Select Committee on Health Appendices to the Minutes of Evidence


Memorandum by BUPA (PS 4)




  1.  Introduction

  2.  Current joint working between the public sector and BUPA

  3.  The Private Finance Initiative

  4.  Questions and Answers

  Appendix I  Concordat activity in BUPA Hospitals

  Appendix II  Details of BUPA's survey of NHS commissioners

  Appendix III  Examples of BUPA's partnerships with the public sector


  1.  The NHS needs additional capacity to reduce waiting lists. Commercial organisations such as BUPA provide high quality care and good value for money. Patients are concerned with access to quality care and are not concerned whether NHS services are delivered by a public or private hospital.

  2.  The service ethos does not stop at the boundaries of an NHS hospital. BUPA's vision is "Taking Care of the Lives in our Hands". This is a simple human expression of the dedication of our staff. There is a further commercial dimension that also underpins the delivery of quality care which is that if a private company fails to provide the service its customers want it can be fired.

  3.  BUPA supports the Concordat between the NHS and the Independent Healthcare Association and welcomes government indications that the private sector has a greater role to play within the NHS. Since the signing of the Concordat in October last year, BUPA Hospitals has worked with over 100 Trusts and Health Authorities to help reduce waiting times for approximately 11,000 NHS patients.

  4.  Public-private partnership works. BUPA hospitals and BUPA Care Services have been working successfully with the NHS to reduce waiting lists and provide care for the elderly for a number of years. Public-private partnership is the established format for delivering care to two of the most vulnerable groups in our society—the elderly and mentally infirm.

  5.  BUPA has experience and expertise that could contribute to expanding NHS capacity. These are:

    —  Management and delivery of elective acute care.

    —  Delivery of high quality customer service.

    —  Use of flexible resource management and working practices.

    —  Providing care for the elderly and mentally infirm.

  These capabilities put BUPA in a strong position to assist in the development of elective acute care, diagnostic and treatment centres and intermediate care.

  6.  NHS and local authority planners should take account of local independent facilities and regard them as an integral part of the local health economy when they review options for health and care provision.

  7.  BUPA is a provident association. It operates on a commercial basis, making a return on its capital invested, in order to fund further future investment. Dealing with a provident association has two main advantages for the NHS. Firstly, it means that money paid to BUPA for partnership work stays within the health and care environment, as any surpluses BUPA makes are reinvested. Secondly, it means that the NHS can deal with a stable customer-focused organisation, experienced in providing value for money in a competitive marketplace, but not subject to the vagaries of the stock market.

  8.  There is an additional reason why BUPA can make a valuable contribution to the NHS. BUPA is able to access capital at competitive rates. This is a result of its track record in providing highly valued services at a steady margin of return.


1.1  Statement of Intent

  1.1.1  BUPA wishes to contribute to the delivery of NHS services and patient care. BUPA has the capability to provide quality, cost-effective care in support of the NHS, thereby helping to produce a better result for patients.

1.2  About BUPA

  1.2.1.  BUPA is a provident association. To ensure future growth, and increase levels of reinvestment, it needs to make a return on services provided. All returns are reinvested into better health and care services. Currently, BUPA owns 235 care homes and 36 hospitals in the UK. Over the last two years, BUPA has invested over £50 million in care services and hospitals.

  1.2.2  Last year, 225,000 people were cared for, on either a day-case or in-patient basis, in our hospitals. This was in addition to those attending as out-patients. Our care homes look after 16,000 elderly people and sufferers from dementia. Three quarters of our residents receive state support.


2.1  The Concordat

  2.1.1  Since the Concordat was signed in October 2000, BUPA Hospitals has worked with over 100 NHS Trusts and Health Authorities to complete nearly 11,000 NHS funded hospital episodes. An analysis is shown in Appendix 1.

  2.1.2  The response of patients treated under the Concordat has been extremely positive. Our routine patient satisfaction survey found that 95 per cent of NHS patents treated in BUPA Hospitals rated their services as "very good" or "excellent".

  2.1.3  A survey of NHS commissioners with experience of contracting with BUPA showed that:

    —  87 per cent said that their relationship with BUPA Hospitals was having a positive impact on their waiting lists.

    —  74 per cent thought that BUPA provided good value for money and high quality care.

    —  65 per cent found BUPA Hospitals' services to be good or excellent.

    —  82 per cent would use our services again.

  Further details of the survey can be found in Appendix II.

  2.1.4  The take-up of BUPA Hospitals capacity has been mixed. In some places hospitals have not had spare capacity and have been unable to accommodate requests. In other locations our hospitals have had no response to offers of support.

