Foundational Economy and Healthcare Services: What the Covid-19 Emergency Tells Us

Abstract

This paper introduces the FSE special session ‘Healthcare, Covid-19 and the Foundational Economy’, which uses the Foundational Economy (FE) approach to analyze the public health crisis determined by Covid-19. First, the paper briefly presents the FE approach, which consists of two macro-areas. The former, identified as a 'material' foundational economy, comprises the supply of basic goods and services (i.e. water, electricity, gas, food or banking). The latter, defined as a 'providential' foundational economy, comprises services traditionally covered by welfare policies and indispensable to our lives, including healthcare. Subsequently, the introduction illustrates the contributions of the special session, which includes articles on France, Italy, Spain, the US as well as a comparative analysis of the Covid-19 impact in Europe. In presenting these papers, the introduction shows how the FE concepts and methodological tools are relevant and extremely useful to analyze the public health pandemic crisis and its causes.

Keywords:

• Healthcare
• Covid-19
• foundational economy
• privatization
• New Public Management

1. Why Healthcare is Part of Foundational Economy

Changes and transformations in the healthcare systems in Europe and in the entire world in the last 30 years are discussed by an extensive literature. Comparative analysis clearly shows how neo-liberalization and New Public Management introduced a common set of principles and tools in different countries (Pollitt & Bouckaert, 2004). Managerialization and the spread of market mechanisms are the two fundamental strategies, which found different implementation in intensity and implications within a context of increasing and general public disinvestment (Blank & Burau, 2017; OECD, 1992; Saltman & Von Otter, 1995).

According to a recent European report (OECD/European Union, 2020), the public health crisis determined by Covid-19 has exposed latent health system fragilities that existed before the outbreak as well as the lack of structural, technical and staff resources. The same report underlines that health spending goes overwhelmingly on curative care, not prevention which is still largely under-financed.

Some data can help highlight the impact of the pandemic: at the end of October 2020, more than 7 million people had been infected and 220.000 died because of Covid-19 in EU, Iceland, Norway, Switzerland and UK. In the first phase of the pandemic, some Western European countries – Belgium, France, Italy, Netherlands, Sweden and UK, had been severely affected. From August 2020, the virus started spreading in the rest of Europe (ibidem).

Although a comprehensive assessment while awaiting a definitive report is still not possible, a shortage in personal protective equipment endowment, in the capacity to provide diagnostic tests and in the availability of hospital beds clearly emerged in many countries. In terms of impact, elderly people and those living in care homes were the hardest hit groups in nearly all countries: at least 90% of deaths were people aged 60 years old or over and around half of all deaths were people living in care homes. Moreover, Covid-19 impact has been extremely strong among people living in conditions of poverty, in poor areas and among ethnical or racial minorities.

In other words, the pandemic has made it clear why healthcare services are necessary for people. Without such services, they would not be able to live. According to the scholars who developed the Foundational Economy (FE) approach, healthcare is part of a broader set of goods and services indispensable to our daily lives. The Foundational Economy Collective presented this approach for the first time in its 2013 Manifesto (Bentham et al., 2013). Since then, the network of scholars, politicians and practitioners participating in the collective have developed a very wide-ranging debate, which is impossible to summarize here.

However, we can highlight some main points. Firstly, the FE consists of two macro-areas. The first of them, identified as a 'material' foundational economy comprises the supply of basic goods and services through distribution networks – water, electricity, gas, etc. – or through networks of branches, as in the case of food and banking services. The second macro-area is defined as a 'providential' foundational economy and comprises services traditionally covered by welfare policies and systems, i.e. education, health, care activities, income support (Foundational Economy Collective, 2018).

Secondly, an important feature of the FE is that it refers less to the individual consumption of essential goods and services and more to social consumption, that is, to the possibility of accessing basic goods and services. In fact the latter depend only in part on individual income, since they are neither created nor increased as individual incomes increase (ibid.). The current health emergency provides the clearest confirmation of this. Of course, it is possible to buy individually a test kit for Covid-19 and obtain an individual result. But with pandemics, nobody is safe until everybody is safe. And collective safety depends on different collective services, such as a laboratory testing system which has the means and skills necessary to perform a large amount of tests (Foundational Economy Collective, 2020).

This does not mean that income-related issues, such as poverty and inequality, do not matter. Rather, it should be emphasized that the lack or insufficiency of income has the most serious effects when accessible goods and services for individual and collective well-being are lacking.

