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NHS and private sector forge new partnerships to clear patient backlog

National Health Service

NHS and private sector forge new partnerships to clear patient backlog

Forced co-operation during the pandemic has taught both sides how they can operate in a mutually beneficial way

Some 4.7m people are now waiting for treatment in England © Curtseyes/Alamy

Health chiefs in England are looking to the private sector to help clear a massive backlog of patients whose care was delayed during the pandemic, creating a dilemma for independent providers that can earn more from people who can afford to pay for their own treatment.

Just over a year ago, the NHS completed an unprecedented deal to buy up virtually the entire capacity of the private sector, pouring in millions of pounds of taxpayer money as part of measures to ensure the health service was not overwhelmed as the Covid-19 crisis escalated. 

Some 4.7m people are now waiting for treatment in England, including more than 387,000 who have been doing so for more than a year. David Hare, chief executive of the Independent Healthcare Providers Network, said: “We think this is a long-term, minimum five year, exercise to get on top of the waiting lists and improve access for NHS patients and . . . that will require a lot of capacity from the private sector.”

The deal forged during the early days of the pandemic, which cost an estimated £400m a month, also shored up private health groups that would otherwise have struggled to survive as the NHS staff they use to perform operations were diverted full-time to duties in the taxpayer-funded system.

While that original deal has expired, more than 90 providers — virtually the entire independent healthcare market — have signed up to another four-year deal with NHS England, worth up to £10bn, which began in March. This includes two of the biggest, publicly listed Spire Healthcare and privately owned Circle Healthcare.

Unlike the previous contract, which took over all private hospitals’ capacity in exchange for paying all their costs, including debt and interest, the new deal will pay them according to the number of patients treated. 

Not all the providers that have signed up will eventually participate. Some are keen to catch up with their own backlog of private medically insured patients. In some cases they are also reluctant to take on more NHS work because they can charge higher prices for private medical insurance-funded and self-paying patients. 

“We don’t want to fill our hospitals with too much NHS work,” an executive at one provider, who declined to be named, told the Financial Times. “The margins from private payers are much higher so we want to do self-pay and private insurance work.”

However, he added that private hospitals were seeking to extend their working hours by taking on more cases in the evenings and on Saturdays, indicating that their company would try to maintain income from both NHS and private patients.

One option for the NHS to reduce its backlog would be to raise fee rates paid to private hospitals but budgetary pressures, which have only worsened during the pandemic, will make that difficult.

Tony Veverka, chief executive of Transform Hospital Group, a cosmetic surgery specialist that worked with the NHS during the pandemic, said the Covid-19 crisis had seen a “groundbreaking partnership” between independent providers and the NHS.

But he warned that “any changes to the tariff mechanism should reasonably reflect the increased costs of care”.

“Any alterations should also ensure that services are appropriately funded to the extent that providers can effectively plan ahead and that capacity can be made readily available whenever and wherever it is needed,” he said.

Private hospitals are paid for each patient but until the end of September, NHS hospitals are being paid through block contracts, receiving a fixed sum to deliver a service, but with additional payments if greater than expected numbers of patients are treated. It may not make sense for hospital trusts to farm out the easier cases to private hospitals while retaining the longer stay patients themselves.

David Rowland, director of the Centre for Health and Public Interest, a think-tank that scrutinises private sector involvement in the NHS, said that it was unclear why the health service would not use all its staff capacity for NHS patients given the long waiting lists. “NHS doctors should be doing as much as they can to clear the NHS backlog rather than treating patients who are able to pay,” he said.

However, some hospital chains such as Australia’s Ramsay, which earned 80 per cent of its revenue from the NHS before the pandemic, are willing to help clear NHS waiting lists. 

Andy Jones, chief executive at Ramsay Health Care UK, said it would “continue to work together to help clear the backlog of patients waiting for elective surgery as well as patients who require treatment in more urgent and priority areas such as cancer and cardiovascular disease”.

But although Spire Healthcare grew its NHS revenues by more than 50 per cent in 2020 compared with the previous year, it believes long waiting lists will encourage people to convert to self-pay, the fastest growing segment of the healthcare market.

Investment by independent providers in diagnostic imaging equipment such as scanners would benefit both self-pay and NHS patients as the health service grapples with a shortage of the machines © Neil Hall/EPA

In early March it said its inquiries from private patients were up 29 per cent on the previous year. 

“People will be choosing to pay for their own treatment and they have [discretionary] cash”, said Justin Ash, Spire chief executive. At the same time, he anticipated working more closely with the NHS. “It will be a different world and there will be a more collaborative approach between trusts, commissioners and independent sector providers.”

The IHPN’s Hare said there were “emerging signs that more people will want to pay for their own care directly and through private medical insurance”, but he suggested the public and private sectors could forge new kinds of partnerships. Investment by independent providers in diagnostic imaging equipment such as scanners, for example, would benefit both self-pay and NHS patients, as the health service grapples with a shortage of the machines. 

Chris Hopson, chief executive of NHS Providers, which represents health leaders across the country, said the NHS was “going to have to treat people differently and more productively and that would suggest there is an opportunity for new ways of doing things that could involve the private sector more”. 

Take up of private sector provision by the NHS even at the height of the pandemic was inconsistent — overall about two-thirds of their capacity went unused and some hospitals furloughed administrative staff.

But Hare rejected the assertion that provision “was underutilised across the board”, pointing to high take up of surgical capacity: operating theatre productivity “was running at around 90 per cent”, he said.

Hopson said difficulties were less about “a cultural reluctance” to use private provision than “sheer logistics”, with NHS organisations asked to make rapid new arrangements with the independent sector “at a point when they were completely overwhelmed with other things”.

But the past year had produced a new enthusiasm for working with different partners to deliver care at times of pressure, he said. He pointed to University Hospitals Plymouth Trust in the west country which, at the height of the pandemic, temporarily transferred its oncology department to a hospital run by Nuffield Health in order to release NHS resources.

“It just feels, when you talk to chief executives, there is a recognition that, given how big the task ahead is, getting as much help as possible, wherever it comes from, is really important,” Hopson said. Collaborations with the private sector had proved “beneficial and helpful, particularly when it became clear that the local NHS controlled the way private sector capacity was used.

“If there were suspicions or concerns, I think the experience over the period of the pandemic has helped to overcome them,” he added.

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