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The Corporate Takeover of the NHS: What Does ‘Privatisation’ of Health Services Really Mean?

In the first of a series of investigations into the corporate takeover of the NHS, Sian Norris considers what NHS privatisation looks like now, and what could change with the new Health and Social Care Bill

Photo: Julian Claxton/Alamy

The Corporate Takeover of the NHS What Does ‘Privatisation’ of Health Services Really Mean?

In the first of a series of investigations into the corporate takeover of the NHS, Sian Norris considers what NHS privatisation looks like now, and what could change with the new Health and Social Care Bill

With the new Health and Social Care Bill set to return to the House of Commons when parliamentary recess ends in September, there has been much discussion about NHS privatisation and the future of the health service as a public good. 

But what do we mean when we talk about privatisation of the NHS? Is privatisation a helpful word? And why are there concerns that the new bill could bring England closer to a privatised health service – whatever ‘privatised’ might mean? 

The new bill will demolish clinical commissioning groups (CCGs), which were introduced in 2012, and replace them with integrated care boards (ICBs). It will also give more power to the Health and Social Care Secretary, including the right to approve the chair of the new ICBs, who – as well as healthcare professionals and local authority representatives – can choose to appoint representatives from private companies to their boards.

It is this latter point that is raising concerns about increased private sector involvement. However, the NHS is already spending large sums of money on independent providers that are keen to skim profits from the health service.

Private Outsourcing 

The perception persists that ‘NHS privatisation’ means patients having to get out their wallets and pay for a GP appointment or having to fill out insurance forms in A&E waiting rooms, as is the case in America.

While NHS treatment is not, in fact, free to all people living in the UK, privatisation is not currently about charging patients for healthcare at the point of service. Instead, it is focused on outsourcing NHS services to private companies, which can then make a profit.

In 2019/20, NHS commissioners spent £9.7 billion on services delivered by the private sector – an increase of 14% since 2014/15. 

In addition, Department of Health and Social Care accounts for 2019/20 show that, if spending with not-for-profit and voluntary providers is taken into account, the spending increases to £14.4 billion – or 10.8% of total revenue spending by the department. A further £1.5 billion was spent on services from non-NHS organisations in 2019/20, as well as £271 million on outsourcing services to other providers including in the private sector. 

It is often reported that 7% of NHS expenditure is spent by the health service on the independent sector to purchase patient healthcare. However, this increases to around a quarter of expenditure (26%) when all of the above and primary care providers are included. These providers include high street pharmacy services, opticians, dentists and GP practices.  


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Beyond Primary 

While we are familiar with private companies such as Boots and Specsavers running pharmacies and opticians, the list of public health services that the private sector can now deliver has expanded to include urgent care and minor injury units; diagnostic services such as blood tests, X-rays and CT scans; maternity care elective surgery; community nursing; and a range of other community services. The latter includes physiotherapy, ambulance services, and prison health.

This is due to clause 75 in the Health and Social Care Act 2012, which required CCGs to put out to public tender any healthcare contract worth more than £615,270 – allowing private companies to bid on a much greater range of NHS services. On average, a CCG currently spends around 15% of its budget on private suppliers – although in some regions of the UK spending is as high as 30%.

This clause is being scrapped in the forthcoming Health and Social Care Bill.

There are some specific healthcare areas where private sector involvement is particularly noticeable. 

The first is mental health care – with 44% of spending on child and adolescent mental health going to private providers. In Bristol, North Somerset and Gloucestershire, 95% of mental health beds are owned by private companies, two-thirds of which originate in the US

Private providers are also increasingly delivering non-emergency surgery. According to the Independent Healthcare Providers Network’s 2018/9 business plan, around 500,000 elective surgeries were carried out for the NHS by private companies in the previous 12 months. In addition, a fifth (21%) of all gastroenterology, trauma, and orthopaedic NHS patients were treated by independent providers, both private and not-for-profit. 

The Royal College of Surgeons reported that 19.7% of NHS hip replacements and almost one in three NHS knee replacements were carried out by the independent sector in 2016/7. 

Who Cares?

There are currently more than 100 private providers working with the NHS, including Virgin Care, Alliance Medical, Sirona, Care UK, Cygnet, and many more. 

Virgin Care’s website explains that it now operates more than 400 NHS services around England, with a first-of-its-kind 10-year contract in Bristol and North East Somerset to run health and social care. It also looks after patients across a number of sectors, including sexual health, GP practices, urgent care centres, and services for children with complex mental, physical and sensory learning difficulties.

Virgin Care had been awarded £2 billion worth of NHS and local authority healthcare deals, but paid no corporate tax in the UK as it operated at a loss. Speaking to the Guardian, a Virgin Care spokesperson explained its £2 billion worth of contracts, “was the maximum Virgin Care would be paid to fund the delivery of health and care services from 2010 until 2027. It is not profit, it is revenue and the vast majority of this will be paid in salaries to more than 7,000 health and social care staff, which includes more than 1,300 nurses, around 100 doctors and 400 other health staff”. Its annual turnover is around £200 million a year.

The managing director of Virgin Care in Bath and North East Somerset, Julia Clarke, is listed on the region’s partnership board – the unitary board which currently runs its integrated care service.  

Staying in the south-west, the private company Sirona now runs adult community healthcare services in Bristol, North Somerset and South Gloucestershire, with a contract worth £1 billion over 10 years. 

Care UK is another private company providing NHS services. Its former chair John Nash, and his wife Caroline Nash, have donated significant amounts to the Conservative Party, including a £21,000 gift to Andrew Lansley’s office when he was Health Secretary. Nash is now in the House of Lords.

In 2020, Care UK split into two organisations, with Practice Plus Group delivering its healthcare services. The latter is now the largest independent provider of NHS services, delivering more than 70 different healthcare centres. These include running hospitals in Emersons Green in Bristol, Ilford in London, Plymouth, and Shepton Mallet in Somerset.  

In terms of mental healthcare, Cygnet Health Care is the second-largest provider of mental health services in the UK and is owned by the US organisation Universal Health Services Inc. Cygnet’s YewTree Hospital, which cares for women with learning disabilities, was involved in a scandal in 2020 when staff were revealed to be physically and emotionally abusing patients. Universal reported revenues of more than $11 billion in 2019. 

The rapid growth of corporate takeovers of NHS services is concerning not just because of companies not paying tax, being accused of abusive behaviour, and of potential cronyism – although all of these issues matter. The biggest concern is who, ultimately, do these companies care for?

Since its inception, the NHS has cared for people. But bring corporations in, and care is diverted to bottom-lines, profits and shareholders. Put simply, introducing private interests allows for companies to skim profits off the NHS.

When we talk about privatisation, we need to ask the question: do we want an NHS run for shareholders and profit, or for the people who need it? 

This article was updated on 18 August 2021 to reflect the timeframe of Virgin Care’s contracts and to include a quote from a spokesperson previously shared in the Guardian newspaper.

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