An exultant article from the grinning director of the Independent Healthcare Provider Network (IHPN) David Furness in the October issue of Healthcare Markets magazine reminds readers that the dire situation of the NHS has opened lucrative doors for the “independent” sector.

With a best case scenario of NHS waiting lists doubling from the “already record high of 4 million,” Furness argues, NHS England has set up a framework contract to buy in around £10bn of additional capacity from non-NHS providers over the next four years:

“Such a substantial contract with the independent sector would ordinarily have stimulated much debate on the merits of NHS/private partnerships,” Furness continues breathlessly, “but in this current climate it almost passed under the radar with even the most ardent critics of the sector struggling to convincingly make the case that the NHS should not be sourcing all available resources in order to improve patient access to care.”

This of course raises a number of questions: exactly what resources does the private hospital sector really have to offer, at what financial and organisational cost?

Despite the IHPN’s bravado it becomes even clearer on close analysis that the huge injection of NHS and public sector funds has been more of a life-saver for the private hospitals than for the NHS.

NHS hospital trusts have been struggling financially, having received almost none of the £32 billion extra government funding for “health” related services to tackle the Covid pandemic.

Trusts’ financial situation has got worse recently, with grim warnings of the  increased demand on NHS beds and intensive care units from the second wave of Covid patients combining with the usual increased ‘winter pressures’, and a funding gap conservatively estimated at £1bn, while NHS trusts also face financial penalties for failing to deliver hugely ambitious NHS England targets to resume previous levels of routine elective and emergency services.

By contrast the initial big, lucrative deal with NHS England in March to ‘block-book’ up to 8,000 private acute sector beds through to the end of May at a total cost of almost £1.6 billion guaranteed the private sector “cost recovery for its services, including operating costs, overheads, use of assets, rent and interest, less a deduction for any private elective care provided.”

The private hospitals, and their lenders and landlords, were cushioned against the impact of Covid-19 on their core business. The published contract reveals that £1.57 billion was shared unequally between 26 private hospital corporations, each of which picked up payments ranging from £0.9m to £346.6m to Britain’s largest private hospital group, which is now Circle Health Holdings, having completed the take over the previous market leaders BMI Healthcare in August.

The other big winners were Spire Healthcare Ltd (£345.9m) Australian-owned Ramsey Health Care (£271.1m), Nuffield Health (£165.2m) US-owned HCA International Ltd (153.2m) and Care UK with £76.3m. The remaining £218m was carved up between 20 lesser companies.

But while the initial focus was on private hospital beds being used, the Health Service Journal points out that in many cases the initial contracts “paid for staff and equipment to be transferred to NHS hospitals as opposed to paying for ward space in private hospitals,” and the press office of Spire Hospitals confirms this analysis.

Most private hospitals are of limited use to the NHS, since they tend to be small in scale (averaging just 43 beds) and geographically separate from the main NHS acute centres, and because the private hospitals are primarily staffed with nurses, with relatively few doctors, most of whom work in them on a part-time sessional basis, while employed by the NHS. Making more use of private hospitals therefore means diverting more NHS staff to do the work, and separating them from the main clinical workforce.

The NHS made no significant use of private hospitals for Covid patients, and a limited number of specific publicised examples underlines the fact that there was also limited use of private hospitals to treat NHS elective patients.  So how many of the potential 8,000 block-booked beds have been used by the NHS?  It’s hard to tell from the limited information published by NHS England.

What we can tell from recent articles in Healthcare Markets is private hospitals have begun to use many of the beds the NHS has opted not to use, to cash in on increasing numbers of self-pay and privately-insured customers seeking to jump past lengthening NHS waiting lists.

In mid June the Guardian reported a sceptical Treasury blocking plans for a £5 billion extended contract to use private hospitals into 2021 – because of concerns over how many of the beds were being used, noting that “NHS England has refused to disclose how many patients have been treated by private providers since March, even though they collect this data each day.”

In mid August Spire Healthcare Group announced that a variation of the initial NHS block booking contract was going to give the private hospitals more scope to increase their own private patient caseload:

“The NHSE Contract, and subsequent variation, is expected to remain in place until at least the end of October 2020 but will have a definitive expiry date at the end of December 2020. The most significant variation is to guarantee that a certain minimum capacity in each hospital will be made available for privately funded patients (PMI and self-pay). …

“Private activity has been building steadily since the de-escalation phase of the NHSE Contract was triggered on 15 May.”

At almost the same time the Independent broke the story that a massive new “framework contract” was being offered, which makes it easier for private hospitals to be contracted to take on NHS waiting list patients: “the health service could spend up to £10bn of taxpayers’ money buying operations and treatment in the private sector over the next four years to reduce waiting times.”

However questions remain unanswered on how many private beds are still being booked – and used – by the NHS at local and national level, and at what cost. September statistics from NHS England revealed that only 2,300 of the undisclosed total of private acute hospital beds block-booked by NHS England were being used in early September.

According to the latest issue of Healthcare Markets the private sector is benefiting two-fold: not only are the private hospital firms celebrating “strengthened ties” with the NHS and the prospect of sharing £10bn revenue from waiting list contracts over the next four years, but conventional private hospital activity is also recovering to pre-pandemic levels, with private cancer treatment exceeding 2019 levels.

With NHS acute bed numbers in England down from 109,000 in 2010 to less than 100,000 remaining, and a soaring NHS waiting list with operations being cancelled this winter, it’s good news all round for the private hospitals, who win out whether patients go private or stay in the NHS queue.

* This article is abridged and adapted from a longer chapter by John Lister in the new book Pandemic: Where are we still going wrong? to be published this month by Bite Sized Books.

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