  2.1.5  Whilst some of BUPA's partnership agreements are long-term (eg the Cambridge MRI scanner and the Manchester paediatric contracts detailed in Appendix III), most are short-term contracts and extend to fewer than 100 cases and less than six months' duration. This "spot market" approach has the benefits of being very flexible and responsive. However, it is limited by the availability of capacity at any given time. Working in a spot market has cost implications. Being able to plan on a quarterly, half-yearly or yearly basis would allow BUPA Hospitals to plan its resources more exactly and thereby offer better value for money.

  2.1.6  In some areas, Trusts and Health Authorities have discussed the possibilities presented by longer-term capacity planning. This allows the NHS and BUPA Hospitals to make best use of available resources and permits more work to be carried out. BUPA Hospitals welcomes this approach as it allows NHS planners to regard the private sector as an integral part of the local health economy and to use it as such.

  2.1.7  So far, Concordat activity has occurred towards the end of the NHS financial year. To date the NHS has not fully exploited independent hospitals' full capacity in the summer months, as confirmed in the monthly reports of spare capacity being sent, as requested, to the Department of Health.

2.2  Current Partnerships

  2.2.1  In Manchester last year, 350 children who had been on a waiting list for more than three months for ENT and more complex general surgery, were treated at the local BUPA hospital. These operations were scheduled on a daily basis and carried out in a three-month period. This provided parents with maximum flexibility in choosing the best possible time for their children's hospital stay. Parent feedback was excellent and has led to a further 500 operations being commissioned for this year.

  2.2.2  Concordat partnerships are in place with over 100 Trusts and Health Authorities and include the provision of specialists cardiac services in Southampton, the running of a rectal bleeding unit in Reading, and housing of an MRI scanner in Cambridge. BUPA also has partnerships with local authorities to manage their care homes and works with the NHS Information Authority to develop new IT systems. Further details of our partnerships can be found in Appendix III.


  3.1  It is important to make the distinction between PFI and PPP. The debate surrounding Private Finance Initiatives is in danger of overshadowing the wider benefits gained from public-private partnerships.

  3.2  PFI projects are about the provision of funds for capital spending projects. Public-Private Partnerships are about the wider aspects of delivering health and care solutions through the delivery of care packages on behalf of the NHS. BUPA Hospitals' strength as a provider lies in the management and delivery of care packages. For this reason BUPA has so far chosen not to become involved in PFI schemes.


4.1  What makes the independent sector think it can improve the delivery of health and care in the UK?

  4.1.1  Independent sector provision of care services demonstrates that the model of long-term public-private partnership works. Approximately 82 per cent of nursing and residential care beds are now provided by private and voluntary organisations (Laing and Buisson 2000).

  4.1.2  A longer-term commitment to using the private sector for acute care would bring additional capital into the sector because risks and their associated costs are reduced if private companies receive long-term commitment to partnership from the NHS.

  4.1.3  BUPA's experience is particularly relevant to the provision to the NHS of diagnostic and treatment services, elective surgery and intermediate care.

  4.1.4  Support can also be provided in intermediate care. Capacity is released by quickly moving people into this environment and out of the acute beds. There are 500,000 care home beds to 135,000 acute beds.

  4.1.5  If there were a more united commissioning environment, within which local authorities were prepared to enter long-term contracts with providers, the independent sector would be able to contribute more capital. This would not only benefit residents, but also increase the amount of people able to move into intermediate care beds and out of NHS acute beds.

4.2  How can BUPA hope to meet NHS quality standards?

  4.2.1  Quality of care is as important to the independent sector as it is to the NHS. Independent sector companies need to provide high standards of care, otherwise their customers will go elsewhere for treatment.

  4.2.2  During the passage of the Care Standards Act, BUPA argued for a single regulatory framework covering both the NHS and the independent healthcare sector. Nevertheless, the introduction of minimum standards for care homes and independent hospitals under the new National Care Standards Commission is an important step forward and one that BUPA supports. These standards will ensure that the quality of care in the independent sector is in line with that in the NHS. Furthermore, the Commission for Health Improvement has powers to inspect independent providers delivering care under contract to the NHS.

  4.2.3  BUPA Hospitals has introduced a programme of clinical governance in line with the recommendations of the GMC, the medical royal colleges and developments in the NHS. Each hospital has a Medical Advisory Committee (MAC) responsible for consultant practice privileges, clinical audit and investigation of clinical complaints and allegations of poor practice. Our MACs have been very active in these areas and work closely with the NHS counterparts.

