This week as the governments controversial Health and Social Care Bill enters its final stages in the House of Lords, patients, health workers and campaigners are to come together on Wednesday for a TUC-organised Save Our NHS rally in Westminster. On Wednesday (7 March 2012) over 2,000 nurses, midwives, doctors, physiotherapists, managers, paramedics, radiographers, cleaners, porters and other employees from across the health service will join with patients to fill Central Hall Westminster. Once inside they will listen to speeches from politicians, fellow health workers, union leaders and health service users.

New evidence nails the “no NHS privatisation” lie

28 Apr 2015, by Sylvia Davidson Guest in Public services

The government habitually dismiss accusations of NHS privatisation. However a new analysis of NHS contracts produced by the NHS Support Federation shows how they will have to confront reality.

Ministers say that very little NHS money goes to private companies (6% is the figure often given). However since the changes were brought in for the NHS in April 2013, private companies have been winning large contracts to plan and deliver NHS work and their involvement with the NHS has grown dramatically. In April 2014-15 alone private companies won awards totalling over £3.5 billion, five times higher than the figure in the previous year (April 2013-14).

More care through the market

Not only have the government’s changes to the NHS increased the use of private companies, but they have increased significantly the use of the market to plan and deliver care. Over the last year, (April 2014–15) £9.6 billion worth of NHS contract awards were made through the process of competitive tendering, up from £1.2 billion in the year before the NHS changes (April 2012-13) and just £291 million in the year after the last election (April 2010-11). Since April 2013 over £21 billion worth of opportunities to plan and deliver NHS care have been advertised, that’s over 1000 contracts up for grabs covering every aspect of the patient journey.

The data has been gathered and analysed by the NHS Support Federation from the contract notices posted by commissioners on official tendering websites. The details have been tracked since April 2010 providing a comprehensive overview of the trends.

Private companies biggest winners

The success rate of private companies in winning contracts is high, according to the data; profit-making companies won 65% of clinical awards in the last two years. Since 2010 the annual win rate has been consistently over 60%. Several companies have built up large portfolios of NHS contracts. Virgin Care has won deals worth over £1 billion since 2012. Other prominent companies, such as Care UK, Circle, InHealth, Lloyds Pharmacy and Boots, have all won numerous contracts.

Non-profit-making organisations (charities and community interest companies) have also gained a small share of the work available; since April 2013 £396 million (7% of contracts) has been won by non-profitmaking bodies, including charities.

Large contracts increasing

Another notable trend in the data is the size of the contracts; many more are valued at over £100 million are being advertised. In the last year 13 such contracts were awarded, more than the previous four years added together. Predictably the private sector companies won six, five were won by consortia containing both non-NHS and NHS organisations, but only two were won by NHS organisations working alone.

Some of the largest awards have been framework contracts, in which several companies are accredited and can then be chosen by Clinical Commissioning Groups (CCGs) to carry out work. In February 2015 two ground breaking framework contracts were awarded:

a £780 million contract for the provision of clinical services (the largest ever awarded), was shared by 11 private firms who will provide diagnostic and surgical procedures;

NHS England awarded several NHS bodies and private companies a place on a contract to provide NHS commissioning services to CCGs, worth up to £5 billion over the next four years.

No part of the NHS untouched

It now appears that virtually every area of NHS care has been advertised and made available for privatisation. In 2012 contract notices covered 40 types of service/treatment, but since April 2013 over 80 categories of NHS services have been advertised, covering every aspect of the patient journey, including diagnosis, treatment and ongoing healthcare across every possible setting.

New contract types

A significant change in the past year, identified by this research, has been a move by CCGs to advertise a new form of contract, a Prime or Lead Provider contract. Under this type of deal the CCG, or a group of CCGs, awards the contract to a single Prime/Lead provider, which then carries out the work or sub-contracts the work to other organisations. These agreements tend to cover a number of different services, where previously many contracts might have existed. The Prime/Lead provider is paid a set amount and is liable for any financial shortfall. In the year April 2014-15 seven such contracts were awarded worth almost £1.8 billion and a further 14 were advertised worth around £2.4 billion.

One of the first Prime Provider contracts was awarded in April 2014 to Circle, a £131 million contract for an integrated pathway for musculoskeletal services in Bedfordshire. The most recent award was in March 2015 to Virgin Care for a £280 million contract to co-ordinate care for long term illness and care of the elderly in East Staffordshire. Under the deals, Virgin Care and Circle can appoint sub-contractors to carry out the work with no need for a further public selection process. The CCGs have effectively distanced themselves from the service and its management.

CCGs are using the contracts for a wide range of service types, including end-of-life care, cancer care, mental health and urgent care. Two well publicized contracts up for grabs are in Staffordshire – cancer care and end-of-life care – together valued at around £1.2 billion; several private companies, including Virgin Care and Optum (previously United Health), are bidding for these contracts.

Just the tip of the iceberg

The data reported by the NHS Support Federation is obtained from publically available databases (TED and supply2health/Contract Finder). These sources are not comprehensive, contract awards are often not published or monetary information is missing. This means that the estimate of income to private companies using this source is almost certainly an underestimate.

Furthermore, according to the accounts and annual reports produced by the private companies, the actual amount of money paid out to private companies by the NHS each year is much higher than the contract data implies. Even a cursory look at the accounts of private companies such as Care UK, BMI Healthcare, Ramsay Healthcare and Spire Healthcare, shows just how important income from the NHS is to these companies:

Care UK reported that for the year to the end of September 2014 it received £370.1 million from the NHS (a combination of CCGs, NHS England and the Department of Health), up 12.4% on 2013;

Spire Healthcare reported that in the six month period to the end of June 2014 the company had revenue from the NHS of £116.9 million, up from £90.5 million in the same period in 2013.

If the current trend continues after the election, many NHS services will be brought before the market and as the data clearly shows, the private sector can be highly effective in securing contracts where they see a profit can be made. The revenue from the NHS for these companies and others is increasing despite a reduction in the tariff (fee per procedure).

It’s decision time

The government’s misleading figure of 6% paid to the private sector is undoubtedly out of date and will rise. It is however the wrong measure and serves to hide how the NHS is becoming dominated by business. There is a tipping point where the viability of NHS units – losing income to the private sector, will be threatened. It may not be far off, which is why we must reverse away from the market and private sector control and rediscover the proven strengths of a publicly driven NHS that is true to its founding principles.