Contract Failures in Hospital Services

The NHS has had contracts with private hospitals to carry out elective surgery for many years and patients were able to choose a private hospital under the choose-and-book system.

Successive Conservative governments from 2010 have refused to fund increasing NHS capacity at a sufficient level to have any impact on the waiting list, so hospital trusts and other commissioning bodies turned to contracts with the private sector. The result is that the number of NHS patients being treated in private hospitals has increased significantly since 2010.  In 2018, the Royal College of Surgeons reported that almost one in three (29.4%) NHS-funded knee replacements and almost one in five (19.7%) NHS-funded hip replacements were carried out by the independent sector in 2016-2017; in 2012-13 the figures were 20.1% knee replacements and 13.7% of hip replacements. For 2019 the independent sector carried out 32.9% of NHS-funded knee replacement procedures and 28.9% of NHS-funded hip replacement procedures.

Elective Surgery and Patient Safety

The safety of the private sector has been a concern for many years, with questions over their lack of ICU beds, use of registered medical officers, lack of transparency, communication issues with the NHS, and even the use of individual rooms. The issue of NHS patient safety has been investigated by the Centre for Health and the Public Interest (CHPI).

The concerns include:

  • Post-operative care in private hospitals is usually carried out by inexperienced junior doctors who are working excessively long hours.
  • The consultant who carries out the surgery and who is responsible for the patient is permitted to be off-site.
  • Nature of this post-operative care has been cited as a factor in a number of patient deaths.
  • Lack of intensive care facilities means if something goes wrong then patients have to be transferred back to NHS hospitals, which in itself is very dangerous.
  • Data on patient safety in private hospitals is poor and they aren’t required to make this information public in the same way as NHS hospitals are.

With the number of patients being treated in these hospitals increasing, particularly with the Choose and Book system or with acute trusts referring patients to clear extensive waiting lists, it is important to note these issues.

CHPI conclude that NHS commissioners and clinicians would find it difficult to avoid blame, and possible legal consequences, if NHS patients are harmed in private hospitals. Particularly now that the risks are openly documented.

This raises the issue of the cost of these referrals, both in the short term and the long term. In the short term, the cost of treatment for NHS patients in private hospitals is much higher than it would be if they could be treated in NHS facilities. Moreover, if something is to go wrong and there are legal consequences then it is the NHS that may have to pick up the bill in the long term.

In another report, the CHPI also document the safety issues in private hospitals following the scandal whereby surgeon Ian Paterson wounded 500 women who underwent unnecessary breast surgery in private hospitals. They conclude that until the private hospitals have full liability for the patients under their care, then there will be no guarantee of safety.

The Paterson scandal led to a public inquiry that released a damning report in February 2020 stating that the private healthcare system he worked in was “dysfunctional at almost every level”. However, the government has yet to make the major changes in the report that would have improved patient safety in private hospitals. In November 2021, the safety of the independent hospital sector was once again under the spotlight in a report released by the HSIB (Healthcare Safety Investigation Branch) – Surgical Care in Independent Hospitals – triggered by the death of a NHS patient sent to an independent hospital for bowel surgery. The report made six safety recommendations, three to NHS England and NHS Improvement, one to NHSX, and two to the Care Quality Commission (CQC).

Covid-19 pandemic and private hospitals

The Covid-19 pandemic has given the private hospital sector major opportunities to work for the NHS. In March 2020 the government agreed a contract to block-book the entire capacity of all 7,956 beds in England’s 187 private hospitals along with their almost 20,000 staff. It is reported to have cost around £400m a month. The plan was for the private hospitals to treat covid-19 patients as well as providing Covid-19 free hospitals to carry out NHS elective surgery and cancer treatment, as the NHS hospitals began filling with Covid-19 patients.

However, in October 2021 the Centre for Health and the Public Interest reported that on 39% of days between March 2020 and March 2021, private hospitals treated no Covid patients at all and on a further 20% of days they cared for only one person. Overall, they provided only 3,000 of the 3.6m Covid bed days in those 13 months – just 0.08% of the total.

Prior to the pandemic, private hospitals undertook 3.6m NHS-funded planned procedures in 2019, that dropped to only 2m during the first year of the pandemic – a fall of 43%. The House of Commons public accounts committee, was shown two letters to the wider NHS explaining why the deal had been struck and what it would cover, which make it clear that it would include care for Covid patients with serious breathing problems as well as routine operations, such as hip and knee replacements. However, The Independent Healthcare Providers Network, which negotiated the deal on behalf of private hospitals, insisted that it was never intended to cover people with Covid.

Chair of the Public Accounts Committee, Labour MP Meg Hillier, said the findings showed the government and NHS had got poor value for money from the very expensive deal.

“Taxpayers have covered an entire year of private hospitals’ costs in return for less treatment and care than before, and many of them now feel forced to pay those same private hospitals over again in the face of an NHS beset with lengthy backlogs.”

Failure of management at Hinchingbrooke hospital

The most well-known contract failure in hospital services is that of Hinchingbrooke Hospital and the contract for its management with Circle. The ten year contract was awarded to Circle in 2013, but just two years later in January 2015, Circle pulled out of the contract. The company announcement came just before the publication of a damning report on the hospital from the Care Quality Commission (CQC): the CQC raised serious concerns about care quality, management and culture at the hospital.

The CQC found a catalogue of serious failings at the hospital that put patients in danger and delayed pain relief. The hospital was put in to special measures, the first time the CQC had had to do this. Circle cited financial reasons for pulling out: under the contract the company was allowed to withdraw if it had to invest more than £5 million of its own money in the hospital and it looked extremely likely that it was going to have to invest much more than £5 million.

Serco and Braintree hospital

In another example, in December 2013 Serco announced that it would be pulling out of its contract for running Braintree hospital in Essex before the end of the contract. In March 2014 the contract was handed back to the Mid Essex Hospital Trust nearly a year early. The company’s other major contract with the NHS for community care in Suffolk has not reaped the profits the company was hoping for and by August 2014, the company announced that it was withdrawing from the NHS clinical services market altogether. In September 2015, when Serco handed over the community care contract in Suffolk to new providers, the company noted that the £140 million the company was paid for the contract was “not adequate” for the work. Serco estimates that it had made an £18 million loss on its three NHS contracts.

See below for further reading on contract failures.

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