  4.2.4  Measurement of outcome is a crucial part of clinical audit. BUPA Hospitals invites its acute surgical patients to complete a health status measurement survey—the Short Form (SF)-36. This is completed immediately prior to surgery and again three months later. The process is designed systematically and objectively to assess health gain after three months. The results cover both physical and psychological factors. Over 60 per cent of all patients return their forms and there are now over 60,000 returns in the database. CHKS, an independent body that assists the NHS in measuring performance and outcomes, administers it. It is then fed back to individual consultants and hospitals to be used as part of their continuous quality improvement process.

  4.2.5  The standards of healthcare in BUPA's hospitals are rigorously audited and are of a very high level. All our hospitals are ISO 9002 accredited and our pathology laboratories are CPA accredited. All BUPA hospitals expect to be HQS accredited by the end of 2002.

4.3  Will BUPA put profit before patients?

  4.3.1  Patient care is as much a priority for BUPA as it is for the NHS.

  4.3.2  BUPA does seek to make a return on its investments. However, as a provident association, growth in company returns means growth in health and care provision, not in shareholder capital.

  4.3.3  Companies that hope to succeed need to provide a good service to their customers. The health sector is no different in this respect. Competitive markets can create good service. If the company does not provide the required level of service, it will not survive.

  4.3.4.  BUPA has been operating in the health sector for 54 years and knows that excellence in both service and care of the patient is key to our success in providing health and care.

4.4  Won't public sector workers moving into the independent sector lose out?

  4.4.1  It has been suggested that if the private sector was to play a greater role in health care delivery in the NHS, this would be to the detriment of NHS staff. This is untrue.

  4.4.2  In common with most private sector employers, BUPA Hospitals does not impose a rigid national pay structure. It has put in place a flexible reward structure that matches local labour market conditions, individual skills, competencies and performance.

  4.4.3  BUPA aims to ensure it provides employees with competitive pay and benefits, attractive working conditions and good career development opportunities. Overall, the basic salaries available to clinical staff are comparable to those offered by the NHS. In addition, BUPA Hospital employees are eligible for:

    —  corporate or stakeholder pension arrangements;

    —  insurance and regular health assessments;

    —  25 days holiday, increasing to 27 days (plus bank holidays);

    —  life assurance;

    —  profit share scheme.

  4.4.4  The BUPA vision "Taking Care of the Lives in Our Hands" guides our treatment of customers and of our employees. A regular survey measures staff satisfaction against a range of organisational indicators. Results compare favourably with service sector industry benchmarks and have shown regular year-on-year improvements.

  4.4.5  BUPA promotes an open culture and positive communication with employees. Each member of staff has an annual performance review that incorporates a personal development plan. BUPA Hospitals is accredited under the Investors in People scheme.

  4.4.6  BUPA Care Services has already demonstrated how negotiation between interested parties can lead to staff easily moving from the public to the independent sector. Powys is an example. The local authority contracted out the management of its care homes to BUPA. We negotiated with the unions and staff and transferred their contracts for a fixed period. Once the term has expired, with full consent of the unions, the contracts are free to be renegotiated by staff and employers. Any change without consent, unless already clearly stated within the contract, would constitute breach of contract and would therefore be subject to legal proceedings through an employment tribunal.

4.5  Where is BUPA going to find the resources to do extra NHS work without poaching public sector workers?

  4.5.1  BUPA and the NHS share the same market for staff. However, treating more patients privately will not necessarily mean an equivalent drain on NHS resources.

  4.5.2  BUPA can provide care for more patients without the use of excessive extra resources and without sacrificing patient care. Because elective surgery is planned, BUPA Hospitals can flexibly and efficiently roster staff to match patient needs with patient numbers.

  4.5.3  This is particularly so when cost/volume contracts are negotiated between Trusts and private hospitals, as this allows us to plan around NHS needs.

  4.5.4  BUPA does not seek to take essential resources from the NHS. The nursing crisis is representative of wider staffing issues and not the private sector using NHS nurses. Approximately 96 per cent of nurses leaving the NHS leave the profession altogether. Four per cent transfer to the private sector.

  4.5.5  Some 98 per cent of BUPA Hospitals consultants conduct only up to two-and-a-half private sessions per week. This is in addition to, not instead of, their contracted NHS time.

  4.5.6  BUPA invests in postgraduate training for nurses and training for nurses returning to the profession. There is an on-going programme of "Continuing Professional Development" under the Huddersfield University education contract to ensure it retains good nursing staff. This programme is open to NHS and BUPA nurses. BUPA Hospitals also has an activity programme for "returners"—nurses returning to practice after five years—in the form of its "return to practice" programme. This will also be available in a distance learning format to enable staff to retrain from home.

