The Devil is in the Detail - NHS England's Contracts with the Private Hospital Sector during COVID
This report analyses the contractual mechanisms of NHSE's £2bn+ deal with the private hospital sector during COVID, building on our 2021 report 'For Whose Benefit' using newly obtained activity data and the contracts themselves.
Our key findings are that:
Far from prioritising NHS patients, there were no incentives to drive increased volumes of NHS care. However, the private sector was given strong financial incentives and targets to treat more private patients, even during the height of the pandemic.
When given the opportunity to renegotiate the contract and address significant wasted capacity, NHSE did not seek to incentivise treating NHS patients. Instead it encouraged the treatment of private patients who could afford to pay rather than NHS patients with a higher clinical need.
A 'Private Patient Offset' allowed companies to keep 15% of any net private patient earned, even as almost all operating costs were being covered by the taxpayer. The 'Offset' was adjusted to scale to 40% of net private patient revenue if confidential private activity targets were met.
The contract limited the amount of private capacity available to the NHS, as low as 60% within the M25, which is where most private hospitals operate.
There is no evidence that this contract allowed 'no profit', as was assured by ministers and senior officials
Private providers were given access to generous liability provisions to ensure that the taxpayer would cover the costs of any patients who were harmed while under this contract.
As a result of our research we recommend that:
The COVID inquiry examine how these contractual arrangements impacted the pandemic response, and whether they prioritised treatment based on clinical need rather than the ability to pay.
NHSE publish all financial data relating to this contract, including rebates arising from treatment of private patients, and also background documents relating to the development of this contract and policy intentions behind it.
The Public Accounts Committee and National Audit Office examine the full costs of the contract - including any hidden costs and liabilities - and undertake a full value for money assessment, and independent audit of whether companies profited from the pandemic contracts.
Primary documents for this report are included in the footnotes, but original copies of the initial heads of terms agreement, the main contract, revisions to the contract and the three-month addendum contract, which together make up the entire agreement between NHSE and the private hospital sector, are available here.
