The NHS paid private hospitals £2bn in the pandemic: did taxpayers get value for money?BMJ 2023; 380 doi: https://doi.org/10.1136/bmj.p329 (Published 15 February 2023) Cite this as: BMJ 2023;380:p329
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How the private sector benefitted from a £2bn NHS covid contract
“A gift to the sector”: why did the NHS’s contract with independent hospitals allow private patients to be treated when the NHS was overwhelmed?
The role of the private sector during the pandemic
“It hadn’t had a great reputation,” says Natalie Balmain, describing Foscote Hospital, a small private hospital in Oxfordshire, which was acquired by new owners in 2019 and rebranded as New Foscote Hospital. “It hadn’t been financially viable for many years.”
The 12 bed hospital was 11 months into a successful turnaround plan when the pandemic hit. Determined not to let “a facility with trained nurses and beds and equipment” be underused during lockdown, Balmain, interim chief operating officer, knocked on the doors of NHS England, Oxford University NHS Foundation Trust, and local MPs in the hope of keeping New Foscote’s doors open. Within weeks, New Foscote Hospital became one of 27 private hospital businesses to join a new national contract between the private sector and NHS England, announced to the public on 21 March 2020.
The “major deal” bought the entire capacity of 200 private hospitals, including 8000 private beds, 1200 ventilators, 700 doctors, and 10 000 nurses, to help the NHS care for patients with covid-19, with cancer, or needing urgent operations.1
A BMJ investigation has found that, despite a generous contract with the NHS estimated to be worth around £2bn, the private sector was massively underused in many areas of the UK during the pandemic. The investigation found that just 30 of the 200 private hospitals were used to treat patients with covid-19 in April 2020.2
In May 2020, the private sector was advised to shift its focus to tackling elective care that had been put on hold by NHS trusts swamped by patients with covid-19.3 But NHS England data collected in the first year of the pandemic show that some private hospitals were also underused when it came to tackling NHS waiting lists. And two of the biggest hospital groups on the contract treated more private inpatients than NHS patients, despite NHS England agreeing to pay for nearly all their operating costs. Experts are now questioning why NHS England bought up hospital capacity rather than paying for activity that was delivered.
Nuffield Health devoted 64% of its episodes of inpatient care across its 29 contracted hospitals to private patients rather than NHS patients in the first year of the pandemic (1 April 2020 to 31 March 2021),4 despite NHS England paying the hospitals’ expenses. Spire devoted 62% of its episodes of inpatient care across 36 of its private hospitals to private patients despite taxpayers paying their expenses, according to data from the Private Healthcare Information Network. Meanwhile, 44% of episodes of inpatient care at Circle’s 47 private hospitals were private patients; at Ramsay’s 31 hospitals nearly 27% of episodes were private. Together Nuffield Health, Circle, Ramsay, and Spire’s 143 private hospitals delivered just 51% of their total episodes of inpatient care to NHS patients in the first year of the pandemic (fig 1).
The Independent Healthcare Providers Network (IHPN), which represents the private hospitals, said that the contract with NHS England paid for independent hospitals’ capacity, staff, and equipment rather than specific levels of activity and that the hospitals were always available to treat NHS patients. IHPN added that private work was only carried out when facilities were not required by the NHS, as was permitted in the contract. Focusing on inpatient care does not reflect the broad range of services delivered by the private sector during the first year of the pandemic, a spokesperson said.
David Hare, chief executive of IHPN, told The BMJ that he was “comfortable” with the sector’s contribution in that period. “The ask was very much to make ourselves available, to throw ourselves at it, to coordinate a response, and to treat as many patients as the NHS wanted us to do. We very much feel that was upheld.”
Richard Packard, chair of the Federation of Independent Practitioner Organisations, which represents medical professionals’ committees in the UK, agreed with Hare, saying that there was “massive underuse” of the private sector in “plenty of areas” around the UK but put the blame firmly on the NHS. “It was the NHS managers who were supposed to organise things,” he said. “The NHS couldn’t organise a piss up in a brewery.”
