According to a recent report in the (£paywalled) Times, Rishi Sunak’s so-called “elective recovery task force,” steered no doubt by its private sector participants, is planning new legislation this summer to compel NHS commissioners to increase the numbers of patients sent to private hospitals.
The Times report quotes from a “leaked draft report” of the task force, saying it has “identified a range of barriers to maximising” the role of the private sector.
However the Times also sums up the legislation, misleadingly, as a step to “improve patient choice,” and “spell out the rules that the health service should follow when deciding to give contracts to private companies.”
Of course this is not new. The phrase “patient choice” was invoked ad nauseam by New Labour government ministers who in the early and mid 2000s first began to restructure the NHS and its finances to facilitate the use of private providers of clinical care.
But it was a misnomer then, because “patient choice” was from the outset imposed upon the NHS, by Department of Health bureaucrats signing national-level contracts for privately-run “diagnostic and treatment centres” and later a network of “independent sector treatment centres” (ISTCs), initially run by overseas companies.
It was all part of a New Labour experiment with using private providers of clinical care, after two decades of privatisation of support services. They aimed to turn the NHS from a planned public service into an artificial competitive market, in which NHS trusts and Foundation trusts would have to compete with private sector providers for contracts funded by taxpayers’ money.
Weaken NHS
Many campaigners warned from the outset that the creation of a new, government-sponsored “independent” sector would seriously weaken existing NHS hospitals, depriving them of vital income and disrupting the training of doctors by hiving off many “routine” operations to tiny private units. Many of these concerns were echoed in 2006 by the Public Accounts Committee, which found gaping holes in the arguments put forward for further expanding the network of ISTCs:
“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.”
Compelling more use of private providers of clinical care would be even more of a problem in today’s context of staffing shortages, since any expansion of private sector caseload can only be achieved by recruiting more from the same limited pool of qualified staff that the NHS itself relies upon.
There were also fears that the NHS itself could eventually be reduced from a universal provider of comprehensive services into something akin to a continental European-style health insurance fund, procuring services from a network of external providers.
One limitation on this from the outset was the reluctance of many NHS commissioners and trust bosses to buy in to this policy, for fear of undermining all of the core NHS services that the private sector has no wish to provide – emergency services, more complex waiting list treatment, maternity care, and health care of the chronic sick.
There was also a widespread reluctance of patients to go to ISTCs, especially where they discovered that the new units, many sporting NHS logos, were privately-run, separate from the main hospitals, and often further away from home.
Guaranteed profits
The ISTCs, quite unlike NHS trusts, which were only paid per patient treated under New Labour’s so-called “payment by results” system, were guaranteed 5-year “take or pay” contracts that ensured they would be paid a guaranteed fee whether or not the planned number of patients turned up. They also insisted on screening to ensure that only the least complex cases were referred to them: the NHS had to look after the rest. They were also paid an average 11.2 percent above the NHS average cost. It was a sure-fire profit – and with NHS and foundation trusts excluded, the only competition was between private providers.
In some cases commissioners (Primary Care Trusts) in the 2000s had to effectively compel patients into the new units for fear of losing their place in the waiting list, making a complete nonsense of “patient choice”.
And by the end of 2005 the policy had moved on once again, to incorporate private hospitals that wished to fill up some of their otherwise unused beds. New guidance obliged commissioners (local Primary Care Trusts) to offer almost all elective patients a “choice” of providers – including at least one private hospital – from the time they were first referred. By 2008, the NHS’s 60th year, any patient was allowed to choose any hospital which could deliver treatment at the NHS reference cost.
New Labour ministers made clear that they wanted at least 10% of NHS elective operations to be carried out by the private sector in 2006, rising to 15% by 2008.
This policy was strongly criticised, not least by the BMA, but also by studies produced by London NHS managers for Health Secretary John Reid, which warned that the plans were “problematic, unaffordable” and of “no benefit” in London, since they would have serious impact on the financial stability and viability of NHS Trusts.
The Commons Public Accounts Committee pointed out the obvious danger that the policy could result in private sector providers “cream skimming” the most straightforward and lucrative cases, leaving NHS hospitals with reduced resources to cope with the chronic, the complex and the costly patients.
There was growing concern that NHS hospitals which lost out as patients chose to go elsewhere could be forced to close departments – or close down altogether: ministers and senior NHS officials said they were willing to see this happen, arguing that it would not be their policy, but patients who made the decision. Then Health Secretary Patricia Hewitt (currently acting on behalf of Tory Chancellor Jeremy Hunt conducting a review of Integrated Care Boards) now even boasts that back then “As Secretary of State myself, I was a ‘window-breaker’ rather than a ‘glazier’.”
Private sector advocates today are keen to argue that use of treatment centres and private hospitals was the key factor in reducing waiting lists in the 2000s: but they ignore the much larger role played by a decade of increased funding and staff in NHS hospitals, which delivered the bulk of the additional treatment.
Sign of weakness
The very fact that Sunak and his ministers are contemplating more legislation to force increased use of the private sector exposes the extent of NHS reluctance to go back down the road that was found to be a dead end 15 years ago.
