Private firms providing services to NHS made £1.6bn profit in two years, research finds | NHS

Private firms providing services to the NHS, including healthcare and consultancy, made profits of £1.6bn in the last two years. research reveals.

The findings, based on contracts worth £12bn, have sparked “scandalous” claims of profiteering, raised concerns the health service is being “emptied” and called on ministers to impose a cap on maximum profit levels.

According to the Center for Health and the Public Interest, profits of £1.6bn in 2023-24 and 2024-25 would be enough to cover the costs of 9,178 doctors or 19,428 nurses in that period.

The findings are based on analysis of NHS contracts in England; 760 private firms provide services to patients, including diagnostic tests such as CT scans and treatments for skin problems and mental health issues, including hip and knee replacements.

The think tank found:

• Of the £12bn contracts, £2bn went to firms whose owners were based outside the UK.

• Of that £2 billion, £533 million went to companies owned by people living in tax havens such as Jersey and the Cayman Islands.

• Firms, particularly those owned by private equity firms, used £353m of £12bn of NHS revenues to pay interest on debt.

The Liberal Democrats’ health spokeswoman Helen Morgan said: “It is an unacceptable waste for private companies to make super profits from the NHS. This money should go to frontline services, not to the inflated profits of big corporations.”

“The NHS should be able to benefit from economies of scale and use its power as a major buyer to drive prices down. I fear our health service looks to be falling by the wayside.”

CHPI analyzed contracts held by the NHS’s 42 integrated care boards and NHS England, which oversee the service as a whole and directly commission some specialist services, including care, that the NHS fails to adequately provide.

The think tank did not name the 760 companies, but separate research it carried out shows 28 earned more than £5 million a year from the NHS, making profits of at least 17% and between them had revenues of £4.1 billion in the last two years.

The 28 firms include large private healthcare providers such as Spire and Circle and consulting firms such as PricewaterhouseCoopers and PA Consulting. They also include five companies that treat vision problems; InHealth, which provides diagnostic tests; four technology and IT companies; and two electronic patient records specialists.

Labor MP Stella Creasy said: “It is frankly scandalous that taxpayers’ money is leaking through these excessive profits into offshore tax havens and into the pockets of private equity firms while patients wait for surgery. We urgently need limits on this rent-seeking and profiteering, and full transparency about where this money is going.”

He said the NHS was not getting value for money with contracts such as those analyzed by CHPI because firms were making such high profit margins on them.

CHPI director David Rowland called on ministers to impose a cap on the profits firms providing services to the NHS can make; This was modeled on the 8% limit the government legislated to introduce for children’s social care providers after similar concerns were raised about providers in this sector.

He said the fact that the government had already limited the profits that could be made by pharmaceutical and defense firms winning public sector contracts showed that a similar system could be applied for NHS contracts.

The Independent Healthcare Providers Network, which represents non-NHS healthcare operators, expressed doubts about CHPI’s conclusions.

“The headline figures run the risk of oversimplifying a complex picture,” a spokesman said. “The analysis appears to combine a wide range of companies the NHS contracts with, not just those providing patient care, and uses a very crude approach to estimating ‘profits’ based on company-wide figures that do not distinguish between NHS and private work.

“Independent healthcare providers play a vital role in providing care to millions of NHS patients each year and are paid on the same basis… Any redundancies reflect productivity and efficiency, allow for greater investment in staff, facilities and services for the benefit of patients and help reduce waiting times.”

The Department of Health and Social Care has defended the NHS’s use of private firms. A spokesman said: “The independent sector has a role to play in tackling waiting list backlogs and creating a more sustainable healthcare system. However, when working with independent providers, we will neither tolerate ‘gaming’ of the national pay scale to randomly select the simplest, most profitable cases, nor any lack of quality. Any care commissioned from independent sector providers must meet NHS standards.”