Jeremy Hunt

£20bn ‘opportunity’ for private NHS providers – so where do charities stand?

By Dan Corry 17 September 2012

The health space has been dominated by the emerging NHS reforms for months now—no less so this weekend, with a briefing paper from corporate finance adviser Catalyst describing healthcare as a ‘£20 billion opportunity’ for the private sector.

The paper goes on to discuss in detail the ‘significant opportunity for the private sector in primary and secondary healthcare’. It cites recent major contracts awarded to Circle, Virgin Care and Serco as evidence that the public sector is keen to ‘leverage the private sector’s ability’ to ‘reduce costs while improving the quality of healthcare’.

So where does all this leave charities? Many have watched the NHS reforms take shape with a mixture of hope, expectation, amusement and at darker times, anxiety. Now the day of reckoning draws ever closer.

The aim of many charities in health and adult social care is to deliver the services needed by those with  physical and mental health issues. This is what they were formed to do—what they are funded to do—and they believe they do it well and have something to offer. The question for them is how does the new landscape in health affect their ability to do this? The question for all of us is does the new system allow the voluntary sector to play the role it should so we get a better healthcare service or does it inadvertently shut them out to the detriment of everyone?

Well first of all, charities have to work out how the new system works. Many had good relationships with the PCTs and with the relevant Local Authority adult social care officers. Now in many places they have to find their way through the new, more complex world of commissioning bodies (often 2 or 3 where there used to be one PCT) , while keeping an eye on the Health and Wellbeing boards and of course the powerful  National Commissioning  Board. Change is always tough and maybe this will settle down after a while. But some fear the transaction costs in the new system—especially  for smaller charities—will  be that much higher.

Second, if they want to be a provider to the NHS then they have to be certified by the health regulator Monitor. This is the body that decides if you are to be a ‘qualified provider’ able to compete in the more market-orientated system that will prevail.  What exactly do you have to do to pass? How will the regulator react to the fact that many charities do not have long track records, or big  balance sheets with hefty insurance standing behind it? Will a system designed to keep out for-profit cowboys end up excluding bona fide, not-for-profit providers?

Third, we are all unsure how the market that charities will have to be involved in if they want work will pan out. Rhetoric and speeches suggest there will be increased room for not for profit players, with ministers being especially excited about so called social enterprises like Central Surrey Health running more services, or ‘employee co-owned partnership’ Circle running Hinchingbrooke Hospital. Both of these are pretty big players, and neither are your typical charity provider.  Is all this talk an illusion and will the way the market evolves look more the like the Work Programme, where the role for the voluntary sector turned out to be as sub-contractors to big primes, an experience few have enjoyed, financially or  morally?

Many of these issues will be discussed at a forthcoming NPC seminar. Our concern is to make sure charities and their funders understand the new landscape and are ready to play in it; that they have the information they need to be able to go up against the for-profit providers who are the subject of Catalyst’s briefing. We are not arguing that charities be reserved a special seat at the table but only that the playing field is as level as can be—for  that is the way to provide the best health service we can.