4.6  Why does BUPA want to become involved in the provision of public services?

  4.6.1  BUPA wishes to help the NHS provide public services in an efficient and effective way, for the benefit of the patient. By using spare capacity in the independent sector, the NHS can benefit by increasing access to health and care services immediately. In turn, BUPA can increase its contribution to health and care and its spare capacity can be used in an efficient and planned way.

  4.6.2  BUPA's skills and resources could contribute much-needed additional capacity and innovation to the NHS. This is a potential commercial opportunity for independent operators, but the sector can only enter this market if the profit margins are adequate to provide a fair return on the substantial investment of capital and management expertise that is needed.

4.7  How much capacity could BUPA provide to the NHS under the Concordat?

  4.7.1  The Concordat provides the basis for a significant additional volume of NHS elective care to be delivered using the spare capacity in the independent sector. Independent hospitals have spare capacity because their patients demand considerable flexibility over the time of admission, often at short notice. The Concordat enables the NHS to access this capacity at attractive rates and with high standards of care. BUPA estimates that our existing hospitals could treat in total around 20,000 NHS inpatients and day cases each year, plus a greater number of outpatients.

  4.7.2  We could contribute more than we are being asked to do at present. The NHS has to date taken up approximately half of the capacity BUPA reported as available. Since April, NHS volumes have declined. BUPA's experience is mirrored by other independent hospital operators.

  4.7.3  There is a further opportunity to involve the private hospital sector in the development of new additional capacity for NHS patients. BUPA would like to be involved in the delivery of NHS care through dedicated diagnostic and treatment centres.

4.8  What does BUPA think about patients being treated in European hospitals?

  4.8.1  Any initiative that provides faster treatment, offers greater choice and increases competition, must be to the patient's benefit. Treatment abroad will be an attractive option for some patients but we believe that many people will have concerns from both a medical and practical point of view. We think that NHS Trusts should first consider the opportunities for treatment in the independent sector in the UK whenever there is available capacity. This has the advantage that:

    —  Patients are guaranteed continuity of care under their GP and consultant—including aftercare.

    —  It will not be necessary to make special arrangements for any post-operative complications.

    —  In many cases, people would be discharged earlier because they would not have to travel long distances following treatment.

  4.8.2  When comparing prices, a number of factors need to be taken into account such as length of stay, types of prosthesis and follow-up care. These may not be included in some of the "headline" prices quoted for treatment in Europe. We are able to offer flexible pricing to purchasers who are able to specify, in advance, the number and range of treatments they require and who will accept some restrictions on when spare capacity can be made available to them.

4.9  What would the public sector lose if the private sector were not involved with health and care?

  4.9.1  If the private sector was to become completely divorced from the provision of public services many elderly and vulnerable members of society would suffer.

  4.9.2  A study conducted by NERA (Valuing the Independent Sector, 1 March 2000) concluded that it would cost the NHS over £680 million to treat the extra patients who would otherwise have received independently funded health and care. In addition, the Treasury would lose over £1,201 million of tax revenue arising from independently funded health and care.

4.10  What change could enable the Independent Hospital Sector to contribute more to the NHS?

  4.10.1.  Health Authorities, Trusts and Primary Care Trusts should be given more encouragement by the Government to include independent provision in their capacity planning reviews and, where appropriate, to invite bids from the independent sector to test the market.

  4.10.2  The proposal to provide guaranteed maximum waiting times should be developed to take account of the independent sector. Patients should be able to opt for treatment in an independent hospital, where this can be done at an acceptable cost, if their waiting time is of a certain length.

  4.10.3  Independent hospital operators should be invited to contribute proposals of the operation of new diagnostic and treatment centres for the NHS. These arrangements need to go beyond the current Private Finance Initiative, which is a vehicle for funding capital assets, towards a genuine public-private partnership for the delivery of care.

4.11  What lessons has BUPA learnt from operating care homes in partnership with the public sector?

  4.11.1  Approximately 65 per cent of BUPA's care home residents receive funding from their local authority.

  4.11.2  BUPA believes that the independent nursing homes sector has raised the overall quality of nursing home provision. Over the last 15 years, the independent sector invested over £11 billion in the care services sector. The quality and cost efficiency of independently provided services has led a number of local authorities to contract out their care services to independent companies. We hope BUPA has demonstrated that the arrangement can be more efficient than in the case of some local authority operated care homes.

  4.11.3  However, with costs rising last year by 8 per cent and local authority funding increasing by only 2 per cent, the independent care home sector is being squeezed and homes are closing.

  4.11.4  If there was a more unified commissioning environment, within which local authorities were prepared to enter long-term contracts with providers, the independent sector would be able to contribute more capital. This would not only benefit residents, but also increase the amount of people able to move into intermediate care beds and out of NHS acute beds.

September 2001

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 15 May 2002