Is the NHS being privatised?

Big election questions
Harry Evans

Ahead of the general election on 8 June, we examine the big issues around health and care.

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 for 2015/16 shows a small increase in the share of spending in the private sector – rising from 7.3 per cent of the budget in 2014/15 to 7.6 per cent, or around £8.7 billion – in 2015/16. Due to changes in how these estimates are made, it is not possible to compare with spend before 2014/15.

The extent of private sector involvement 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. More recently, some hospitals have also increased the outsourcing of some services, especially elective hospital treatment, as they struggle to deliver waiting time targets. NHS Improvement has noted that the costs of outsourcing in the provider sector is set to rise from £241 million in 2015/16 to £402 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.

Some large-scale contracts involving private providers have proved controversial. For example, the decision to tender for a £1.2 billion contract in Staffordshire to deliver end-of-life and cancer care has been widely criticised. After a lengthy delay, the cancer element of this contract, worth a potential £687 million, was dropped (the end-of-life care part of the contract is continuing as planned).

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 intended to 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.

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 the private sector or widespread privatisation of NHS services. In many cases the use of private providers to treat NHS patients reflects operational challenges facing NHS organisations 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 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.

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