By Kam Sandhu & Ranjan Balakumaran / Edited by Jude McArdle / Video by Clear Blue Films / Images by Peter William Rudd
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Simon Stevens was appointed Head of NHS England in 2014. He now oversees vast transformation of the UK’s public health service while he may be implicated in a lawsuit that claims his previous employer committed ‘massive’ fraud against the American taxpayer over healthcare.
After leaving a Tony Blair-led government where he acted as advisor and ‘architect of New Labour’s marketisation of the health service’ (think PFIs), Simon Stevens worked for United Health Group (UnitedHealth) – the largest healthcare insurer in the US. Between 2006-2009, Stevens was Chief Executive of Medicare before being promoted to Vice President, a position he held from 2009 to 2014.
In February, the Department of Justice (DoJ) joined a lawsuit to sue UnitedHealth on allegations that the company overcharged the US taxpayer to the tune of hundreds of millions – ‘likely billions’ – of dollars, over a number of years, through its administration of Medicare services under Obama’s Affordable Care Act (ACA). The DoJ along with other prosecutors say United Health Group did this by claiming patients ‘were sicker than they were.’ The fraud took place during the years of Stevens’ employment.
Under the name Optum, UnitedHealth regularly competes alongside new healthcare giants Virgin Care and Interserve for NHS contracts, while Simon Stevens pushes through more opportunities for the private sector. Optum is here in the technology too. UnitedHealth’s ScriptSwitch is ‘the UK’s leading provider’ of prescribing support software used in 7,500 GP surgeries.
What will the NHS look like as companies like UnitedHealth increase their grip?
Before Obamacare, insurers had already killed off the Healthcare Reform Bill under Bill Clinton in the early nineties. Paul Starr, a Princeton professor who authored the proposals in 1992, later said ‘the health insurance and small-business lobbies’ were ‘focused unambiguously on defeating change.’ The largest insurer in the US, United Health Group (UnitedHealth) was, for a long time, opposed to any government health plan – a stance that had only strengthened fifteen years later.
According to actuary John Shells, 56% (88 million) of Americans with employer-provided coverage would desert the private insurance market which UnitedHealth dominated, in favour of a more affordable government plan. But UnitedHealth dominated a landscape which saw the highest spend on healthcare and the worst results. In 2008, the US remained the only country in the developed world not to offer universal care.
Nine years on from the electoral mandate that created Obamacare, and UnitedHealth has become one of the greatest beneficiaries of the Affordable Care Act – alongside and above of the same two insurance companies that topped the market previously. How did the relationship change from one of opposition to mutual benefit? Healthcare technology and Data Collection.
United Health Growth
Established in 1977, United Health grew exponentially from a small provider among the City’s giants, to dominating US healthcare – now both public and private.
Under the leadership of William W McGuire from 1991, the Group expanded through acquisition. McGuire bought up rival companies and diversified into technology, data analysis and software. This early adoption of healthcare technology was perhaps one of the most lucrative strategies of the last 20 years. By 2008 UnitedHealth’s operating profits stood at $5.3bn with revenue of $81.2bn.
With company acquisitions came more talent, and many CEOs passed through United Health Group’s doors. The intelligence garnered from its purchasing business model was perhaps unrivalled. Many of these individuals went on to drive the company further into technology, further into policy and deeper into government. People like Andy Slavitt.
Before building and selling his healthcare company ‘Health Allies’ to UnitedHealth in 2003, Slavitt was an investment banker for Goldman Sachs and also worked as a consultant with McKinsey and Company, a private healthcare lobbying firm. Slavitt quickly rose through the ranks at UnitedHealth, eventually becoming head of Optum Insight (née Ingenix) – the company’s technology arm. By the time the opportunity in new government infrastructure came up, UnitedHealth had the technology, expertise and leaders to scale up.
This is not to underplay the value of this technology for the new President. When Obama needed to showcase the benefits of a new healthcare system, to avoid the mistakes of the past, he needed to make it tangible. How could he deliver it? Where would he find the money, in a country so big, so divided? What would a new healthcare system on this scale look like? Framing was (and is) so important in America’s culture wars, technology made the difference between labouring under the the stigma of a socialist relic and presenting something inviting, user-friendly and a part of America’s future.
