Health firms told to get set for £20bn NHS bonanza: Report says there is 'significant opportunity for private sector in primary and secondary care'
Private health firms can expect to win business worth around £20bn from the NHS in the next few years by taking over GP surgeries and setting up new community health clinics, according to a report written for profit-making companies keen to expand their role in the health service.
The "£20bn opportunity ahead for the private sector" in the NHS as a result of coalition policies and pressure on public finances is set out in a briefing on the private sector's potential future role by Catalyst, corporate finance advisers who specialise in healthcare.
There is a "significant opportunity for the private sector in primary and secondary care," says the Catalyst report. "The introduction of GP commissioning and interest in healthcare models offering alternatives to hospital care will require a higher proportion of services to be delivered by the private sector. The markets for these services are estimated to be worth around £20bn."
Recent contracts worth as much as £500m which private firms have won to provide NHS services show the NHS is becoming more open to such providers, it says. "Landmark contracts awarded to Circle, Virgin Care and Serco demonstrate increasing recognition from the public sector that leveraging the private sector's ability to invest capital and use more efficient delivery models is necessary for the government to reduce costs while improving the quality of healthcare."
Virgin Care, part of Richard Branson's business empire, signed a £500m contract with a primary care trust in Surrey to provide community health services over the next five years and is the preferred bidder to land a £130m contract for children's health and social care services in Devon.
Justin Crowther, director at Catalyst and coauthor of the report, said: "Despite many challenges, the private sector is increasingly providing healthcare services, whether paid for by the taxpayer or directly by consumers at the point of use. Whether this is to turn around underperforming hospitals, operate GP surgeries, deliver community services or create centres of excellence in areas such as pathology, [NHS] commissioners are increasingly using the skills and capital of the private sector."
With pressure growing for more services to be provided outside of hospitals closer to people's homes, private firms can expect to make inroads into the £8.3bn spent on GP services every year in England, the report states. Virgin Care and The Practice currently earn about £185m a year from operating GPs surgeries, just 2.2% of the primary care budget.
In addition, of the £8.5bn community health services budget, "we believe the private sector could deliver up to 20%, or around £2bn, by 2020," it says.
Private firms could afford to build new premises which the NHS's budget squeeze means it cannot, it adds. The restructuring of pathology services is another opening, with the NHS Midlands and East of England's strategic health authority's decision to let private firms tender for a £500m pathology contract an example of a potentially profitable emerging trend.
The creation next April of local clinical commissioning groups by the coalition's controversial NHS shakeup, groups of GPs who will buy healthcare for patients and control £60bn of NHS budgets, will see them buying back-up known as commissioning support services – a market worth an estimated £1.3bn a year – the report adds.
While the impact of the Health and Social Care Act on the NHS's procurement policies remains unclear "the role of the private sector is increasing. If this is combined with the removal of barriers to higher participation, such as in primary care removing practice boundaries and goodwill on GP practices, investment would be boosted and the opportunity for the private sector to build business with scale will be considerable," it predicts.
Labour said the report was "concrete proof that the great NHS carve-up is well under way. The government opened the floodgates with a Health Act that places a market free-for-all at the heart of the health.
"Since then, they have ordered the open tendering of community services, creating the conditions for private firms to pick off lucrative services," said Andy Burnham, the shadow health secretary.
"Worse still, in Jeremy Hunt we now have a health secretary who bent over backwards in his last job to promote powerful private interests and, in his own back yard, encouraged the handing over of NHS community services to Virgin. The NHS is not at all safe in Mr Hunt's hands."
Dr Clive Peedell, cochair of the NHS Consultants Association and member of the British Medical Association's ruling council, said ministers had misled the public with "their repeated denials of NHS privatisation when this is clearly part of their supply side economic policy to replace large swaths of public sector provision of services with private provision/supply … The £20bn QIPP efficiency drive agenda introduced by New Labour started this process and the Health and Social Care Act is the legislative catalyst, which will drive the privatisation process much faster," he said.
As NHS services fail they will be offered to the private sector, added Peedell. Hinchingbrooke hospital in Cambridgeshire is already being run by private healthcare firm Circle, while private companies are being allowed to bid to take over the similarly debt-laden South London Healthcare trust, which is in administration.
But Vernon Baxter, editor of specialist business magazine HealthInvestor, which monitors private healthcare, said opposition to private providers from NHS organisations could mean their acquisition of new business proves "patchy". "The size of the opportunity for the private sector is likely to run in to the billions, but making it a reality is going to be a real challenge, and there will be significant resistance from within the ranks of the health service." While some CCGs would welcome private providers, others will not use them, he predicted. The Guardian
Private health firms can expect to win business worth around £20bn from the NHS in the next few years by taking over GP surgeries and setting up new community health clinics, according to a report written for profit-making companies keen to expand their role in the health service.
