What role for private providers in the NHS after the election?

Circle’s decision to withdraw from its management of Hinchingbrooke Health Care Trust is being championed by some as evidence that private sector involvement in the NHS brings only disaster, and by others as an example of the service’s malevolent reaction to any innovation arriving from elsewhere.

The heat in this debate is inevitable amid an election campaign, but a different, more interesting conversation is under way at all levels of the NHS about its service capacity and private providers.

Robert Royce writes that the rash of “major incidents” is “a symptom of a system slipping out of control”.

‘The new government will have to decide how it will stop elective waits rocketing’

Meanwhile, one trust’s record breaking contract with Portakabin suggests NHS patients will again be spending hospital time stuck inside mobile wards.

There is also growing recognition, resignation and frustration that the £250m provided to reduce the elective care backlog has merely slowed the decline in performance.

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Crunch point

The emergency care “crisis” may or may not ease. But the underlying trend in elective referrals is still climbing. NHS England has said there will be no additional “resilience” funding next year, creating a potential crunch point post-election.

The new government will have to decide how it will stop elective waits rocketing. One question it will have to address is how best to use the private sector.

‘To have impact, this solution requires the private sector to incur the risk of investing in the necessary capacity’

There has been a steady, but slow, increase in NHS patients treated by private providers stretching back to the start of the century.

Current patterns of use have fallen back into a “safety valve” arrangement, helping commissioners and trusts deal with surges in demand.

But as pressure builds, memories have gone spooling back to the first half of the last decade and the astonishing turnaround in waiting times achieved by the NHS.

Controversy continues over the ingredients of that success, but the capacity and contestability supplied by independent sector treatment centres played its part.

Confidence boost

The argument goes that the NHS hospital sector again needs a rapid boost in the number of beds it can access, which will give it breathing space to develop new care models and, possibly, increase capacity, and that buying those beds from the private sector would be the most effective way to bridge that gap.

However, to have a meaningful impact, this solution requires the private sector to incur the risk of investing in the necessary capacity. That would require an increase in market confidence, bought with significant expenditure of public finance and political capital.

There is, of course, an important difference between 2005 and 2015.

In blunt terms, “overpaying” independent sector treatment centres to break the back of unacceptable waiting times and put the wind up some complacent NHS providers was feasible because there was enough cash to serve all competing demands.

‘Private providers are established as an important part of how the NHS manages demand’

Today, every penny is already accounted for, sometimes two or three times over. Most health economies would benefit from extra capacity via the private sector.

But they would struggle to justify buying it when faced with other investment options. In theory, the private sector could make a case by “undercutting” NHS prices, but margins are already thin, scrutiny on quality has increased and commissioners are wary of allowing cherry picking of patients.

Private providers are established as an important part of how the NHS manages demand – something that needs to be recognised and managed efficiently, rather than be the subject of political tit for tat. Clever commissioners could well use them – for example, as a force for change for out of hours delivery.

However, hopes the sector may make a defining contribution to achieving a sustainable position on waiting times seems a very long bet – and if Circle’s experience at Hinchingbrooke teaches us anything, it is that those are best avoided.