NHS 'privatisation': what's the mood among independent providers?

NHS 'privatisation': what's the mood among independent providers?
Private sector providers continue to increase their presence, despite a widespread feeling that political support for them has expired.

Much ink has been spilt since the 2010 election over the coalition government's "privatisation" agenda. Commentators, politicians, wonks, lobbyists and health academics alike have built careers on the back of this most emotive of political debates, but amid the sound and fury there is one party that has been largely absent from the discourse: the private sector itself.

To its critics, the independent sector's reticence to join the debate is a symptom of its malevolence – sharks silently circling their prey.

In practice, the UK's independent sector providers are a disparate bunch, competing against each other as often as colluding. And while there are some deep-pocketed exceptions (such as Serco and Virgin Care), most are small to medium enterprises that depend on flexibility and opportunism to survive. Their businesses rely on winning tenders, not ideological arguments.

Each year, then, HealthInvestor magazine and the law firm Nabarro conduct the Healthcare Industry Barometer – a telephone survey of more than 110 senior leaders in the independent sector – to gauge the atmosphere in the market.

The survey focuses on politics, the economy and the NHS. However, it is the latter of these three sections that tends to attract the most attention.

This year, the consensus among the private sector is that the health service is heading for a "logistical, quality and cost crunch". The stress this will place on the system will, independent providers feel, lead to greater opportunities for them.

In the near term, this is likely to manifest itself in the private sector providing excess capacity for the parts of the health service that are over-stretched, and competitive tension where it is a touch flabby.

In the mid- to long-term, though, the expectation is that services will have to be reconfigured to deliver more care in the community (and less in large acute trusts). Achieving this within the health service itself is much easier said than done. NHS managers have long been judged on how competently they control costs and meet targets within their respective fiefdoms – asking them to redistribute the revenues generated by their service lines can feel counterintuitive to some, and amounts to career suicide for others.

This perhaps explains why the private sector is bullish on the role it can play in the health service. As the current procurement for older people's services in Cambridgeshire and Peterborough suggests, many senior figures in the health service believe integrated care pathways (where budgets are shared, not siloed) are the route to salvation.

So far, at least, there has been a trend to tender for these contracts by setting an aggressively tight capitated budget (a set fee per patient), and hoping that a prime contractor can deliver the service within costs, keeping whatever surplus is left as profit. Of course, this doesn't always work so well in practice – just look at NHS Direct.

It is worth noting, though, that such contracts remain the exception rather than the rule, and enthusiasm for Andrew Lansley's Clinical Commissioning Groups remains muted. Indeed, over the past three years, the percentage of those surveyed who believe commissioning has led to "a more plural and competitive market" has slumped from just over 50% down to 20%.

Not for the first time, a top-down organisation has resulted in inertia and confusion, rather than the anticipated innovation.

Likewise, since 2010, HealthInvestor's readers have been asked to grade how confident they are that the Conservative-led coalition would accelerate the expansion of the private sector in the health service. And since 2010's peak, when more than 80% felt positive, confidence has been steadily on the wane. Just over half of this year's cohort argued that any overt political support for the independent sector had expired.

Confidence in politicians, though, is a flimsy basis for any business plan – and in reality, most independent providers simply keep their heads down and get on with it. As a report from the Institute for Fiscal Studies and the Nuffield Trust detailed this year, the independent sector continues to increase its presence in the market despite these setbacks.

That is not to say that the debate over who provides our public services, and how they are regulated, is anything less than vital. But to the investors that support the private sector, the latest message from the market is one of austerity trumping ideology. The Guardian