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Focus on… Working with the private sector

Of all NHS debates, the most persistent seems to concern privatisation: its meaning, impact, feasibility, and desirability.

The NHS/private sector interface has been a bone of contention since the inception of the NHS. It is well known that general practice sits mainly in the private sector: small, ‘for-profit' groups providing services for the publicly funded NHS, controlled by contracts rather than rules of employment. Also, almost a third of the NHS budget is spent in the private sector, as almost everything except staff salaries eventually translates into equipment, medications, surgical devices and so on, provided by private, for profit organisations.

So why does this discussion burn so fiercely? Why are its proponents so keen, and its opponents so averse, to this relationship? For me, the arguments are distilled into four key terms: ownership, profit, control and stability.

The NHS is so large, staff risk losing a sense of connection. They identify with the NHS concept, but it has become so de-personalised that there is often little ownership of problems or their solution.

Received wisdom is that encouraging staff to have a formal stake in their organisation, as Circle is doing in Hinchingbrooke (page 30) brings back a sense of ownership. The simplest way to give staff a stake is financially, and so models created in the private sector, be they profit-sharing partnerships or staff bonuses, are being tried across the NHS.

It could be argued that the foundation trust movement, or social enterprises, or even staff engagement programmes, are alternative models, but none allow tangible approval in the way that paying people for improved performance does.

Of course, financial incentives raise the spectre of profits made from public sector funds, an idea unpalatable to many despite the fact that all commercial suppliers to the NHS, including GPs, need profits to survive.

The issue should perhaps be less about profits than profiteering, something that needs effective commissioning to control. But we need to be careful about conflicts of interest among providers ,especially those who provide some services and sub-contract others. Dr Oliver Bernath's model (page 22 ) shows the lengths to which some systems will go to ensure probity in this regard.

The two largest anxieties about private-sector involvement in public services concern control and stability. The recent financial turmoil has shown that when too much power is ceded to organisations driven by profit rather than service, then excessive control is also given away and stability is threatened. Rebecca Norris (page 36) explores how Monitor is being developed to assert some of these controls.

So what should we learn from all this? First, privatisation needs to be defined more clearly. I suggest services are public when they are funded and directed by public bodies; whether they are provided by a public or a private body matters less than where their control and regulation lie.

Second, control and regulation mechanisms must be effective; nothing could be worse than the tail of profiteering wagging the dog of public service.

And third, we should only outsource services that are small enough to be contestable; if the service could be re-provided by someone else (think physiotherapy or radiology), then it's safe to tender. If the provider gains an unbreakable monopoly (think whole hospitals), then life could get difficult.

Dr Jonathan Shapiro is a former GP and senior lecturer in health service research at the University of Birmingham