If you knew your medical consultant could make a profit from the cancer treatment he or she recommended for you, would you still feel confident it was the right treatment for you? For the vast majority of cancer patients in the UK this question never arises. The NHS insulates patients from the conflict of interest that can skew clinical decision-making in for-profit healthcare systems.

In the US there are copious opportunities for clinicians to make money from prescribing drugs, surgery or diagnostic tests which can put patients at risk of harm from unnecessary interventions, while also wasting huge amounts of public money when the treatment is covered by Medicare. In order to combat this, the federal government has put in place tough rules to penalise any hospital or clinician that engages in fraudulent activity. Despite this, healthcare fraud in the US is now estimated to cost up to a staggering $272bn a year.

Private cancer care in London is now the single biggest earner for the private hospital sector

But the UK healthcare system is not completely insulated from this threat. NHS England estimates that only half of its consultants do private work. Private medical consultations are remunerated on a fee-for-service basis – they receive a fee for every operation or consultation. The most extreme example of what this can lead to may be the case of the breast cancer surgeon Ian Paterson who carried out unnecessary private operations on 750 patients, in many cases telling them they had cancer when they didn’t. Paterson made a substantial amount of money out of his actions and was sent to prison.

But in addition to receiving a fee for carrying out each private healthcare intervention our research shows there are now more than 600 mainly NHS consultants who also own shares or equipment in private hospitals and who stand to benefit personally from the financial performance of the hospital where they treat their patients. It should be stressed that this is a very small proportion of the total number of NHS consultants. However, the ownership of shares and equipment in the private hospitals and clinics is most prevalent among cancer consultants (oncologists). This is a special concern since the patients who are most likely to try, and be willing to pay for any treatment that could save or prolong their lives are at greatest risk of being exploited, with an estimated one in 16 oncologists now having a financial interest in a private hospital where they treat patients.

To comprehend why this is happening, it is necessary to understand the fundamentals of the private hospital business model. The only way for a private hospital to make money is by having patients referred to it for private treatment by a consultant. As a result, private hospitals, particularly in London and Manchester, are in “fierce competition” with one another to win the loyalty of consultants, to the point where in 2014 the Competition and Markets Authority (CMA) found a widespread culture of what could be termed “kick back” payments whereby consultants were rewarded financially according to how many patients they referred to a hospital. The higher the number of patient referrals in any one year the bigger the reward. This practice was prohibited, though not to protect patient safety, but because it distorted competition. But the CMA still permitted share ownership in private hospitals so long as it did not exceed a 5% equity stake and was fully declared.

There are two reasons why cancer consultants are being specially targeted in this way. First, private cancer care in London is now the single biggest earner for the private hospital sector, outstripping orthopaedics and cosmetic surgery for the first time. Millions of pounds of investment have been poured into this market by international investors who see the declining NHS performance in cancer treatment as an opportunity to meet a demand from middle-class patients who are not prepared to wait and are willing to pay. The second reason why hospitals are targeting cancer consultants is that there is a finite number of them in the UK. They need to pull them towards private practice. One of the ways of gaining the commitment of an NHS cancer consultant to undertake private work is for a private hospital to offer them a share of the profits made out of their services, on top of fees they will receive for treating patients.

This approach has been adopted most successfully in the UK by the US healthcare giant HCA Healthcare, which now has profit-sharing arrangements with NHS cancer consultants, especially in London and Manchester. In an astute business move HCA has locked its for-profit fee-for-service model into the heart of the UK’s leading cancer hospitals at University College London Hospitals, Guy’s and St Thomas’ and the Christie in Manchester. The private cancer units HCA has set up in these hospital trusts are jointly owned with NHS consultants, some of whom are employed by the trusts. The trusts receive rental income from HCA for using their facilities, or in the case of the Christie, a share in the profits generated.

The NHS consultants at the Christie with shares in their trust’s private patient unit will have shared a dividend pot between them of over £2m between 2013 and 2017. A bonus which is on top of their NHS salary and the fees they will have received for treating patients at the private patient unit. The profits available to HCA Healthcare over the same period were £25m. Outpatient visits to the private patient unit increased by 30% during this period, suggesting that more patients were going private either due to increased demand or difficulties in accessing NHS services.

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This represents a new form of privatisation of the NHS, from the inside. The extent of the collaboration between HCA Healthcare and NHS trusts is almost impossible for members of the public to find out about. And, not only do the consultants involved have a financial incentive to provide unnecessary treatment, they could also have an incentive to encourage patients to go private rather than remain in the NHS.

Of course, for a doctor to behave in this way would be a significant breach of professional ethics and there is no suggestion that this is occurring in these cases. However, in order to remove the risk of such financial incentives operating against the best interests of patients, a much tougher regulatory regime needs to be introduced. Clinicians should be barred outright from owning shares and equipment in the private hospitals where they treat patients not only to protect the integrity of the health service but also to protect patient safety.

With the NHS clearly in the sights of the US healthcare lobby, there is an urgent need to put in place a regulatory regime to protect patients from the worst aspects of the profit-driven model of healthcare, which wastes huge amounts of public money and harms patients.

• David Rowland is the director of the Centre for Health and the Public Interest (CHPI)

