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Nicholas Timmins considers whether the government's decision to cut back its planned use of the private sector in the NHS is pragmatic or ideological
Happy trade unions, a fuming private sector, bewildered taxpayers, patients who are still waiting, and—almost certainly—an inquiry by the National Audit Office.
That was the outcome of health secretary Alan Johnson's announcement last week that only three more schemes are definitely going ahead from the second wave of contracts for diagnostic services and new independent sector treatment centres in England.
Mr Johnson's written statement dealt merely with the 16 contracts still extant from a negotiation that has been going on for three years now. Six other schemes were cancelled. Seven remain under procurement—although the health department says that there is “no guarantee” they will go ahead, despite giving private assurances to the companies that they will.
But behind Mr Johnson's studiedly low key statement was a bigger picture. What, under Tony Blair's government, was originally meant to be about £6bn (€8.4bn; $12.3bn) worth of business for the private sector over five years has now shrunk in stages to no more than around £2.5bn worth. Even this figure assumes that all the remaining schemes go ahead. If they don't the final total may be nearer £2bn.
In other words a programme launched with two key objectives—providing some extra capacity for the NHS but at the same time deliberately injecting some private competition into the supply of care—has been cut by around two thirds.
It is that second objective of extra competition that the Brown government “no longer seems quite to believe in or be willing to pay for,” says Julian Le Grand, the London School of Economics professor who was Tony Blair's Downing Street health adviser.
Mr Johnson insisted that slashing the size of the programme “does not represent a change of policy.” The independent sector retains “an important and increasing role in the NHS,” he said.
But Karen Jennings, head of health at the public sector trade union Unison, welcomed what she called “a change of emphasis.” Jonathan Fielden, chairman of the BMA's Central Consultants and Specialists Committee, said it was “a welcome turnaround.”
The health department admitted that it has already spent almost £93m on the procurement, with more to come as it pays out millions in private sector costs (potentially tens of millions) for cancelling contracts at the last minute. Mr Fielden said it was “a crying shame” that so much taxpayers' money has been wasted. Conservative MPs take an even stronger view, and the National Audit Office hinted that it would probably accede to their demands for an inquiry.
Mr Johnson cited improved performance and productivity by the NHS itself as the reason for cancelling the deals. He insisted that his position was “pragmatic not ideological” and was to do with value for money. Primary care trusts can still—and will—contract locally with the independent sector, he said.
Better performance in the NHS was also the reason Mr Johnson gave for cancelling an already running contract for diagnostics with Care UK in the West Midlands. Less than 5% of the contract's capacity was being used, because the local NHS had got the average wait down to three weeks, the health secretary said.
The health department's own figures, however, show that almost a quarter of patients awaiting tests or investigations in the West Midlands had been waiting more than six weeks at the end of September, 5600 of them for more than six months, and almost 4000 for more than a year, most of them needing the services that Care UK was offering.
The cancellations still leave private operators with at least £2bn worth of business. And, condition by condition, patients are increasingly gaining the right to choose any private hospital that is prepared to treat them at NHS prices. This option potentially still represents big business for the private sector and a big challenge for NHS institutions. And Mr Johnson, in an attempt to appease a furious private sector, promised that he will more vigorously publicise that right to choose.