Privatization of the NHS: Staff and Patient Views

Staff and Patients Perception on the Government’s Proposal of the Part Privatization of the NHS
Anne Cook
1. Abstract

The National Health System (NHS) provides medical care, generally free at the point of use, to all people in the United Kingdom. The NHS is the responsibility of the Ministry of Health. In recent years, using the Private Finance Initiative, elements of health care are increasingly being placed on long-term contracts with the private sector.

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Medical staff and the public at large are currently dissatisfied with the move to part privatization and believe that patient care will be compromised, particularly for those unable to opt out of the NHS and become paying patients. Job losses in the medical profession have occurred and the public feel that the basic right of free medical care should not be moved to private enterprise that is profit driven. This is seen as undermining a fundamental right of all citizens.

The Ministry of Health, on the other hand, defends their position stating that the move is in the best interests of the public and the profession, and state that patients will have more choices as a result of the new system. They do acknowledge that there are cases of cost overruns that were not initially budgeted for.

The public feels betrayed by the changes to what was a fundamental right to free medical. The paper concludes that the transition is difficult and could take years to show the required improvements. There is no buy-in to the change from staff within the profession or the public; this is likely to be due to a lack of marketing of the changes, no buy-in from the stakeholders and a mistrust of the motives for partnering with the private sector.

2. Table of Contents (Jump to)

1. Abstract

2. Table of Content


3. Literature Review

Government Paper

Table 6, p26 Comparison of Increases in PFI Project Costs (million pounds)

Public Feedback on PFIs in the Health Sector

Tory Stand on the NHS Financial Status

Medical Personnel Disillusioned


4. Research Objectives

5. Research Methodology

Porter’s 5 Forces Diagram.

SWOT Analysis Diagram

PEST Analysis Diagram

6. Research Findings

Porter’s 5 Forces Model

Summation of Porter’s 5 Forces Model

S.W.O.T Analysis

Summation of S.W.O.T. Analysis

P.E.S.T Analysis

Table – Age Structure in the UK 2001-2051


The National Health Service (NHS) was set up in the United Kingdom in 1948 to provide healthcare for all citizens, based on need, not the ability to pay.

The NHS is funded by the taxpayer and managed by the Department of Health, which sets overall policy on health issues. It is the responsibility of the Department of Health to provide health services to the general public through the NHS.

Many changes have occurred over the years, but the basic principal of free medical services for all has been a fundamental right within the United Kingdom for nearly 60 years

The following information from the official NHS website summarizes the current method of operations within the system and mentions the controversial introduction of the Private Finance Initiative. Ref [1]

A feature of the NHS compared to other public healthcare systems in Continental Europe is that not only does it pay directly for health expenses (with partial exceptions like prescriptions and dentistry it is free at the point of use), it also employs the doctors and nurses that provide them, and in most cases owns and runs its hospitals and clinics. However, under the [2]Private Finance Initiative, an increasing number of hospitals have been built (or rebuilt) by private sector consortia, and have non-medical services (such as catering) provided under long-term contracts by the same consortia.

As reported on [3], clearly the costs of the PFIs are currently an issue.

The scale of PFI projects in the Health & Education sector since 1997 is now having a serious impact on Public Service Budgets. Because the projects are more expensive in the Private sector (On average 30% more than if the Government borrowed the money and did the work in the Public sector) the payments to the Private owners of the PFI schemes are stretching already constricted Budgets. Many Health [4]Primary Care Trusts are in serious difficulty already, and when the level of spending falls in 2007, some may go bust. The Government is already in negotiation with Private Healthcare providers to come in and run ‘failing’ Trusts.

3. Literature Review
Government Paper

[5]The House of Commons Research Paper 01/117, 18 December 2001 (Graham Allen) studies the Private Finance Initiative. The document states ‘Under the PFI, the public sector does not own an asset but pays the PFI contractor a stream of revenue payments for the use of the facility over a contract period’ ‘The Department of Health has signed the most PFI deals, 105, with a total value of just over 2.5 billion pounds. Under the section entitled Cost overruns the following items appear

[6]Table 6, p26 Comparison of Increases in PFI Project Costs (million pounds)

Initial Cost

Final Cost

% Increase

Norfolk & Norwich NHS Trust




Greenwich Healthcare NHS Trust




The report contains differing views for the cause of the severe overruns in PFI project costs. According to the private enterprise companies they blame the increases on the NHS and MoH as they are repeatedly changing the requirements from the original specifications. This could be a result of a lack of experience in managing private enterprise projects by the MoH – more efficient management and tighter control over specifications would result in major cost savings. There could be reason to revisit the bid process to identify where there are loopholes which allow the private companies to overrun and yet charge back the cost to the Ministry during the course of the contracts.