Despite the huge increase in NHS waiting lists, the private sector is not booming in the way that many expected. It’s clear that the sheer cost of many of the most sought after operations is out of reach for many, especially in these times of a worsening cost of living crisis.
The most recent statistics released by the private sector (Quarter 3 2022/23) show that the caseload of the private hospitals – far from soaring as desperate NHS patients try to escape waiting lists – has barely recovered to pre-pandemic levels. A brief flurry of growth in “self pay” operations was followed by three months of reducing numbers, while numbers of privately insured patients treated is now consistently below pre-pandemic levels.
The BMA warned last March of the potential dangers of excessive and continued NHS use of private hospital capacity:
“we are concerned that the UK Government’s plans … risk embedding a longer-term trend of outsourcing NHS contracts and funding to ISPs (independent sector providers) in England, rather than sustainably increase NHS capacity. We have consistently opposed the outsourcing of NHS contracts to the independent sector, on the basis that it threatens the clinical and financial viability and sustainability of the NHS.”
The Health Foundation last November gave written evidence to the Public Accounts Committee describing a larger role for private providers, but questioning whether the private sector is actually delivering any net benefit to the NHS, asking:
“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?”
Compulsion
Ignoring any such doubts, at the end of last year, after the churn of Prime Ministers and health secretaries, the first meeting of Rishi Sunak’s newly constituted task force once again tried to kick start (or “turbo-charge”) a fresh increase in NHS use of private hospitals. According to the Telegraph in December:
“A new taskforce, bringing together independent hospital leaders and NHS officials, will examine how to significantly expand use of the private sector and give patients more choice over where they receive treatment.” This body apparently “ordered” the NHS:
“to ‘turbo-charge’ use of the private sector to help clear record waiting lists. A Downing Street summit on Wednesday will work on plans to maximise use of all available hospital capacity – regardless of who provides it – as pressures on the NHS mount.”
This was of course welcomed by the private hospitals’ lobby group, the Independent Healthcare Providers’ Network (IHPN), which is quoted in the government press release that states openly that the role of the taskforce is to increase privatisation:
“Experts will focus on how the NHS can utilise existing capacity in the independent sector to cut the backlog. The independent sector has been used to bolster NHS capacity and ease pressure at critical times for nearly 2 decades …”
However the Telegraph does tacitly concede that private sector referrals might not be such an attractive prospect for patients, especially those with mobility problems, when it reports “Patients will increasingly be offered surgery hundreds of miles away in an expansion of schemes that have seen NHS patients in Devon offered knee and hip operations at private hospitals in Surrey.”
Almost a month later effectively the same story surfaced in the Daily Mail, which assured its readers:
“More NHS patients will be sent to private hospitals and new surgical hubs or treated at home in ‘virtual wards’ under Rishi Sunak‘s plan to slash waiting lists.”
Mr Sunak is quoted saying “he was ‘comfortable’ with the NHS making more use of private hospitals ‘if that’s what it takes to get patients quicker and better care’. Patients will also be given ‘as much choice as possible’, including options to travel to a hospital further away for faster treatment.”
Whose choice?
Again the word “choice” is used and abused. Recent polling from the Health Foundation has confirmed that the choice that most patients have expressed when asked it is to be able to access timely, safe care from a properly staffed NHS hospital close to their home:
“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”.
Few if any would choose to transport themselves hundreds of miles away from family and friends to seek treatment in a private hospital they have never seen or visited.
By last month IHPN CEO David Hare was again demanding greater use of private hospitals, this time in response to a Public Accounts Committee report into managing backlogs and waiting times. He said
“Our members believe there is more they can do to support this effort, and they are ready and willing. We must be leaving no stone unturned to ensure every person on the waiting list can be seen and treated as quickly as possible. This includes ensuring every NHS patient is aware of their legal right to choose the best provider for them, including in the independent sector.”
The IHPN, of course claims “elective care is critically dependent on independent sector provision”. However it also claims that around 6% of NHS elective admissions are now going to private hospitals, and this is echoed by a government press release. So the NHS is left to deal with the other 94% of elective work – as well as 100% of the emergencies, complex and chronic care.
Even this exaggerates the importance of the private hospital sector. With few exceptions private hospitals tend to be very small, averaging just 46 beds, and focused entirely on quick turnover elective treatment for the least complex cases. And while private hospital bosses would prefer to be able to fill beds with self-pay and privately insured patients who pay higher fees, there are not enough of these patients around.
So most private hospitals have become dependent upon NHS-funded patients (and self-pay patients driven by despair or chronic pain to leapfrog growing NHS waiting lists) to fill otherwise empty beds. Of course they also depend upon NHS-trained and often NHS-employed medical and nursing staff to deliver treatment and care.
The private sector was already facing problems of stagnation prior to the pandemic: a 2019 IHPN blog indicating a far from positive mood, warned:
“Private healthcare finds itself at a crunch point. Low (or no) growth across local and international markets, spiralling costs, falling medical insurance subscriptions and “intelligent consumerism” continue to challenge the sector.”
