The independent acute sector probably has most to gain from increasing its NHS work - and could make significant inroads into NHS waiting lists.
Since the signing of the concordat with the independent sector last year, the NHS has started to commission more work. The Independent Healthcare Association talks of a tripling of activity since the concordat, and says 50,000 NHS patients were treated in the first quarter of this year - a figure which could rise to 100,000 by the end of the year. It supplies monthly figures to the Department of Health showing activity by region, but will not make them public.
Some commentators believe that although there was a dramatic rise in the early part of the year, this has tailed off significantly.
Independent sector analysts Laing and Buisson estimate the NHS spent£126m in the private acute medical surgical sector in 2000-01 in the UK.
This was actually down from£144m in the previous year due to the abolition of GP fundholding.
William Laing, editor of Laing's Healthcare Market Review, expects NHS work to account for between 5 and 7.5 per cent of independent hospitals' acute work in 2001.
The independent sector has 10,000 beds and 240 hospitals. The three big operators - BMI, Nuffield and BUPA - account for nearly 60 per cent of these beds. But there are many smaller chains and individual charitable hospitals, some with historic links with the NHS.
The three big operators are all doing work for the NHS, generally arranged at local level. But the amount is small in relation to their overall turnover: Nuffield Hospitals, for example, says its NHS work increased by 47 per cent in 2000 - but is still only 3 per cent of its total revenue.
The vast majority of this work is still on a 'spot' basis, designed to reduce NHS waiting lists. Effectively, a hospital trust will subcontract work to the private sector - though PCTs are beginning to commission work themselves.
Independent hospitals will normally tender a per-case price including both the operation and immediate aftercare. In many cases, the surgeon's fee will be included in this and the independent hospital will make its own arrangements with the surgeon. However, sometimes surgeons will agree to perform the operations as part of their NHS contract, and the independent hospital will provide the bed, operating theatre and other staff.
Traditionally, much of this work is commissioned in the first three months of the year, and then tails off. This year hasfollowed the same pattern, though in the second quarter the workload has settled at a higher rate than previous years. For example, BUPA performed 5,000 operations for the NHS in the first quarter of the year - a three-fold increase on previous years - but then saw this tail off in the second quarter. However, it has settled at a higher level than pre-concordat. Most of the contracts were short-term, involving perhaps 100 operations across a three to four-month period.
Potentially, the concordat could lead to work evening-out across the year, allowing independent hospitals to make better use of facilities in slack periods, such as the summer.
Dr Tim Evans, executive director of public affairs at the IHA, says this is already happening - with some regions consistently commissioning work from the private sector, month after month.
But long-term contracts have been slow to emerge since the concordat. Where they do exist they are often for a limited range of facilities, such as MRI scanners, and tend to pre-date the concordat.
Charles Auld, chief executive of the General Healthcare group, says the shape of NHS work has remained the same.
'By and large, the level of discussion in acute elective surgery for medium or longterm work is very low, ' he says.
'Since the election, everything has just gone very quiet.'
This lack of long-term commitment can be a major headache and may stop private providers tailoring services to NHS needs. John Randle, executive director of the Hospital Management Trust which runs 15 charitable hospitals and nursing homes, says: 'The value of NHS work has gone up since the concordat and is continuing to do so. But most trusts and health authorities do not know what their budgets are. . . a lot want to commit themselves for three to four years but do not even know what their budget for this year is.'
Even in an area where the HMT hospital is wellintegrated into the local health economy and is involved in long-term planning, commitments may only be for 18 months, he adds.
But Mr Auld suggests it can sometimes be worth investing without the commitment, if there is an unmet need. The psychiatric side of GHG - Partnerships in Care - has recently set up a mental health unit without any contracts and this is already half-full.
'If I get the right noises of encouragement and I know that people are going to be allowed to send patients to me, then why should I not build a diagnostic and treatment centre?' he says.
