The economics of contracting out NHS services to the private sector.

The cat is out of the bag. Here’s the perceived wisdom;

The NHS is a bad thing, it’s the ‘Big State’, its inefficient and it costs too much.

Private healthcare providers could do it all much better and cheaper.

Instead of the NHS/the State providing healthcare it should be commissioning private care providers to do it on their behalf instead.

Here’s the reality;

The Competition Commission (CC) believes that the main private healthcare providers (BMI Healthcare, HCA International and Spire Healthcare) have been overcharging their private patients by between £173 million to £193 million a year between 2009 and 2011.

These three companies dominate the market and as a result have bumped up their charges, or as the Competition Commission puts it they have; “been earning returns substantially and persistently in excess of the cost of capital” over those three years.

The overcharging is estimated to be around 10% to 11% of their private revenue although the Commission thinks that this may be an under estimate.

All three companies deny the allegations but an investigation will follow and is likely to throw up some more interesting figures.

This all came about because a smaller company, Circle which isn’t part of ‘The Club’, made a complaint to the Commission which blew the gaff on the ‘big three’

Chief financial officer Paolo Pieri said: “We are delighted that we have been vindicated by the Competition Commission and believe more patients will now be able to access our state-of-the-art facilities as a result of this ruling…..This report is clear that patients across the country have suffered higher prices and poorer care because of the monopolistic behaviour of private hospital providers. We now look forward to the Competition Commission pushing through these remedies with haste – including pursuing the maximum financial penalties – to finally ensure a fair deal for patients across the country.”

 

What all this exposes is that the private healthcare providers are ripping off their private patients and there is absolutely no reason to believe that they aren’t ripping off the taxpayer/NHS in the contracts they carve up between themselves when they do work for us.

So much for more efficient, cheaper, better.

Neil Harris

(a don’t stop till you drop production)     

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