Public Feedback on PFIs in the Health Sector

The lobby group, Keep our NHS Public, [7], has a launch statement that includes the following

‘At the heart of the changes is the creation of a market that welcomes profit-driven international corporations who answer to shareholders, not patients. This market will compel hospitals and health professionals, who have traditionally cooperated to deliver healthcare, to compete with each other and with the private sector. Far from supporting the NHS, the private sector is in competition with it, and is already draining away resources and staff.’

On the web site, Frank Dobson Member of Parliament for Holborn and St. Pancras says:

Before long we will have a health insurance system and the NHS role as a provider of care will be limited to picking up the difficult cases and looking after the worst off. It is time we worked together to put some chocks under the wheels of this fashionable bandwagon.

The campaign launched in late September and has already won the backing of hundreds of senior doctors, academics, health workers and trade union leaders, celebrities, MPs and local campaigners for its launch statement. The lobby group feels strongly that the NHS is being divided up and the only driver for its continuation will be profits and not the medical well being of the patients. They have garnered support from many leading medical professionals since their launch. And the campaign is rapidly gaining momentum.

Saturday 11th February 2006

Tory Stand on the NHS Financial Status

The Guardian, http:/ / uk_ news/ story/ 0,,1707494,00.html of February 11th 2006, states the Tory case of the financial state of the NHS

NHS in England heading for ?750m deficit, say Tories. The Tories have accused the government of burying evidence of a worsening financial crisis in the NHS that is starting to seriously damage the quality of patient care. Andrew Lansley, the shadow health secretary, said he had data from strategic health authorities showing the NHS in England is heading for a deficit of ?752.6m by the end of the financial year, compared to the ?200m overspend hoped for by Patricia Hewitt. Lansley said Hewitt’s intervention had forced down the quality of patient care with many trusts delaying operations. This tactic has failed because hospitals continue to pay staff for doing less work – transferring overspending from PCTs to hospital trusts. 22 SHAs in England forecast deficits, two surpluses and four in balance.

This statement not only highlights the deficit anticipated, but it also points to an administrative situation that is convoluted and inefficient. The over run on anticipated deficit is huge and points to a lack of monitoring and cost reductions over a long period.

Medical Personnel Disillusioned

The Guardian, April 13, 2005, printed an article entitled ‘Disillusioned Doctors Drop Support for Labour,,7991,1458601,00.html

Only a third of a group of doctors who signed a public letter urging voters to support Labour in 1997 would do the same again, it emerged today.

Disillusionment with Tony Blair’s decision to pursue the same internal market policies as his Conservative predecessor was one of the main reasons why the doctors had deserted Labour this time round, according to the results of a new survey.

In their original letter, the doctors had condemned the internal market forces in the NHS as “a cancer eating away at your NHS”.

But of the original 59 GPs, consultants and academics who put their names to the letter published only a few days before the 1997 general election, only 17 said they would sign a similar letter warning voters that if the Conservatives won on May 5, “the NHS as we know it would disappear”, according to the results of the survey.

Emeritus professor of clinical biochemistry at the University of Surrey, Vincent Marks, who put his name to the original letter, said today: “Most of us feel that we have been badly let down. The dismantling of the NHS has continued apace.”

Consultant cardiologist at St Bartholomew’s hospital in London Duncan Dymond, who was also one of the original signatories, said: “The government has missed a huge opportunity with the health service. There has been marginalization of the clinician and manipulation of patients to satisfy bureaucrats.”

Orthopedic surgeon Anthony Jones from Swansea in Wales, who also put his name to the letter in 1997, said: “The cancer of the internal market has prospered under Blair.”

