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Hospitals up and down the country are undergoing privatisation in various ways and to varying degrees. Contracts with private companies include for elective surgery, and for the non-clinical day-to-day running of a hospital. 

Private companies, such as Interserve and ISS, have large multi-year contracts for all aspects of facilities management of hospitals, including cleaning, maintenance and catering. A fall in capacity within the NHS is leading to more and more patients being referred to private hospital chains for elective surgery. The entire management of one hospital, Hinchingbrooke, was handed over to the private company, Circle Health, in 2011; this proved a disaster and is now back in NHS hands. However, over the past two years hospital trusts have sought to create their own private companies to undertake non-clinical work. This has been referred to as privatisation by the backdoor.

 

Privatisation

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Private income cap for NHS hospitals
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Increase in rejected requests for knee/hip surgeries

Private sector involvement in NHS hospitals covers a wide range of services:

  • Facilities management, including contracts with Interserve, Capita, ISS and Mitie.
  • Hospital management, see Circle Health
  • Elective surgery
  • Private patient care
  • Spin-off companies for support services

Facilities Management

Many hospitals have outsourced all aspects of facilities management, often under large multi-year contracts covering every aspect, such as cleaning, catering, building maintenance, car parks, and grounds maintenance. Even if a large facilities contract is not in place, catering and cleaning are often outsourced. Hospitals built under the Private Finance Initiative (PFI) always resulted in a long (20-40 years) facilities management contract once the hospital was up and running, often with a company involved in the initial building. For more details see our pages on PFI and individual companies, such as Interserve.

Hospital Management

The most extreme example of private involvement in an NHS hospital, to date, was the contract awarded to Circle in 2011 for the complete management of Hinchingbrooke Hospital near Cambridge

This ten year contract to run Hinchingbrooke Hospital began in February 2012. Under the agreement, the staff and assets remained part of the NHS. At the time Hinchingbrooke hospital had a debt of approximately £39 million, which Circle needed to eliminate if it was to make a profit from the contract.

The Hinchingbrooke contract was a disaster for Circle in both financial and reputational terms. A report by the National Audit Office in September 2012, noted that Circle had already missed its own financial target for the Hinchingbrooke contract, generating a deficit of £4 million by September 2012, £2 million behind where Circle said it would be.

To try and make the contract financially viable, Circle needed to make big savings at the hospital and this led to a drastic reduction in care quality. Savings were made at the expense of staff, with between 270 and 300 jobs being cut and several wards lying empty. The hospital fell from joint-highest in the area in a patient satisfaction survey to nineteenth out of 46 hospitals trusts across the NHS Midlands and East region in August 2012.

In early 2015 as Circle announced that it was terminating the contract to run Hinchingbrooke, the CQC released a report on the hospital. The report rated the hospital as inadequate and the hospital trust was put into special measures.

Elective Surgery

The number of NHS patients being treated in private hospitals has increased significantly over recent years.  In 2015, 5% of NHS funded elective surgical admissions were to independent sector facilities, compared to just 0.35% in 2004/05.

The BMA report on these figures found it concerning that despite this growing role of private hospitals in NHS provision there continues to be no obligation for independent sector providers (ISPs) to report patient safety incidents and performance data.

NHS Improvement figures show that in the last two years over £1 billion has been spent by NHS trusts across England on buying health care from non-NHS bodies.

The most common treatment patients are being sent to private hospitals for are hip and knee surgeries, which is unsurprising due to the rationing and cuts these treatments have faced in recent years.

Phillippa Hentsch, of NHS Providers, said: “Hospitals have to hand over the patients because they have simply not got the beds, staff or theatres free to see them due to the pressures on the emergency side.”

Data that NHS Support Federation has compiled from NHS Digital shows that the total number of NHS beds available in England decreased by 9.85% between 2010/11 and 2017/18, down to 130,232. This is despite the number of admissions to hospitals increasing on average by 11% across England.

It was reported in March 2017 that £901 million of the cash that had been earmarked for front-line services by the Chancellor was in fact used to buy care from private or other non-NHS providers.

total beds

Private care in NHS hospitals

Before the introduction of the Health and Social Care Act in 2012, hospitals were only permitted to make 2% of their income from private sources. However, when the legislation passed this cap was lifted to 49%.

The Independent probed an investigation into the effects of this change. Hospitals can now make considerably more money from private paying patients within the NHS institutions. For example, income from private patients for the Royal Marsden in London, a world-leading centre for cancer, increased by 105% from 2010/11 to 2016/17 up to £91.9 million. This made up nearly a third of its total funds.

Figures released quietly by the government acknowledged that the NHS in England made nearly £584 million from private patients in 2016/17, a nearly 29% increase from 2011/12.

