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From red to black: Private sector profiting as NHS crumbles

Companies are steadily making gains in the health service as it struggles to cope. Caroline Price investigates

nhs in distress 3x2

nhs in distress 3x2

‘No extra cash,’ was reportedly the message from Prime Minister Theresa May to the NHS at a recent private meeting.

It seems the Conservative austerity programme will continue, despite lengthening waiting lists, greater rationing and mounting concern over how the NHS will get through the winter.

In contrast, a special investigation by Pulse shows private healthcare in the UK is buoyant.

Pulse has learned major healthcare companies are seeing profits more than double, uniformly citing the pressures on the NHS as the driver for increased activity. But the companies benefiting are not the usual suspects, like Virgin Care and Care UK, who rely on winning contracts to run large parts of the NHS.

Instead, it’s those companies offering an alternative to the decrepit NHS that are cashing in. Private hospitals are capitalising on the underfunding of the NHS by expanding their services, focusing on areas subject to rationing drives or long waiting lists – such as cataract treatment and hernia repair.

A recent survey of private healthcare industry leaders concluded the ‘self-pay’ market could grow by 10-15% a year over the next three years.(1) Tellingly, it singled out falling confidence in the NHS among the public as a major driver of business.

Meanwhile, figures obtained by Pulse under the Freedom of Information Act reveal many CCGs are expanding the use of the private sector to reduce waiting lists, with commissioning of care from private hospitals growing by 18% between 2013/14 and 2015/16. 

nov2016 private hospitals 290x344

nov2016 private hospitals 290x344

And GPs in one area were recently asked to encourage their patients to use their private health insurance if they have it. The reason? CCGs’ desperation to make savings. The policy was a success, of sorts. NHS Mid Essex CCG reported GP referrals to private providers increased by 6%, perhaps providing a measure of relief to stretched NHS services.

But this short-term gain provided a window on the future direction of the health service – one where the NHS is shrinking, while private healthcare continues to expand.

And general practice services themselves are next in line for the private sector; in the past year a raft of private GP outfits have burst onto the scene, with many explicitly citing the crisis in general practice to promote their self-pay services.

They include app developers, who match up patients and GPs offering private sessions, and others who offer the chance to speak to GPs over a video link. Larger private providers are also showing interest in general practice.

GP leaders say the Government is undermining the NHS in favour of the private sector through ‘scandalous’ underfunding, and ‘sleepwalking’ us towards a US-style health insurance system.

And private companies’ own figures seem to back this up. BMI Healthcare says it more than doubled its profits last year, reporting a 2.3% overall increase in inpatient and day cases, and a 13.5% rise in its NHS caseload, ‘with waiting list pressure and patient choice driving the increase’.(4)

In August, BMI announced a new ‘general medical admissions service’, which will enable GPs to refer patients quickly for private treatment for a ‘broad range of conditions and illnesses’. The company’s lead for the new service Wouter Van Den Brande tells Pulse it has been introduced in response to the ‘many enquiries received from our patients… who want a viable alternative to queuing to get into an NHS site’.

Meanwhile, Spire, which runs a network of 38 private hospitals, has seen revenue and patient volumes increase by 30% and 20% respectively in the past five years, and expects to see this trend continue. Its 2015 annual report2 cites the ‘NHS funding gap’ as a key driver and says that, with funding constraints forecast to continue, ‘the independent sector can help to bridge the gap’.

Interestingly, Care UK and Virgin Care – which rely on winning contracts to deliver services in the community – have seen revenues fall, while UnitingCare pulled out of an £800m contract in Cambridgeshire after just eight months, complaining the arrangement was ‘financially unsustainable’.