The doctors involved in the above intend withdrawing their votes in order to take a stand against the current changes within the NHS. Undeniably, they believe in the principals of a united medical service to the public who are currently promised a free medical system for all UK citizens. These medical professionals are prepared to make a political statement to show their lack of support for the current government handling of the NHS

Dr Eric Bowman, from Scotland who responded to a BBC report ‘Public Health, Private Money’, echoes this negative outlook with the current situation

I am a UK resident but I am also a US citizen. I prefer the UK’s NHS to the nightmare of red tape, expense and iniquitous medical resourcing that is inherent in the US private system. I cannot imagine how anybody, including Blair, can consider a private healthcare system that diverts precious financial resources to profits as being “efficient”. I am appalled that Labour will invest in “public-private” partnerships rather than simply investing in the NHS.

Deb McDee responded:

I am an NHS Manager and was recently ‘work shadowed’ by someone from a highly rated, large private company as part of a training scheme. For such a large NHS organization, he could not believe the small size of the management team, the long hours worked, the productivity and the low salaries compared to similar size and budget in the private sector. There is no chance that the private sector can run the NHS more efficiently at current funding levels. Any additional money would be swallowed up in more bureaucracy, inflated private sector salaries and a reduction in services.

The above respondents identify the fact that private companies are in business to make a profit, in addition, staff are generally better paid for similar jobs. They feel that any private partnerships will prove to be more expensive than running the services under the NHS.

A prominent dentist, John Renshaw, has resigned his profession over changes to the NHS. His story appeared in the Guardian on February 11th 2006 titled, ‘Top Dentist Quits over NHS plans

One of Britain’s leading dentists is leaving the NHS to go private after 37 years, in the growing row over the way dentists will be paid in future.

John Renshaw’s practice in Scarborough will become private in April.

Mr. Renshaw, chair of the British Dental Association from 2000 to 2005, has refused to sign the new NHS contract.

He says it will mean even less access to the service and lower standards of treatment. The government says the new contract provides a guaranteed income.

Mr. Renshaw said: “The NHS appears to want to secure a cheap deal and take control of every NHS dentist’s business.

“I will not be a party to this move and I am leaving the service for good.”

In addition to his BDA role, Mr. Renshaw was dental practice adviser to North Yorkshire Health Authority for 10 years to 2001 and has served on many bodies, including Scarborough Health Authority.

The Royal College of Nursing expressed their frustration at the changes to their profession in the Telegraph Article ‘Plan to Part Privatize NHS Nurses Quietly Unveiled, on 26th August 2005. [8]

The Government has “quietly” unveiled radical plans that will lead to the part-privatization of many non-hospital NHS services, nurses’ leaders claimed yesterday.

The Royal College of Nursing accused ministers of deliberately announcing fundamental changes to the way primary health care was provided during the summer holidays and then announcing a public consultation it called “little more than a facade”.

Plans to transfer tens of thousands of district, school and mental health nurses, health visitors and community midwives out of the NHS primary care trusts were disclosed in a letter to the heads of NHS organizations at the end of last month.

It said that in future primary care trusts would commission these services from private companies, charities, local authorities and acute trusts.

The RCN yesterday said the public consultation on the future of community health and social services, announced last week, and was meaningless, as the key decision to end the provision of these services by the PCTs had already been taken.

Howard Catton, RCN head of policy, said: “An NHS that no longer provides these services, that no longer employs these staff is a very different sort of NHS to the one the public knows.

The Royal College of Nursing (RCN) is a membership organization with over 370,000 members in the United Kingdom. Most members are Registered Nurses but student nurses and Advanced Healthcare Assistants are also admitted.

These prominent professionals and the largest representative group of nursing professionals are outraged at the division of the medical services and part privatization. They raise the question of charities being called on to provide certain services – charities are currently stretched financially and are unlikely to be able to take on responsibilities that have previously been handled by the NHS.

Part-privatization of ambulance work sparks union anger, written by the Guardian Social Affairs Editor, John Carvel. – The article below, printed on October 13th, 2005, is a single example of numerous instances where medical services have been outsourced.

Most of the ambulance service in Surrey is to be hived off to a private company specializing in prison management, immigration detention centres and court escort duties, which broke off from Group 4 security services last year.

The Surrey ambulance service said yesterday it was “deeply disappointed” at a decision by local NHS commissioners to transfer all non-emergency ambulance work to the Worcestershire-based company GSL. In a further ratcheting up of private sector involvement in the NHS, the company will become responsible for transporting about 150,000 patients a year on journeys to and from hospital. The NHS ambulance service will retain blue-light emergency work, but GSL will also look after high-dependency patients who need oxygen and constant supervision during journeys between hospitals.

