Thin end of the wedge? Private firm to run NHS hospital

Imagine the letters “NHS” were removed from your local hospital’s name. Would that worry you as a prospective patient? This scenario has not happened yet - but is getting closer. Last week saw the announcement of England’s first district hospital where all clinical services will be run by a private company. With the coalition’s Health Bill imminent, concerns about NHS local care becoming a franchise for big private operators are moving centre stage.

Imagine the letters “NHS” were removed from your local hospital’s name. Would that worry you as a prospective patient? This scenario has not happened yet – but is getting closer. Last week saw the announcement of England’s first district hospital where all clinical services will be run by a private company. With the coalition’s Health Bill imminent, concerns about NHS local care becoming a franchise for big private operators are moving centre stage.

Hinchinbrooke Hospital, a district hospital in Huntingdon including A&E and maternity, is to be run by the Circle Group under a 10 year contract starting next June. Circle was set up by an ex-Goldman Sachs banker, and runs several private hospitals under a partnership model involving minority staff shareholding.

Their NHS experience is limited to two planned surgery centres in the Midlands, with a much smaller and less complicated patient group than at Hinchinbrooke.

Circle will be “taking full risks for demand and volume with no guarantees on future revenue”, though with a pledge that “its buildings and assets will remain in the NHS and Hinchinbrook staff will continue to be employed by the NHS”. This follows a tender process which produced five private and one NHS bids to run the franchise.

Hinchinbrooke’s circumstances are distinctive – a small catchment population, a high cost base, compounded by an expensive PFI scheme, and significant operating debts (almost £40 million on an £80million turnover) – but so was the solution, sanctioned by Labour in government. Not surprisingly there has been strong local public support for keeping services running.

Yet Hinchinbrooke has wider significance. The former NHS head of commissioning, Mark Britnell, now with consultants KPMG, recently suggested that as many as 20 organisations could follow Hinchingbrooke’s lead in the next year or so, mostly those who have not achieved foundation trust status.

Across NHS services, franchising is the model that Andrew Lansley explicitly favours to break up NHS provision. On 12 July, he told Parliament:

“We will allow any willing provider to deliver services to NHS patients—provided that they deliver the high quality standards of care we expect from them.”

The Spending Review last month confirmed this is the coalition approach:

“The Government believes that while it should continue to fund important services, it does not have to be the default provider. This stifles competition and innovation and crowds out civil society.”

The creation of Lansley’s “level playing field” for independent providers is the job of the new economic regulator, Monitor. Left Foot Forward has previously highlighted how competition law is likely to be used to target NHS providers – putting at risk the close working relationship between GPs and consultant specialists at local hospitals. The doctors’ union, the BMA, have called on GPs to promote relationships with local NHS services, but this could yet be defined as anti-competitive.

The coalition is also strongly encouraging social enterprises, based on caricaturing the public sector as anti-innovation and unresponsive. Social enterprises may conjure images of workers’ co-operatives but these are not-for-profit enterprises, with any surpluses re-invested in themselves. They behave as businesses and, being independent of government, can pull out of a service if they choose.

Citizens have no stake in them, and no right to comment on how they are run or what they do as a private company. The community nurses of Surrey, in the social enterprise Surrey Community Health, are the Tories’ favourite example; their managing director addressed this years’s Conservative conference.

Yet elsewhere, staff are resisting the move to social enterprises, fearful of the effect on terms and conditions, including pensions. For example in the south west half of all Primary Care Trusts are proposing this option for community health staff and community hospitals, against 20 per cent nationally. Increasing cost pressures on the NHS and the full market overseen by the new regulator can only encourage merger and acquisitions activity amongst providers of NHS services over the next few years.

The speed of change in developing a level playing field for the private and social enterprise sector is hard to predict. Yet against growing concern about NHS financial pressures during 2011/12, it raises further concerns about coalition ambitions for healthcare reform.