Seeing an opportunity, UnitedHealth began to court Democrats. It’s spend on lobbying activity was highest during 2007-09, according to the Centre for Responsive Politics (approaching $5m for each of those three years). Chad Terhuhne and Keith Epstein, in an extensive report for Bloomberg in 2009, described ‘shiny 18-wheelers outfitted with high tech medical gear near the Capitol, inviting members of Congress aboard their ‘mobile diagnostic centre’’ while laws were being discussed inside the White House. These once polarised factions were increasingly comfortable in each other’s spaces.
Judah C. Sommer, who heads the company’s Washington office, looked on with satisfaction. “This puts a halo on us,” he explained. “It humanizes us.”
Sommer headed up global lobbying for Goldman Sachs before being hired by United Health to run their office in the Capital in 2007. He then assembled a new team stacked with his contacts, operating from an office between the White House and the financial district.
As Head of Technology, Slavitt got closer to Obama and in 2009 he was appointed to the position of Administrator for the Centre for Medicaid Services (CMS). This was a federal agency previously known as the Health Care Financing Administration (HCFA). The position commanded 6,000 employees tasked with carrying out Medicare services. When Slavitt left his position at United Health he divested all shares in the company (a move which he defends as perfectly legal). To do so, he was granted an ‘ethical waiver’, allowing him to avoid a one year mandatory delay before taking up his new position. It also meant Slavitt avoided paying capital gains tax on the 23,711 shares of the United Health Group stock he sold, netting him $4.8m tax free, according to the conservative site, The Daily Caller.
With the insurers well and truly on board (and their expert lobbyists and PR contacts) the industry was able to mould the reforms even further into their own designs; it’s hard to see any losses on their part. It made inroads into government for UnitedHealth, while killing off terms that posed the greatest threat to the insurance industry, including the creation of a public service model (like the NHS) and a proposed tax on insurers to pay for Medicare. Bloomberg concluded that the ‘success’ of the insurance giants (UnitedHealth, Wellpoint and Aetna) in shaping the terms of the debate during the time Obamacare was being drafted, was such that ‘no matter what specifics emerged’, the insurance industry would become more profitable.
And while Democrats were wooed with the potentials of IT, UnitedHealth was already frontrunning its capabilities in technology fraud.
Ingenix and Optum
In February 2008 (during UnitedHealth’s ramped up lobbying period), New York Attorney General Andrew Cuomo announced he would be extending an investigation into Ingenix, the $1.7bn data and technology arm of UnitedHealth, now known as Optum Insight. Ingenix analysed data, outcomes and billing information of consumers, and through an algorithm set the ‘reasonable’ industry standard rate for expected payouts for insurers.
‘This involved fraud in the hundreds of millions of dollars, affecting thousands and thousands of families’, Cuomo said. ‘We believe there was an industry wide scheme perpetrated by some of the nation’s largest health insurance companies to defraud consumers.’
Ingenix had been fixing the algorithm, so that insurers paid out less than what would be considered reasonable by law – seeing some patients pay almost 70% of their out-of-network medical visits. Cuomo prosecuted the company. ‘It has gone on for many, many years – over the course of a decade,’ he said.
Linda Lacewell, from Cuomo’s healthcare taskforce described UnitedHealth’s use of data as ‘deception, manipulation of data and outright fraud.’
Ingenix was forced to stop production of the database, and after a few months changed its name to Optum Insight, denying this was because of the price manipulation scandal.
Still, this didn’t stem UnitedHealth’s gradual influence of the terms and standards of the ACA (Affordable Care Act).
It was Simon Stevens (now Head of NHS England) and colleagues that urged US government for a ‘more industry friendly’ ratio on payouts. Stevens called for a reduction from a 76% reimbursement rate (with patients picking up 24% of the bill) to 65%.
Soon enough, the trust of politicians once courted by UnitedHealth began to erode with some concerned the insurance industry was under-playing the windfall they were set to receive from the Reforms.
Quality Software Services Inc (QSSI)
When a contractor was pulled from the construction of Obamacare’s website healthcare.gov in 2013, a subsidiary owned by UnitedHealth was drafted in and handed the entire operation.
