Select Committee on Health First Report


The Health Committee has agreed to the following Report:




1. Considerable interaction between the NHS and the private and voluntary sector was evident even before recent steps by the Government to strengthen their links. NHS private patient units and pay beds comprise 20% of private acute beds. The NHS provides around a third of the funding for voluntary hospices. Almost half of the abortions carried out in the independent sector are funded by the NHS. The NHS also funds around a third of the independent sector acute psychiatric beds and this sector also provides 55% of medium secure psychiatric beds.[1] Over 80 % of brain injury rehabilitation takes place in the private and voluntary sector, as does the bulk of specialist care for eating disorders and substance abuse.[2] Most consultants in the independent sector also work for the NHS.[3] Community pharmacy services are provided exclusively by private sector organizations or individuals.[4] Indeed, the general practice contract is itself a form of public private partnership for the delivery of health care.

2. Our inquiry, however, seeks to examine recent changes and trends in the relationship between the independent sector[5] and the NHS. When deciding on our terms of reference we sensed that events were changing rapidly.[6] Accordingly we chose broad terms, but indicated that the inquiry would specifically focus on:

    The NHS Concordat with the Private and Voluntary Sectors
    The Private Finance Initiative
    Public Private Partnerships[7]

3. Our report deals with each of these areas in turn but also includes evidence relating to the treatment of NHS patients in hospitals overseas, as a consequence of policy developments arising during the course of our inquiry. Our inquiry deals mainly with primary care and the acute hospital sector.

4. Between October 2001 and January 2002 we took oral evidence from the Rt Hon Alan Milburn MP, North Durham Health Care NHS Trust, Consort Healthcare (Durham) Ltd, County Durham and Darlington Health Authority, UNISON, the Business Services Association, Bradford Hospitals NHS Trust, Leeds Teaching Hospitals NHS Trust, Catalyst Healthcare Management Ltd, KMPG, Central Manchester NHS Trust, Royal Berkshire and Battle NHS Trust, South Manchester University Hospitals NHS Trust, Professor Allyson Pollock, Quest Diagnostics Limited, the Royal College of Pathologists, MSF, The Doctors Healthcare Company (TDHC), West Middlesex University Hospital NHS Trust, the NHS Alliance, the British Medical Association, Partnerships for Health, Channel Primary Care Group, the Federation of Independent Practitioners, General Healthcare Group, the Independent Healthcare Association (IHA), Cancer Services Collaborative (South East Region), the Association of Community Health Councils, the Royal College of Nursing (RCN), the NHS Confederation, and Department of Health (the Department) officials.

5. We also received around 100 memoranda which informed our inquiry. We are extremely grateful to all those who submitted oral or written evidence.

6. Many of the areas we examined were highly technical in nature so we are indebted to our specialist advisers, Dr Seán Boyle of the London School of Economics, Mr Kingsley Manning of Newchurch Limited and Mr Chris Vellenoweth, an independent adviser and a former manager in the NHS. We greatly benefited from their expertise. In addition the National Audit Office offered us useful technical support for which we are most grateful.

7. The Government has indicated that it wishes to make much greater use of the independent sector, seeing in this relationship the potential to improve public services. In a speech delivered to the NHS Confederation in July 2001 the Secretary of State for Health set the tone:

    "We have taken a hard look at where the private sector can help. First, using spare capacity in the private sector, such as in private hospitals, to perform operations on NHS patients. Second, getting private sector management to run some of the new stand-alone surgery centres our Manifesto commits us to building and which will specialise in precisely those procedures where private hospitals have some expertise. Third, extending PFI beyond the hospital sector where it has already helped deliver the biggest hospital building programme the NHS has ever seen into new Public Private Partnerships in primary care, social services and the provision of equipment. And fourth using private sector management expertise such as in the provision of IT systems. It is around these four activities that we will forge a new relationship between the NHS and the private sector."[8]

8. The key health policy document, The NHS Plan, anticipated a greater emphasis on the role of the independent sector when it stated:

    "The time has now come for the NHS to engage more constructively with the private sector, and at the same time make more of its expertise available to employers throughout the country."[9]

The Plan gave additional detail on some of the areas where the Government envisaged further co-operation with the independent sector. It proposed the development of a generation of Diagnostic and Treatment Centres "to increase the number of elective operations which can be treated in a single day or with short stay" to be developed in partnership with the private sector and also heralded the formation of new public private partnerships within a new equity stake company, the NHS Local Improvement Finance Trust (NHS Lift), to improve primary care premises in England (see below, section V).

9. The Department referred to four essential tests which would be applied to any proposed partnership with the private sector:

  • is it in the interests of patients?
  • is it consistent with the local (and national) strategies for the NHS and its development?
  • is it value for money?
  • is it consistent with public sector values, including that treatment is determined by clinical need and that staff are treated fairly?[10]

These are some of the issues we hope our inquiry will illuminate.

1   Ev 222. Fifth Report of the Health Committee, Session 1998-99, The Regulation of Private and other Independent Health Care, (HC 281), para 32. Back

2   Ev 220, Ev 222. Back

3   HC 281, para 32. Back

4   Ev 1.  Back

5   Independent health care we define as health care which is provided outside the NHS by commercial or charitable interests. Back

6   Even since concluding our evidence, the Chancellor in his recent Budget has made a number of policy statements relating to healthcare funding and the delivery of The NHS Plan, the implications of which we have not been able to address. Back

7   Health Committee Press Notice No. 1, 18 July 2001. Back

8   Ev 1-2 . Back

9   NHS Plan, July 2001, para 11.1. Back

10   Ev 2. Back

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Prepared 15 May 2002