The companies booming are the ones taking advantage of long waiting lists at NHS providers. There has been an 18% overall increase in the amount spent on NHS care delivered at private hospitals over the past three years – a hike that followed the new competition regulations under the 2012 Health and Social Care Act.

nov2016 private patients 290x344

nov2016 private patients 290x344

NHS Walsall CCG, for example, has seen a 175% jump in spend on privately delivered care, from £1.6m to £4.4m, after it was forced to take ‘remedial action’ under NHS England direction to clear a backlog of operations at the local acute trust. Paul Maubach, accountable officer at the CCG, explains the main reason for the rise was ‘the significant pressure on our local trust to meet its constitutional referral-to-treatment targets to treat patients within 18 weeks’.

Others cite waiting list pressures. NHS Horsham and Mid Sussex CCG increased its spend on private providers doing elective care by 80%, from £800,000 in 2013/14 to £1.5m in 2015/16. 

CCG chair Dr Minesh Patel puts this down to ‘GPs wanting to ensure timely care for patients as well as supporting the local acute provider to manage its own activity levels’.

Alongside as the introduction of the new competition rules for CCGs in 2013, the cap on the amount hospitals could make from private care was lifted from 2% to 49%. This has led to the perverse situation that extra capacity in trusts is being used for private care, while 3.7 million NHS patients wait for treatment – the most since December 2007.

At the same time, trusts across England saw a 14% increase in income from private patients between 2012/13 to 2015/16.

They say they are doing this to raise revenue for NHS activities. Pulse can reveal Royal Brompton and Harefield NHS Foundation Trust brought in £39.3m in private income in 2015/16 – a 36% increase on 2012/13 – at a time when it is going through remedial action for missing waiting time targets. A spokesperson tells Pulse: ‘As pressures on NHS funding continue, this revenue stream becomes increasingly important.’

Meanwhile, Poole Hospital NHS Foundation Trust, in Dorset, increased its private revenue by 83% between 2012/13 and 2015/16. It is now broadening its private services to include a range of surgical, oncological, diagnostic and outpatient tests. A statement from the trust says: ‘All the income is reinvested into the hospital to support the care of NHS patients – which is extremely useful in the current financial climate.’

Cherry-picking

But GPC chair Dr Chaand Nagpaul says the rise in private use ‘represents a clear diversion of funds out of the NHS and into the private sector’.

Dr Nagpaul says: ‘In many cases private providers will cherry-pick low-risk patients, adding further strain onto impoverished NHS hospitals caring for patients with greater morbidity. This is unfairly undermining the NHS in favour of the private sector.’

BMA council member and former RCGP chair Professor Clare Gerada, who led much of the opposition to the 2012 reforms, is even more pessimistic.

She believes the situation will lead to a ‘multi-tier system’ where those with the means ‘buy what we see now as “normal” GPs’, while others rely on services ‘scrambling for money from the state, charitable, academic and business sectors’.

Professor Gerada adds an ominous warning: ‘I am afraid that we are sleepwalking into US health system.’

But the Department of Health has continued to highlight the £10bn invested by former chancellor George Osborne into the NHS. A spokesperson says: ‘This Government was the first to ensure that doctors, not politicians, make decisions about who provides care. In fact, the rate of growth in use of the private sector as a proportion of the NHS budget remains slower than it was before 2010.

‘On the back of a strong economy, we are giving the NHS the £10bn it asked for to fund its own plan for the future.’

In the grand scheme of things, the slice of NHS money going into the private sector, although rising, remains low, at 7.6%. But this doesn’t take into account the hidden privatisation occurring as patients look at long NHS waiting lists and decide to go elsewhere. While the NHS is having to cut its coat according to the shrinking cloth on offer, private companies can expect to continue the boom of recent years.

References

1 Private Healthcare UK. Self-Pay Market Study 2016.

2 Spire Healthcare Group. Annual report 2015. tinyurl.com/2015-spire

3 Nuffield Health. Annual report 2015. tinyurl.com/2015-nuffield

4 Netcare Limited, Summarised audited group results 2015. tinyurl.com/2015-netcare.

5 Circle UK Annual report 2015

6 Care UK. Annual report 2015.

7 Virgin Care. Full accounts, March 2015.

8 Department of Health. Annual report and accounts.

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Readers' comments (9)

  • But I thought the NHS would get £350 m / per week extra after Brexit . Lying tory jeremies

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  • to be fair, the process of privatization began during Blair's government. there is no political will across the major parties to continue life support for the anomaly that NHS has become.

