A weak private sector is bad news for the NHS

Why, especially given all the talk of opening up NHS care to private players; and, does it matter?

To answer the first question it is helpful – with apologies to older readers – to recap recent history. The private hospital sector saw a six-fold increase in work from 1980 to 2000. Then Gordon Brown found billions for the NHS and the Blairite reformers concluded, correctly, that spending some of that cash with the private sector would both help cut waiting lists rapidly and spur NHS providers to new efforts. Patient choice and the treatment centre programme combined to increase NHS spending with acute private hospitals by 466 per cent in the seven years to 2010.

But the NHS largesse was a double-edged sword as reducing waiting lists saw the self-pay market shrink. Then the recession arrived to undermine the private insurance sector. In 2004, NHS funded care constituted 10 per cent of acute private hospital revenue, by last year it was one quarter.

Now the economy is struggling to recover, while NHS expenditure is squeezed. Laing and Buisson has reviewed the market landscape, including the NHS reforms, and found a range of reasons why private hospitals face a “static” future. If the private hospital groups were NHS trusts, nearly all would be labelled as “challenged”.

Even the few apparently significant examples of the private sector winning NHS work, such as Assura’s huge community services deal in Surrey, do not herald a new dawn. “The pace of penetration of the NHS community health services market is likely to be fairly slow in the face of resistance from incumbent staff”, notes the review. Other opportunities are, as yet, straws in the wind.

What about the second question – does the weakness of private health matter? Well, at a time of economic pain, the underperformance of any industry is a cause for worry. But, as far as UK health goes, the plight of the private hospital sector may feel like a sideshow. While NHS spending has nearly tripled since 2002, private hospital revenues have risen more slowly. Privately provided elective care now constitutes just 12 per cent of total activity.

But, there is a case for the NHS to desire a stronger private health sector. Purchased wisely, the private sector offers useful spare capacity to tackle demand bottlenecks. In mental health hospital care, it shoulders a quarter of the national care burden. The presence of private providers also provides meaningful patient choice in areas which are dominated by a single NHS elective provider.

The private hospital sector – despite its travails – can also innovate and develop services with a freedom not always readily available to NHS providers. It is has spent more time on achieving “customer satisfaction”, providing valuable lessons for the NHS in the light of a range of new incentives and measures focusing on patient experience.

Then there are the career options private health offers for healthcare staff. Few HSJ readers would want to work in a country in which there was only one choice of employer.

So, the NHS can benefit from private hospitals. But, as Laing and Buisson points out, the independent sector needs to embark on its own efficiency programme and reconfigure its offer – focusing more on specialist services, for example – to get itself fit for the future. The NHS veterans of the quality, innovation, productivity and prevention programme could no doubt offer helpful advice. It would fit with the zeitgeist in which the most obvious opportunity for private hospitals may be to work with NHS providers to develop their own private patient units.