The Health Committee has agreed to the
THE ROLE OF THE PRIVATE SECTOR IN THE
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.
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.
Most consultants in the independent sector also work for the NHS.
Community pharmacy services are provided exclusively by private
sector organizations or individuals.
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
and the NHS. When deciding on our terms of reference we sensed
that events were changing rapidly.
Accordingly we chose broad terms, but indicated that the inquiry
would specifically focus on:
The NHS Concordat with the Private and Voluntary
The Private Finance Initiative
Public Private Partnerships
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. 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
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
- 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
These are some of the issues we hope our inquiry
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
Ev 220, Ev 222. Back
HC 281, para 32. Back
Ev 1. Back
Independent health care we define as health care which is provided
outside the NHS by commercial or charitable interests. Back
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
Health Committee Press Notice No. 1, 18 July 2001. Back
Ev 1-2 . Back
NHS Plan, July 2001, para 11.1. Back
Ev 2. Back