NHS trusts consider greater role for private sector

Friday 16 March 2012

private providers noteSpeculation that the George Eliot Hospital NHS Trust in Nuneaton may be taken over by a private sector organisation has highlighted the possibility of more NHS hospitals being run independently.

Last year the trust identified a number of options to help it achieve foundation trust (FT) status, one of which was to form a partnership with the independent sector. The proposal was then described by chief executive Kevin McGee as 'an informal throwing of hats in the ring', but the trust has now announced it is in talks with a number of private providers, including Serco, Care UK and Circle. Tendering documents are imminent.

Circle already runs Hinchingbrooke NHS trust in Cambridgeshire, the first time an all-purpose NHS hospital has been managed by a private sector company. George Eliot is also in talks with three foundation trusts: Burton hospitals, the Dudley Group and South Warwickshire.

The move follows a difficult year for the trust, rated as having the highest death rate in England with 1,024 deaths observed in the year ending March 2011 against an expected 843, and also having to acknowledge that it cannot, without partnership, achieve FT status (one of 40 per cent of trusts yet to do so).

The expectation is that all NHS trusts will become FTs by April 2014. Those unable to meet the deadline will continue to work towards authorisation under new arrangements, which may provide further opportunities for private providers as trusts consider outsourcing their management in order to qualify.

NHS Devon and Devon County Council are conducting a tendering exercise for the provision of county-wide children's service, including child protection and palliative care. The contract is a significant one, running for three years and valued at £130m. Bids from Serco and Virgin Care, two private sector organisations, have been shortlisted, as have bids from Devon Partnership NHS Trust, bidding along with Barnardo's, and other local charities.

According to the criteria set out on the European commission website - where competition law requires European public tenders to be published - the contract will be won by the 'most economically advantageous bid', other factors such as service delivery and capacity being equal. This has led to speculation that larger private corporations, able to take advantage of economies of scale, may be favourably placed to compete against NHS or third sector providers.

Concern that the Health Bill will lead to the greater involvement of the private sector in the NHS has fuelled debate about the privatisation of services. The Bill proposes the creation of an economic regulator which would ensure a level playing field between the private and public sectors, with no presumption in favour of NHS providers. This would allow the independent sector to bid for the management of trusts that are failing or unable to qualify as FTs, perhaps creating a 'domino effect' among underperforming trusts.

However, whether or not increased private management would necessarily lead to hospital closures and mergers is speculative and it is apparent that the Hinchingbrooke takeover and George Eliot and NHS Devon bids have occurred under current arrangements.

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