The case for private sector partnership with the NHS

21 July 2016

Reform today releases a new research paper, Delivering the 2015 Spending Review objective of successful NHS partnerships with the private sector. The paper was produced in partnership with Alliance Medical. It is based on case studies of two independent sector partnerships with the NHS: the delivery of intravenous chemotherapy to cancer patients and the provision of PET-CT diagnostic scans. Both case studies involve The Christie Hospital in Manchester, one of the world’s leading cancer centres.

In the November 2015 Spending Review, the Government pledged to “encourage long term partnerships between the NHS and the private sector”. It intended that such partnerships should “modernise” NHS services and deliver “efficiencies”. It highlighted the potential contribution to better diagnostics and the development of new models of care.

The Reform research challenges a number of positions held by some in the health policy debate.  It shows:

  •          Private sector companies play a significant role in the NHS. Private-sector companies play a much larger role in the NHS than is often realised. The main Department of Health definition is the amount spent by NHS commissioners on independent-sector providers. That stood at £6.91 billion in 2014-15, or 6.3 per cent of all NHS spending (up from £6.47 billion in 2013-14).  That figure, however, ignores the activity carried out on behalf of the NHS by independent contractors such as pharmacists and dentists. A recent estimate on the wider definition placed the level of spending on the private-sector contribution at around £31 billion.  The true figure will be even higher than that since private companies also provide a vast range of products and equipment to the NHS.  The Spending Review therefore goes with the grain of life in the NHS.
  •          Private sector partnerships can improve NHS services. What distinguishes successful partnerships is a focus on outcomes that the NHS wants to achieve, and a genuine sense of the contribution made by private-sector partners. The Christie judged that an independent sector company, Baxter, was able to provide a higher level of resilience in the supply of high quality IV chemotherapy. On PET-CT, the Christie joined with Alliance Medical to create a collaborative network that would lift the diagnostic infrastructure in England to a new level. Such a network would not simply provide diagnostic scans. It would provide training and education for radiologists, technologists and radiographers through a School of Oncology provided by The Christie. It would also generate data for researchers at The Christie and other academic institutions.
  •          Modern partnerships are flexible and future-proofed, so that the NHS purchaser is protected if external circumstances change.  One stereotype of private-sector involvement with public services is that the relationship is adversarial, with the private-sector provider able to take advantage of the public-sector commissioner. Another is that contracts are inflexible so that public-sector bodies end up paying unfair costs. The Baxter and Alliance examples show that, at least in these cases, that stereotype is entirely misleading.

In the light of this, the paper makes three key recommendations:

  •          Central government should resist the temptation to direct the NHS towards partnerships, perhaps by introducing new frameworks or template contracts. Successful partnerships respond to local needs and judgements. They stem from local understanding, and creative thinking, on how services can improve for the long term.
  •          Central government should recognise the true contribution of the independent sector.  Because some oppose partnerships, politicians and NHS leaders can be nervous of referring to it, or of recognising the true scale of its role in the NHS.  Such a reticence holds back the development of NHS services because it creates the inaccurate sense that partnerships impose some kind of challenge to the delivery of excellent patient care.
  •          More broadly, the Government should act on the recommendations of the Rose review of NHS leadership. That review reported that the NHS is “drowning in bureaucracy”, in particular the very many requirements for data collection from the various NHS authorities. It rightly found that NHS leaders are distracted from strategic questions about service improvement, which would include partnership.

Andrew Haldenby, Director, Reform



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