A spokesperson for NHS England said, “The purpose of the contracts was to increase the physical capacity and staffing numbers available to the NHS to respond to the pandemic. The contracts were not to simply refer NHS patients to private providers.” They added: “The NHS was facing an unprecedented pandemic with high levels of uncertainty, and the support of the independent sector in the early stages of the pandemic was vital both to care for covid patients in NHS hospitals and to the provision of emergency and routine services for patients in both NHS and independent sector hospitals.”
Were private hospitals covid ready?
On the 21 March 2020, NHS England announced that it had signed a “first of its kind” deal to secure 8000 private hospital beds to “aid in the fight against coronavirus.”1 The national contract block booked beds, equipment, and staff at England’s private hospitals for covid-19, cancer, or urgent elective care on NHS patients, on a not-for-profit basis. It allowed NHS teams to take over whole departments of private hospitals if necessary. NHS England agreed to pay for the bulk of the hospitals’ operating costs, including staff, consumables, rent, capital expenditure, building modifications, and infrastructure.
Spire said in its contract that only 35 of its 44 hospitals were able to treat patients seriously ill with covid-19. HCA UK said that only one of its hospitals could treat patients with covid-19 requiring high dependency respiratory support. Nuffield Health, Circle, and Ramsay, however, said in their contracts that all of their hospitals, including clinics specialising in cosmetic surgery and laser eye surgery, were able to care for patients seriously ill with covid-19, in line with NHS England’s guidance.
Yet, between the 30 March 2020 and 30 April 2020, only 0.62% of the private sector’s contracted beds were used to treat patients with covid-19, The BMJ has found.2 There is no suggestion the hospitals breached their contracts by treating so few patients with covid-19 because the national contract did not set expected activity levels.
By 12 April 2020, when the number of patients with covid-19 in England’s hospitals had hit its peak,2 NHS hospitals in England were treating 18 921 inpatients with covid-19, 2881 of them on mechanical ventilation. On the same day, despite the high number of patients with covid-19, only 52 were being treated in private sector hospitals under the national contract.
Just 30 of the 200 private hospitals treated patients with covid-19 from the start of the contract on 23 March until 30 April, and some took less than a handful. King Edward VII’s Hospital, an upmarket 56 bed private hospital in London, treated one patient with covid-19 for one day in this period, although it says that it provided urgent elective care to more than 1000 NHS patients in the first five months of the pandemic. “I don’t think the independent sector ever refused to take a covid patient,” said Alison Pittard, an NHS consultant anaesthetist on the front line during the pandemic and former dean of the Faculty of Intensive Care Medicine. “It is just that the staff and specialist equipment weren’t available in the independent hospitals.”
IHPN said that private hospitals “did not neglect to treat covid patients”; the decision on where patients with covid-19 were sent was made by GPs and local NHS commissioners. A spokesperson for IHPN added that treating patients with covid-19 was never the priority of the national contract. Instead, it was about providing all forms of urgent treatment, including cancer care and elective care, and that treating patients with covid-19 was seen as a last resort if the NHS was overwhelmed. NHS England added that patients with covid-19 in NHS hospitals were treated with the help of private sector staff and private sector ventilators.
Some private hospitals did treat more patients with covid-19. HCA’s Wellington Hospital, which has 206 beds, used 400 bed days to treat patients with covid between 22 March and 31 April 2020. Nuffield Health’s Cheltenham Hospital, which has 33 beds and a high dependency unit, used 252 bed days to treat patients with covid-19. By contrast, the London Clinic, one of the UK’s largest private hospitals, used just 72 bed days to care for patients with covid-19 in its 234 bed hospital, including 13 intensive care beds.
From May onwards the focus became about keeping private hospitals as “covid-free hospitals that could continue to deliver elective activity and help NHS waiting lists from exploding,” says Nils Gutacker, professor of health economics at the University of York. But some private hospital providers treated low numbers of NHS patients, The BMJ has found.
