcare limited to the far-left
parties, Swedes are likely to see more changes.
In Stockholm, more
than 500 beds are being removed from the country's best known health
centre, the Karolinska University hospital, and the services are being
moved into the community to be run by private companies, a policy that
in England would almost certainly lead to demonstrations.
Pro-marketeers
argue that companies can improve patient experience at a reduced cost,
and expand provision at a time when the state cannot afford to do so.
This view was challenged last year when a business-backed research
institute, the Centre for Business and Policy Studies, looked at the
privatisation of public services in Sweden and concluded that the policy
had made no difference to the services' productivity.
The academic author of the report, who stood by the findings, resigned after a public row.
There
have also been scandals involving claims of shocking treatment of some
patients. Last year Stockholm county council, which controls healthcare
for a fifth of the Swedish population,
withdrew contracts from a private company after staff in a hospital were allegedly told to
weigh elderly patients' incontinence pants to see if they were full or could be used for longer.
Stig
Nyman, a Christian Democrat member of the council instrumental in
ushering in a pro-market health policy for 20 years, says he still
believes private business is necessary.
Over coffee and biscuits
in his modern office amid the 19th-century neoclassical columns of the
council building, Nyman dismisses the allegations of mistreatment. "We
have hundreds of contracts with private firms. In this case journalists
found five or six mistakes. It's not a big deal.
"In healthcare,
companies drive up standards. We pay 5,000 Swedish krona [£465] a
patient on average. We force people to compete on the quality of service
and treatment."
Perhaps most damaging for private investors drawn
by the potential profits to be made from the state has been the probing
of their affairs by tax inspectors. The industry has been under
scrutiny since 2007, when a spate of high-profile deals, including the
buyout of Capio, led to investigations into financiers.
The charge
is that private equity firms siphon profits out of the state's coffers
while avoiding their fair share of taxes. Berglund, of Capio, says: "It
is always thrown about that we are not paying taxes but it is not true."
Swedish
tax authorities are, however, taking some companies to court because
pay in private equity groups is often linked to the profits made on
deals and has been incorrectly taxed for years, it is said, at rates
lower than that required for income in Sweden.
Earlier this month
one of Capio's owners, a private equity firm called Nordic Capital, lost
a court case against the Swedish tax agency, leaving
it with a bill of 672m Swedish krona [£63m]. The authorities, it is reported, will also slap a tax bill collectively of 2.6bn krona on
another 34 individuals.
"There
has been a strong reaction in Sweden. These people have been paying
themselves enormous sums of money," says Dahlgren. "It should be a worry
for every health system where you have competition and private firms
arriving."
