Short Cuts by Dave Lindorff - London Review of Books Nov 2017

is the author of Marketplace Medicine: The Rise of the For-Profit Hospital Chains.

In late September, AmerisourceBergen, one of the world’s biggest pharmaceutical distribution companies with revenue of $150 billion, was fined $260 million by the US Food and Drug Administration for emptying pre-filled glass syringes of expensive cancer drugs and reloading the drugs, in slightly smaller doses, into cheap plastic syringes before distributing them to oncology centres. For years, the company allegedly pocketed the profits obtained by creating and selling 10 per cent more pre-dosed syringes in this manner. Prosecutors claimed that because the refilling process was not conducted under sterile conditions, it led to ‘floaters’ and bacterial contamination, putting at risk the health of thousands of cancer patients with compromised immune systems.

Earlier this year, the Justice Department filed a lawsuit, based on evidence from a whistleblower, against UnitedHealth Group, the largest provider of subsidised private medical insurance for the elderly, accusing it of overcharging the government by more than $1 billion, by claiming patients were sicker than they actually were.

The FBI estimates that fraud, both private and public, accounts for up to 10 per cent of total US healthcare expenditure, or about $350 billion, of the annual $3.54 trillion that Americans spend on healthcare. The scale of medical fraud in the UK is still small by comparison, but some of the companies that have paid huge fraud fines in the US – including UnitedHealth, McKesson, Celgene and the Hospital Corporation of America – are becoming increasingly involved in NHS privatisation schemes, in accordance with the government’s wishes.

The Health and Social Care Act pushed through by Andrew Lansley as health secretary in 2012 was intended to increase privatisation, outsourcing, inter-regional competition and ‘marketisation’ in an already strained system. There is little sign that it is improving services or reducing costs, but private firms see profits to be made.

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NHS Support Federation report into state of tendering of NHS contracts - Dec 2017


In this report we explore the evidence about which NHS contracts are being tendered, who is winning them and how these trends form part of the new direction the NHS is now taking. Our data is based largely on a process of analysing published awards, a data base that we have compiled from observations over the last 4 years. 

We also review the catalogue of problems that have emerged in the various types of outsourcing that have been tried, as part of the NHS market experiment. Some of these failures have undoubtedly influenced the current changes in strategic approach and led to the widely supported view that this experiment should end.

It is time to act on the knowledge that has been built up about how outsourcing in the NHS can negatively impact upon patients, staff, the level of resources and other NHS services. This evidence makes a compelling case and we would therefore urge the government to repeal its competition legislation and focus on building an adequate level of publicly-provided NHS services.



1. Activity in the market for NHS contracts remains high despite a signaled shift away from competition by the Chief Executive of the NHS. Over the last year (Apr 2016/17) £7.1 billion worth of NHS clinical contracts has been awarded through the tendering process. This is on a par with the preceding year. £1.6bn worth of NHS contracts were advertised in the first quarter of the current financial year (2017/18); which brings the total value of contracts awarded through the market to around £25bn, since the Health and Social Care Act (2012) came into force. The number of high value clinical contracts that have been advertised, worth over £100 million pounds each, has almost doubled in the last year, rising from 11 to 20, of which eight were won by the private sector.

2. The private sector share of NHS contracts is rising, as they focus increasingly on growing opportunities to provide community health services. For-profit companies won £3.1 billion worth of new contracts in the last year (16/17). This was 43% of the total value of awards advertised and their share has risen from 34% (15/16). Companies are turning their attention to new opportunities offered by the intention to treat more patients in the community and less in hospital, an NHS wide policy. Circle – the company that walked away from a contract to run the NHS Hinchingbrooke hospital, is now investing in intermediate care, intending to offer care beds outside hospital to look after NHS patients that hospitals want to discharge.