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  • ‘This Government was the first to ensure that doctors, not politicians, make decisions about who provides care. In fact, the rate of growth in use of the private sector as a proportion of the NHS budget remains slower than it was before 2010.

    ‘On the back of a strong economy, we are giving the NHS the £10bn it asked for to fund its own plan for the future.’
    It is not whether you win or lose it is where you place the blame!
    Fantastic hospital pass from Government to doctors about how the funds are spent so doctors can be responsible for rationing. Sound bites on how much money is being spent placates the public who will then either pay up or complain and wait. Once the NHS can no longer be sustained because of relentless demand in the health and care system the doctors will be held responsible as they see their private patients ahead of the NHS ones. Back to pre 1948! I would not want to be a councillor now as the STP's are making plans to rescue NHS finances and not social care and woe betide them if they go against saving NHS services. The denationalisation is almost complete!!

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  • Fantastic news...really, really...I mean truely interesting and so very, very, very exiting... sorry I meant exciting!

    If you can't do anything about it, then at least plan for the inevitable privatization and stop whinging , Cardigans!

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  • Vinci Ho

    Read once again Julian Tudor Hart's rare , brilliantly insightful article 'Government, healthcare professionals, and the people’s NHS: time for a new hypothesis?' (http://blogs.bmj.com/bmj/2016/09/07/julian-tudor-hart-government-healthcare-professionals-and-the-peoples-nhs-time-for-a-new-hypothesis/) and 'Leader: Mark Carney — a rock star banker feels the heat' on NewStatesman (http://www.newstatesman.com/culture/observations/2016/10/leader-mark-carney-rock-star-banker-feels-heat) this morning .
    My inspiration is we are stuck in a war between classical liberalism(hence, free market capitalism) and Keynesian (hence, collectivism) economics (and its later modified version(s)).The former was advocated by Friedrich Hayek and his so-called Chicago school, fully appreciated by Margaret Tatcher's government . The protagonist of the latter was John Mayar Keynes ,responding to the Great Depression in 1930s.
    I may have over-simplified by saying that this is the Right versus Left ,once again. The truth is subsequent governments would want to flip between the two ideologies when things did not work out for them at one time or another.Fundamental question here:Is health service a true commercial commodity or an essential life ingredient?We do not need to pay for the air we breathe but we do pay for the water we drink.
    For a very long time(last 20-30 years)we have been living in a 'free market' where cost and demand have an intricate relationship . Globalisation was born with help of technology in communication via the ingenious Internet. Inflation of the bubble was unstoppable until the unprecedented financial crisis in 2008 when the collapse of Lehman brothers set off a domino effect of doom and gloom. The government(s) at the time found themselves suddenly in a serious debts. The immediate reflex answer was austerity without any vision of the future . In a sense , the free market ideology was still defended . In fact , Osborne trusted the market would revive fully as long as the government tightened the belt as much as possible. The Bank of England was left on its own to play around with cutting a already historically low interest rate and quantitative easing . NHS executives and technocrats , however , had very little to manoeuvre around . Nevertheless , the birth of the Health and Social Care Bill/Act pushed the pendulum even more to the right emphasising the traditional Tory's belief of the free market(Liberal Democrat was undeniably an accomplice).What we are seeing right now (the profit rise in private health providers , CCG outsourcing to them and NHS hospitals providing a lot more private treatments) , is not deep frozen ice down to three feet in one cold day.
    Then here comes Brexit, killing off both the prime minister and chancellor at the time. Globalisation is well blamed and we want less immigrants coming into this country. But the price there may be more economic recession(s) coming . Bank of England has exhausted all its measures and the new chancellor is obliged to go back to the drawing board.Here comes the re-birth of Keynesianism. The government , reluctantly , is forced to increase borrowing for more fiscal measures in infrastructure investments to boost economic growth .The third runway in Heathrow dogged by controversies,Hinkley Point nuclear plant succumbing to Chinese government's ambition and the HS-2(high speed rail) are all projects to convince how important Britain,as an location for foreign investments ,is despite Brexit.
    For the health service , we are left out to dry in the free market and its ideology . The models of Multi-specialty Community Provider(MCP) and Primary & Acute Care Systems(PACS) proposed by Simon Stevens were pushing for 'bigger the better' super or mega-practices under the heading of integrated health care. This appears to be an irony while the outside world is blaming globalisation and smaller institutions want to break away from bigger establishments( for various co-existing reasons , perhaps). In theory , it would move things forwards provided the funding formula was well supported by the government . Instead of something similar to fiscal measures for the economy , we just learnt the truth about how much money would actually come in ,through the uncovering of the real figures by the House of Commons Health Committee as well as the report about the private conversation between Simon ,May and Hammond. So there is no Keynesian approach(which I thought , could manifest in many ways) in NHS economy. Instead , we are told to go down the route of Mission Impossible :STP(Sustainability and Transformation Plan). Even the NHS technocrats do not believe what they were forced to write down as a 'rescue pack'.
    We are where we are but I still believe general practice and modern NHS should be driven by a centre ground politics instead of being left in one extreme end or the other. For a brief moment , I had some wishful thinking on this Post-Brexit prime minister who was implicating a centre ground and promised a government of NHS in her party conference . So far , we see none of these.Politicians are politicians , always politicians........