42 Responses to “Thin end of the wedge? Private firm to run NHS hospital”

  1. Brian Moylan

    RT @leftfootfwd: Thin end of the wedge? Private firm to run NHS hospital //bit.ly/exkpTT reports Trevor Cheeseman #nhs #ukpolitics

  2. Lee Hyde

    RT @leftfootfwd: Thin end of the wedge? Private firm to run NHS hospital: //bit.ly/hJfc2u

  3. Richard Simcox

    Or the thick end, even?…RT @leftfootfwd: Thin end of the wedge? Private firm to run NHS hospital: //bit.ly/hJfc2u

  4. MayorWatch

    RT @leftfootfwd: Thin end of the wedge? Private firm to run NHS hospital: //bit.ly/hJfc2u < Lab brought tons of private firms into NHS

  5. Stuart Singleton-White

    This is indeed very worrying, but I think we need to understand while we need to watch carefully for the creeping privatisation that this government is embarked upon this process was in fact stated by the last Labour government. So let’s hope that Ed’s commitment to moving beyond new Labour will mean we’ll never allow such decisions to be taken by any future Labour government.

  6. Luke Bozier

    This kind of attitude toward private sector being involved in the NHS is what makes Labour the new conservatives //bit.ly/gLbi61

  7. Emma Coften

    RT @leftfootfwd: Thin end of the wedge? Private firm to run NHS hospital: //bit.ly/hJfc2u

  8. jennifer roberts

    RT @leftfootfwd: Thin end of the wedge? Private firm to run NHS hospital: //bit.ly/hJfc2u

  9. Pen

    RT @leftfootfwd: Thin end of the wedge? Private firm to run NHS hospital: //bit.ly/hJfc2u

  10. Matthew Taylor (MTPT)

    Citizens have no stake in them, and no right to comment on how they are run or what they do as a private company.

    Absolutely right, citizens don’t.

    Shareholders, on the other hand, or consumers…

  11. George Woods

    RT @leftfootfwd Thin end of the wedge? Private firm to run NHS hospital: //bit.ly/hJfc2u

  12. Morgan D Evans

    The coalition pledge to protect the NHS seems more and more foggy. Thin end of the wedge? //bit.ly/gLbi61

  13. L DTUC

    RT @leftfootfwd: Thin end of the wedge? Private firm to run NHS hospital: //bit.ly/hJfc2u

  14. Solomon Hughes

    There was an earlier attempt to get a private firm to run a complete NHS hospital (including urgent care) – in 2007 Labour said private frim Care UK would completely take over the Lymington hospital, in the New Forest, but the deal fizzled out I understand Care UK backed off at the last minute, but the (then Labour) government never explained why the deal was off.

  15. Diane Hain

    RT @leftfootfwd: Thin end of the wedge? Private firm to run NHS hospital: //bit.ly/hJfc2u

  16. Mark Stevo

    Over stating the Goldman Sachs link here just a touch, the guy is their investor relations lackey.

  17. Jonathan Taylor

    RT @leftfootfwd: Thin end of the wedge? Private firm to run NHS hospital: //bit.ly/hJfc2u

  18. Rosie

    RT @leftfootfwd: Thin end of the wedge? Private firm to run NHS hospital: //bit.ly/hJfc2u

  19. Christian DeFeo

    RT @leftfootfwd: Thin end of the wedge? Private firm to run NHS hospital: //bit.ly/hJfc2u

  20. John Edginton

    RT @leftfootfwd: Thin end of the wedge? Private firm to run NHS hospital: //bit.ly/hJfc2u

  21. Lauren G

    RT @leftfootfwd: Thin end of the wedge? Private firm to run NHS hospital: //bit.ly/hJfc2u

  22. James Bull

    RT @leftfootfwd: Thin end of the wedge? Private firm to run NHS hospital: //bit.ly/hJfc2u

  23. Henry

    We need to keep an eye on how many of these companies/individuals are Tory donors – or have been donors to Lansley’s office…

  24. Mark Stevo

    I note, by the way, that eveyone’s favourite healthcare system in Sweden is very comfortable with the private provision of public care.

  25. Richard Blogger

    As you say, but not loudly enough, this outsourcing process started under Labour, and it would have happened if Labour had won the election. At the beginning of the year there were five private companies tendering and one Foundation Trust. The FT decided that they could not take the risk and pulled out of the tendering. So we have known for 10 months that a private company would be running Hinchingbrooke. To be frank, when the alternatives are the likes of Serco, Circle seems to be the least worst option. But it did not have to be so. Labour could have blocked the tendering plan and made sure that there was a NHS solution to Hinchingbrooke.

