ourNHS: Opinion

UK government’s pandemic deal was win-win… for private hospitals

A multi-billion-pound contract enlisted 187 private hospitals to help the UK’s COVID response. Why did they care for just 0.08% of patients?

Sid Ryan
26 October 2021, 7.00am
The private hospital sector cared for an average of eight COVID patients a day between March 2020 and March 2021
Nick Moore / Alamy

At the outset of the pandemic, the British government struck a remarkable deal with the private hospital sector. Twenty-six private companies were enlisted to provide beds, staff and equipment to assist with England’s COVID response.

The multi-billion-pound plan was for private hospitals to provide “vital buffer capacity” to the National Health Service (NHS). The taxpayer would cover 100% of the operating costs of the mainly foreign-owned private healthcare multinationals, which would in return supposedly treat COVID patients, provide care when the NHS could not and redeploy staff to COVID hotspots.

In reality, the private hospitals provided almost nothing tangible in return for their money – and, a year-and-a-half on, the UK government has still neither disclosed how much this deal actually cost.

Our research at the Centre for Health and the Public Interest shows that the private hospital sector’s support to the NHS fell well short of expectations, that it received a government ‘bailout’ to help it avoid financial collapse and that it manoeuvred itself to a position from which it can capitalise on the demand for healthcare caused by soaring NHS waiting lists.

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NHS data shows that the private sector cared for just 0.08% of the national total of COVID patients during the pandemic. The contract gave the NHS access to 8,000 beds in 187 private hospitals, but those beds were occupied by no more than one COVID patient a day for 59% of the first year of the pandemic. On average, the private hospital sector cared for eight COVID patients a day, between March 2020 and March 2021, while the NHS averaged 10,000.

Even though the government was paying private hospitals to treat patients who couldn’t be looked after in NHS facilities, NHS-funded activity in the private sector actually fell by 43% compared to 2019. Rather than stepping up and delivering more services, private hospitals provided 235,000 fewer elective procedures and 1.3 million fewer appointments for NHS patients compared to 2019. Equivalent NHS activity fell by only 21.5%, suggesting it adapted to the pressures of the pandemic better than the private sector.

NHS-funded activity in the private sector actually fell by 43% compared to 2019

Nor was the private sector able to provide much help with staffing to support overstretched NHS wards. Most private hospitals do not employ their own doctors, but rely on NHS consultants carrying out private practice in their spare time. Therefore, private hospitals did not have many frontline medical staff to contribute to the national effort. There is little evidence of the redeployment of other private healthcare staff too. Under the initial phase of the contract 10,000 nurses, 700 doctors and 8,000 other clinical staff were ‘made available’ to the NHS, but the Independent Health Provider Network’s (IHPN) March 2021 report outlining the benefits of this deal records only around 350 staff being transferred to the NHS.

And, even though the NHS had nominally purchased 100% of private healthcare capacity, the companies were allowed, arguably even incentivised, to continue to treat fee-paying patients so long as a rebate was paid to the government. As a result, over the course of the pandemic, the private hospital sector began to turn back towards its usual, profitable focus on private patients.

With the government silent on this issue, we can only guess at why this large purchase of capacity led to less healthcare delivered. The key problem appears to be the same as Nightingale hospitals, that the government bought facilities that could only be used by diverting precious staffing from other parts of the healthcare system. The contract also appears to have a perverse incentive, in that it allowed the companies the choice between treating fee-paying patients for a profit or treating NHS patients, on which they’d merely break even.

The assistance the private hospital sector was able to provide the NHS seems limited at best, but what did it get out of the deal? The full costs have not been disclosed. Contract Award Notices and ministerial statements suggest about £170m-£200m per month. However, senior NHS sources speaking to The Guardian and Health Service Journal put the cost at “about £400m” a month. Industry sources quoted by the Financial Times say it is even higher – up to £540m. This puts the total cost somewhere between £2bn and £5bn for the whole year of the contract, with the 26 companies paid in advance every week, for facilities that were often lying empty.

10,000 nurses, 700 doctors and 8,000 other staff were ‘available’ to the NHS, but only 350 were deployed

The government’s commitment to allowing the private hospital sector to look after its fee-paying customers, even when the NHS was under acute strain is reflected in the contract renegotiations towards the end of 2020. Even as case numbers and COVID admissions spiked, the government revised the contract to reduce the amount of private-sector capacity that could be used by the NHS, seemingly under pressure from the Treasury to cut costs.

This decision left NHS Trusts without the support they needed, and in January 2021, at the peak of the pandemic, NHS medical directors in London had to plead with those doing private work to cease treating non-urgent, fee-paying patients and dedicate their resources to treating seriously ill NHS patients.

From a business perspective, the NHS deal saved the private healthcare industry from financial ruin. And now these companies are set to capitalise on the huge NHS waiting lists that have built up during the pandemic, which they were paid to help avoid. Both the growth in patients being forced to pay privately, as well as new NHS contracts to help address the backlog, has driven record increases in the revenues of some private hospital companies.

The principal architects of this deal, the IHPN, a private healthcare lobby group, walked into the negotiating room with ministers knowing that it had little to offer the NHS other than facilities, equipment and a relatively small number of non-medical staff. It knew that the business model of private hospitals was entirely reliant on NHS consultants and that it could not offer much in the way of intensive care services.

With emergency powers available to the British health secretary, then Matt Hancock, to dictate to the private hospital sector how it should operate, the IHPN appeared to be over a barrel. Instead, it ended up with a contract that guaranteed its hospitals’ operating costs would be covered by the government even as it continued to treat fee-paying patients.

It’s no wonder NHS England and the government have avoided questions about this crucial part of their response to the pandemic. It is now down to Parliament to seek answers about how much this contract cost, what exactly the taxpayer got in return and whether the deal was in fact designed to protect the private sector rather than the NHS.

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