Two weeks ago, the Lowdown took a detailed look at the situation of the private healthcare sector.

We were seeking to understand why – after 13 years of policies promoting privatisation and driving waiting list patients towards private treatment – Rishi Sunak should be contemplating new laws to compel NHS bosses to send more patients for treatment by the private sector.

But in the wider search for information for that study it became clear that it’s not just campaigners and trade unions who have concerns over the impact on the NHS of relying on the capacity of the unevenly-spread patchwork of private hospitals and clinics: questions are also being asked by the Commons Public Accounts Committee.

Despite receiving an extensive written submission from the Independent Healthcare Providers Network (IHPN) singing their own praises, the cross-party PAC was clearly unconvinced by their account, and by what they heard from NHS England about their elective recovery plan (which focused heavily and repeatedly on use of the private sector but made no attempt to explain the possible drawbacks of this policy).

The PAC’s Report, Managing NHS backlogs and waiting times in England was published on March 1. It notes:

“NHS England’s elective recovery programme partly relies on initiatives which have potential but for which there is so far limited evidence of effectiveness… [and] their impact on other parts of the health and social care system, and how they will work on a greatly expanded scale.”

The Committee called on NHSE to write to it to explain “the extent to which these initiatives have so far generated genuinely additional activity, rather than simply displacing activity elsewhere in the NHS.”

That is the kind of question the private sector hates to see asked.

That’s because their big claim to have played a useful role as a “partner” of the NHS rests entirely upon the period from 2003 to 2010, when the New Labour government chose to invest in new privately-run “Independent Sector Treatment Centres” – to create “contestability,” and a lop-sided “market” in elective care (in which only the private sector was allowed to compete) – rather than in expanding the NHS. It was a license to print money, guaranteeing profits for private companies, who took only the least complex patients, and were given preferential long-term contracts and paid an average of 11.2% above the NHS cost for each treatment.

Back in 2006 the Public Accounts Committee of the day found gaping holes in the arguments put forward for further expanding the network of ISTCs, which only ever played the most minimal role in the reduction of waiting times, while the main brunt of the work was done by the NHS. The PAC then was unconvinced by the private sector’s bluster:

“The Department of Health has carried out analysis of the possible effects of the ISTC programme on NHS facilities, but it has refused to disclose the analysis to us. Phase 2 ISTCs may lead to unpopular hospital closures under ‘reconfiguration’ schemes.

“… There was also considerable scepticism about whether the ISTC programme represented value for money. We found it difficult to make an assessment since the Department would not provide us with detailed figures on the grounds of commercial confidentiality.”

Private sector demands higher return for NHS work

Parliamentary questions casting doubt about the effectiveness of contracting work out to private providers clashed head on this week with latest demands of the major private hospital chains, Circle/BMI, Ramsay and Spire for increased payments for each treatment from the NHS. The HSJ has revealed that this plea for substantial increases in the tariff of prices paid by NHS England has come with the threat that if they don’t get a big enough rise the companies will pull away from further NHS work.

This is dangerous territory for the private sector: if they achieve their price increase they immediately wipe out one of their main arguments justifying their role, which has been that they take patients at the NHS tariff price – and therefore are no more expensive.

NHS England and the acute trusts have already knuckled down and accepted a tariff that only partly covers the costs of recent and ongoing inflation, and the government’s tough line in seeking to face down pay demands from nurses and doctors has been (spuriously) linked to the need to bring down the rate of inflation. For them to concede now to the private sector’s demands would further inflame anger in the NHS workforce.

But of course if they don’t succeed, the bluff of the private hospital bosses will be called: if they walk away from their lucrative NHS contracts they know that the actual private market (insured and self-pay patients) has not significantly grown beyond the level it reached before the pandemic, despite the mushrooming size of the NHS waiting list. The cost of living crisis, and inflated cost of private operations, has limited their already pretty small market – and they would be stuck with thousands of empty beds.

Fallout on patient care and services

The fight over pricing is not the only problem the private sector faces. Serious clinical concerns have been raised over the consequences of the expansion of privately-delivered eye care, the largest single area of private sector activity, with specialists calling for more investment in “comprehensive NHS services.”

The HSJ reports a “workforce census” survey carried out by the Royal College of Ophthalmologists found almost 60 per cent of respondents believed independent providers were having a “negative impact” on care and ophthalmology services in their area, with problems including cases being passed back to the NHS when IS care failed, and the NHS being left with a greater concentration of more serious, and costly, cases while the IS focused on routine cataract operations.

All this raises the broader question of how many NHS operations are now being carried out in the private sector, and whether, indeed this does represent additional capacity or simply the private sector carving out a slice of the NHS budget in the absence of any NHS capital to expand.

Submissions to the Public Accounts Committee, all produced last November, show the growth of private sector involvement since the peak of the pandemic, but also how uneven that growth has been and the limitations of the private sector in handling much more of the NHS caseload.

The IHPN submission wants on the one hand to boast about its success, noting: “in August 2022, [waiting list] activity delivered by independent providers was 16.3% higher than it had been in August 2019, pre-pandemic.”

