Richard Branson’s Virgin Care won a record £1bn of NHS contracts last year, as £3.1bn of health services were privatised despite a government pledge to reduce the proportion of care provided by private companies.
Overall, private firms scooped 267 – almost 70% – of the 386 clinical contracts that were put out to tender in England during 2016-17, according to a new report. They included the seven highest value contracts, worth £2.43bn between them, and 13 of the 20 most lucrative tenders.
The £3.1bn in contracts, a big rise on the previous year’s £2.4bn, prompted concern that profit-driven companies are increasingly involved in delivering care, in a development that undermines repeated assurances by the health secretary, Jeremy Hunt, that they play only a marginal role.
“These figures clearly show that privatisation has a strong momentum within the NHS,” said Paul Evans, the director of the NHS Support Federation, a campaign group which monitors the privatisation of NHS services and which produced the report. “The doors to private sector involvement in the NHS remain open despite promises to move away from market-based approaches by NHS leaders and politicians. Privateers continue to win huge new NHS contracts.”
Virgin’s £1bn haul means it now has over 400 separate NHS contracts. Its growing role has prompted particular anger among anti-privatisation groups. It pays no tax in the UK and its ultimate parent company, Virgin Group Holdings Ltd, is based in the British Virgin Islands, a tax haven.
In addition, it came under fire for suing six clinical commissioning groups (CCGs) in Surrey, NHS England and Surrey county council last year after losing an £82m contract for children’s services to a rival bid involving a local NHS trust and two social enterprises. A settlement of the action appears to have involved the six CCGs paying Virgin an undisclosed sum.
Virgin said it had been so concerned over “serious flaws in the procurement process” that it had no choice but to launch the proceedings.
The private sector’s £3.1bn of wins last year represented more than two-fifths (43%) of the £7.2bn of contracts tendered by the NHS for services including babies’ health and out of hours GP care. That dwarfed the £2.55bn (35%) of tenders won by NHS trusts and £1.53bn (21%) by not-for-profit organisations, including charities.
The expanding role of for-profit firms comes despite a pledge by the NHS England chief executive, Simon Stevens – backed by Hunt – to abolish the purchaser/provider split in the health service introduced by Margaret Thatcher’s government in 1990, which helped facilitate competition in healthcare and the outsourcing of services, and promote greater integration of health and social care services.
“Private health providers now have a strong foothold,” said Evans. “Billions of pounds-worth of opportunities to bid for NHS business are still being advertised, despite numerous failures and widespread criticism.”
Critics say that the sector’s continued success stands in sharp contrast to a long history of winning contracts, often by undercutting rival bids from NHS trusts, only to then hand back those that do not yield a profit or have them taken away because they have provided inadequate care.
The report details “a catalogue of failures” – dozens of examples of private firms taking over NHS services since 2012 but then abandoning them, either because they cost them too much to provide, or could not recruit enough staff, or went into administration – or, often, because of serious complaints about the quality of their service.
For example, in 2014 Circle pulled out of its 10-year contract to run Hinchingbrooke hospital in Cambridgeshire – the first NHS hospital to be run by a private firm – two years early after encountering financial problems and heavy criticism from the Care Quality Commission (CQC), which regulates NHS care standards.
In 2013, Serco ended its contract to provide out of hours GP care in Cornwall after staff falsified data about its performance. And in 2015, Coperforma’s £63.5m takeover of non-urgent patient transport to hospital in southern England was branded an “absolute shambles” by health unions after kidney patients awaiting dialysis and cancer patients undergoing chemotherapy missed vital appointments. It finally lost the contract in late 2016.
“The NHS is currently going through the biggest financial squeeze in its history, which has translated into service closures and greater rationing. Now on top of that this report reveals more evidence of increasing NHS privatisation accelerating at an alarming rate, and yet this toxic outsourcing agenda is failing both patients and staff alike,” said Jonathan Ashworth, Labour’s shadow health secretary.
Care UK, which has links to the Conservative party, gained the second biggest share of NHS contracts last year – worth £596.3m. It won a contract worth £169.5m in partnership with an NHS trust, and three others for £135.6m, £120.9m and £115m in its own right.
Both it and Virgin Care have benefited by changing tactics to target often high-value contracts for community-based health services as the NHS in England increasingly moves care out of hospitals, the report says. Care UK already runs the NHS 111 telephone advice service and walk-in centres in some areas. In 2009, its chairman, Sir John Nash, donated £21,000 to Andrew Lansley, who as the Conservative health secretary in the coalition a year later forced NHS bodies to tender out far more services through the controversial Health and Social Care Act.
“Dysfunctional” NHS procurement rules mean that private firms could land another £10bn of contracts in the next three years, said Evans. The NHS Support Federation, which is funded by individuals, charitable trusts and trade unions including the TUC, tracks publicly available information about NHS tenders.
Virgin Care and Care UK defended their role in delivering NHS-funded healthcare. A Virgin Care spokesman said:“We have a strong track record of delivering high quality, free NHS services over the last 11 years. More than 93% of people rating the services we run would recommend them, while the CQC have said in their recent report we can evidence the improvements we have made to community services.”
A spokesperson for Care UK said: “We have a very strong track record in partnering with the NHS to deliver high-quality and patient-focused care. This includes three services rated outstanding by the CQC and consistently high patient feedback scores.”
A Department of Health spokesperson said: “Spend on private healthcare by the NHS accounts for just eight pence of every pound and this government is fully committed to a world-class NHS owned and funded by the British taxpayer and free at the point of use, now and in the future.”