The concerns with this are that a two-tier system is being created within the NHS whereby profits gained within NHS hospitals are going to American healthcare centres.

Moreover, these private patients are being treated by NHS doctors in NHS beds so private patients looking for world class facilities are using beds and services that should be provided by the NHS to our whole population.

Dr David Wrigley, a GP in Carnforth, north Lancashire said: “The fact private patients can jump the queue for treatment flies in the face of the founding ethos of the NHS – that all patients are seen as equal and treated according to need and not the ability to pay.”

In March 2019 Nottingham University Hospitals Trust advertised a contract worth £250 million seeking a partnership with a private company to develop a “best in class” provision of private patient services in Nottinghamshire. This is a large NHS trust advertising that it wants to develop a private patient service in Nottinghamshire, using NHS facilities and NHS staff.

Spin-off Companies for Support Services

In recent years there has been a rise in the number of spin-off companies within the NHS, which can be described as a form of back-door privatisation. These spin-off companies, wholly owned by the trust, employ non-clinical staff such as porters, cleaners, and maintenance staff. More details of this phenomenon can be found on our dedicated pages on Spin-off Companies.

Issues

There are concerns with every aspect of privatisation in hospitals.

Facilities Management

In facilities management, there have been concerns with quality and cost. There have been reports of low-pay received by the staff employed by facilities management companies and cost-cutting leading to reduced cleanliness. An investigation by researchers at the University of Oxford found that hospitals that used outsourced cleaners had higher rates of MRSA, which causes life-threatening infections.

In 2013 Interserve signed a contract with Leicestershire Partnership NHS Trust, University Hospitals of Leicester NHS Trust and the Leicester City, Leicestershire County and Rutland Primary Care Trust Cluster to improve estates and facilities management services across the cities and counties. The contract was seven years long, worth around £300 million and was expected to save the NHS a significant amount of money.

However, in April 2016 this contract was scrapped four years early due to major problems and poor standards. These included patients in one hospital receiving meals up to three hours late and the merging of cleaning and catering services meaning around 100 people lost their jobs.

After the contract was scrapped, it came to light that the ex-Interserve staff were getting paid half what the NHS contracted staff were being paid.

Elective Surgery and Patient Safety

With the increasing outsourcing of NHS patients to private hospitals for elective treatment, the issue of patient safety has been investigated by the Centre for Health and the Public Interest (CHPI).

500,000 patients are now treated each year in private hospitals across England. CHPI address some of the systemic patient safety issues in private hospitals. These 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.

Spin-off companies

There are several concerns surrounding this type of privatisation; these are discussed in the section entitled Spin-Off companies.

Companies

Private hospital companies that carry out NHS work, include:

Circle Health

Circle was founded in 2004 and now runs three private hospitals, in Bath, Nottingham and Reading, plus NHS services under contract in four locations.  Circle has a joint venture with VAMED with which it runs Circle Rehabilitation, a centre near its Reading hospital providing rehabilitation services. The company won the contract to run Hinchingbrooke Hospital in 2011, however Circle terminated this contract in early 2015. A full company overview can be found here.

Spire

Spire Healthcare is the UK's largest private hospital company, with 39 hospitals, 11 clinics, a diagnostics centre, and a cancer care centre. The company was founded in 2007 and is a public company with share traded in the UK. The company's revenue is from personal medical insurance patients, NHS patients and self-paying patients. In 2017, Spire received 31% of revenue or £287.8 million from the NHS. A full company overview can be found here.

Care UK

Care UK is the UK's largest independent provider of health and social care, with more than 110 care homes across the UK. In healthcare the company’s services include treatment centres, GP practices, walk-in centres, out-of-hours GP support and diagnostics facilities. Care UK also provides healthcare at a number of prisons. The company is increasingly seeking contracts for carrying out elective surgery for the NHS. In late 2018 the company entered a partnership with the University Hospitals Plymouth Trust to carry out all the trust's elective orthopaedic surgery for 18 months. Surgeons and anaesthetists at the NHS trust will move to Care UK's Peninsula Treatment Centre to operate on around 200 patients per month. A full company overview can be found here

Other companies include Nuffield Health, Ramsay, and BMI Healthcare.

Background

The privatisation of hospital care has been ongoing for years. Successive governments over the last 30 years have brought in 'reforms' that have encouraged the use of private companies. The governments of Blair and Brown used private providers to bring in choice and increase capacity to bring down waiting lists.

However, it was the health and social care act 2012 that ushered in an era of competition and really opened up the NHS to private providers; the number of contracts being awarded to non-NHS organisations since 2012 has accelerated.

The NHS Support Federation's Contract reports over the past few years bring together the evidence of the increased number of NHS contracts going to private companies. These can be found on our publications page here.

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