Who profits when private providers take over health services?

Last weekend tens of thousands of NHS staff, patients and campaigners marched to Westminster in protest against the underfunding of the NHS and the privatisation of many health services in England. The government may have pledged to invest another £20bn in the NHS over the next four years, but there are concerns that much of this could find its way into the hands of private companies. Addressing the crowds, the Labour leader, Jeremy Corbyn, called for an end to privatisation, the closure of the internal market and for staff to no longer be subcontracted to private companies, “the profits of which could and sometimes do, end up in tax havens around the world. I don’t pay my taxes for someone to rip off the public and squirrel the profits away,” he stated.

In the year to April 2017, £7.1bn worth of NHS clinical contracts were awarded through an NHS tendering process, according to a report by the NHS Support Federation. Since the Health and Social Care Act came into force in 2013, which stipulated that “any qualified” provider could bid for NHS contracts, spending on non-NHS providers has totalled around £25bn.

“The number of contracts awarded to the private sector has increased sevenfold since the act came into force,” says Paul Evans, director of the NHS Support Federation. He adds that for-profit companies won £3.1bn worth of new contracts in 2016-17, 43% of the total value of those advertised. And according to recent figures compiled by the federation, the number of clinical contracts worth more than £100m advertised by the NHS has almost doubled in the last year to 20, of which eight were won by the private sector. Evans says the amount spent in the private sector is “regularly downplayed by ministers and NHS England”.

But outsourcing NHS services does not always work. Analysis by NHS for Sale shows that private sector contracts to provide non-emergency ambulance transport in Sussex, Hertfordshire and Bedfordshire failed, while companies running networks of GP surgeries in Doncaster and Bedford went bust, and others have handed back their contracts for GP surgeries and out-of-hours services.

Circle, which in 2012 won a high-profile contract to run the NHS Hinchingbrooke hospital in Cambridgeshire, walked away three years later. And Serco announced in 2014 that it would cease providing clinical services after problems with its deal to run Braintree hospital in Essex and its community care service in Suffolk led the company to hand back both contracts early.

The two biggest private providers of NHS services are Virgin Care and Care UK. In 2016-17, Virgin won more than £1bn worth of new business, mostly in community healthcare. But these have had some problems.

Bath and North East Somerset clinical commissioning group (CCG), awarded Virgin Care a £700m 10-year contract in November 2016 to provide 200 different health and social care services, ranging from dementia and stroke recovery to mental health, care of children with learning disabilities and rehabilitation care for elderly people discharged from hospital. Despite high levels of patient satisfaction with non-profit community interest company Sirona, which had been running the service, the CCG gave the contract to Virgin.

A board report by the CCG shows that the first year has been problematic. The CCG and Bath and North East Somerset council issued a contract performance notice (CPN) in December. Reasons included unsatisfactory rates of delayed discharges from hospital, as well as delays in developing integrated care records for patients, despite this forming a key part of Virgin’s bid.

The CPN follows revelations that staff themselves reported safety concerns to the Care Quality Commission, only to be told by Virgin Care managers to go through senior management with any complaints “to avoid any duplication” and to allow the company to communicate centrally with the watchdog, even though staff are legally obliged to raise concerns directly with the CQC. And staff also raised continuing IT problems, leading to cancelled appointments, delays in sending letters and reports.

A spokesman for Bath and NE Somerset CCG says: “We issued the CPN because we felt Virgin Care’s reporting procedures could be improved, not because we had concerns about specific services. In the past six months, these have improved and are reviewed as part of monthly quality and performance monitoring meetings. Unnecessary delays in discharging patients from hospital is a problem for the whole health and care system. However, locally we are seeing an improved position and we are working closely with our partner organisations, not just Virgin Care, to support timely discharge.”

A spokesman for Virgin Care says: “The CCGs issued a CPN to ask us to change how we report quality information to them, and not because of any specific concerns about services which we run on their behalf.We have responded to the notice by making the requested changes to the reportingand the CCG has acknowledged that it is pleased at the improvements we have made.”

Nationally, Virgin Care has had problems with the outsourcing process. The company won a £65m deal to run children’s services in West Lancashire, but, after a legal challenge by local NHS trusts last month, this was blocked by the high court due to the cost and disruption to patients, and the fact that procurement rules weren’t followed by the county council. In Surrey, the NHS was forced to pay Virgin Care around £2m after losing a high court ruling due to flaws in the way a contract to provide children’s medical care was awarded. The company took legal action after the local NHS trust and a social enterprise firm won a three-year, £82m contract last year, and it secured an out-of-court settlement.

As the NHS celebrates its 70th anniversary this week, outsourcing services to private providers remains highly controversial.

Additional reporting by Anna Bawden


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