3. Virgin Care has been the most successful company in winning NHS clinical contracts - mostly to provide community healthcare, picking up over £1bn worth of NHS awards in 2016/17. Its latest awards are a £355m contract to provide children’s health services in Essex and a £65m award to run community health in West Lancashire. In each case the company is taking over services from the NHS and non-profit making providers. Virgin care is now the dominant private provider in the NHS market – winning a third of the total value of contracts won by non-NHS providers over the last year. The number of services the company provides to the NHS has risen from 230 to 400 over last 12 months, according to its website.

4. There is compelling evidence that the competition regulations under section 75 of the Health and Social Care Act (2012) - introduced in April 2013 are dysfunctional and have resulted in numerous failed outsourcing projects. In a growing number of instances NHS organisations are starting to game-play the procurement rules to avoid open competition. At the same time private companies are using the courts and competition law to try to maintain their access to NHS contracts. Competitive tendering was put at the heart of healthcare planning by the Health and Social Care Act (2012) and was a catalyst for numerous experiments with the outsourcing of NHS clinical services. Just five years on there is now a substantial body of examples to show how outsourcing arranged under these procurement regulations often results in contract failures and serious breakdowns in the delivery and quality of care. All at a cost to patients, staff, NHS services and the tax payer.

5. There is a growing consensus that the competition framework needs to be replaced and yet party-political concerns are preventing it, a situation which will leave the NHS with a failing procurement model and could result in a further £10bn in NHS contracts going to the private sector over the next 3 years. In March, NHS Chief Simon Stevens confirmed that the arrival of STPs would “effectively end the purchaser-provider split for the first time since 1990”. This represented a major shift in policy away from the themes of competition and patient choice - the Lansley era. The current health secretary, Jeremy Hunt also backs the need for new legislation, an intention outlined in the Conservative’s election manifesto. After the election however, he acknowledged that the government’s precarious Parliamentary situation had effectively removed the possibility. This means that the current legal framework around tendering will remain in place, which on current trends will lead to the private sector winning a further £10bn of NHS clinical contracts over the next 3 years.

6. Accountable Care Systems have been flagged as the new model for local healthcare planning in the NHS. The future role for private companies has not been clarified, but commercial opportunities are far from being capped. Only a handful of examples of new models of care are fully developed and so far the private sector have not been bidding for the multi-billion contracts. However, in Nottingham, Capita and Centene have been employed to help develop the Accountable Care System. Healthcare companies are also well placed to bid to market their cost-saving solutions to ACOs, who will operate with capped budgets. Virgin and Care UK have already landed over £2bn worth of NHS business and the government has not signaled that it will inhibit this kind of sub-contracting or outsourcing. An even bigger role for business is possible though. The ACO contract that has been drawn up by NHS England does not preclude the private sector from bidding for them, although the major players in the international market, companies like United Health and Humana and Centene could will want to assess the business risk.

7. The scale of private sector involvement in the NHS is regularly downplayed in departmental and ministerial statements, but the H&SC Act has ensured that non-NHS providers have been able to establish a substantial foothold in local NHS provision. A survey of CCG accounts for 2016/17 by the NHS Support Federation shows that these commissioners spend around 15% of their operating expenses on employing private companies and charities to deliver healthcare to CCGs. This is higher than the 11% figure shown in the national accounts - which expresses the spending on non-NHS organisations as a % of the overall DEL (Departmental Expenditure Limit). The value of the contracts awarded through market procurement is now seven times higher than in 2013.

8. Over the last 3 years the types of services being tendered has shifted almost entirely towards those that are delivered in community settings, outside of hospitals. The private sector and charities win a majority share of these contracts. Three years ago, hospital based care contracts accounted for 40% of the value of those clinical services put up for tender. Services delivered in hospital now account for less than 10% of the value of tenders, with the vast majority being contracts delivered in the community. Contracts to deliver services in the community cover a wide range of services including; out of hours GP care, community nursing, public health and children’s health services. In the last year the private sector and charities won over 60% of the value of these contracts.