Thirdly, the boundaries of the FE are not given once and for all. Defining what is essential is a discretionary, context-dependent, modifiable choice (Froud et al., forthcoming). Undoubtedly, it is now evident that health services are necessary for our daily lives. However, we have become aware of their importance only in this crisis and emergency situation. In a sense, Covid-19 has demonstrated that foundational economy has too often been taken for granted and remained invisible. In other words, the pandemic has brought to the fore and in full light what is normally submerged or undervalued.

This is also the case of workers. Many kinds of employees, working in the sectors of foundational goods and services, have been classified as 'key workers' in the lists produced since the outbreak. The problem is that they are badly paid despite their delivery of essential services such as home care or supermarkets (ibidem).

Indeed, in the past thirty years the aforementioned very important activities have been considered secondary to activities characterized by a high content of technological innovation, even if the value of foundational activities and employment is higher. In all European countries, the foundational economy directly employs around 40% of the labour force. In 2017, foundational activities in total employed 44% of the UK’s labour force, 41% of Germany’s workforce, and 37% of Italy’s (ibidem).

Although considered secondary, since the 1980s all these activities have been affected by privatization in the context of neo-liberalization processes, as regards both utility services and welfare services. A deterioration in the quality of and accessibility to the FE has normally resulted from these processes focused on the search for profitability (Barbera et al., 2016). In parallel, public investment has decreased significantly.

This issue is dedicated to the foundational goods and services delivered by healthcare system in some European countries. The structural problems that have become evident in this sector during the pandemic raise questions about how to guarantee the health as well as the survival of individuals and communities. These questions relate to processes that started about three decades ago due to neoliberalization. As we said before, the pandemic has revealed dynamics that have been ongoing for some time, and it forces us to face them. Therefore, to understand causes and devise solutions, we need to conduct detailed analysis, which helps to identify the first signs of the long wave hitting us today with the destructive violence of a tsunami.

Obviously, there are differences among contexts and territorial macro-areas, which should be taken into account. Yet some basic interpretative keys can aid the understanding of these differences. As scholars of the Foundational Economy Collective (2020) point out starting from the UK case, redundancy is a central variable to explain the greater fragility of some health care systems compared to others. More precisely, ‘hospitals and laboratories failed in two distinct ways. First, they were already so tightly stretched that they did not have the buffers needed to absorb a pandemic surge. Second, however, they also lacked the organisational capacity to respond to unexpected circumstances’ (ibidem, p. 2). The lack of redundancy is in turn caused by three decades of reforms centred on marketization and New Public Management, with the consequent reduction of resources and the implementation of organizational models taken from business models – which do not encourage organizational redundancy.

The application of New Public Management has therefore led to a drastic reduction in the institutional and organizational capacity to react to uncertain circumstances and unpredictable events. This has happened in diversified ways and to different extents, in the UK certainly more than other European countries.

However, we need to understand better where these dynamics originate and what their consequences are. This issue tries to provide this improved understanding.

2. The Special Issue

Our review starts with a comparative analysis, carried out by Giarelli, of how European countries have tackled Covid-19. Unlike most of the international comparative literature, Giarelli’s study does not compare nation states, but European ‘macro-regions’, which encompass families of similar transnational health systems, representing the complex of multidimensional factors influencing the health of a population. Amid a growing debate on comparative health policy, Giarelli takes a stance against ‘methodological nationalism’ (Ciccia & Javornik, 2019; Kazepov & Barberis, 2013; Wimmer & Glick-Schiller, 2002), calling for the adoption of a macro-regional level in comparative research so as to integrate the nation-state level of analysis.

The concept of macro-region derives from a combination of the notion of macro-regional system, proposed by Skinner et al. (1998) in order to go beyond the usual borders of the nation state as the dominant spatial and political unit of comparative analysis, and the notion of health system, which is preferred to that of healthcare system. The former is more comprehensive than the latter because it takes into account all the ecological, structural, relational, and biopsychic factors affecting the health of a population, beyond the influence of the institutional set of resources and organisations of the healthcare system.

Giarelli identifies five macro-regions in Europe: (1) the Anglo-Irish health macro-region (United Kingdom and Ireland); the Scandinavian health macro-region (Norway, Denmark, Sweden, Iceland and Finland); the Central-Western health macro-region (France, Belgium, the Netherlands, Luxembourg, Switzerland, Germany and Austria); the Central-Eastern health macro-region (Czech Republic, Slovakia, Slovenia, Croatia, Hungary, Poland, Romania, Bulgaria, Estonia, Latvia and Lithuania); the Mediterranean health macro-region (Italy, Spain, Portugal and Greece).

After having described his conceptual framework, Giarelli compares the impact of the Covid-19 pandemic in the five macro-regions by providing a quantitative analysis of epidemiological data referred to 2020. The findings are interpreted according to data and information about structural dimensions of the healthcare systems and policy responses to the pandemic, drawn from the COVID-19 Health Systems Response Monitor of the European Observatory on Health Systems and Policies.

According to Giarelli, significant differences among the five macro-regions can be detected in terms of share of Covid-19 cases per population and lethality rate. The health systems that suffered most from the pandemic, at least in 2020, were those of the Central-Western macro-region with regard to the spread of cases of contagion, and those of the Anglo-Irish macro-region followed by the Mediterranean one for mortality. However, the countries belonging to the Central-Western macro-region recorded the best performance in terms of diagnostic coverage of the population, which affects the number of detected cases, as López Casasnovas and Pifarré i Arolas remark in their study on Spain.

If the macro-regions show relevant differences among themselves, equally relevant differences emerge among the countries included in each macro-region. The highest coefficients are found within the Central-Eastern macro-region for the spread of contagion, within the Scandinavian one for the mortality rate, and the Central-Western for the diagnostic capacity. This shows that there is a significant heterogeneity among the national health and healthcare systems in their ability to cope with the pandemic, even in the same macro-region.

In this respect, this issue pays particular attention to the Mediterranean macro-region, or, rather, to the Southern European welfare states. These are characterised by national health services that have been more recently instituted and provided by the state with command-and-control systems weaker than those of Northern Europe (Ferrera, 1996; Moran, 1999). López Casasnovas and Pifarré i Arolas adopt a healthcare system typology, which recalls the traditional ones, being based on the role of the public actors in the organization of the health care system (financing, regulation and provision). Public intervention in health care in Western European countries can be divided into two broad organisational forms: National Health Services (NHSs), under which healthcare responsibility and funding for provision as well as service production are attributed to the public sector; National Health Insurance Systems (NHIS), which are publicly-regulated health insurance schemes primarily for workers. NHISs combine, with varying importance, public regulatory frameworks as well as private production schemes, with health-care providers that may include both for-profit and not-for-profit organizations.

According to López Casasnovas and Pifarré i Arolas, these different features and their consequences imply that it makes sense to compare primarily healthcare systems belonging to the same type and this includes Covid-19 responses and their causes. In their study, the authors highlight the poor performance of the Spanish healthcare system in responding to the pandemic emergency in 2020, although they underline that an evaluation based on outcomes, such as the number of cases and deaths, should be performed with great caution.

The difficulties of the Spanish healthcare system in tackling the pandemic in 2020 were not caused principally by the cuts in healthcare spending and available resources carried out in the austerity policies of the previous decade. López Casasnovas and Pifarré i Arolas maintain that Spanish expenditure on health is similar to that of comparable NHS in Western European countries, including those which performed better in coping with Covid-19. In doing so, they take a stance different from that of Bifulco and Neri, who maintain that the Italian NHS’s underfunding was one of the main factors undermining the ability of that healthcare system to tackle the emergency.

Instead, López Casasnovas and Pifarré i Arolas mainly point to the unpreparedness of the healthcare system, the lack of coordination between the central and the regional levels of government (relevant factors also in explaining the Italian case), as well as to the limited autonomy given to healthcare organisations in responding to the pandemic and its evolution. In particular, because of the decentralized nature of the Spanish NHS, policy responses are shared between central government and Regions. These two institutional tiers often adopted different methods to mediate the contrasting ways to fight against the disease and to limit the economic consequences of public health measures aimed at containing the spread of the contagion. After the initial months of the ostensible prevalence of homogenous decisions taken at the national level, conflicts between central government and Regions progressively increased, significantly slowing down the introduction of the measures, which were necessary to adapt the public health responses to the evolution of the pandemic.

However, the authors do not call for centralization reforms in the Spanish NHS: instead, they highlight the importance of social and economic differences among Spanish Regions. These differences must be considered when imposing public health measures such as social distancing, because they can encounter a different degree or possibility of compliance among social and occupational groups, but they were not taken into account either in national or in regional policy-making when approving policy measures against Covid-19.