The company said it would acquire 60 state-of-the-art ambulances to provide patients with safe, comfortable journeys when it takes over in March.

The decision to award it the contract was taken on Tuesday by a consortium of primary care trusts headed by Alan Kennedy, the ambulance trust’s former chief executive.

The announcement of this first major privatization of ambulance work caused an angry reaction from Unison, the public service union. Karen Jennings, its head of health, said: “This is all about saving money and nothing to do with providing high-quality patient care. It will undermine the trust’s ability to provide an integrated emergency service in the area.”

News of the deal came as the board of Thames Valley health authority took a step towards contracting out NHS healthcare management in Oxfordshire.

It agreed to submit plans to the Department of Health to make NHS managers compete against the private sector for the job of commissioning services from hospitals.

This could, in effect, privatize the process of deciding what health services and drugs should be available to the county’s 600,000 residents.

Nick Ralph, the Thames Valley chief executive, said the contractors would be accountable to a board of non-executive directors with power to look after the public interest.

But Howard Catton, head of policy at the Royal College of Nursing, said contracting out strategic management could reduce the NHS to little more than a brand name for services that were managed and delivered by the private sector.

This report shows a lack of communication and direction between the MoH and the NHS on policy and procedures and the way forward. In addition, the cost of providing new ambulances and training personnel who have no medical care background with be high, the private company will have built such costs into their fees to be paid by the MoH over the period of the long term contract.

John Carvel, the Social Affairs editor of the Guardian on Sept 22, 2005, wrote the below article Plans to Hand Over NHS Staff and Buildings to Private Sector

Health secretary Patricia Hewitt is preparing to transfer NHS hospital buildings and staff into the private sector as part of a ?3bn scheme to promote competition in the health service, the Guardian can reveal. Documents show that companies bidding for contracts to treat patients from the NHS waiting list will be allowed to take over NHS premises, doctors and nurses.

Initially, they will also be guaranteed a minimum throughput of NHS patients and paid accordingly, even if the patients choose to go elsewhere.

Disclosure of the “strictly confidential” documents is likely to fuel protest at the Labour conference next week that the government’s NHS reforms are in danger of destabilizing the health service, but Ms Hewitt will argue she is saving it by putting the needs of patients before those of providers. The information was provided to companies wanting to bid for 24 contracts to run treatment centres across England.

They will compete with NHS trusts to attract NHS patients, who from the end of this year will have a choice of where to be treated. Ms Hewitt has said she wants them to diagnose and treat 1. 7m patients over the next five years.

The documents, which were obtained by Hospital Doctor magazine, disclose plans for companies to take over the latest state-of-the-art operating theatres that are being built for the NHS at hospitals in Birmingham and the New Forest.

The independent sector will also be handed the surgical units at Ravenscourt Park hospital in Hammersmith, west London, where wards have been shut due to lack of patients.

Many of the 24 contracts involve “significant volumes” of patients and staff transferring from the NHS into the private units.

Doctors and nurses may have little choice if they want to keep their jobs.

Paul Miller, chairman of the BMA’s consultants committee, said: “It now looks as if we are at the start of a massive privatization of the provision of healthcare in the NHS.”

But Ms Hewitt said his claims were nonsense. “This is all about giving patients speedier access, more choice, and improved services.”

The taking over of staff and premises, without prior consultation and negotiation with the personnel involved, is a very autocratic way to shift responsibility and accountability and lacks any regard for the medical staff involved. This does imply they will retain a job, in contrast to the ambulance drivers in a prior article who would be out of work as the private company would staff the service themselves.

If the NHS cannot attract patient to ‘state of the art’ facilities, I cannot understand how handing them to private enterprise will turn around the situation and make the facilities profitable. There has to be some form of financial incentive for the private sector to take on such a contract. In another article quoted, there is reference to the MoH paying private companies for patients, regardless of whether those patients take up the services in the area. If this is the case here, why wasn’t the NHS made the same offer and continued to run the facilities themselves?

