The NHS’s most powerful hospital trust chief executive has used a HSJ interview to call for an expansion of independent sector provision.

Gareth Goodier, the chair of the Shelford Group, which represents the 10 most prestigious and powerful acute trusts, spoke to HSJ before taking a new job in Australia.

He complained of a lack of “honesty” in the debate about using the private sector, and also warned of the “disaster” of shifting care too quickly to community settings, the impact of social care cuts, and top-up payments for specialist trusts.

Dr Goodier, chief executive of Cambridge University Hospitals Foundation Trust, rejected the argument that NHS inefficiency means it should be opened up to private sector competition.

“The reason for going down that road is choice. Not because the NHS is inefficient,” he said.

“Does the NHS need to change? Yes. There is a tsunami of need coming and the way we deliver care needs to change. But is the NHS inherently inefficient? I don’t think it is.

“I suspect at the moment we are not having a truly honest debate [about the reasons for using the private sector].”

However, Dr Goodier said he believed increased private sector provision of NHS care would boost quality and efficiency.

“Personally I like a mixed [provider] system – 70:30 per cent [the latter being private]”, he said. This is roughly the same proportion as in Dr Goodier’s native Australia. Analysts Laing and Buisson recently estimated less than 5 per cent of NHS-funded elective care is provided by private firms.

Dr Goodier said it would only be when the independent sector in the UK operated at a similar scale to Australia that it would start to drive efficiency and quality.

Letting private sector providers run small, debt-ridden trusts like Cambridgeshire’s Hinchingbrooke Health Care Trust on the grounds that they had been inefficient was “not a fair test of the [private] model”, he said.

The former physician to the Saudi royal family, who was the highest placed hospital chief executive in the HSJ100 list of the NHS’s most  powerful figures, also endorsed a co-payment system like that used in Australia. This would see many patients contribute to the cost of their care.

Dr Goodier was pessimistic about the quality of care if the NHS budget was cut after the next election.

He told HSJ: “I wouldn’t want to be on the bridge looking at care quality [at that point].”

Although the NHS had not seen a reduction in its budget to date, cuts to local government had affected patient care and trust finances, he said.

A recent growth in delayed transfers of care caused by a lack of support for patients awaiting discharge had clogged up Cambridge’s local care system, Dr Goodier said. This meant that, “for the first time in the six years I have been there”, Cambridge had twice been forced to delay cancer surgery.

The trust calculated that each delayed transfer cost it £150 a day in bed costs, plus £350 income lost from not being able to treat other patients.

A recent spate of delayed social services assessments and transfers effectively saw £65,000 transferred from local authorities to the trust.

Asked about a key aspect of the Department of Health’s £20bn savings programme – the shift of resources out of hospitals – Dr Goodier said “it has to happen because of the demographics”, but questioned whether community services were ready.

“Shoving millions more into the community without proper business management systems is a recipe for disaster,” he said.

“What really disturbs me is the complete reluctance by commissioners and the DH to give the same focus to performance and cost measurement in the community that they do in hospitals. How do you move all that care into the community until you have an activity-based pricing system and there are performance metrics of the same kind that exist in hospitals?”

When Dr Goodier leaves in June to become chief executive of Melbourne Health, Dame Julie Moore, chief executive of University Hospitals Birmingham Foundation Trust, will become Shelford Group chair.

The group has lobbied Monitor and Treasury for a top-up payment to better reflect additional costs incurred by specialist providers, which treat cases of a complexity not necessarily recognised by the tariff.

This would be along the lines of NHS London’s “Project Diamond” in which specialist trusts are awarded funds to cover gaps left by changes in the research budget funding formula.

These awards came to £50m in 2010-11, with nine trusts receiving sums of £1.5m-£10m.

The same London trusts received £40m in 2011-12, NHS London confirmed.

Dr Goodier said: “The way you estimate prices needs to be based on a cohort of hospitals with very high-quality costing and coding systems. Reference costs [currently used to work out tariff prices] have no credibility whatsoever.

“Even then there’s an acknowledgement that it will take five years to introduce a more refined system. In the meantime, the Project Diamond funding needs to move to a national level.

“There’s no logic in the NHS having two different systems. We would ask that it’s not just for the Shelford Group but for the Leicesters and Southamptons [trusts] as well.”

The Shelford group

The Shelford group of hospitals account for £7.3bn of NHS activity each year.

They are:

  • Sir Ron Kerr, Guy’s and St Thomas’ Foundation Trust
  • Gareth Goodier, Cambridge University Hospitals Foundation Trust
  • Tim Smart, King’s College Hospital Foundation Trust
  • Mark Davies, Imperial College Healthcare Trust
  • Sir Andrew Cash, Sheffield Teaching Hospitals Foundation Trust
  • Dame Julie Moore, University Hospitals Birmingham Foundation Trust
  • Sir Jonathan Michael, Oxford Radcliffe Hospitals Foundation Trust
  • Sir Robert Naylor, University College London Hospitals Foundation Trust
  • Sir Leonard Fenwick, Newcastle upon Tyne Hospitals Foundation Trust
  • Mike Deegan, Central Manchester University Hospitals Foundation Trust

Project Diamond payments 2010-11

TrustTransition payments £000s          
University College London Foundation Trust10,000 
Barts and the London Trust9,500 
Guy’s and St Thomas’s Foundation Trust8,000 
Imperial College Hospital Trust8,000 
King’s College Foundation Trust2,000 
North West London Hospitals Trust1,500 
Royal Brompton & Harefield Foundation Trust7,500 
Royal Free Hampstead Trust2,000 
St George’s Hospital Trust1,500