NHS decentralization emerges as a very significant dimension in the case of the Italian healthcare system, which also belongs to the Southern European welfare states. This case highlights the importance of sub-national comparisons in health policy analysis (Daigneault et al., 2021; Greer et al., 2015). As illustrated by Bifulco and Neri in their study, different models of regional healthcare systems arose after the 1990s reforms, which introduced neo-liberal reforms in the NHS. Managerialization inspired by New Public Management principles, managed competition and market incentives, such as the case-based Prospective Payment Systems (PPPs) for providers, based on the Diagnostic Related Groups (DRGs), significantly affected the evolution of the entire Italian NHS, but found also a partially different interpretation among the Italian Regions.

In some cases, a more extended implementation of these policies had stronger consequences in promoting the development of a healthcare system based on highly specialised hospital services, to the severe detriment of primary and territorial care. The weakness of these services and the lack of coordination between hospital and non-hospital care emerged in the pandemic, especially at the onset of the contagion, significantly limiting the ability of these regional healthcare systems to tackle the emergency. Other Regions, which had better preserved the public planning and coordination mechanisms traditionally adopted in a NHS system, were in a better position when territorial services emerged as the frontline against the pandemic.

However, the historical-sociological analysis carried out by Bifulco and Neri shows that, despite these regional differences, neo-liberal policies, matched with austerity measures and cuts in staff and public services in the decade 2009-19, undermined primary and territorial care as well as prevention and public health services throughout the country. Although it was rooted in the inception of the NHS, the collective dimension of health was progressively neglected over the decades and forgotten in favour of the assertion of an individualized, ‘privatized’ concept of health care. This also prevented an effective integration between health and social services, which required giving major importance to the territorial dimension of health and health care. The consequences of this historical evolution were devastating for the safety and protection of the population’s health, as clearly emerged after the onset of the pandemic.

Both the quality of health services and the production of health in itself depends on the quality of the work provided by healthcare staff. Managerialization and neo-liberal policies, with the related processes of service privatization and outsourcing, introduced great changes in the work of health professions, by increasing their workload and reducing their traditional autonomy (Dent, 2003), and often worsening the pay and working conditions of the healthcare workforce as a whole (Mori, 2020). This was especially true in Long-Term Care (LTC) and residential and home care services for the elderly, in which terms and conditions of employment are usually worse than those in acute hospitals and outpatient care (OECD., 2020).

Worsening working conditions contributed to increasing staff shortages, especially of nurses and many kinds of specialised doctors, in many Western European and OECD countries; this induced many governments to adopt specific recruitment policies (OECD, 2016). However, austerity policies hindered or prevented the adoption of these policies, as the case of Italy well demonstrates: Bifulco and Neri show how the lack of redundancy and staff shortages had major consequences when the pandemic began.

In the case of the French National Health Insurance Systems, Sainsaulieu maintains that the investment in human as well as financial and structural resources made in the 10–15 years before 2020 was significant, but it proved insufficient at the outbreak of the pandemic. The workload of healthcare staff was increased enormously to tackle the emergency. Doctors, nurses and other health staff were concentrated in Covid-19 wards, both in hospitals and in residential care services for the elderly, and they experienced exhausting extra shifts and additional working hours. This intensive use of staff in hospital and residential care services was intended to balance the weaknesses of the French healthcare system, which, as in Italy, were evident in terms of both prevention and the capacity of primary and territorial care to curb the spread of contagions.

However, the emergency in the first wave of the pandemic in spring 2020 created the conditions to revitalise the collective dimension of work by staff in the French healthcare and LTC services. As Sainsaulieu explains, this dimension was weakened by the managerial policies adopted in the previous decades, but it did not vanish completely. Moreover, the quality framework introduced in recent years had re-valued the importance of collective or group contributions to the service provided.

Sainsaulieu’s qualitative study consists of a set of semi-structured interviews carried out with staff in hospital operating theatres and other hospital wards, as well as in residential care homes and palliative care services. It highlights that the outbreak of the pandemic determined a global re-shuffle of groups, professions and skills, eased also by large-scale staff re-displacement to Covid-19 wards.

This situation created a favourable context not only for the development of inter-professional teams provided with a high level of cooperation, but also for more egalitarian relationships within teams. The importance of hierarchy and hierarchical relationships among doctors, nurses and other healthcare staff seemed significantly reduced, as evidenced by many interviews. This concerned both hospital and LTC services. Although decision-making at organisational level followed traditional lines, subordinate staff felt that their needs were being seriously taken into account.