The bland sounding Quality Software Services Inc were first tasked with the software handling personal information (verifying income, identity details). All very valuable and useful data, but that wasn’t what attracted UnitedHealth to buy the subsidiary.
The Maryland firm had just been awarded a public contract to construct an interchange service within Medicare. This would be the exchange on which healthcare insurers bid for plans. QSSI’s contract was far reaching in powers, leaving them with the responsibility to certify, decertify and take action against delinquent insurers. This small but experienced outfit apparently knew the worth of its new asset and they became open to a buyout. Ironically, when they were taken up by Optum, it wasn’t declared to the Securities and Exchanges Commission.
Some were concerned about help from the inside. Steve Larson, Director of the Center of Consumer Information and Insurance Oversight (CCIIO) enabled the deal and also left his post in 2012. Also to join Optum.
This incestuous web, or capture, is difficult to keep up with. Here UnitedHealth would be in charge of the exchange where insurers, of which they are the biggest one, bid to sell healthcare plans. They would be able to decertify those they deemed ‘not fit’ and were even responsible for remedial action against those not ‘following the rules’ – despite regularly not following the rules themselves.
Slavitt even faced Congress in 2013 over QSSI’s failure to deliver on its healthcare.gov project. This was in place of the company’s three managers, Bikram Bakshi, Tony Singh and Kawaljit Singh. Bakshi now heads up the UK’s technology arm of UnitedHealth.
During the hearing, Slavitt blamed his own CMS department for the failings, despite complaints from Democrats and Republicans that the company had given a false promises in the weeks leading up to healthcare.gov’s beleaguered and troubled launch.
UnitedHealth and the UK
Since the coalition took power in 2010, there has been outright denial of NHS privatisation as it happened. Both Nick Clegg and David Cameron said ‘they would not privatise the NHS’ nor implement any ‘top down reorganisation.’ It was a matter of weeks before the Health Minister Andrew Lansley announced his intent of doing exactly that in a reorganisation so large, according to Sir David Nicholson ‘it could be seen from space’ – the Health and Social Care Act of 2012.
A court ruling found the government had mislead the public on reforms and were continuing to do so by refusing to publish the risks attached to the changes. Concluding that the ‘risk register’ had profound public interest and should be made public, the Information Tribunal said:
According to Full Fact the Act formalised the relationship between the public and private sector. Primary Care Trusts (PCT) would be converted to Clinical Commissioning Groups (CCG) who were required to tender their services and work with the private sector.
- Nick Seddon left No 10 as Conservative Party Advisor in Match to join United Health – Read ‘Crisis in the NHS: Nick Seddon, Private Healthcare, and the Scourge of ‘Influence Laundering’
Bristol and Optum
In Bristol, Optum had been working closely with the Primary Care Trust for nearly a decade by 2014, when it renewed 180 Clinical Commissioning Groups (CCG) contracts for £50m. In the press release, Optum was the only organisation shortlisted in every mental health contract.
When the contract was won, Katherine Ward – Senior VP of International Business Development at Optum UK, said ‘We are delighted to have been selected to continue our service to Thames Valley and Wessex NHS CCGs, and to continue to help them deliver a high quality service while reducing costs.’ Optum claimed to have delivered £23m of efficiencies since 2009.
Ward knew Bristol well, having worked for four years at the local PCT before joining United Health’s Optum as a Programme Director in 2006. She has taken on various roles at the company since, acting now as Chief Growth Officer since March 2014.
That same year, Ward participated in an Optum sponsored roundtable and article in the Guardian – regarding the need for further preventative integrated care in the UK. ‘Experts were told’ at the event that Britain was on the verge of a ‘revolution in integrated care.’ Optum’s Nancy Williams stated that technology was at the heart of this, and that instead of reacting to patient care, ‘healthcare providers needed to take a step back to intervene before health issues took hold.’
Less than two years later and the ‘revolution’ seems to be in motion under Simon Stevens’ plans. Muted by its confusing title, STPs push inequity straight into the health service.
Sustainability and Transformation Plans (STPs) put further pressure back on Local Authorities while they are hit by central government cuts. It creates inequity based on postcodes, and is starting to catch people out.
At the time of their announcement, NHS England said STPs would be an ‘enormous opportunity for the private sector.’
