The election period brought a debate on the extent of NHS privatisation – with some, especially on social media, eager to over-emphasise or exaggerate the inroads that have been made by the private sector, and others trying to argue that it is a side-issue.
The first early blow in this contest was struck ahead of the election by a London School of Economics blog from David Rowland, a former head of policy for three national regulators of health professionals, now working for the independent think tank, the Centre for Health in the Public Interest (CHPI).
Entitled Flawed data: Why NHS spending on the independent sector may actually be much more than 7%, the blog takes a critical look at the details provided each year in the Department of Health and Social Care’s Annual Report and Accounts. This document is the source of the “settled view of the media that around 7% of NHS expenditure is spent in the independent sector.”
Rowland helpfully brings together the equivalent figures going back to 2013/14, the first year after the implementation of the Health and Social Care Act which pressurised Clinical Commissioning Groups to put services out to tender and invite private bids.
But surprisingly he does not comment on the significant (almost 25%) increase in the level of NHS spending on independent sector (private) providers the year after this legislation took effect, far higher than the total increase in spending that year, of just under 10%.
Rowland’s focus is on the overall percentage of total NHS spending, which appears to increase by a much smaller amount (from 6.1% to 7.3%) although this is almost a 20% increase in share of spending in a year.
Indeed he effectively ignores this increase, and argues that over the six years the share of spending has remained “remarkably stable,” since the figure then rises above and falls back to 7.3% – although this, as noted the change over 6 years is a 19.7% increase, and 7.3% of £125 billion is a large sum.
Rowland’s objection to the way the figures are presented by the Department are set out clearly, and some points are quite obvious: for example he highlights the £1.3 billion spent in 2018 by trusts on sending patients to private hospitals – a figure that has more than doubled since 2013/14 and clearly should be included in spending totals.
It is also fair for him to point out that almost all of the money paid to local authorities has been for them to commission nursing care and social care that is in practice delivered by the private sector. This spending was £2.8 billion in 2018-19, although the blog does not appear to go on to separate out this spending in the alternative table.
Rowland also argues that many voluntary sector organisations and not for profit companies are to all intents and purposes private sector providers, although again the implications of this are not worked through in the final figures.
We can also agree that a very large share of pharmacy and ophthalmic services have been effectively privatised, with Boots, Lloyds Pharmacy, Specsavers and Vision Express cashing in on NHS contracts.
But much more controversial is Rowland’s argument that General Practice and General Dental services should be similarly bracketed as independent sector (i.e. private sector) spending – effectively regarding all GPs and all NHS dentists as the equivalent of Virgin Care or The Practice, and ignoring NHS dentistry. The case for this is not clear, and while campaigners will continue to fight to remove for profit companies from GP services the extent to which the relatively small corporate sector in GP services can be singled out from the total budget is not clear.
Before moving on to present his alternative breakdown of spending Rowland also quite reasonably questions the sense of comparing private spending with the total of Department of Health Spending, rather than NHS England’s actual spending on health services. This does have the effect of appearing to minimise the level of private spending. Obviously if this was to be changed, the comparison would need to be changed for each year to ensure consistency, so it would make a one-off difference, but then the benchmark would remain the same.
Having made these points Rowland notes:
“On this basis, we find that in 2018/19 £29 billion was spent by NHS England on the independent sector, which is around 26% of total expenditure. This percentage of the NHS’s expenditure on the independent sector has stayed fairly constant for the past six years.”
With a nod to those of us who object to including all GPs in the private sector, he adds:
“If General Practitioners are excluded from this calculation, the figure is £21 billion, or around 18% of total expenditure on the independent sector.”
In fact the inclusion of the large sums spent on GP services and the smaller, but significant sum spent on General Dental services skews all of the sums, and diverts from the significant growth in the share of NHS spending on private providers.
Indeed of GP and dental spending are deducted, Rowland’s figures show £13.5 billion was spent on private providers in 2013-14, rising to £18.4 billion in 2018-19, a 36% increase, and rising from 14% of NHS England spending in 2013-14 to 16% (almost £1 of every £6 spent) by 2018-19.
This is useful information for campaigners. It’s a shame it is so complex a process to get to it that few will make use of it.
Concentrations of privatisation
However modest the overall percentage of spend on private providers might be, we know that within certain services the concentration of private provision is much higher than the average.
This imbalance is highlighted by a new report researched by the Nuffield Trust for the Institute of Fiscal Studies. Recent trends in independent sector provision of NHS-funded elective hospital care in England does exactly what it says on the cover: but it begins with the Department of Health figures we have just seen criticised.
The motivation for the IFS commissioning specific NHS research appears to be this “neutral” body’s wish to question Labour’s election manifesto and commitments:
“Labour has vowed to ‘end and reverse privatisation in the NHS in the next parliament’, signalling an ambition to end – or at least significantly reduce – the role played by private providers in treating NHS-funded patients.”
Its key findings show that while emergency care remains almost exclusively provided by NHS hospitals, there has been a significant privatisation of the provision of NHS-funded elective care, from “almost none” in 2003-4:
“ISPs [independent sector providers] account for a small, but growing, share of NHS inpatient activity. They provided 609,549 NHS-funded elective episodes in 2017–18 (6% of all NHS elective activity) ….
