What’s the issue?
The involvement of the private sector in the NHS is a hotly contested topic. Private companies have always played a role in the NHS, but critics claim that their increasing involvement is evidence of growing privatisation of care and is undermining the service’s core values.
What’s behind this?
Private provision of health care services has always been controversial, even though some services, such as dentistry, optical care and pharmacy, have been provided by the private sector for many years and most GP practices are private partnerships.
Analysis of the Department of Health’s published accounts shows that the share of spending by NHS commissioners on the private sector was 7.7 per cent of the budget in 2016/17. This has increased slightly from 7.3 per cent in 2014/15, although changes in data definitions mean this is not strictly a like-for-like comparison. Total spending by NHS commissioners on non-NHS organisations (including the voluntary sector and local authorities) was 10.9 per cent, up from 10.7 per cent in 2015/16.
Due to changes in definitions, it is difficult to precisely measure changes in the amount spent on private or non-NHS organisations over time. However, a trend of small incremental rises in spending on private provision is consistent with longer-term gradual increases over the past 15 years. The extent of private sector-commissioned services also varies between different areas of care. For example, evidence suggests that spending on private providers between 2010/11 and 2012/13 increased more quickly in community services and mental health than in other services.
The Department of Health’s accounts also show that NHS providers spent around £1 billion on services from non-NHS organisations. This includes an increase in outsourcing elective hospital treatment in order to deliver waiting times targets. NHS Improvement reports that spending on outsourcing elective work to the private sector rose significantly from £241 million in 2015/16 to £381 million in 2016/17.
These are not new developments. Both the Blair and Brown governments used private providers to increase patient choice and competition as part of their reform programme, and additional capacity provided by the private sector played a role in improving patients’ access to hospital treatment. The NHS and the private sector have also established partnerships for the delivery of clinical services such as radiology and pathology and non-clinical services such as car parking and management of buildings and the estate.
The Health and Social Care Act 2012 extended market-based approaches, emphasising a diverse provider market, competition and patient choice as ways of improving health care. There is evidence that this led to a large number of contracts being awarded to private providers, but it did not result in a significant increase in spending on the private sector. This was in part because these contracts tended to be smaller than those awarded to NHS providers.
A potentially controversial exception was the decision to tender for a £1.2 billion contract in Staffordshire to deliver end-of-life and cancer care. In the face of widespread criticism, and after a lengthy delay, the cancer element of this contract, worth a potential £687 million, was dropped. In July 2017, it was announced that the remaining part of the contract, for end-of-life care, would also be dropped.
Hinchingbrooke Hospital is another controversial example. The hospital was franchised to a private sector operator, Circle, in a process initiated in 2009. In January 2015, Circle announced that it would hand management of Hinchingbrooke back to the NHS as a result of financial pressures and having been put into special measures. Further management franchises seem unlikely because the significant financial challenges facing the NHS make them less attractive to the private sector.
More recently, the government has proposed the sale of NHS Professionals, which provides temporary staff to the NHS. In November 2016, ministers announced that the Department of Health, which currently owns the company, will sell a majority shareholding, with a tender for the sale expected soon.
The King’s Fund view
Following the Health and Social Care Act 2012, the number of contracts awarded to private providers increased, though there is little evidence of a significant increase in spending on private providers or widespread privatisation of NHS services. In many cases the use of private providers to treat NHS patients reflects operational challenges within NHS providers and is a continuation of longstanding practices. Provided that patients receive care that it is timely and free at the point of use, our view is that the provider of a service is less important than the quality and efficiency of the care they deliver. More positively, the NHS can benefit from partnerships and joint ventures with the private sector to deliver some clinical and non-clinical services.