NHS outsourcing

Given the current scale of the NHS elective care waiting list, the Government has renewed its focus on the independent sector’s role in delivering NHS-funded care.

Location: England
Audience: All doctors
Last reviewed: 15 March 2022
NHS Structure Article Illustration

About the report

Outsourcing of NHS services to the independent sector is not a new phenomenon, yet the Government's pandemic response and newly published elective recovery plan heavily reflect its commitment to further embedding the independent sector into the fabric of health services delivery.

The Government's policy proposals come at a time when the English NHS is experiencing some of the most severe pressures in its 70-year history. A decade of underinvestment and inadequate system planning has left the NHS with crippling workforce and bed shortages, and therefore, no spare capacity to tackle the NHS elective waiting lists which existed before the COVID-19 pandemic and have been ever-expanding since.

Consequently, it is important to use all available capacity to address waiting lists and ensure patients receive the treatment they need with as little delay as possible. This involves using the independent sector in the short-term. However, we are concerned that the UK Government’s plans – and namely its recently published elective recovery plan - risk embedding a longer-term trend of outsourcing NHS contracts and funding to ISPs (independent sector providers) in England, rather than sustainably increase NHS capacity.

We have consistently opposed the outsourcing of NHS contracts to the independent sector, on the basis that it threatens the clinical and financial viability and sustainability of the NHS.

Our new research examines the extent of ISP involvement within the NHS and what this means for doctors, patients and the health system as a whole. This sits alongside a wider examination of the role and reach of the independent sector within the health service in England and how the changing policy landscape might alter it, as well as our recommendations for how the NHS should be at the heart of its own recovery.

Context

More private sector contracts are being used to help tackle NHS waiting lists

The elective recovery plan proposes to significantly increase the use of the independent sector through a range of factors, including the expansion of patient choice, long-term contracts and partnerships with ISPs, and the development of a payment regime to incentivise increased activity.

Among the initiatives to help clear the elective care waiting lists is the four-year ‘National Increasing Capacity Framework’. This is an agreement that could see ICSs and NHS trusts spend up to £2.5 billion a year procuring elective activity from a pre-approved list of ISPs. These funds represent almost double the amount spent on contracts with independent sector hospitals in 2018 and 2019.

These arrangements succeed the first COVID contracts in 2020 that block-purchased the entire operational capacity of 26 ISP hospitals in England. The extent to which this capacity was used remains unclear and, consequently, there have been widespread concerns around the enormous levels of funds allocated to these ISP hospitals.

ISPs have played a growing role in the delivery of elective procedures

The contribution of ISPs in delivering NHS-funded care has rapidly grown from a small base. Our analysis suggests that:

  • in 2020-21, ISPs provided approximately 386,800 NHS-funded elective episodes – or approximately 5.2% of all NHS elective activity. This compared to just 0.02% in 2003-04, the year independent treatment centres were introduced.
  • in 2021 almost half (46%) of all NHS funded cataract procedures were carried out by the independent sector. By contrast, 11% were delivered in the independent sector just five years prior in 2016
  • in 2016-17, approximately 29% of knee and 20% of hip replacements were delivered by ISPs, up from 20% and 14% respectively in 2012-13.

Non-NHS provider spend has increased since the 2012 Health and Social Care Act

Non-NHS providers have a substantial and growing role in delivering healthcare and support services. Successive pro-marketisation reforms have led to a larger share of public sector funds transferred onto the balance sheets of non-NHS providers. Our analysis suggests that:

  • The proportion of spend allocated to non-NHS providers has increased from 8.7% of the DHSC’s RDEL (planned day-to-day health department spend) budget in 2012-13 to 11.1% in 2021-21
  • While the total DHSC RDEL has not even doubled between 2012-13 to 2020-21 (42% increase), NHS trust spend on outsourcing to ISPs has increased nearly seven-fold, from over £220 million to £1.7 billion, in the same time frame (659% increase).

Spending on ISPs specifically increased in 2020/21 due to the pandemic

The increase in ISP spending during the pandemic reflects the historic lack of NHS funding which led the Government to contract with ISPs to bolster NHS capacity.

  • Spend on ISPs was £2 billion higher in 2020-21 compared to the previous year, where spend was £11.8 billion.

The future of independent outsourcing

The government’s elective recovery plan risks embedding ISP provision of elective NHS care in the longer-term and potentially beyond the 2025 target for elective recovery. This threatens to undermine NHS planning, finances, and staff training if certain surgeries – namely high volume, low complexity procedures - are no longer performed in the NHS.

