More hospitals could be privately operated in NHS shakeup, says review

Private sign

Management of more NHS hospitals could be handed over to private companies in a shakeup of England’s healthcare system, according to a government-commissioned review.

It suggests the establishment of concessions by which companies were given contracts to operate publicly-funded hospitals and points to Spain as an example that could be followed.

At present only one of the 242 hospital providers is run by a profit-making firm, Circle, which won a 10-year contract to operate Hinchinbrooke hospital in Cambridgeshire. The review, headed by Sir David Dalton, chief executive of Salford Royal NHS Foundation trust, also suggests that a single private or public organisation could own and operate chains of hospitals across wide geographical areas, standardising clinical pathways and cutting back-office and procurement costs.

The options are the most eyecatching from a menu of choices Dalton and a panel of other chief executives have provided for the health secretary, Jeremy Hunt, as a recipe to lift standards of healthcare across the NHS despite its continuing financial crises. They include Circle boss Steve Melton, previously Argos supply chain director.

Managers and national politicians have also long complained that it takes far too long to lift the whole health service up to the levels of the best and are also anxious to find ways of subverting public protests against local closures and service changes.

Other new options the review presents for providers of NHS care include increased use of “buddying”, by which high-performing hospitals help those in special measures, joint venture networks such as the orthopaedic centre in south-west London run by four NHS trusts, and the “expert provider” system. Moorfield’s eye hospital in London is involved in care at 23 places in and around the capital.

Dalton, in a letter to Hunt outlining the possibilities, asked: “Why should any family have to accept that a relative living in one area can be confident in accessing excellent care whilst another, with the same needs living elsewhere, cannot? We might understand some of the reasons for this variation, but we should not tolerate the extent of it.”

A significant number of NHS providers will not deliver financial and clinical sustainability under their present organisational models, said Dalton. The public and patients were now beginning to understand that traditional district general hospitals were struggling to meet the needs of their populations, he said.

The report was careful not to champion one new model of healthcare over another, but, said Dalton: “Safeguarding reliable, high quality care to patients is more important than preserving organisations.”

Case studies, however, indicate the direction of travel. One is on Ribera Salud Grupo in Spain, which started by designing, building and operating a hospital in La Ribera, in the Valencia community in eastern Spain. It was the first privately run public hospital in the country and the model now covers 4% of all Spain’s population and 20% of the Valencia region’s.

Another case study to back the idea of a single provider operating a number of subsidiaries cites as a possible template the for-profit AMEOS German hospital group which runs 68 facilities in Germany and Austria and provides a significant amount of public healthcare. Its business model is based in identifying and buying failing hospitals. It warns progression along this route must however avoid the mistakes made by some federations of academy schools that grew too far and too fast and put standards at risk.

The report also calls for a national system of “credentialling” successful trusts so that only those with a proven track record could tender for management contracts and acquisition.

The proposals will delight Hunt as a way of removing many of the poorer performing trusts and their managers while paving the way for new conglomerations of super NHS trusts, some privately managed. These bigger organisations could well lead to local closures and deflect some of the resulting protests away from ministers, who would be able to point to the expert decisions of doctors and nurses.

The for-profit models it cites could also imply the new bigger organisations eyeing expansion abroad. Critics will see it as further privatisation of public services.

Hunt said: “The NHS is the best health system in the world but we know there is still too much variation in care. Sir David’s proposals go hand in hand with the NHS five-year forward view on how to meet the challenges of the future, and they will be food for thought for hospitals and commissioners looking to innovate, supported by the £200m transformation fund we announced last week.”

Powered by article was written by James Meikle, for The Guardian on Friday 5th December 2014 19.04 Europe/London © Guardian News and Media Limited 2010