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The NHS carve-up model now revealed

Lip-smacking profits of £20bn for the private sector are today revealed in a prospectus sent out by Catalyst, corporate finance advisers specialising in healthcare. It notes that already contracts worth £500m have been won by the private sector to provide NHS services. They are now eyeing up the £8.3bn spent each year on GP services as well as the £8.5bn community health services budget of which they expect to capture a fifth by 2020.

What is new however is how they expect to get it, and that too is now becoming clear. It’s not of course by competition on a level playing field – the private sector would lose hands down every time on that basis – it’s by rigging the market which Blair started over independent treatment centres and the Tories are now extending much further.

How’s it done? Rule 1 is bankrupt a number of hospitals by the £20bn financial squeeze on the NHS. The South London Healthcare NHS Trust is already in administration because of its unpayable debts, and many others are clearly being driven down that route too. Among the Foundation Trusts which were supposed to be the copper-bottomed solid base of the Blair reforms, Peterborough is now £50m a year in debt, and again there are many following behind in similar distress. This process of gradual evisceration is being given a hearty strengthening by the regulator, Monitor, reducing tariff charges which by cutting hospitals’ income will rapidly hasten the demise of the weaker brethren.

Rule 2 is undermine NHS hospitals by draconian referral criteria which severely ration treatments and thus cut the number of operations and thence hospital income. This is already happening for hip and knee replacement which is being withheld until people can no longer cope independently, even though means keeping more than 100,000 on the waiting lists for more than 18 weeks.

Rule 3 is to take advantage of these huge and growing lists of people denied NHS treatment by administrative restrictions through generating a massive increase in private sector work within the NHS. Under Labour general hospitals were restricted to just 2-3% of their facilities being used for private practice. The Tories have extended that to no less than 49%, and in addition insurance companies are enjoying a binanza offering top-up cover to fill the gaps left by thr NHS being forced to withdraw.

Rule 4 is push the burgeoning takeover of GP surgeries by private companies, many of them US healthcare multi-nationals. Cameron must be pleased that so many were taken in by his slogan: “I’ll cut the deficit, not the NHS” when of course what he really meant was the precise reverse.


  1. David Ellis says:

    Kerrching! The cash point is now open. A huge percentage of your National Insurance Contributions will now be directed away from the provision of health care into fat cat executive salaries and shareholders who couldn’t give a flying one if you die of cancer or not.

  2. David Ellis says:

    Any `efficiencies’ will come from a huge contraction in the services available for no charge at the point of delivery.

  3. There is more to it than meets the eye.

    First, have a look at Southern Cross – a provider of residential care. This company was a prop-co/op-co with one half owning the property and the other half running the nursing homes. The prop-co recklessly bought property during the boom and hence built up a huge debt they could not pay back. The op-co was heavily dependent upon payment from local authorities: the public sector. Southern Cross collapsed when the prop-co had to put up rents to try and manage its debts while the op-co’s income was squeezed by government cuts.

    The five big private hospital groups are like the Southern Cross prop-co – they are heavily in debt and the bankers want repaying. Private health insurance is in recession: fewer people can afford it personally and companies are regarding it as a benefit that is too expensive to provide. Self pay is up slightly, due mainly to the rationing in NHS care as you mention: people get ONE cataract done by the NHS and so have to pay for the other done in a private hospital.

    Are private hospitals efficient? No. There is a Competition Commission market review at the moment and the initial evidence (from the OFT) is that private hospitals are inefficient. The OFT say there is no competition because they put their hospitals where there are no other private hospitals and they also operate cartels. The likelihood of the market review is that the private hospital groups will be forced to compete for private patients and will have to lower their prices. This will be a huge shock to the private sector that is already heavily in debt. One or more of the big groups will not survive it: we will have another Southern Cross. The private sector is desperate for a government bailout.

    At the moment, one quarter of the income of private hospitals comes from treating NHS patients. The NHS is propping up the inefficient, expensive private sector. The Lansley reforms are designed to allow the state to prop up the private sector further with more NHS cash.

    For example, look at Hinchingbrooke. Contrary to the shrill rantings of some people, the hospital was not privatised. The assets (the property) are still owned by the NHS and the staff are still NHS employees. All that has happened is that the management has been replaced by a private company. The important point is that the company, Circle, is allowed to make a profit from the surplus generated by the trust (if there is one). The point is, Circle have NOT invested in Hinchingbrooke, they are not using their own money. They do NOT have the problem that (for example) General Hospital Group have of a £1.4bn debt from buying hospital property. (Incidentally, Circle are in debt too, they have never made a profit.) Hinchingbrooke is a way for a private company to make a return WITHOUT investment. This is the primary aim of the Lansley reforms: to prop up the private sector with NHS cash.

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