The prospect of ISPs sitting on newly established ICS Elective Care Boards, which will plan and deliver local strategies for elective care recovery, is alarming. The use of NHS resources should be determined by NHS leaders and based on patient need. ISPs should not be able to directly influence local decision making on elective recovery.

Demand for self-funded care in the independent sector is increasing

The extent to which independent sector hospitals will be able to take on NHS waiting list initiatives going forward is unclear. Mounting evidence shows that longer waits for NHS treatment are driving more patients to seek private healthcare.

NHS-funded activity carried out by ISPs is further constrained by the backlog of private patients who were unable to access treatment during the 2020 block-booking arrangements.

A BMA survey (September 2021) of doctors engaged in private practice found:

  • 60% of private practice respondents were unable to provide care to their private patients at the time
  • 25% reported private patients presented later than they should have.

The Health and Care Bill risks opening the door to further outsourcing

The BMA has been clear that the Health and Care Bill is the wrong bill at the wrong time and is actively campaigning for it to be significantly and urgently amended to safeguard the NHS.

We believe that the Bill must be amended to make the NHS the default option for NHS services. This would mean that NHS providers would be the first choice for NHS contracts, with a view to supporting their long-term financial security, the continuity of patient care, and the development of collaborative and integrated models of care.

 

Our view

In February 2022, we surveyed our members to better understand their views on the outsourcing arrangements in place with ISP hospitals, and the potential trade-offs or implications this may have on doctors, patients, and the NHS more broadly.

Our research found that doctors are largely divided as to whether purchasing additional capacity from the independent sector would improve the ability to manage pressures on NHS hospitals. Two in five doctors (39%) feel that ISP contracting will significantly worsen the ability to manage NHS pressures, compared to just 29% who believe it would improve.

Concerns highlighted include:

  • the availability of NHS staff (83%), as a result of the existing limited pool of staff taking on additional work in the independent sector;
  • the funding and sustainability of NHS services (81%) if certain more profitable services are ‘creamed off’;
  • the scope and quality of doctors’ training (81%), given independent sector providers are under no obligation to train staff.

There are also concerns around the fair and transparent regulation of ISPs (47%) and the potential for the quality of clinical outcomes for NHS patients to worsen (41%) in ISP settings, which often do not have access to emergency care for example or the resources available in NHS hospitals.

Our research looks at these results in more detail.

 

Our recommendations

Due to historic underinvestment, the NHS does not have adequate capacity to address the record backlog of care. It is therefore important to use all available capacity - including the independent sector in the short-term - to ensure patients receive timely care.

Any arrangements carried out with the independent sector should be time-limited and run alongside the development of a new strategy that credibly deals with the NHS backlog, staffing needs and resources to match with the health needs of our population.

The Government must:

  • Develop a workforce strategy that ensures sufficient investment in growing the workforce, and - as a minimum - must increase medical school and postgraduate specialty training places. It is also imperative that the NHS takes immediate action to retain the existing workforce, including resolving pay and punitive pension taxation rules that force doctors to reduce their overall working hours or retire early.
  • Take steps to increase bed capacity in the NHS, including re-opening of closed acute beds. This is a more efficient way of expanding capacity and would not rely on the transfer of doctors from NHS hospitals to neighbouring private hospitals to staff these.

Where outsourcing is likely to occur, any associated risks around, for example, patient safety and reduced medical training in ISP settings, must be appropriately mitigated.

  • To ensure that the next generation of doctors are equipped with appropriate levels of training, the NHS Standard Contract should be amended to require ISPs to contribute towards the education and training of the NHS workforce – both financially and by virtue of making available suitable opportunities. Providing training for junior doctors should be a precondition of ISPs accepting NHS work and must be an explicit part of any outsourcing contracts. 
  • Adequate risk assessments must be built into any new agreements with ISP hospitals to ensure robust patient safety. Within this, it must be ensured that pre-operative checks are aligned for NHS and private hospitals. Where there are no critical care facilities in ISPs, there must be structured arrangements in place to ensure patients can be safely and swiftly transferred to the right environment should they need higher acuity care.
  • It is crucial that a clear and transparent governance system is in place, including contracting and financial arrangements. The costs and performance of the approved framework suppliers must be monitored and scrutinised to ensure that public resources are not being wasted on ISPs who are not delivering on their contracts.

The Health and Care Bill must be amended to safeguard the NHS from further outsourcing.

  • The default provider for NHS contracts must be the NHS.
  • The Government must rule out independent sector companies wielding influence over commissioning decisions.
  • The Government must be responsible for ensuring adequate staffing levels in the NHS.

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