Vincent Marks, a professor of clinical biochemistry at the University of Surrey was quoted on May 13th, 2005, after hearing of another part privatization being announced by the then new Minister of Health, Ms Hewitt ‘”Once you start farming it off into private enterprises the NHS as we understood it will gradually disintegrate.”

And Shadow Health Secretary Andrew Lansley added: “I do agree in principle the independent sector should have a right to supply to the NHS.

“But not the sort of contracts the government is signing. They (independent sector providers) get more money than NHS would do.”

Niall Dickson, chief executive of the King’s Fund, a health think-tank, said while using the private sector in such a way had “obvious advantages”; there were still “potential pitfalls”.

“This will have significant implications for NHS institutions and core services, as well as the training of doctors.”

And British Medical Association chairman James Johnson said he was concerned the move could destabilize the NHS, as the private sector would only take on the most straightforward cases.

Ms Hewitt, who was previously trade and industry secretary before taking over at health in the reshuffle last week, has also championed latest figures that have shown patients were being treated faster.

The number of people waiting over six months for an operation at the end of March was 40,800 – a 32.5% fall on the previous month.

The overall waiting list also fell slightly to 821,700 – down by 2.8% on the previous month.

And a report by the NHS chief executive Sir Nigel Crisp showed the health service was ahead of target for treating heart and cataract patients.

This article raises the question of training for future doctors. One can argue that if the majority of future doctors are likely to be employed in private companies rather than the NHS that the MoH could reduce funding for doctors training and training faculties in general. The private sector is unlikely to take on this responsibility and could result in a more acute shortage of trained doctors, as the cost of training would fall to the individual.

Certain improvements in waiting times are indicated; however, these are a small percentage of the overall services provided and may not be indicative of a general improvement across the board. They could be achieved at the expense of others services which could have been pushed back.

The Battersea and Wandsworth TUC have produced a paper titled ‘SW London Hospitals under Pressure’. This document highlights the plight of the particular area but echoes the typical situation countrywide and provides an insight into the reasons for the current state of the NHS

It states that ‘consistent patterns of under resourcing and crisis measures running back to the early 1980s’. It states ‘The resort to private sector providers to plug gaps in local NHS capacity is both costly and self-defeating. Not only does it siphon vital cash from local NHS trusts, but it also increases the level of competition between the NHS and the private sector for nursing and other staff’ ‘Private contractors must be removed from the provision of hospital support services. Their role for the past two decades has been to cut the pay and conditions of staff to run down the quality of services. The constant threat of privatization has been used as a weapon to hold down the pay for other NHS staff, with dire consequences for morale.’

They make the following recommendations (summarised)

Runaway costs of employing agency staff to plug gaps in the full time NHS workforce have to be tackled
There is an urgent need for a thorough and independent audit of the financial situation in all local NHS Trusts, to establish a realistic baseline budget that will sustain the necessary levels of service – and the additional money must be made available, to ensure that the services are expanded as required on a stable and sustainable basis.
Any planned deals with private hospitals should be abandoned, ad priority should be given instead to the most rapid possible expansion of local NHS capacity, alongside longer term plans for the renewal of old or obsolescent buildings
Privatized support services which generate profits at the expense of low paid for staff must be brought back in house, with staff properly reincorporated into the NHS team.
With the government currently able to borrow money on the international markets at 2% interest or even lower, all PFI schemes should be abandoned as too costly and inflexible to suit the needs of the NHS. Instead the government should make NHS capital available for the further upgrade of Epsom (hospital) and a new publicly funded hospital to replace St Helier, and local treatment centres to complement the services already available in smaller local hospitals

Current literature clearly indicates that the move towards part privatization of the NHS has serious negative perceptions both within the medical profession and in the general public. However, the Department of Health believes the move is already proving to be successful and that the move to further part privatization is the way forward for an efficient and effective NHS. In summary the documents highlight.

Costs to the Department of Health will significantly exceed previous spending on the NHS. The move to part privatization is in the early stages and the long term management and control need to be carefully monitored and checked.
The Department of Health has to sign on to long-term contracts with the private sector service providers, as stipulated in the Private Finance Initiative papers.
There have been some significant overruns on initial budget figures; cause for concern when the initiative is still in the early stages and the contracts are for extended periods.
The Department of Health is losing control over areas of health management.
Health care providers are leaving the profession as they are disillusioned with the changes to the NHS
Health care providers have

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