However, as the first wave of the pandemic subsided, most healthcare staff realised that these conditions were simply extraordinary and provisional, without any transfer into the structural and organisational mechanisms. Inter-professional relationships as well as hierarchical roles within teams and organisations were re-established. Many interviews evince the impression that the experience acquired in spring 2020 had faded away, creating a strong sense of dissatisfaction, which was reflected in the second wave of the pandemic, in autumn-winter 2020–2021, and in the following months of 2021. The collective dimension of work appeared undervalued, and its potential to improve the quality of work and the quality of health service seemed neglected and ignored.

If one looks outside Europe, the USA provides a good example of a highly-marketized Health Insurance System based on private health insurance and funds, beyond the Medicare and Medicaid public insurance programmes respectively targeted on the elderly and socially deprived population. As is well known, and as highlighted by epidemiological data, the US response to Covid-19 was highly deficient in terms of both public health measures and the capacity to curb the spread of contagions. However, it is difficult to identify a unitary response in such a federal system. As underlined by Frisina Doëtter, Preuß and Frisina in their study, reconstruction of the policy responses to Covid-19 in the USA depicts a highly fragmented pattern, which highlights disparities among citizens.

In their paper, Frisina Doëtter, Preuß and Frisina focus on the racial and ethnic differences in the impact of Covid-19, which has disproportionately affected ethnic minorities across all age groups. In this respect, the pandemic represents a sort of mirror which reflects long-standing social inequalities manifest particularly at the intersection among health, social inequality, and race/ethnicity in American society.

Therefore, after looking at evidence of stark inequalities in mortality outcomes specific to Covid-19 between Blacks and Hispanics versus Whites, Frisina Doëtter, Preuß and Frisina explore how disparities correspond to the nature of measures adopted by public authorities to combat the pandemic and specific factors associated with increased risks of exposure and death due to the virus. In doing so, they wonder whether the greater stringency of state measures aimed at controlling the spread of the virus led to improved mortality rates for Communities of Color (CoC), focusing on Blacks and Hispanics, and Whites equally. If not, they intended to investigate what role pre-existing and Covid-specific vulnerability played in determining the outcomes observed among groups.

To address these issues, the authors performed a statistical study involving correlational and regression analyses. The findings confirmed the significantly higher Covid-19 mortality rates for Minorities relative to Whites in the USA. Vulnerability factors involving neighbourhood characteristics and housing (e.g. crowded urban living conditions), access to quality healthcare (e.g. health insurance/coverage), occupation and job conditions (e.g. overrepresentation of essential workers within healthcare facilities, farms, factories, food production or grocery stores, and public transportation), and education/income are key social determinants of health, contributing to the disproportionate impact of Covid-19 on Minorities, according to American public health institutions. However, these vulnerability factors and others specific to Covid seem to correlate significantly with the mortality rate in Minorities and not in Whites. This result may be due to different forms of institutional racism within and beyond the health care sector.

Frisina-Doëtter, Preuß and Frisina point out that analysing the impact of public policy on mortality leads to similar conclusions, showing that greater stringency in state policy measures benefit Whites, and especially the vulnerable White population, but it does not correlate significantly with the mortality of Blacks and Hispanics.

Therefore, the study comes to the conclusion that greater stringency of state-led measures aimed at controlling the spread of the virus does not lead to improved mortality rates for CoC Minorities and Whites equally. Moreover, the role of pre-existing and Covid-19-specific vulnerability plays a significant part in determining outcomes observed for ethnic/racial Minorities, even amid rigorous measures taken by States. This induces the authors, on the one hand, to call for studies aimed at investigating the nature of vulnerability specific to race and ethnicity in the USA, and on the other, to underline that a one-size-fits-all approach to combating the pandemic cannot work and will eventually increase social and ethnical disparities.

To conclude, in this regard it should be borne in mind that Richard Horton, editor-in-chief of The Lancet, described Covid-19 as a ‘syndemic’ and called on governments to ‘develop policies and programs to reverse deep disparities’ (Horton, 2020). The concept of syndemic expresses the idea that the virus does not act in isolation but in combination with conditions (physical, social, environmental) that aggravate the damage caused by Covid-19 and are closely linked to social stratification, especially in conditions of poverty and inequality.

From the point of view of the FE, what needs to be addressed is the way in which the current solutions adopted for the production and distribution of goods and services for social needs create conditions of vulnerability or vice versa of well-being. As far as health is concerned, this means bringing to the centre a concept of health and health services based on territorial and prevention services, primary care and non-hospital care, able to act in close proximity to people and local communities and to implement integrated interventions aimed at their well-being.