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  • VH 2:35
    Good reference - thanks. I enjoy reading JT-H but would have to disagree with him here:
    "The gap between what could be done, and what actually is done, threatens to become socially intolerable—not because our population is becoming older and sicker, but because useful scientific knowledge will continue to grow exponentially and irresistibly, and with it, the social duty to apply that knowledge wherever it is needed."
    In fact, it's both of these irresistible drivers that make the NHS funding model unsustainable.
    Carl Sagan put it well - "Exponentials can't go on forever - because eventually they gobble up everything."

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  • I find it fascinating that always only TWO causes for zooming NHS expenditure are mentioned:
    New Technology and Ageing Population. Nothing to do with the fact that total net migration to the UK in just ONE year (ending March 2016) was 327,000, on top of 336,000 in 2015 and 260,000 in 2014. Or, is it unPC to mention it?

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  • @11:25

    Mention it if you wish, but don't complain about the headlines asking why you were not ensuring that a recharge was raised to the county of origin or the Home Office.

    Not a matter of PC, it is a matter of admin.

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  • The severe underfunding of the NHS, the imposition of customer and shop competition on the NHS and the clinical and commercial incompetence of commissioners and the commercial incompetence of private bidders have caused chaos in this Taxpayer Funded NHS where good order reigned before. It is time to protest. N. Bevan invented the NHS in the Post World War Two Austerity and just because this Government has this austerity policy of cutting public funding when £1261bn has been given over to supporting the Banks, whose criminal and reckless misconduct left them moneyless, caused this Public Deficit so, if I were King Henry VIII for the day summoning there executioner, I would command the Bankers to pay down this deficit they created plus a surcharge for the unemployment they caused. When I wrote to the Conservatives about this Bankers' draught during New Labour's Tenure, Phillip Hammond told me his party thought Bankers bonuses should be limited to £2,000. In Government they have sadly abandoned this noble aim. The Banker ancestors which included embezzlers and buying banks with hidden holes of debt in their account sheets, would nevertheless be shocked at what their descendent Bankers had done: internationally lending their investors' money to people with no prospect of repayment.

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