“Wider NHS activity has increased substantially over the last 15 years, with ISPs accounting for one-sixth of this growth.
“The NHS is becoming increasingly reliant upon ISPs for some types of elective work. For example, in 2017–18, ISPs conducted 30% of all NHS-funded hip replacements, 27% of inguinal hernia repairs and 20% of cataract procedures. Replacing this capacity within NHS providers would therefore require careful planning.
“In some cases, ISPs have provided additional capacity for the NHS, while in others they appear to have been used as an alternative provider of care. 82% of the growth in hip replacements between 2003–04 and 2018–19 was accounted for by ISPs.”
The researchers argue that the private sector is important, but a relatively minor player in the provision of NHS elective care: “It is important to note that while volumes have increased at ISPs, this increase still only represents a small part of the growth in NHS activity over this period.”
Between 2003–04 and 2017–18 NHS-funded elective episodes at NHS hospitals increased by 3.2 million, an increase of 48.8%, while total NHS-funded elective episodes increased by 3.8 million, so one-sixth (16.1%) of the extra operations were by private providers.
But in some specialties the private sector played a bigger role: “by 2017–18, ISPs accounted for 19.6% of all NHS-funded cataract surgeries, 27.3% of inguinal hernia primary repairs and 30.3% of hip replacements.”
On hip operations the private sector had the lion’s share of the increased caseload, with NHS hospitals increasing by 5,101 compared with 23,354 additional procedures (82.0% of the total increase) by ISPs.
The study offers no explanations or discussion. The extent to which this was due to New Labour’s policy of subsidising “independent sector treatment centres,” with contracts for which only the private sector could bid, is not discussed, but the graph shows most of the increase in private sector share of hip replacements had taken place by 2010.
The researchers point out that the pattern is “even starker” in the case of hernia repairs, where private sector caseload grew by 13,478 over the period, and NHS hospital volumes actually fell.
The paper concludes by noting the geographical variation in the level of private provision of elective treatment, with 40% of hip replacements being done by private providers in the South East and East Midlands, compared to just 11% in London.
But it offers little discussion on the reasons for the shift of activity to private providers, or the geographical differences: one possible factor is the high levels of NHS bed occupancy linked with increased pressure on emergency services, along with potential financial consequences of failing to deliver performance targets for elective care.
It appears that the IFS would be happy for us to conclude that while privatisation is a significant factor in these specialist elective services, the scale of the private sector role is great enough to mean there is ‘no alternative’ to continued substantial reliance on private hospitals to deliver NHS-funded treatment.
Corbyn claim justified: Nuff said?
The third approach, taking another distinct view is a short report from the Nuffield Trust entitled Privatisation in the English NHS: fact or fiction?
Written by Nuffield Trust policy wonks Helen Buckingham and Mark Dayan it makes no reference to David Rowland’s blog, or to the Department figures, but annoyingly asserts
“Around 22% of the English health spending goes to organisations that are not NHS trusts or other statutory bodies.”
This figure is not explained, referenced, or linked in with the published statistics: but the authors go on to state that:
“this includes many services that the general public would regard as being within the health service. For example, almost all the GPs, dentists, pharmacists and opticians who treat NHS patients are private businesses, and have been since the inception of the NHS in 1948.”
The authors go on to touch private (Virgin) and non-profit providers delivering community health services, private and voluntary sector providers of ‘talking therapies’ and the right of patients seeking elective treatment to choose from a list of providers including private hospitals.
They do however concede that “Much of the inpatient provision for people with a learning disability or mental health problems and high levels of need is privately run.”
They go on to discuss the extent to which privatisation has grown in recent years, and argue that:
“Adding together all non-NHS providers, looked at as a proportion of spend to adjust for the generally increasing budget, the purchase of private health care has been both significant and relatively stable, at between 20 and 22% for the last nine years.
“Regardless of whether we include charities or not, private spending is actually proportionately lower in 2018/19 than it was in 2015/16.”
However the authors accept that Jeremy Corbyn’s claim that ‘privatisation has doubled since 2010’ is focused “primarily on areas such as hospital and mental health care, rather than ‘primary care’ areas like GPs and opticians,” the authors admit – perhaps surprisingly for some readers – that:
“his claim that it has doubled is correct in cash terms, although the context is that health spending overall has risen by a third. But even in terms of proportion, we do see a notable expansion in private spending in these areas.”
They note that, private spending has effectively “flatlined for the last three years:”
“This may reflect that while the 2010 to 2015 coalition government had several initiatives to increase competition and private provision, there have been no more major moves in this direction since.”
They note the debate in which some campaigners have argued that moves towards “integrated care systems” (ICSs) will inevitably increase the role of private providers, but also note the comment of David Hare, the chief executive of the main lobby group for private providers working with the NHS, who has said that he does not expect his members to take on ICS contracts.
The Nuffield paper pulls up short of the “nothing to see here, move along” school of thought promoted by the Health Service Journal.
Like Rowland’s blog and the IFS study it can help us build a picture of what is happening, although it is not sufficient to do that in itself.
It’s up to campaigners and trade unionists to identify an approach that is credible and focused on the main issues – and one that recognises how much of the NHS remains a public service, under public ownership, and how hard we need to fight to defend it.
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