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The independent sector in the NHS: a cool look at a hot subject

1 December 2006

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Robert Short
Freelance Medical Journalist

Robert is a freelance medical journalist and a former editor of the British Journal of Hospital Medicine. He writes regularly for the BMJ, Circulation and a variety of GP, nursing and pharmacy publications. Robert’s interests include a thriller he has long been writing, the life and loves of DG Rossetti, and holidays in Rome

The NHS is becoming an organisation that commissions care for patients rather than providing all the care itself, according to David Nicholson, the NHS’s chief executive.(1)

By 2008, the NHS will be spending more than £5bn annually on care supplied by the private sector.(2) The NHS has always employed the private sector in one way or another. Aneurin Bevan, the founder of the NHS, insisted that GPs should be independent contractors, and today 70% of GPs remain exactly that, paying themselves out of the profit of running their business.(2) Since 1948, the NHS has held several contracts with voluntary and charitable hospitals for care.(2) Semicontractual and grant-giving relationships have existed with hospices, and the NHS funds patients needing long-term care in private nursing homes.(2) Since 1980, the NHS has bought operations from private hospitals, and portions of mental healthcare.(2) The NHS has always bought equipment and drugs from the private sector.

Private sector “running” PCTs
However, recently there have been worries that key commissioning decisions might be handed over to private consortia. The “misdrafting” of a government advertisement sparked off a reaction against the suggestion that private companies might tender for the running of primary care trusts (PCTs).

Ann Rossiter, director of the Social Market Foundation, comments: “If you are talking about having management consortia making big-picture decisions about the NHS, then you are talking about the private sector in charge of large areas of health policy as well as health implementation.” She stressed that, if commissioning is to be outsourced, then good practice would be to separate the purchaser and provider.

But has a PCT actually been handed over to be run by a private company in the way feared? Ms Rossiter said: “Not that I am aware of. The government did get its fingers burnt for suggesting it.” Dr Peter Holden, chair of the BMA’s Official Fees Committee, agreed: “The short answer is ‘No'”.

Private sector running practices
Early in 2006, North Eastern Derbyshire PCT invited UnitedHealth Europe (UHE) to run two general practices in deprived areas. In May, Barking & Dagenham PCT signed a £5m contract with Care UK to provide GP services in East London.

Ms Rossiter said that general practices had always been in effect businesses, albeit small businesses. She added: “I would not say that ‘United Utilities’ providing a couple of GP practices is privatisation of the NHS. I would say that outsourcing of large-scale commissioning is. For me, that is where the dividing line comes.”

Dr Holden’s own practice is based in Derbyshire. He thinks that UHE is an expensive option, and that the standard GP practice model supplemented with guaranteed extra payments would be more cost-effective. Dr Holden said: “Big firms have big overheads and will want a certain return. The return that the traditional doctor wants is his income.”

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However, in August, Lord Justices quashed the selection of UHE to run the Creswell Primary Care Centre in Derbyshire, and ordered the tender to be reopened by North Eastern Derbyshire PCT. The PCT is required to consult with the local community over its plans. This verdict was the result of pensioner Pam Smith’s action and appeal.

Alex Nunns, of Keep Our NHS Public, said at the time of Ms Smith’s win: “People are rightly suspicious of profit-making companies taking over their family doctor surgeries. They fear that the standard of care will decline, and that shareholders will be put before patients. If ‘patient choice’ is to mean anything at all, the NHS must listen to these concerns and stop imposing the private sector on unwilling communities.”

Independent sector treatment centres
The first wave of independent sector treatment centres  (ISTCs) are contracted for £2.5bn over five years. A second wave is planned, worth the same amount, as is the first part of what is promised to be a £1bn contract over five years for diagnostics.(2)

In the first wave, ISTCs are paid for operations whether they do them or not. They are not working at full capacity, and NHS traditionalists therefore say that the money is being wasted.

A survey carried out by the Health Services Journal, and reported in The Times, of 42 NHS chief executives, found that three-quarters felt their finances had been damaged by the centres – including 7% who called the effect “disastrous”.(3)

Dr Jonathan Fielden, chairman of the BMA’s Consultants’ Committee, said that while an increase in capacity to clear waiting lists has long been called for, the ISTC programme has been poorly planned to do it: “Despite requests from both trusts and, more importantly, the medical profession, there was little or no involvement of them to ensure that capacity was properly integrated.” As a result, he said, capacity has been put in where it was not necessary in some areas, and also that in some areas NHS facilities are being cut back or mothballed.

The impact of ISTCs on waiting lists, he says, has been shown to be small and in the main comes from NHS operations. The report of the Health Select Committee on ISTCs says that it is unclear how far the decline of waiting lists is due to the NHS changing in response to the challenge of ISTCs.(4) Dr Gill Morgan, chief executive of the NHS Confederation, pointed out: “The prospect of ISTCs has encouraged NHS providers to become more productive and create additional capacity themselves.”

NHS Logistics handed to DHL
A controversy, leading to national strikes led by members of the union Unison, is the giving of NHS Logistics to the German parcel courier DHL to run. Ms Rossiter is surprised at the way the government has rattled union cages when it did not need to. She said: “It would appear that the service was working pretty well for the patient, and so the question has to arise: ‘What problem are you trying to fix?'”

Secretarial work goes abroad
Some hospitals have been considering sending their typing work to South Africa or India. Managers at Brighton & Sussex University Hospitals NHS Trust say that more than £1m a year could be saved and backlogs cleared. Ann Rossiter considers that the concerns about this strategy are the cultural barriers to efficiency and accuracy of the work, and the security of confidential patient information.

The public view
What does the public think of privatisation? According to a BBC survey, the public in general is “unconcerned about NHS privatisation”. The survey, conducted by Populus on a random sample of 1,023 adults interviewed by telephone on 11 October, found that: “85% do not care who carries out procedures such as hip operations as long as the service is ‘free, fast and effective.'”(5)


  1. Timmins N. NHS set role of commissioning most treatment. The Financial Times 2006 Sep 16. Available from:
  2. Kings Fund. Introducing a supplier market. In: Timmins N, editor. Designing the “new” NHS. London: King’s Fund;2006. p.5-42.
  3. Hawkes N. Private centres “waste NHS millions”. The Times 2006 Sep 25. Available from:,,8122-2373391.html
  4. House of Commons Health Committee. Independent Sector Treatment Centres. Fourth Report of Session 2005–06. Volume 1. London: Stationery Office; 2006. Available from:…
  5. Available from: