Greg Dropkin, KONP Merseyside
NHS monies are flowing to private companies, including firms with a dismal track record in the UK and some whose US parents have faced multi-million-pound penalties from state and federal authorities. The spending spree may escalate as companies are accredited by NHS England to develop Integrated Care Systems.
After the Health and Care Act sailed through Parliament last Spring, control of local NHS budgets passed to 42 Integrated Care Boards (ICBs). NHS hospitals, community, mental health, and primary care, still account for most ICB spending. But the threats to a publicly provided and accountable NHS are real.
From July to February, nearly 2900 private companies received over £3.9bn, as shown by the available monthly spending reports from 40 ICBs. The biggest winner, Circle Health Group Ltd, received nearly £169m from 36 ICBs. Yet Circle was already notorious for its failed takeover of Hinchingbrooke Hospital in 2011 and exit in 2015, and the under-utilisation of capacity block-booked for Covid in 2020.
Circle is now 100% owned by Centene Corporation, a $135bn / year US firm specialising in health insurance and managed healthcare.
The Violation Tracker is a searchable database of corporate offences. Centene’s rap sheet has 205 penalties imposed by state and federal authorities, including:
- In September 2022 Centene agreed to pay Texas $165.6 million to settle allegations the company overcharged the Medicaid program for pharmacy benefit management services. Similar large claims were settled earlier with the US government, the state of Washington and at least 9 others. Washington state authorities began investigating in 2019 after a whistleblower revealed managers were failing to disclose true pharmacy benefits and services costs.
When Centene took its initial 40% stake in Circle back in January 2020, the CEO of Centene’s UK arm Operose Health was Samantha Jones, later appointed as Boris Johnson’s Chief Operating Officer and now a non-executive director at the Department of Health and Social Care.
The issues are even sharper with another US-owned firm, Optum Health Solutions (UK) Ltd. Seventeen ICBs have paid Optum a total of £4m. The contracts include Medicines Management (Lancashire, South Yorkshire), Prescribing (Birmingham, Bristol, Cheshire & Merseyside, Devon, Kent, Shropshire), Central Drugs and IM&T (Gtr Manchester). What should we know about Optum and pharmacy?
Optum Health Solutions (UK) Ltd is owned by UnitedHealth Inc, the largest US health corporation. As UnitedHealth explains “Optum is a health services business serving the broad health care marketplace, including payers, care providers, employers, governments, life sciences companies and consumers, through its OptumHealth, OptumInsight and OptumRx businesses.”
- Last year, the State of Arkansas sued Pharmacy Benefit Managers (PBMs) including OptumRx, and drug manufacturers. The defendants were accused of engaging in a collective “Insulin Pricing Scheme” which caused millions of Arkansas residents to pay inflated prices for insulin. Arkansas charged the firms with deceptive trade practices, unjust enrichment, and civil conspiracy.
The PBMs establish a list of drugs that are to be covered by health insurance. If a drug is not on the list, health insurance will not cover the cost, giving the defendants “enormous control over drug prices and drug purchasing behavior”.
Rather than selling the drug for $20, as the manufacturer defendants did in the 1990s, they now sell for between $300 and $700 when they are less than $2 to produce. Allegedly, a portion of the inflated price is paid back to the PBM, which later grants “preferred status” on their formularies to the manufacturers that pay them the most and have the most highly inflated price.
UnitedHealth itself has paid over $667m in 354 penalties mainly concerning consumer protection and government contracting. But this is small change for a firm with an annual revenue of $283bn.
UnitedHealth is seeking to expand its UK market. Last June, the Optum subsidiary Bordeaux UK Holdings II Limited agreed to buy EMIS Group Plc, formerly known as Egton Medical Information Systems. The Competition and Markets Authority is now investigating the takeover. Egton software is widely used in primary care, community care, accident and emergency, and community and hospital pharmacies. Twenty ICBs have already paid the company over £6.5m.
Health Systems Support Framework
When the Health and Care Act was still under development, NHS England launched the Health Systems Support Framework, intended to fast-track procurement for contracts to develop Integrated Care Systems. The Framework accredits over 230 firms, at least 32 of them US-owned.
Optum is accredited for 18 topics under headings including Shared or Integrated Care Records, Population Health Intelligence, Business and Clinical Intelligence, Decision Support Tools, Integrated Care-coordination, Patient pathway optimisation and care model design.
Infrastructure for Shared or Integrated Care records will include “sharing structured medications data across all care settings for a variety of uses such as population health management, risk stratification, patient assessment, medications reconciliation, and decision support.”
It’s a marriage of pharmacy and software, blessed by NHS England.
Cheshire and Merseyside
At least 14 companies accredited under the HSSF have received funds from Cheshire and Merseyside ICB. Along with Circle, Optum, and Egton Medical, they include:
- PricewaterhouseCoopers (PwC), which received £150k from the ICB in January, is advising Liverpool University Hospitals FT on how to comply (pdf p111) with the £75m budget cuts imposed by the ICB. PwC are accredited for 15 HSSF topics and are listed for 19 violations in the US, and 10 in the UK involving accounting fraud or deficiencies.
- PA Consulting, owned by US firm Jacobs Engineering, has advised the ICB on its long term financial planning (pdf pp 90-91) but this is not shown in the spending reports. The company is accredited for 18 HSSF topics, and Jacobs has 61 violations in the US.
- Deloitte supplies unspecified Programme Wide Projects to the ICB. Accredited for 23 HSSF topics, it has 13 violations in the UK and 25 in the US, most involving accounting fraud or deficiencies. In 2018, Deloitte agreed to pay the US $149.5m arising from its role as the independent outside auditor of a failed originator of mortgage loans insured by the Federal Housing Administration.
- The Public Consulting Group UK is accredited for 10 HSSF topics, including “Organisational redesign, governance, payment and contract reform”. Their work for the ICB involves personal health budgets. In September, the US parent company (Public Consulting Group) paid the federal government $2.5m to resolve accusations that PCG caused local school districts to submit claims that were not covered by Medicaid.
- Carnall Farrar has carried out a Liverpool Clinical Services Review (pdf p144 ff) which recommended “an ICB-led service change programme” for Liverpool Women’s Hospital which may involve moving services out of Toxteth, despite strong public opposition. Carnall Farrar are accredited for 14 HSSF topics including “Development of Service Change and reconfiguration proposals”. As the ICB acknowledged, the HSSF was used to appoint Carnall Farrar as “the procurement timeline could be reduced as the Providers are in essence ‘pre-approved’”.
This pattern is probably replicated in other ICBs as the private sector, including US-owned firms, gains strategic influence over the NHS despite the public track record of failures and violations. ICB spending is only part of the issue, as private companies also hold contracts directly with NHS England or the Department of Health. Furthermore, the Trusts funded via the ICBs have their own private sector contracts.
Whilst Cheshire and Merseyside ICB spent £154m, its 18 Trusts spent at least £568m on private companies, including PFI, construction, pharmaceuticals and many others including HSSF-accredited firms. The reality may come as a shock to those who thought the Health and Care Act would end NHS privatisation, or that it makes no difference who provides the service.
We call for the restoration of the NHS as a publicly provided, publicly accountable, universal, comprehensive health service, free at the point of need, with decisions on treatment taken on clinical grounds without regard for ability to pay.
Greg Dropkin, KONP Merseyside