HSJ’s fortnightly briefing covering safety, quality, performance and finances in the mental health sector.
Will NHS England’s plans for mental health result in growth for private providers?
Yes, appears to be the suggestion of a recent market report from healthcare consultancy LaingBuisson.
It predicts annual growth of 5.2 per cent for independent providers of NHS-commissioned mental health care between 2018 and 2023. The market is currently worth about £1.9bn.
This would be significantly higher than the expected growth rate for all mental health services, likely to be around 3.5 per cent.
It’s also an increase on the 4.1 per cent annual growth the sector – which is largely dominated by a handful of organisations, including the Priory Group, St Andrew’s Healthcare, Elysium Healthcare, and Cygnet – saw between 2011 and 2018.
The drivers for the growth included:
- NHSE’s temporary ban on commissioning new “in-house” capacity for specialised services;
- The lack of appetite for NHS trusts to invest in specialised services, which are generally dependent on out of area demand;
- A continuing reduction of NHS in-house capacity, driven by staff and capital funding shortages; and
- The NHS’ focus on community-based services rather than increasing in-house inpatient services.
Looking ahead, policy announcements from NHSE suggest no immediate plans to expand the NHS bed base, with future funds focussed instead on community services.
But the NHS has been here before, with bed capacity being reduced amid pledges to improve community care and prevention.
In many areas, those pledges did not materialise into reduced demand for inpatient beds. There is clearly a significant risk of that happening again, which will mean healthy business for the private hospitals.
The LaingBuisson report is not publicly available, so MHM cannot attach the full report.
NHSE’s plans to outsource its specialised commissioning powers to provider collaboratives could also impact on private provision.
The central idea is to repatriate out of area patients and develop stronger community services focussing both on prevention and discharge.
Theoretically, this would temper the independent sector, which takes a big majority of out of area placements. There’s also an argument that independent providers would not be incentivised to improve discharges and flow from inpatients into the community as it could effectively leave them out of pocket.
Speaking with some local leaders, who are in early stages of planning these collaboratives, there is a suggestion we could see agreements which result in independent providers helping increase discharges in exchange for a “steady” or guaranteed long-term income.
Interestingly, LaingBuisson also suggests provider collaboratives, which will further decentralise commissioning, could weaken the NHS’ bargaining position.
Capital catch up
If the current government, or any future Labour-run government, wants to limit its reliance on the independent sector, significant capital funds would need to be made available to increase the NHS bed base.
But, for the immediate future at least, any capital funding NHS trusts have at their disposal is instead likely to be spent on their existing estates, which have deteriorated badly.
A recent analysis from the Royal College of Psychiatrists revealed mental health trusts’ backlog maintenance rated “high risk” grew by 29 per cent between 2016-17 and 2017-18, against the all NHS trust average of 10 per cent.
Mental Health Matters is written by HSJ’s mental health correspondent Rebecca Thomas. Tell her what you think, or suggest issues she could cover, by emailing her in confidence at firstname.lastname@example.org or by sending a direct message on Twitter.
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