Department of Health and Social Care Annual Report figures confirm the private sector has good reason to be concerned. They show the amount spent by the NHS on private providers of clinical services rose each year from 2006, from just over £2 billion to almost £9 billion by 2016, with the private sector share of NHS spending rising from 2.8% to 7.7% over the same period.
However this flat-lined in 2016/17, and declined to £8.7 billion (7.3%) in 2017/18.
Spending on “independent sector providers” increased to £9.7bn in 2019/20, before the first year of the pandemic brought a massive leap to £12.1bn in 2020/21 (up 25.6%). A major factor in this was the massive pandemic-driven contract signed in 2020 for a big increase in numbers of NHS patients to be treated in private hospitals – effectively bailing out and rescuing the private sector.
However, as we subsequently discovered relatively little of the extra capacity was actually used. So it’s no surprise that the biggest-ever increase in spending was followed by a 10% reduction in 2021-22, according to the most recent Department of Health and Social Care Annual Report, to £10.9bn, with the private sector share of total NHS spending falling from 7% to 6%.
There is of course a long-running debate about how accurate these figures in the DHSC annual reports may be on the real level of spending on private sector clinical contracts: some analysts argue the private sector share could be three or four times higher, depending on how we define GPs dentists, primary care services and spending via local authorities on social care.
The latest DHSC report shows that NHS spending on social care and mental health services from local authorities has remained at the higher level seen in 2020/21, but spending on the for profit sector has fallen sharply, and the non-profit and voluntary sector, which increased by over 9% in 2020/21 has also fallen, by 4%.
Moreover, despite NHS England policy statements and further “framework contracts” making it easy to use private hospitals, the latest figures, backed up by board papers in several Integrated Care Boards suggest that NHS trusts and ICBs have been pulling back as much work as they can in-house, rather than see precious NHS funds flow out to private providers.
Waiting for private sector boom
It’s important to remember that private health providers are not in business to make a point, but to make a profit. That’s why they are clearly increasingly nervous over the failure of the government that has scooped up lavish donations from private health bosses has failed to deliver the expected boom in business.
For private hospitals to be so dependent on under-funded NHS contracts in a time of soaring inflation is not a comfortable place for them to be.
Claims of large increases in private hospital treatment and a “surge” of patients to private GPs are not borne out by the actual figures. Misleading figures from the IHPN, publicised by the Daily Telegraph, aimed at convincing potential customers that private hospital care is much more affordable than it is, are another sign that they are worried.
NHS pay beds
While the private sector waits anxiously for the profitable openings they expected, it seems that the private beds in NHS hospitals may also be lacking in punters –despite shameless hospital trusts trying to scare patients into going private, warning them of the length of their own waiting lists.
A Guardian article in January that pointed to numerous examples of trusts seeking to promote their private wings cites plenty of advertising – but little hard evidence that patients can afford to take advantage of NHS private care – or that the private wings are themselves financially viable.
Latest figures from the Private Healthcare Information Network show private patient procedures in NHS hospitals are only “at around half (49%) the level of the equivalent period before the pandemic (Q3 2019).”
An impenetrable cloud of secrecy means that trusts and the DHSC will only ever reveal their alleged income from such venture, but never the costs incurred of ring-fencing beds for private use (leaving them empty, reducing capacity for NHS patients), and providing the enhanced facilities, catering, décor and staffing that private customers would expect.
Research by the Centre for Health and the Public Interest has raised serious doubts over the extent to which private wings generate any surplus rather than draining resources from the NHS.
In 2018 research for UNISON Eastern Region, based on Freedom of Information replies from trusts revealed a number of instances of virtually unused private beds and luxury facilities while NHS wards were full to overflowing, and asked the critical question “How much are private patients costing the NHS?”
Lose, lose scenario
Whether the private beds are in private profit-seeking hospitals or in plush private wings of NHS hospitals it seems clear that they are far from additional capacity, but rather a drain both on NHS funds and on the scarce supply of qualified professional staff.
There is no evidence that making more use of private hospitals lifts any burden from the NHS; instead it increases trusts’ costs for bank and agency staff to fill gaps as doctors and nurses moonlight elsewhere.
To make the NHS more dependent upon the use of private hospitals can, as the BMA warned, result in a chronic dependency that leaves the NHS lacking resources to cope with emergency pressures (for which the private sector has no services to offer). This is even more the case while Covid continues to be a factor hospitalising patients and reducing capacity for emergency and routine cases, and while the government continues to run down social care.
That the government sees its role as driving more work towards the private hospital sector while doing nothing to relieve the mounting crisis situation in emergency departments will come as no surprise to many Lowdown readers.
But it does mean that – barring some astonishing change of tack by ministers – any solution to the capacity problems of the NHS will have to come from a new government, with a fresh policy based on bringing outsourced clinical and support services back in-house to maximise the effective use of the workforce.
A crucial starting point has to be opposing any new laws designed to force more privatisation onto NHS management who have shown in practice that they don’t believe it to be a viable policy.
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