But it also repeatedly stresses the unused private sector capacity, the “appetite” for more NHS contracts and the missed opportunity for further work to be commissioned:

“independent providers have offered to deliver increased capacity for NHS-funded activity to help reduce NHS waiting lists. Unfortunately for the past 18 months, and despite this capacity offer, NHS activity delivered through the independent sector has struggled to return to pre-pandemic levels across almost every specialty (ophthalmology being the notable exception).”

The private sector lobby group blames local NHS bosses for defying NHS England guidance and holding on to scarce financial resources, claiming there is a “disconnect between the policy direction coming from the Department for Health and Social Care and NHS England, and the implementation of these policies on the ground.”

It also claims the payment system is unfair to the private sector, and effectively discourages additional NHS referrals in the precarious financial situation of trusts and commissioners. It complains bitterly that most cash-strapped NHS systems “appear to be prioritising the process of transferring patients to the independent sector from existing waiting lists,” [as many people would hope would be the case] rather than prioritising the abstract notion of “patient choice”.

By contrast the NHS Confederation, representing NHS commissioners and providers, points to the profound limitations of using the private sector:

“The independent sector is being commissioned to take on more procedures to tackle the waiting lists in the NHS. Whilst this is welcome as it can alleviate the pressure on the NHS, the independent sector will not have the capabilities, workforce or capital to take on the cases which are more complex in nature and acuity.

“The NHS will likely be left with the more complex and costly procedures to carry out because of the expertise and infrastructure needed. People on waiting lists, many of whom have been waiting several months, have deteriorated in their health and will need more complex care than they did when they first joined the waiting list. Due to this, these patients will not have the choice to use the independent sector, and this further complexity of care means health inequalities worsen.”

The Confed goes on to point out that both the NHS and private sector “are recruiting from the same pool” of qualified staff, so the growth of the private sector undermines the NHS. And it highlights the lack of capital for investment to expand or to maintain and rebuild or replace ageing hospitals and clapped out equipment as factors limiting NHS capacity.

NHS Providers, representing trusts and foundation trusts, also highlighted the financial constraints and fears of a majority of trust bosses that they lack the resources to achieve the targets set for them by NHS England, as well as the problems and limitations of using private providers:

“Trusts have mixed views about the use of the independent sector in tackling the waiting list. Firstly, private sector provision is not uniform across the country and therefore access to the independent sector isn’t always available. There is a concern that a reliance on the independent sector could further widen health inequalities as independent sector provision is more likely to be present in affluent areas. […]

“The role of the independent sector is limited … Independent sector provision largely covers high volume, low complexity cases as most independent sector providers do not have intensive care capacity. Therefore, independent sector provision can only really accommodate low risk patients.”

The submission from the Health Foundation helps to answer a question often misunderstood by campaigners: how much NHS care is privately provided, and whether its role is growing: the answer seems to be that private hospitals have a growing share of a reduced market:

“Before the pandemic, ISPs [Independent Sector Providers] delivered around 12% of total NHS-funded planned treatments requiring hospital admission and 7% of outpatient treatments. As of March 2022, the share of care delivered by ISPs was higher than it was before the pandemic. For care requiring hospital admission, the volume of ISP provided care grew by 9%, equating to an increase in share from 12% to 16%. At the same time, the total number of NHS and ISP provided treatment was 14% lower.”

Health Foundation survey data also shoots down one of the private sector’s favourite arguments for patient choice to use providers outside the usual area. In fact the desire for choice was to be offered local treatment:

“89% support giving patients more choice over where they are treated, for example, the option of being treated in a hospital in their local area if there is a shorter wait.”

Moreover there was a clear majority (81% of those surveyed) in favour of waiting lists to be prioritised by the urgency of the condition – favouring the NHS and its resources – rather than length of time on the list.

The Health Foundation submission also noted that while there are 250 ISPs providing elective care at Independent Sector Treatment Centres (treating only NHS patients) and private hospitals, ISPs tend to be narrowly focused on particular treatments (one in four, 23% covering only ophthalmology).

A previous Health Foundation study had shown the uneven spread of ISPs across the country, the reduction in numbers of NHS patients treated in some specialties compared with the significant rise in ophthalmology, and the questions that arise over growing inequality of access to services.

Their latest submission concludes with the telling question that has now been raised by the Public Accounts Committee:

“Could the increased proportion of treatments being delivered by the independent sector be helping to limit waiting list growth, by delivering care that otherwise could not be delivered by the NHS? Or does this represent displacement of activity from the NHS to the independent sector?”

The limitations of the private sector are therefore exposed once again, as they seek to jack up the prices they are paid without drawing too much attention to the fact that whatever growth they have enjoyed in the past 13 years has been a product of a Tory government’s costly and discredited ‘reforms’ and the prolonged austerity squeeze on the NHS.

Two decades of experiments in utilising private providers has shown only that whatever minor role they may play in acute services, the buck for complex care, emergency care and chronic care stops with the NHS. There is still a lot of it to defend.







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