The managing director of outsourcing giant Serco’s health business has cast doubt on “bullish” forecasts of a rapid expansion of private sector provision of NHS community services.
Over the past 12 months analysts have predicted a significant increase in the proportion of community services managed by private providers, driven by factors including the government’s NHS reforms, the health service’s £20bn savings target, and the need to re-tender existing contracts.
Healthcare market intelligence firm Laing & Buisson has suggested the private sector could control 20 per cent of the £8.5bn NHS community services market by 2016.
More recently, corporate finance advisors Catalyst estimated there was a “£20bn opportunity” for the private sector in the NHS, citing Serco’s March 2012 win of a deal to manage community services in Suffolk as a “landmark contract”.
However, Serco Health managing director Valerie Michie said of these reports: “We’re not as bullish as that.”
She told HSJ that while the health reforms and the £20bn “Nicholson challenge” created a “natural opportunity for us”, the key question about the NHS community services market was: “What will be the priorities of the newly-forming [clinical commissioning groups]?”
Ms Michie continued: “It depends what they want to do with those services. Do they want to look for a different model, that provides services in a different way, or actually are they going to invest their time looking at acute services, because that’s clearly a critical part of their budget?”
The Suffolk contract is worth £140m to Serco over three years. The value of the services tendered was £53.3m a year, or £160m over three years, suggesting the company sees scope to significantly reduce costs.
Ms Michie said Serco planned to make savings by investing in mobile technology to give clinicians 24/7 access to patient records at the point of care, and by introducing a care co-ordination centre to provide a single point of access for GPs making referrals into community services.
She admitted the company would need to reduce staff numbers to realise these savings, but argued: “That’s no different than what the NHS is currently doing. We have different tools and techniques to enable those changes, but that’s no different to what’s happening in the service in total.”
She added: “There will be natural attrition within that period, so we would seek not to replace people that would naturally leave.”
Asked what kind of a profit margin she planned to make on the Suffolk deal, she said the net margin for the Serco Group was 6 per cent, and she would not “expect us to make more or less” on the deal than “what we would do typically as a group”.