The "£20bn opportunity ahead for the private sector" in the NHS as a result of coalition policies and pressure on public finances is set out in a briefing on the private sector's potential future role by Catalyst, corporate finance advisers who specialise in healthcare.
There is a "significant opportunity for the private sector in primary and secondary care," says the Catalyst report. "The introduction of GP commissioning and interest in healthcare models offering alternatives to hospital care will require a higher proportion of services to be delivered by the private sector. The markets for these services are estimated to be worth around £20bn."
Recent contracts worth as much as £500m which private firms have won to provide NHS services show the NHS is becoming more open to such providers, it says. "Landmark contracts awarded to Circle, Virgin Care and Serco demonstrate increasing recognition from the public sector that leveraging the private sector's ability to invest capital and use more efficient delivery models is necessary for the government to reduce costs while improving the quality of healthcare."
Virgin Care, part of Richard Branson's business empire, signed a £500m contract with a primary care trust in Surrey to provide community health services over the next five years and is the preferred bidder to land a £130m contract for children's health and social care services in Devon.
Justin Crowther, director at Catalyst and coauthor of the report, said: "Despite many challenges, the private sector is increasingly providing healthcare services, whether paid for by the taxpayer or directly by consumers at the point of use. Whether this is to turn around underperforming hospitals, operate GP surgeries, deliver community services or create centres of excellence in areas such as pathology, [NHS] commissioners are increasingly using the skills and capital of the private sector."
With pressure growing for more services to be provided outside of hospitals closer to people's homes, private firms can expect to make inroads into the £8.3bn spent on GP services every year in England, the report states. Virgin Care and The Practice currently earn about £185m a year from operating GPs surgeries, just 2.2% of the primary care budget.
In addition, of the £8.5bn community health services budget, "we believe the private sector could deliver up to 20%, or around £2bn, by 2020," it says.
Private firms could afford to build new premises which the NHS's budget squeeze means it cannot, it adds. The restructuring of pathology services is another opening, with the NHS Midlands and East of England's strategic health authority's decision to let private firms tender for a £500m pathology contract an example of a potentially profitable emerging trend.
The creation next April of local clinical commissioning groups by the coalition's controversial NHS shakeup, groups of GPs who will buy healthcare for patients and control £60bn of NHS budgets, will see them buying back-up known as commissioning support services – a market worth an estimated £1.3bn a year – the report adds.
While the impact of the Health and Social Care Act on the NHS's procurement policies remains unclear "the role of the private sector is increasing. If this is combined with the removal of barriers to higher participation, such as in primary care removing practice boundaries and goodwill on GP practices, investment would be boosted and the opportunity for the private sector to build business with scale will be considerable," it predicts.
Labour said the report was "concrete proof that the great NHS carve-up is well under way. The government opened the floodgates with a Health Act that places a market free-for-all at the heart of the health.
"Since then, they have ordered the open tendering of community services, creating the conditions for private firms to pick off lucrative services," said Andy Burnham, the shadow health secretary.
"Worse still, in Jeremy Hunt we now have a health secretary who bent over backwards in his last job to promote powerful private interests and, in his own back yard, encouraged the handing over of NHS community services to Virgin. The NHS is not at all safe in Mr Hunt's hands."
Dr Clive Peedell, cochair of the NHS Consultants Association and member of the British Medical Association's ruling council, said ministers had misled the public with "their repeated denials of NHS privatisation when this is clearly part of their supply side economic policy to replace large swaths of public sector provision of services with private provision/supply … The £20bn QIPP efficiency drive agenda introduced by New Labour started this process and the Health and Social Care Act is the legislative catalyst, which will drive the privatisation process much faster," he said.
As NHS services fail they will be offered to the private sector, added Peedell. Hinchingbrooke hospital in Cambridgeshire is already being run by private healthcare firm Circle, while private companies are being allowed to bid to take over the similarly debt-laden South London Healthcare trust, which is in administration.
But Vernon Baxter, editor of specialist business magazine HealthInvestor, which monitors private healthcare, said opposition to private providers from NHS organisations could mean their acquisition of new business proves "patchy". "The size of the opportunity for the private sector is likely to run in to the billions, but making it a reality is going to be a real challenge, and there will be significant resistance from within the ranks of the health service." While some CCGs would welcome private providers, others will not use them, he predicted. The Guardian
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