Few NHS inpatients
For two years, NHS England and the IHPN resisted requests to release the granular data showing how much NHS work the private sector actually did during the first year of the pandemic.
The only publicly available dataset was published by the National Audit Office in the form of a pie chart.5 It showed that the private sector carried out around 2 152 392 outpatient activities (66% of its workload), 613 085 diagnostic activities (19%), 340 504 day case activities (10%), 103 332 inpatient activities (3%), and 53 106 chemotherapy and radiotherapy activities (2%) between 23 March 2020 and 4 April 2021.
In November 2022, NHS England finally released a breakdown of the data for each private health business, following a series of freedom of information requests from the Centre for Health and the Public Interest (see supplementary file on bmj.com). The data suggest that some of London’s most prestigious independent hospitals treated few NHS patients, despite crisis level NHS waiting lists.
BUPA’s Cromwell Hospital, in London, provided just 1588 NHS inpatient, outpatient, and day case activities, and 1173 diagnostics between the 29 March and 13 September 2020, despite having 137 beds. And yet it managed to carry out 7550 episodes of care for private inpatients between 1 April 2020 and 31 March 2021, according to data from the Private Healthcare Information Network. The government’s contract with BUPA Cromwell Hospital was worth £27.5m.
The London Clinic, which advertises itself as “one of the largest private hospitals in the UK,” provided just 896 NHS inpatient, outpatient, and day case activities and 1415 diagnostics between 29 March and 13 September 2020, despite having 234 beds and a 13 bed intensive care unit. And yet it delivered 16 220 episodes of care for private inpatients in the first year of the pandemic. The government’s contract with the London Clinic was worth £28.2m.
When contacted by The BMJ, the London Clinic said that it admitted 1487 inpatients, outpatients, and day cases between 28 March and 6 September and said “the slight differences in data [compared to NHS England’s official figures] may be due to classification differences.”
When it came to cancer, only seven of the 27 private hospital businesses signed up to the national contract treated NHS patients with chemotherapy or radiotherapy between 22 March 2020 and the week ending 4 April 2021, including Circle and Spire, which completed 16 253 and 24 075 activities, respectively. IHPN said that additional cancer care was carried out by NHS teams in private hospitals, and this is not captured in these data.
BUPA’s Cromwell Hospital carried out just 11 chemotherapy or radiotherapy activities on NHS patients between 1 April 2020 and the week ending the 13 September 2020 when its contract ended. In a statement, BUPA told The BMJ that it carried out 647 time critical cancer surgeries and 2500 nights of care for NHS patients with cancer between March and July 2020.
Rocco Friebel, an assistant professor of health policy and director of the Global Surgery Policy Unit at London School of Economics, says that the private sector’s relatively low activity figures are “remarkable,” especially given the long waiting lists of NHS patients. “If a certain number of NHS patients were not seen by the private sector, or a certain number of beds remained unused, there should have been a financial penalty.”
IHPN said: “This data is not a complete record of all activity carried out in private hospitals, as some NHS trusts moved entire teams into private facilities and the activity is recorded as NHS work.” Private hospitals’ contribution to the pandemic “has been publicly acknowledged by the NHS, royal colleges, and charities, and recognised by the National Audit Office. This made a real difference to the lives of millions of patients,” a spokesperson added.
An NHS England spokesperson said that The BMJ’s analysis “does not reflect the flexibility of the arrangements, including activity that NHS providers were able to deliver themselves based in independent facilities, or capture that staff and equipment were also available for the NHS to use in their own facilities.”
The true cost
NHS England encouraged independent hospitals to treat private patients and allowed them to keep between 15% and 40% of the net revenue they received from carrying out this work. The rest of the revenue was due to be given back to the government because it was paying private hospitals’ costs. NHS England said that this arrangement would reduce the overall cost to the taxpayer.
