Outsourcing of services to for-profit companies in the NHS has been steadily increasing since the 2012 Health and Social Care Act. A recent study details the additional billions of pounds spent by NHS commissioners on for-profit companies.
Ben Goodair, Doctoral Researcher in the Department of Social Policy and Intervention at the University of Oxford
Aaron Reeves, Professor of Sociology and Social Policy in the Department of Social Policy and Intervention at the University of Oxford
The privatisation of England’s NHS, through the outsourcing of services to for-profit companies, has been steadily increasing since the introduction of the 2012 Health and Social Care Act. In fact, a study that we have published details the additional billions of pounds spent in recent years by NHS commissioners on for-profit companies.
Since the introduction of for-profit healthcare providers into the NHS, many have debated the impact this would have on the quality of care received by patients. Some have compared outcomes between patients treated in NHS and independent hospitals but such straightforward comparisons are rarely revealing because a) patients treated in these different sectors tend to have very different health needs and b) there is a potential for ‘knock-on effects’ from outsourcing on NHS providers’ performance which can’t be captured with this comparison. Instead, it is important to also assess the total impacts of outsourcing by testing whether overall levels of privatisation from each commissioner are associated with improvements or declines in quality of care in their local area.
This is exactly what we did. We brought together a variety of data sources that had never been combined before and we able to uncover a rather concerning pattern. When spending on for-profits increases in a given area, there is a corresponding rise in mortality and a worsening of health in the following year.
What does privatisation mean for health service quality?
While important, this association is only from a single study of one dimension of the quality of healthcare provision. Given this, it is important to read this finding in light of the large body of evidence in this area, which also suggests that introducing for-profits into care systems, health services and children’s services might not result in the improvements in quality that is promised by advocates of private service provision.
The fears are that profit motivations from new providers are at a discord with equitable NHS service delivery. This might mean that the services themselves are worse due to cost-cutting and employment practices; or that the whole service suffers from selective provision which results in inequitable outcomes. Either way, the last decade has represented a further shift towards the private provision of England’s NHS services and the evidence suggests this has not resulted in improved quality of care for patients.
Why, then, is outsourcing on the rise?
It may seem a simple question, and an important one given our findings, but one which the government are unable to answer. They maintain that “there has been essentially no proportional increase in NHS spending with non-NHS providers in the last decade”. This is not what the data shows: both the proportion of treatments and the percentage of expenditure on for-profits has risen significantly in the last 10 years.
The increases in outsourcing are to some extent by design. NHS reform has intentionally opened up the service to an external market in the hope that a ‘diverse pool of providers’ can compete for NHS contracts. To achieve this, preferential treatment based on whether the hospital is NHS or independent has been outlawed along with ‘anti-competitive behaviour’ by commissioners. This has resulted in a service which is open to the healthcare market, and we have seen corresponding rises in privatisation.
However, privatisation is not on the rise in all geographic regions, nor across all treatment types, leading to further questions about whether there isn’t some ‘distortion to the level-playing field’ – whereby something other than patient choice and higher quality of care is driving the outsourcing of services. This selective service provision based on relationships or profitability might be of concern given the stringent funding of the service and the direct implications of outsourcing on the quality of care.
There is more that needs to be done to unpack why outsourcing continues but what is clear is that further moves into this area risk undermining patient safety and may increase mortality.
This blog is written based on the following peer-reviewed research: Goodair, Benjamin, & Reeves, Aaron. (2022). Outsourcing health-care services to the private sector and treatable mortality rates in England, 2013–20: An observational study of NHS privatisation. The Lancet Public Health, 7: e638-e646. https://doi.org/10.1016/S2468-2667(22)00133-5
 Expenditure data available from Rahal and Mohan (2022) The Role of the Third Sector in Public Health Service Provision: Evidence from 25,338 heterogeneous procurement datasets. Available at: https://osf.io/preprints/socarxiv/t4x52/ . Treatment data is author analysis of monthly RTT waiting times data.