The head of NHS England has questioned whether an agreement to pay private hospital providers to earmark capacity in the event of an increase in Covid admissions represents “good value for money”.
Amanda Pritchard, head of NHS England, took the unusual step of seeking a direct order from Health Secretary Sajid Javid before proceeding with the contract that puts private hospitals on standby for the next three months.
Senior officials have a duty to ask for such “ministerial directions” when they are concerned that a policy may not be a good use of public money, but the law is relatively seldom exercised.
Under the contract, private hospitals will be paid a minimum of between £ 75m and £ 90m per month. In some circumstances, they will be paid a higher rate for work than the NHS, even though they use largely the same medics.
“The NHS will normally only pay for activities that are actually delivered,” Pritchard said in the letter. “In providing a minimum income guarantee, there is a significant risk that the NHS will pay for activity that is not carried out.”
The agreement, announced Monday includes 10 hospital groups including Circle Health, BMI Healthcare, Ramsay, Spire and Nuffield Health. The providers have agreed to share capacity with the NHS in the event of NHS hospitals being overwhelmed.
In her letter, sent Jan. 7, Pritchard pointed out that private providers would be paid at least 10 percent more than NHS hospitals for performing the same procedures. The higher payment will apply to work performed outside an agreed minimum income guarantee, and to more complex work such as cancer treatment.
The lack of intensive care beds and dedicated staff in the private sector “does not easily support significant 7/7 manned beds capacity”, Pritchard said.
As private hospitals rely on NHS medics to perform surgeries in their spare time, she warned that any outbreak of Covid “would limit capacity at NHS and IS [independent sector] websites ”.
The deal is also, on a per-bed basis, “significantly more expensive than the equivalent cost of an NHS site with much less certainty about potential staff capacity,” she wrote.
Leonid Shapiro, an analyst at consulting firm Candesic, said private hospitals would need an incentive to join the deal. He pointed out that private providers were doing very well at the request of patients anxious to avoid long NHS waiting lists during the pandemic.
“Private paid work is several times more profitable than NHS work, so the real question is what private hospitals will lose from this agreement,” he said. However, according to the terms of the contract, the companies will continue to treat private patients and reserves the right to choose which matters to adopt.
David Rowland, head of the Center for Health and Public Interest Brainstorming, said it was “surprising that the NHS is being forced to join an agreement that its CEO knows is not value for money”.
“The Minister of Foreign Affairs does not have emergency powers that must be used to dictate the private sector, not the other way around.”
Siva Anandaciva, chief policy analyst at King’s Fund think tank, said the most recent previous request for an instruction from the head of the NHS he can remember took place in March 2020.
At the time, Simon Stevens sought approval for violating departmental spending limits to fund the increased costs of Covid-19. “The search for a ministerial direction for such an essential issue does not happen so often,” he said.
The Independent Health Care Provider Network said the new agreement would provide “much-needed additional capacity” to the health service and help “strengthen planned NHS care”, including the delivery of essential cancer treatment.