Nuffield Trust - "Shifting the balance of care" - March 2017

The Nuffield Trust has published its own research into the credibility of the proposals to shift care into the community, the proposals which underlie Simon Stevens' "Five Year Forward View" (2014) and its implementation in the 44 regional "Sustainability and Transformation Plans" (STPs) (2016).

The Nuffield Trust  "Shifting the balance of care: Great Expectations" was published in March 2017.

I have selected two key messages from the report:

....• Nonetheless, in the context of long-term trends of rising demand, our analysis suggests that the falls in hospital activity projected in many STPs will be extremely difficult to realise. A significant shift in care will require additional supporting facilities in the community, appropriate workforce and strong analytical capacity. These are frequently lacking and rely heavily on additional investment, which is not available.

.....• While out-of-hospital care may be better for patients, it is not likely to be cheaper for the NHS in the short to medium term – and certainly not within the tight timescales under which the STPs are expected to deliver change. The wider problem remains: more patient-centred, efficient and appropriate models of care require more investment than is likely to be possible given the current funding envelope.

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Open letter to Jeremy Hunt from Dr Louise Irvine - NHA candidate in South West Surrey constituency at the General Election

The facts don’t lie, and nor do I – An open letter to Jeremy Hunt MP

Dear Mr Hunt

On Thursday night, in your acceptance speech, you accused me of “falsehoods”.

In your words, you accuse me of lying about “both our record with the NHS and also our motives”. You were clearly rattled that over 12,000 people in South West Surrey showed their concern for the NHS and voted for someone who questioned your record, but that is what democracy is all about – holding the government to account.

The truth is that I haven’t lied for the simple reason that I haven’t needed to. The facts speak for themselves.

When I talked about your record, I drew out many facts:

  • The number of people lying on trolleys waiting more than 4 hours to be admitted to a hospital bed increased from 387,737 in 2015/16 to 560,108 in 2016/17 – that’s a 45% increase in one year. I’m sure I don’t need to remind you that a trolley is one of the least safe places to be in the health care system or of the three patients who died in Worcestershire hospital on trolleys during last winter’s crisis?[i] The British Red Cross described it as a “humanitarian crisis.
  • Ambulance response times, especially for the most urgent calls, are the worst since records began. The national target of reaching 75% of Category A calls within eight minutes has not been met for 32 consecutive months. [ii]
  • Mental health services are struggling. Suicide is the commonest cause of death in boys age 5-16 yet children’s mental health services can’t cope with the volume of referrals and often there is not a single mental health bed anywhere in the country due to cuts to mental health provision. [iii]
  • Performance against the 6-week cancer treatment target and the 18-week elective treatment target are deteriorating. [iv]
  • Infant mortality is rising for the first time in years, having been rising for poorer children for a decade. [v]
  • The Royal Society of Medicine attributed the 30,000 excess deaths in the winter of 2015 to cuts to health and social care. [vi]
  • The NHS has fallen further down international league tables of mortality due to treatable causes. [vii]

None of these is a lie.

I also talked about the increasing privatisation for the NHS and your quote that “I am not privatising the NHS”. Was it a lie when I pointed out that the percentage of Dept of Health budget spent on for-profit providers rose by 25% in two years? [viii]

Perhaps it was my comments about funding that you felt were untrue. I said that the NHS had been underfunded and that future plans in the manifesto were insufficient. In fact, it was your government that was rebuked by the health select committee (including two Conservative MPs) for claiming that you’d be spending an extra £10 billion a year on NHS by 2020.[ix] They pointed out that a large proportion of this was taken from public health and doctor and nurse training budgets. Moving money around within a service to appear more generous than you actually are is fundamentally dishonest. [x]

In fact, your claim that you will be spending an extra £10bn per annum by 2020 compared with 2015 turns out to be only a £4.5 bn increase. This amounts to a 1.1% annual rise each year in the decade from 2010 -2020[xi], the biggest funding squeeze in NHS history and not even half of the 2.7% per annum forecast growth in need over that period, according to the NHS chief executive.[xii] As for the future, Prof Anita Charlesworth of the Health Foundation says that the promised extra funding for the NHS in the Conservative manifesto is far less than the NHS needs.[xiii]

