Out of Sight – the hidden profits and conflicts of interest behind the outsourcing of NHS cataract care.
This report is the third in a series of studies looking at the outsourcing of NHS cataract care to the private sector.
In this report we look at how the very rapid growth in private sector provision of NHS cataract care has happened, the profits which have been generated by some of the companies and the conflicts of interest which lie at the heart of this new way of delivering NHS eye care.
Based on an analysis of NHS expenditure data, freedom of information requests, companies house accounts and interviews with those working in NHS England we have identified the following issues which policy makers should address.
Profits
5 companies who generate the majority of their income from the NHS generated an estimated £169 million in profits (EBITDA) from providing NHS services in 2023/24.
The average profit margin (EBITDA) for these companies is 32%, which means that on average £1 in every £3 which the NHS pays for a cataract operations leaks out in the form of profit.
In addition, in 2023/24 £68m of taxpayer funds went towards paying interest on the high cost loans taken out by some of these companies.
Conflicts of interest
There are over 100 NHS ophthalmic consultants who own shares or equipment in the private clinics which provide NHS funded cataract care.
Some of these consultants have generated millions of pounds in dividends from these arrangements. Very few of these conflicts are declared on the websites of the NHS Trusts where they work.
Whilst the clinics where these consultants own shares have seen very large increases in income from providing NHS cataract operations, the NHS hospitals where they are mainly employed have seen a large drop in the number of cataract operations delivered over the past 6 years.
This suggests that these conflicts of interest maybe impacting care for patients with more complex conditions, but further research is needed to establish the link between financial stakes in private clinics and the resources available to the NHS
There is evidence that high street optometrists are being offered financial incentives to refer patients to particular private companies.
The estimated potential value to all high street optometrists of referring a patient to a particular private company is in the region of £17 million – £21 million a year.
Recommendations
In the light of these findings we make the following recommendations to policy makers:
The profits of companies providing all forms of NHS funded care should be capped in order to prevent scarce taxpayer funds leaking out and any private provider of NHS funded care should be subject to financial regulation.
Conflicts of interest, such as share ownership by NHS consultants in companies providing NHS care should be banned.
Using financial incentives to induce referrals from high street optometrists or other healthcare professionals should be made clearly illegal. The relevant authorities should examine whether any breaches of existing rules and guidance have occurred.
Key Facts
£536 million - the amount paid by the NHS to 5 eye care companies in 2023/24.
32% - the average profit margin of 5 eye care companies according to their latest accounts.
£169 million - the estimated amount of profit (EBITDA) generated by 5 eye care companies from the NHS in 2023/24.
£620 million - total long term debt of 5 eye care companies who receive most of their income from the NHS.
£90 million - estimate of the total amount extracted from the NHS in the form of interest payments and dividend payments in one year.
113 - the number of ophthalmic consultants who are mainly employed by the NHS and who own shares or equipment in private hospitals.
£18m - the dividends paid out to 50 ophthalmic consultants by private eye care companies over 4 years of whom 45 are NHS consultants.
84,000 - the number of cataract operations over a 3 year period which were provided without a contract with private providers.
£21m - the estimated potential gain to high street optometrists for referring NHS patients for treatment at particular private clinics rather than NHS hospitals.