However, some NHS managers doubt whether the big operators really want long-term contracts. In at least one case, attempts to 'rent' sessions in an operating theatre for a long period have been unsuccessful.
A recent report from consultancy firm Newchurch highlighted the NHS's reputation for costly, timeconsuming procedures and concluded 'there is no evidence of the private sector rushing to get involved in the core activities of the NHS'.
1Also, there could be conflicts with insurers if too much capacity is booked to the NHS.
Philip Blackburn, an economist with Laing and Buisson, has doubts about whether the independent sector has enough capacity to make major inroads into NHS business. With a waiting list of over 1 million, even 100,000 operations a year is not going to make waiting lists disappear.
Could the private sector do more? Dr Evans says 200,000 patients a year could be treated and many hospitals are adding extra beds. But demand from both insured and self-funded patients is growing rapidly.
This is borne out by BUPA, where operations director Richard Jones says: 'There is no way that the private sector can share all the capacity problems in the NHS but it can make a contribution.
'A lot of our hospitals are very busy and we have had to say we can't do any NHS contract work or very little.
'That is particularly true of the south of England - a lot of our hospitals around the M25 have done little or no NHS work.'
However, he believes the concordat has changed the atmosphere. 'Twelve months ago, the whole private sector was not even considered by many in the NHS. . . now most of our hospitals have been in contact with the NHS in their areas.'
However, some NHS managers are still opposed to the idea of commissioning from the independent sector. One private hospital manager says:
'I've tried to arrange meetings with a couple of trusts locally and they just do not want to know.'
So what does the future hold? More operations carried out in private hospitals under contract with the NHS seem likely, if not certain.
But it is going to take some time for NHS organisations to enter the longer-term contracts which many in the private sector want to see, rather than treating it as a handy source of extra beds in bad winters.
There may be some players who want to run the government's proposed fasttrack centres, 12 of which are planned to be in operation by 2004.
Mr Auld points out that private hospitals are effectively diagnostic and treatment centres already.
But all this depends on a favourable political atmosphere.
The private sector may be happy to offer the NHS its spare capacity: but if it is to develop extra capacity specifically to meet this market, it will need to be convinced that the NHS is in for the long haul.
BMI Healthcare (owned by General Healthcare Group) Size: 44 hospitals with 2,379 beds.
Status: For-profit provider, with a history that can be traced back to 1970 with the establishment of the Harley Street Clinic. A number of mergers--notably Amicus Healthcare Group and the UK healthcare division of Generale des Eaux in 1997--brought it to its present size.
Value: NHS work is now around 8 per cent of turnover. In 1999, revenues were£351m.
Distinguishing features: Nine of its hospitals are on NHS sites, either as a separate unit within a hospital or in the same grounds. Long history of working closely with the NHS - examples include buying in lab services from NHS trusts and renting out MRI scanner time.
www. generalhealthcare. co. uk BUPA Size: 36 hospitals in the UK with 1,886 beds.
Status: A mutual not-for-profit organisation, with a long history dating back to 1947.
Value: Turnover in 2000 was over£360m. NHS work likely to be below 5 per cent of this.
Distinguishing features: Household name, which for many symbolises the independent sector. It argues that being a provident society - and therefore not worrying about shareholders' dividends - means it can take longer-term views on investment. www. bupa. co. uk Nuffield Size: 43 hospitals with 1,697 beds and 196 day beds Status: Charitable provider, established in 1957.
Value: Turnover of£244m in 2000 - of which around£7m is probably NHS work - with a 'profit' of£16m.
Distinguishing features: Some hospitals were originally established by charitable appeal and many retain strong local links.
www. nuffieldhospitals. com Others are:
Community Hospitals: A commercial provider recently bought by the Swedish company Capio, with 22 hospitals.
www. community-hospitals. co. uk Abbey Hospitals: A commercial provider mainly operating in the north west, with six hospitals.
www. abbeyhospitals. co. uk