The private sector and the NHS: not ‘on the table’, but already in the market

Politicians on both sides wasted no time distancing themselves from Donald Trump’s suggestion that the NHS would be "on the table" in any free trade deal. Jeremy Corbyn said he would fight it with his "last breath", Dominic Raab declared the NHS was "not for sale", while Matt Hancock took to Twitter to say "not on my watch". By the next day, the President had reversed, saying "I don’t see it being on the table".

This reaction is not surprising in a country where only 7% of people told a YouGov poll the NHS should be privatised and run by the private sector, and where the London Olympics opening ceremony featured a homage to the NHS.

Governments have maintained the NHS is a public system, free at the point of use, funded by general taxation. While any suggestion of privatisation will provoke a backlash, the public might be surprised at the degree to which the NHS relies on private companies, from Britain and elsewhere, to deliver health care and support services. And even if any moves toward privatisation are ruled out of trade negotiations, changes to the way the NHS buys medicines from pharmaceutical companies might not be.

Private providers already deliver health care services on behalf of the NHS

In England, clinical commissioning groups and NHS England buy health services – from hospital operations to GP appointments. They can purchase from any provider that meets their standards, including private sector providers, as well as charities and local authorities.

Private providers have a significant – but far from dominant – role in delivering health care. Nearly £9 billion, or 7.3% of the Department of Health and Social Care’s (DHSC’s) day-to-day budget, was spent on purchasing health care services from the private sector in 2017/18, down from 7.7% the previous year. While it is difficult to be precise about movement in this figure because of changes in methodology, The King’s Fund estimates that this spending has increased gradually over the last 15 years.

American-owned health care companies are already part of this picture, with procurement rules allowing them to bid for contracts if they have a presence in the EU. For instance, Priory Group runs over 450 facilities and provides mental health services to the NHS. HCA Healthcare UK, whose parent company is the world’s largest private hospital group, operates over 30 facilities in London and Manchester and runs private wards in NHS hospitals (for instance at University College London Hospital). In other cases, American companies have entered the UK market through acquisitions, such as Tenet Healthcare’s 2015 purchase of Aspen Healthcare, which runs nine private facilities and has earnt 5 to 10% of its revenue from the NHS.

NHS buying from the private sector extends beyond health care services

In 2016/17, the NHS purchased more than £10 billion worth of services from private sector facilities management providers. This includes cleaning, catering and building maintenance. A further £4.7 billion was spent on capital procurement in 2017/18, covering hospital equipment like CT scanners, while the purchase of medicines cost the NHS £17.4 billion in 2016/17.

Even though the public might not see them as such, GPs are part of the private sector. This has been the case since the NHS was created. Rather than being employed directly as NHS staff, most GPs run private businesses, on their own or in partnership, and contract with the NHS to deliver services to its patients. GP services are due to receive £12 billion of the NHS budget by 2020–21.

A free trade agreement need not open the floodgates to private providers – but it might lead to more expensive medicines

From the US perspective, the big prize in a free trade deal may be the NHS’s pharmaceuticals spend – £17 billion a year and growing. The UK Government negotiates purchase prices with the medicines industry to contain costs. The Americans, from the President down, would like to change this arrangement, because it puts downward pressure on the revenue of their pharmaceutical companies. Past experience, and the US trade representative’s negotiating objectives, suggest they will try to use trade talks to increase market access and prices received by US drug companies. But a better deal for industry could mean the UK Government (and ultimately the taxpayer) pays significantly more for drug purchases.

Even if political pressure ensures the ‘free at the point of delivery’ principle is not ‘on the table’, the public should know that the private sector already has a vital role in delivering public health care services – and the Government should be clear that a trade deal with the US might mean other difficult choices, including about the buying of medicines.