“This contract was supposed to be about helping the NHS, but the only incentives were to treat private patients,” says Sid Ryan, senior researcher at the Centre for Health and the Public Interest. “It’s hard to understand why NHS England made it better business to treat private patients over more urgent NHS cases.”
IHPN said that it was not true that there was an incentive to treat private patients over NHS patients and that the treatment of these patients helped to reduce pressure on the health service. “The NHS had first call on the capacity of independent sector providers,” a spokesperson said. There is no suggestion that any private patient was ever treated at a private hospital in preference to an NHS patient.
Contract award notices published online indicate that NHS England expected to pay private hospital businesses around £2.05bn. The BMJ understands that Circle expected to receive at least £462.6m in the first year of the pandemic, Spire expected to receive £459.9m, Ramsay expected £380.1m, Nuffield Health expected £221.2m, and HCA expected £153.2m. NHS England expected to pay at least £373.7m to the remaining 22 hospital groups.
These payments do not represent the final cost of the contract because NHS England and the private hospital groups were still trying to settle the final bill months after the contract ended. NHS England said that it received a “substantial” rebate for each private patient treated but would not reveal what proportion of private sector revenue was reimbursed.
Packard holds the NHS responsible for the “massive underuse” of the privately owned hospitals: “The onus was on the NHS to organise themselves to use the space that had been made available to them . . . It was hardly the private sector’s fault that people didn’t use their space,” he said.
But, as part of the national contract the private sector agreed to “work collaboratively” and “to use best endeavours to maximise coverage and utilisation” of private hospital beds, staff, and facilities. There is no suggestion that private hospitals did not carry out this obligation, but there is evidence that the relationship between the private sector and the NHS was not invariably harmonious.
Packard says that NHS surgeons were only expected to use private operating theatres between standing operating hours of 9 am to 5 pm. “Outside of that time private hospitals could do private work.” Balmain described how one private surgeon at New Foscote Hospital would try to barge in on NHS colleagues who were still operating on NHS patients after 5 pm. “We were saying: ‘Hurry up! We’ve got private patients coming in at 5 pm.’ The [NHS] surgeons were saying: ‘We can’t hurry up! We’ve got a patient on the operating table.’” Balmain was obliged to change the schedule to ensure the private surgeon was not operating on the same night as NHS surgeons.
New Foscote Hospital told The BMJ that Balmain was describing an incident where a clinician was asking colleagues when he could start an urgent cancer operation and that this “does not reflect a cut-off point beyond which NHS patients could not be treated.”
Sam Oussedik, clinical lead of trauma and orthopaedics at University College London Hospitals NHS Foundation Trust, said that his team had to be careful about which NHS patients were referred to the Schoen Clinic, a London private clinic that treats sports injuries and orthopaedics.
“We were quite restricted in the type of NHS patient we could bring to the Schoen Clinic, because they had to be fit and well. High risk patients were kept at UCL so that we could have built-in emergency and critical care expertise at hand. The end result was that fit and healthy NHS patients from the bottom of the waiting list were often prioritised over patients who were just as deserving, but more likely to need back-up services. This created an inequality of access for more complex NHS patients,” Oussedik says. Nevertheless, UCL’s partnership with the Schoen Clinic “allowed us to keep some operations going throughout the pandemic, and for this we are very grateful,” Oussedik says.
The Schoen Clinic said that its consultant intensive care doctors and critical care equipment, including ventilators, were on loan to the NHS in the first four months of the pandemic. This limited the types of patients it could safely treat.
Ambition for more NHS work
Allyson Pollock, clinical professor of public health at Newcastle University, says that the National Audit Office or Public Accounts Committee should conduct a detailed and urgent inquiry into the private sector contracts. “The lack of transparency and accountability for public funding in the national contract is quite shocking,” she said.
However, the prime minister Rishi Sunak is holding discussions with the private sector about how it might continue to help reduce NHS waiting times as part of a recovery plan to tackle waiting lists.6 The shadow health secretary Wes Streeting has also said that he would not “shirk” from using private providers to reduce waiting lists.7
Friebel says that any future contracts with the private sector must contain activity targets, with financial penalties if they are missed. “We can’t just say: ‘We’ll buy all the beds and let’s see what happens.’”
