Wes Streeting was spot on when he said during the election campaign that the biggest risk to the NHS is that it ends up becoming a ‘poor service for poor people’, where the middle classes are forced to pay for their own care, leaving fewer resources to treat sicker, poorer and unhealthier people in NHS hospitals.
It is a risk that has grown significantly over the past decade, where cuts to the NHS have meant that more people are paying out of their own resources in the private sector for hip operations, social care, IVF and dentistry.
Unfortunately, Labour’s plan to use the private sector to deliver more NHS care is likely to exacerbate this risk, rather than to reduce it.
Here’s why.
To start with, private sector provision of NHS care prioritises those who are better off.
Research from the Health Foundation found that patients who are white and who live in more affluent areas are more likely to get NHS treatment in the private sector than other groups.
This is because the private sector’s business model is designed to carry out high volumes of operations for patients who are mainly quite healthy, leaving the NHS to deal with those patients who have more complex needs.
In the case of ophthalmology, the use of the private sector has exacerbated this inequality.
Our recent study into the outsourcing of ophthalmology care found that those with complex eye care conditions such as macular degeneration and glaucoma, as well as children are struggling to receive NHS care in highly stretched NHS eye care departments.
This is in part because private eyecare companies have poached NHS staff and taken away income from NHS hospitals when delivering large volumes of cataract surgery.
Over the past 5 years, for-profit eye care companies often backed by private equity funds have set up over 100 low cost eye care clinics in England, offered lucrative contracts to NHS staff to work in their facilities and exploited the poorly regulated NHS market to gain large chunks of the income from NHS funded cataract care.
This strategy has meant that private companies have now become the main provider of this form of surgery in England seeing their income increase from the NHS by 300% over 5 years .
On the other hand our study shows that NHS hospitals eye care departments have lost on average around 20% of their income from cataracts over the same period, have seen activity decline by the same amount and have lost the capacity to train staff.
Our survey of 200 NHS ophthalmologists found that almost half (46%) said that the outsourcing of cataract care had negatively impacted their ability to treat more complex patients.
Moreover, the private healthcare sector which currently exists in the UK has not been magicked into existence overnight – it has achieved its rapid ascent on the back of income from the taxpayer and the use of NHS staff.
In fact, a number of the private companies which are now servicing private payers began their lives as companies which were established under Labour’s turn towards the private sector under Tony Blair’s Independent Sector Treatment Centre (ISTC) programme.
Three of the 5 major private healthcare providers in the UK Care UK, Spire and Ramsay were originally set up by foreign investors to run ISTCs in the early 2000s and were attracted to providing healthcare to the NHS by the significant public subsidies which were offered by the last Labour government, which also underwrote the risk of their entry into the UK market.
These companies, who have typically generated around 40% of their income from treating NHS patients over the past 10 years have used this secure income stream from the taxpayer to build and expand their businesses.
However, prior to the pandemic these companies calculated that the NHS was never going to be able to meet the growing needs of the population.
So they placed a bet against the NHS and decided to pivot away from treating NHS funded patients, focusing instead on the growing numbers of people who were being forced to pay privately due to rising waiting lists.
In the case of both Spire and Care UK (now Practice Plus Group) their current business strategy is to wean themselves off NHS income and to focus on the private pay market, where they can generate much higher profit margins.
This pattern of companies using taxpayer funds and subsidies to build their businesses, and then pivoting towards those paying privately can be seen in other areas of health and care.
In the care home sector, for example, multi-national private companies were built on the back of the subsidies provided by the state in the 1990s and the income from the taxpayer.
However, once these companies realised that they could charge 40% higher fees to private payers, they also pivoted towards this part of the market.
As a result, many care home companies are now focused solely on private payers and are now only building new care homes in the richer parts of the country, in particular the South East of England. In contrast, those reliant on local authority funding are often left in ‘care home deserts’ unable to get access to good quality social care.
A similar pattern can be seen in be seen in dentistry and IVF where businesses which were established on the back of NHS income are now turning their attention to the private pay market where demand is growing and margins are much greater.
The lesson of the last two decades of the outsourcing of NHS care is clear: giving more taxpayer income to the private sector will only enable it to become more dominant, until it reaches a point where it has the option to pivot away from the NHS to treat more profitable fee paying patients leaving the NHS to care for more complex patients, but with fewer resources.
The only possible way of preventing the NHS becoming a poor service for poor people is to re-invest in staffing and facilities in the NHS and to remove the subsidies and income which have put the private sector in a position to capitalise on the NHS’s growing inability to meet the comprehensive healthcare needs of the population.
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