Criticisms say the plans are able to force through contentious cuts, which disproportionately affect certain communities. Further, it would remove local accountability and generally be less transparent.
Open Democracy reported in July 2016 that these moves were so secret that North West London council leaders were urged to sign a two page summary of the local STP ‘without seeing the full document.’ The text, unfinished and confidential, had apparently changed vastly in its many drafts and covert discussions to ’51 densely packed pages containing repeated commitments to hospital closures.’
This was the ‘revolution’ discussed at the roundtable. It seems the model insurers are pursuing comes with buzzwords ‘integrated care’, ‘community services’ and ‘preventative measures.’ It would decrease the use in hospitals, and public money would be given to insurers who are incentivised to keep people out of hospitals encouraging closures, despite already having the second lowest number of beds per capita in Europe. For those who do need hospitals, treatment could be more difficult to find and charges may be placed here. ‘Integration is extremely dangerous’, NHS Dr Bob Gill told Real Media in March, ‘They want to integrate the budgets.’
Some are already waking up to charges. In Dorset, a GP offering patients the opportunity to skip the queue at a price of £40 for 10 minutes, £80 for 20 minutes or £145 for 40 minutes is the first known example of what may be to come.
Further, Gill describes how data collection exercises, at the expense of the patient are already being tasked to doctors:
‘Screening for dementia in people who are over 65 is a very poor test, it has lots of false positives – so that means patients are labelled demented when they don’t have the condition – and that induces a lot of worry and concern which over time has proven to be unnecessary. But what we’ve been asked to do is collect data on behalf of the future runners of the NHS which will be the insurance industry, so they can set premiums accordingly.’
The difference in the public’s trust of the NHS and the American system is significant. The relationship we associate with insurers can be very barbed, and can come with the expectation of fabrication on both sides.
As Trump shows, dependent on politics, the public is forced to play a rigged system. Healthcare insurance can mean that income determines whether what you pay for security is a gamble or a guarantee.
Now moving from its 65 year tradition, reforms and STPs are catching people out of the NHS’ no longer universal provisions, as smoking cessation and weight loss help are the first to go, and some have been turned down for treatment where private companies say they have fulfilled their quota.
Making Revolutions Mandatory
At the start of 2017, the Financial Times reported that private sector companies had been invited to bid for 14% more contracts in the NHS than the previous year, by which point 70% of contracts up for tender were going to this sector.
While the marketisation of the NHS has been sold under the mantra of choice and competition, some find themselves asking how much is the private sector being forced on the NHS, and how much choice is there to say no to these influences.
In Stoke, a contract for diagnosis of illnesses (including scans for cancer and other conditions) was ‘handed’ to a private firm despite the NHS offer being £7m cheaper, according to the Stoke Sentinel. In January 2015, Ian Syme, Co-ordinator of North Staffordshire Healthwatch, told Buzzfeed ‘’There is little or no openness in these tendering processes, no public debates, no meaningful public scrutiny. Ask for credentials and you get obstructed by the ‘commercial confidentiality’ excuse.’
Local GPs, clinicians and residents in West Lancashire found their urgent care services had been left with only two providers in 2015 – Virgin care or Optum.
While Chief Nurse of the CCG Claire Heneghan was quoted as saying, ‘We have listened to what our local community and clinical staff have told us’ MP Rosie Cooper was unable to find a single local GP or nurse involved in urgent services who had been ‘consulted’ by Heneghan. Further, local health service patients said the CCG had not raised the issue at any of the meetings during 2015, after which the CCG failed to advertise the 2016 meetings schedule.
Frustrated, Cooper asked: ‘Who are the people who made this decision? On what information was their decision made?
When defending the covert actions of the Conservative government around the NHS, Michael Portillo said on the BBC’s This Week programme that ‘they didn’t believe they could win an election if they told you what they were going to do.’
But when do the public get to catch up? Despite her reticence to talk policies and debate in the lead up to the snap election, earlier in the year Theresa May suggested healthcare could be a part of the US trade deal, opening the doors to the American model.
Brexit will offer the governing party carte blanche to see this transformation to its end, in the NHS’ most decisive election yet. Changing tack in Election season, May assured the public in a Facebook live q&a, ‘no one is privatising the NHS.’