NHS spending on independent services is up by more than 10%

Primary care trusts in England spent 10.7% more on services commissioned from independent healthcare providers in 2011-12 than in the previous year, new data show. This compares with a 3.5% rise in total healthcare spending.

The analysis by the healthcare intelligence consultancy Laing & Buisson comes as a leaked letter from the Academy of Medical Royal Colleges to the health minister Lord Howe expresses grave concern that the government’s changes to healthcare are leading to creeping privatisation.1

NHS Financial Information 2013 shows that total NHS spending on healthcare services supplied by private companies and voluntary organisations was estimated at £5.9bn (€6.8bn; $8.9bn) in 2011-12.2 This is equivalent to 6.5% of the £90.7bn total healthcare spending by primary care trusts in England in that period. This figure is up from the £5.3bn spend in 2010-11, equivalent to 6.1% of total spending.

Driving the increase was growth of more than a third in spending on independent community health services linked to the end of their direct provision by primary care trusts during the year. There was also strong growth in spending on general and acute health services, which rose by nearly a fifth to £1.6bn.

However, the sums spent varied markedly in different parts of the health service. Spending on primary care services, for example, fell by more than a quarter. Spending on services for people with learning difficulties fell sharply, by 12%, while spending on mental healthcare was static.

Spending on independent healthcare services also varied widely among primary care trusts. The largest increases were seen in Nottingham city, which saw its spending rise by 60.5% from £85m to £136m, and in Cornwall and Isles of Scilly, up from £77m to £120m, an increase of 55%. Meanwhile, there was no real increase in dependency on the independent sector in Hampshire or Yorkshire.

The analysis also showed that spending on consultancy services overall was stable in 2011-12, showing only a small real terms decline after sharp cutbacks the year before. The NHS spent £466m on consultancy in 2011-12 and £457m a year earlier, well down from the £605m in 2009-10. This was due to the new commissioning arrangements, which meant that spending on consultants by primary care trusts and strategic health authorities dropped.

However, use of consultancy services in acute trusts and foundation trusts rose to £325m from £278m. The increase was driven mainly by London trusts, with the largest single spender being King’s College Hospital NHS Foundation Trust, which increased its spending by a third.

The report also showed that total income from private patients was up by 5.3%, from £448m in 2010-11 to £471m in 2011-12. Growth was strongest in London, where the top five private earners (Royal Marsden, Royal Brompton and Harefield, Guy’s and St Thomas’, Moorfields, and King’s College) saw combined revenues from private patients rise by 15%.