Hare’s focus is firmly on expanding the private sector and helping the NHS “turn the ship around.” He told The BMJ: “The idea that the NHS can get by without the private sector is for the birds, frankly. And I don’t think the public will thank the NHS if that is what it chooses to do.”
“Proud of our contribution”
Joanna Franks is a consultant breast surgeon at University College Hospital London and chair of HCA UK’s breast cancer board. She says that nearly 500 time critical breast cancer surgeries were done on NHS patients at HCA’s Wellington Hospital under the national contract.
“It was clear at the start of the pandemic that University College Hospital would be unable to support critical cancer cases in our normal theatre environments because of the risk of these vulnerable patients catching covid-19. Surgery was being cancelled at the very last minute, which was very distressing for all concerned.
The Wellington Hospital already had an efficient breast service, so it was decided that it would start working with 11 NHS trusts to provide time critical breast surgeries in London. Each trust would have its own lists in theatre, carried out by NHS surgeons and anaesthetists and supported by HCA staff.
Once a week the breast panel would meet online to plan surgery two or three weeks ahead of time, because patients needed to self-isolate for 10 days. All the consultants at the NHS trusts would present the cases they had, and between us we would work out which of the NHS patients needed to be prioritised for the list. It was really collegiate. That’s one of the things about this arrangement that was a major benefit.
We would make sure that the list was shared and maximised to full capacity. So we had NHS teams from different hospitals sharing lists, and we had people moving from one theatre to another sharing skillsets. We pooled use of radiologists coming in to do localisation. We had some of our own equipment, but then we also were able to borrow equipment from the NHS. Normally we didn’t have more than one breast theatre running at the time, now suddenly we had four or five running simultaneously.
The HCA theatre staff came in even though many of them were vulnerable or had vulnerable people at home. We had personal protective equipment; we had the masks and the visors, and we kept people out of theatre during intubation, but at that time we didn’t know how effective those safety measures were going to be. The staff were nervous to travel in by tube but they still came in to make sure the lists ran, because they wanted to make sure that patients with cancer got their treatment.
Part of my role was to make sure that everything ran smoothly on the day of surgery, making sure all their paperwork was in place, including their medical history, their pre-assessment, their mammogram, their pathology report, and so on. Our priority was to make sure that the patient didn’t need to go to a red site [hospital treating patients with covid-19] to have things done. We needed to provide the whole package of care, including radiology and nuclear medicine at the Wellington.
It was all about logistics: did we have all the correct equipment, particularly if we were running four breast theatres simultaneously? We had to stagger patients so we had enough of the right equipment in each theatre. We also needed to make sure that we had an adequate number of staff in case of emergency.
The only private patients that were operated on nationally were those with time critical breast cancers. There was no differentiation between NHS and private patients at that time; they all followed the same pathway and the same rules.
The biggest difficulties we had was when patients discovered they were covid positive a couple of days before surgery. We didn't want to leave fallow theatre space. So we would prep more patients than needed and keep them on a standby list, because most people were self-isolating anyway.
We also made sure that we had two consultants operating per list. Normally we would have a consultant with a junior. But in the first few months of the pandemic we had two consultants operating so that if one went down with covid-19, the other one would still be able to do the list.
The HCA staff are really proud of their contribution to the pandemic. They said to me: “Now I feel like when everybody claps outside I am part of that because I’m here doing these patients that wouldn’t be otherwise done.’”
Provenance and peer review: Commissioned; peer reviewed.
Competing interests: I have read and understood BMJ policy on declaration of interests and have no competing interests to declare.
Additional reporting: Stephen Armstrong, Lihn Vu, Zainab Hussain.
This feature has been funded by the BMJ Investigations Unit. For details see www.bmj.com/investigations