    I am pleased that you are finally seeing the folly of social enterprises as providers of healthcare. Unison and Unite have been leading the opposition but Labour have done nothing because, well, it was their policy any way. Central Surrey Community Health became a social enterprise under the Last Labour government (28 other community health services around the country did too). Social enterprises are merely management buy-outs. Unison did a survey in the South West and found that only 4% of health workers supported the policy, yet their managers were pushing for it.

    I know this is a forlorn hope, but I would like Ed Miliband to state his commitment to a publicly-owned NHS. I would like him to say that any hospital or Community Health Service that becomes a social enterprise and hence taken out of public ownership would automatically revert to public ownership under the next Labour government. Such a policy would be extremely popular with the public. However, I don’t think that Ed Miliband has to balls to do something that is both popular and right.

  26. Care in the UK

    RT @leftfootfwd: Thin end of the wedge? Private firm to run NHS hospital //bit.ly/fEUg4X and then they subcontract it all .. to follow!

  27. Wendy Maddox

    RT @leftfootfwd: Thin end of the wedge? Private firm to run NHS hospital //bit.ly/fEUg4X

  28. Saltley Gates

    Yes Labour has sold out the NHS to the highest bidders.
    Labour lost the 2010 election because Health Workers deserted Labour,we were sick of Labours privatisation,Labours bullying managers, Labours light touch regulatorlike Monitor, Labours victimisation of our Union reps,Labours sick joke of consultation and stakeholders ending in the feudal hierachical Labour Foundation Trusts

    Labours privatisations become the foundations for the Con Dems dismembering of our NHS.The Neo Liberal concensus, Labours shame.

  29. Jack Stone

    Thin end of the wedge? Private firm to run NHS hospital | Left Foot Forward: //bit.ly/hHj11v via @addthis

  30. Mr. Sensible

    I am very concerned about this.

    If this is a result of Lansley’s proposals…

  31. Mancunian Candidate

    And we've got more on Hitchingbrooke here: //t.co/PtEKVSOk #bbcqt #SaveOurNHS #SaveTheNHS

  32. Peterward

    And we've got more on Hitchingbrooke here: //t.co/PtEKVSOk #bbcqt #SaveOurNHS #SaveTheNHS

  33. Teresa

    And we've got more on Hitchingbrooke here: //t.co/PtEKVSOk #bbcqt #SaveOurNHS #SaveTheNHS

  34. Paul Krishnamurty

    And we've got more on Hitchingbrooke here: //t.co/PtEKVSOk #bbcqt #SaveOurNHS #SaveTheNHS

  35. Alan Mackie

    And we've got more on Hitchingbrooke here: //t.co/PtEKVSOk #bbcqt #SaveOurNHS #SaveTheNHS

  36. Dave Winter

    Thin end of the wedge? Private firm to run NHS hospital.
    //t.co/bwrm9w7V

  37. Samantha Johnston

    And we've got more on Hitchingbrooke here: //t.co/PtEKVSOk #bbcqt #SaveOurNHS #SaveTheNHS

  38. Pete Berry

    RT @shamikdas we've got more on Hitchingbrooke here: //t.co/YfKDcYJn #bbcqt #SaveOurNHS #SaveTheNHS // nobody voted for any of this

  39. Cyrus Bulsara

    And we've got more on Hitchingbrooke here: //t.co/PtEKVSOk #bbcqt #SaveOurNHS #SaveTheNHS

  40. Watching You

    And we've got more on Hitchingbrooke here: //t.co/PtEKVSOk #bbcqt #SaveOurNHS #SaveTheNHS

  41. Shamik Das

    @alexhern @leftfootfwd //t.co/1zl5WMTZ & this frm 2010: //t.co/e1yx6gPo #BBCqt #SaveTheNHS #DropTheBill

  42. Alex Hern

    @alexhern @leftfootfwd //t.co/1zl5WMTZ & this frm 2010: //t.co/e1yx6gPo #BBCqt #SaveTheNHS #DropTheBill

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