Private companies can deliver exactly what the NHS needs

News & Analysis

9th January 2015

The end of the private management of Hinchingbrooke Hospital is not a dagger in the heart of NHS competition and reform. It does not mean, as the BBC’s business editor wrote today, that a private business cannot run an acute hospital (which is an extraordinary statement given that such businesses routinely do so in other countries). Competition is at the heart of the NHS England Five Year Forward View (5YFV), which all major political parties have supported.

The degree of successful private sector delivery in and around health is often underestimated. The much-used figure is that 6 per cent of the NHS budget is spent on private providers (i.e. just over £6 billion a year). That obscures the fact that some parts of the NHS use the private sector much more extensively.  Private companies play a vital role in NHS provision of mental health for people with severe needs, as they do for state education for children with learning difficulties.  The 6 per cent figure does not include GPs, most of whom work as independent contractors to the NHS (and many of whom are highly entrepreneurial and commercial). It leaves out NHS payments to the private companies which provide NHS equipment, from MRI scanners to rubber gloves. Similarly, well over half of social care is provided by private companies. All this means that the warnings of risks from greater ‘privatisation’, made by some representative groups of NHS staff workers, are entirely misleading.

Private companies can deliver exactly what the NHS needs in future. The same company that has pulled out of Hinchingbrooke, Circle, is running a contract in Bedfordshire to ensure proper co-ordination between GPs and hospital doctors for musculoskeletal patients. This ‘integration’ of services is one of the most important things that the NHS now has to achieve, as Andy Burnham has rightly argued.

The Bedfordshire contract is actually a better precedent for the contribution of the private sector in future. Certainly private companies should be given the chance to run acute hospitals, as they do in other countries (only a third of German hospitals are run by the public sector), where that is the right thing to do.  But hospitals are just one part of local health economies. It would be better to ask private companies to deliver better outcomes for groups of patients, and then take charge of all of the services that bear on those outcomes, whether primary or secondary care, mental health or social care.  Steve Melton of Circle was absolutely right to say this morning that, ‘the problems facing Hinchingbrooke can only be achieved through joined-up reform in Cambridgeshire across hospitals, GPs and community services’. The NHS England forward view makes the same case.

There are also misconceptions about the politics of private sector NHS competition. The public is overwhelmingly pragmatic. In the latest Reform poll, 62 per cent of voters said that they didn’t mind who treated them provided that there is fair access to treatment. In a big deliberative exercise carried out by Michael Ashcroft before Christmas, one discovery was that concern over the private sector is really a wish for reassurance. Members of the public want companies to be properly regulated and transparent on levels of profits and other financial information. If they have that reassurance, the great majority have no ideological opposition.

Why, then, do political leaders queue up to attack ‘privatisation’ in the NHS, as Andy Burnham and Ed Miliband did this week and David Cameron and Nick Clegg did when their own NHS reforms fell apart in 2011? They do so because some representative groups of NHS workers oppose private sector competition. The problem however is that appeasing these groups is exactly the wrong way to prepare for life after the general election.

Whoever wins the next election will have to implement the biggest reform of the NHS ever seen. 5YFV envisages far-reaching change to every part of the service. Paul Corrigan, former health adviser to Tony Blair, and Mike Parish have written that three quarters of NHS services will be run in different ways, and in some cases by new private sector organisations, in ten years’ time. As an example of that, Simon Stevens said earlier this week that young people will stop using GPs because they will seek advice digitally and online. All this means that the next government will have an almighty row with the representative NHS bodies. Politicians would do much better to seek a mandate for change ahead of the election, including private sector competition. They would be more in line with public opinion than they may realise.

Andrew Haldenby is director of the independent think tank Reform