Maybe you are accusing me of lying when I draw attention to NHS staff shortages and the disgraceful way you treat NHS staff:

  • In 2015, Health Education England calculated that the NHS had 30,000 fewer full-time equivalent nurses than needed – equivalent to nearly one in 10 positions.[xiv]
  • You have imposed a draconian pay cap on nurses meaning their pay will have been cut by 12% by 2020[xv]
  • You have removed the bursary for student nurses, meaning many people who want to train to become a nurse can’t afford to do so[xvi]
  • You have treated nurses and junior doctors with contempt. Record numbers are taking time off with stress because they fear that patients aren’t receiving the care they need[xvii] and 50% of nurses are considering leaving the profession because of this[xviii]
  • In the recent NHS staff survey, 47% said current staffing levels were insufficient to allow them to do their job properly and 59% reported working unpaid overtime each week.[xix]
  • Since your announcement in 2015 of 5,000 more GPs by 2020 we actually have fewer GPs now than two years ago! [xx]

In the election campaign I stated that your performance as Health Secretary is destroying the NHS, demoralising staff and risking patient safety. As you can see from the above, this is absolutely true.

Finally, you accused me of lying about your motives. I have no idea what your motives are for destroying our NHS, but I have tried to give you the benefit of the doubt.

I have assumed that you are doing it deliberately – in order to run it down and provide an excuse for privatisation.

If I were you I’d accept that interpretation, because the alternative is that this has all been caused by your sheer incompetence.

Patients and NHS staff deserve better than this. The NHS is a great organisation and provides excellent care to most people most of the time, thanks to its dedicated and hardworking staff. But it is cracking at the seams and sometimes failing, due to the many pressures it is under. I am motivated by the desire to defend the NHS and raise the alarm about the dangers it faces from a continuation of Conservative policies. And as long as you are health secretary I will continue to hold you to account for what you are doing to the NHS.


Dr Louise Irvine

















PFI/PPP Buyouts, Bailouts, Terminations and Major Problem Contracts

Further reading: Prof Allyson Pollock and David Price: "PFI and the National Health Service in England" June 2013

ESSU Research Report No 9, Dexter Whitfield - Published February 2017

Details 11 buyouts, 20 terminations and 43 projects with major problems, plus many bailouts, accounting for 28% of PFI/PPP contracts by capital value. The public cost of buyouts, bailouts, terminations and major problem contracts is £27,902m, when combined with the additional cost of private finance, interest rate swaps and higher PFI transaction costs. This could have built 1,520 new secondary schools for 1,975,000 pupils, 64% of 11-17 year old pupils in England. The UK’s 6.8% ratio of buyout and terminated contracts is higher than the 5.4% average of World Bank projects in developing countries for terminated contracts. This ESSU Research Report explains the causes and fundamental flaws in the PFI/PPP model.

Databases of buyouts, terminations and major problem contracts.

"Neoliberalism and the state-business partnership: the PFI/PPP model

PFI/PPP projects are a product of neoliberalism. The Design, Build, Finance and Operate (DBFO) model has increased the commodification and financialisation of public infrastructure to provide new opportunities for accumulation; created new markets for finance capital, construction and facilities management companies, consultants and lawyers; reduced the role of the state; and ultimately widened the potential for privatisation of buildings, transport and utility networks and public services.

Incomplete and complex contracts

A large and complex contract is at the centre of every PFI/PPP project. A standard draft contract is amended and developed as procurement proceeds up to the point of financial closure. The final contract or project agreement can range from a few hundred to several thousand pages. But no matter how comprehensive they are, virtually all contracts are incomplete in practice (Hart, 2003), because they cannot predict future events and changing economic and social needs. Tirole (1999) identifies three reasons for incomplete contracts:

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