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NHS privatisation soars 500% in the last year, finds in-depth new study

Don't be misled by one line denials of NHS privatisation based on old figures. The first in-depth analysis of the true impact of Cameron's health Act paints a shocking picture. 

Discussion of the NHS has repeatedly fizzed to the surface of the election, but debate has been clipped and often short on detail. A good example is the way the coalition parties have dismissed privatisation. “It’s a tiny fraction of the health budget” is the ministerial mantra.

However a new analysis of NHS contracts produced by the NHS Support Federation proves that the public are being denied the truth about the impact of the NHS changes.

We are often told the NHS only spends 6% on the private sector. But this figure actually relates to 2013/4 – and so it tells us very little about the impact of the Health & Social Care Act. The Act only came into force in April 2013, and the process of making the first round of decisions under it, typically took another year or more.  

So today’s evidence from 2014/5 is the first to begin measure the true impact of the new competition regime. And it is shocking.

Over the last year private firms have won £3.5bn worth of new clinical contracts – an increase of 500% on the previous year, our research shows. 

Two years on from the Health and Social Care Act we now have clear evidence that NHS privatisation is accelerating.

 Just as opponents predicted, the Act has stoked the market and forced open many more NHS contracts for private firms and charities to bid for. In the last two years over £21 billion worth of opportunities to plan and deliver NHS care have been advertised, though not all have been awarded yet. That’s over 1000 contracts up for grabs covering every aspect of healthcare.

And in the twelve months to this April, £9.6 billion worth of NHS contracts have been awarded through competitive tendering (up from just £291 million in 2010/11). 

Profit making firms have taken nearly 40% of that cash in the last year – and have scooped up more than 60% of the total number of contracts (large and small) every year since 2010. And they are winning more contracts every week.

Virgin Care has won deals worth over £1 billion since 2010. Other prominent companies, such as Care UK, Circle, InHealth, Lloyds Pharmacy and Boots, have also built up large portfolios of NHS contracts. Third sector 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 such groups.

More ‘super-contracts’ are emerging too. In the last year 13 were awarded, each worth in excess of £100m, 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. 

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 a Clinical Commissioning Group awards the contract to a single Prime/Lead provider, which then carries out the work or sub-contracts the work to other organisations. 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 healthcare, 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 (part of United Health) are bidding for these contracts.  

 

The data obtained and reported by the NHS Support Federation include the commissioning of the NHS centrally, not just CCGs, as NHS England and the government organise some of the largest NHS outsourcing. It is taken from the official EU and UK tendering websites (TED and supply2health/Contract Finder). These sources are not comprehensive - contract awards are sometimes 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. However it should not be down to groups like ours to piece together these trends. The government should be open and precise about the destination of public money and it should be available for all to see.

It is vital that the public get a clear sight of how their NHS is changing. The government's misleading figure of 6% paid to the private sector is undoubtedly out of date and rising sharply.

Of course the NHS is not being sold off in a day, but the momentum behind piece-by-piece sell-off is powerful, is now backed by law - and there are no limits on the amount of NHS contracts that can be transferred in to private hands.

And we should not get too hung up on tales of ‘small percentages’. There is a tipping point where the viability of NHS units is threatened as they lose a vital portion of their income – particularly the most lucrative and predictable bits - to the private sector. This tipping point may not be far off, which is why we must reverse away from the market. The Reinstatement Bill recently launched in Parliament, should receive early attention after the election.

A crucial part of the survival plan for the NHS must be to rediscover the proven strengths of a publicly-driven NHS that is true to its founding principles.  

About the author

Paul Evans is the director of the NHS Support Federation, which campaigns to protect the NHS from being undermined by commercialisation.


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