NHS leader calls for partnership with private sector to build new hospitals

The NHS should be given the green light to work with private healthcare companies and property developers to build new hospitals to help close the healthcare backlog, a healthcare chief executive has said.

The last Labour government was heavily criticised for controversial Private Finance Initiative (PFI) deals to build dozens of new NHS facilities, which generated huge profits for big business.

But in a major intervention, the head of NHS Providers, Julian Hartley, has called on the next government to relax Treasury rules restricting the NHS in England from entering into such partnerships, insisting the NHS has “nothing to fear” from them.

He said: “We need to think outside the box when it comes to solving this double whammy: public finances are under pressure and the NHS is in urgent need of renewal.

“Working with public and private partners such as ethical pension funds, developers, universities, private healthcare providers and local authorities could create opportunities for NHS trusts keen to build new hospitals or redevelop existing sites hampered by strict Treasury rules.”

However, Dr John Puntis of Keep Our NHS Public said most people would find his suggestion “appalling” and that it represented “a shocking attack on the very foundations of the NHS” as the organisation prepares to mark the 76th anniversary of its foundation on Friday.

Hartley cited recent partnerships between NHS trusts in Birmingham and Surrey and private healthcare providers to run newly built facilities, treating NHS and paying patients, as “successful examples of NHS and private sector collaboration. We can learn positive lessons that this is achievable, that the NHS and private sector can work together and that it supports the interests of NHS services”.

“This doesn’t have to be PFI Two. This isn’t about privatising the NHS; this is about strengthening and supporting the NHS through investment that creates better facilities for patients,” Hartley added.

The University Hospitals Birmingham (UHB) trust has taken operational control of 72 of the 122 beds in the Harborne Private Hospital on its site, which opened in January in a partnership between it and HCA, a major US healthcare company that operates a network of private hospitals in the UK. UHB did not contribute to the £100m construction cost of the hospital, which provides cancer, cardiac and orthopaedic care, but has secured a lease on two of the eight floors for its own patients.

The extra beds will allow people in Birmingham and Solihull to receive treatment more quickly “in world-class facilities, delivered by leading NHS specialists” by reducing waiting lists, the hospital has said.

In a similar move, the Royal Surrey NHS Trust and Genesis Cancer Care have entered into an agreement to a new special cancer centerwhich opened in March in Guildford, Surrey. The £30m facility provides oncology and radiotherapy to NHS and private patients.

Hartley urged the chancellor and health secretary after the UK general election to keep an “open mind” about NHS partnerships involving large injections of capital from pharmaceutical companies, pension funds and universities. The new government should see the new wave of hospitals that would follow as a boost to the economy and a way for the public sector to tap private funding sources at a time when public spending is likely to remain tight, he said.

He wants the Treasury to review the Department of Health and Social Care’s Capital Expenditure Limit (CDEL), which restricts how much health insurers and the NHS more generally can spend on capital projects, even if some of the money comes from external sources. The backlog of needed repairs to the NHS in England has ballooned to £11.6bn in recent years.

Keir Starmer and the shadow health secretary, Wes Streeting, have said that under a Labour government the NHS would use the private sector as much as possible to clear a backlog that has grown to 7.6 million procedures. If we implement Hartley’s idea we risk angering those who are concerned about the privatisation of the NHS.

Hartley highlighted that dozens of NHS hospitals were unable to rebuild or replace sometimes dangerously dilapidated facilities when of the 100 that applied for the New Hospitals Programme, the scheme to deliver then-Prime Minister Boris Johnson’s pledge to build “40 new hospitals” by 2030, only 40 were accepted because the number of hospitals was limited.

David Hare, chief executive of the Independent Healthcare Providers Network, which represents private healthcare providers, said: “There is a huge willingness in the independent sector to work with the NHS and provide much-needed new capital, capacity and capabilities to give patients better access to NHS services, free at the time they use them.”

But David Rowland, director of the Centre for Health and the Public Interest thinktank, warned that NHS/private partnerships would “accelerate a two-tier health system”. He accused Hartley of showing “astonishing naivety” in his attitude to “the for-profit sector, particularly that with private equity backers”. Such companies are only interested in the NHS so they can “use the highly skilled NHS workforce to treat those patients who can afford to pay privately and so skip the queue.

“The last Labour government thought that partnering with the private sector to fund, build and operate NHS hospitals under the PFI scheme would bring in investment and expertise. In reality, it has led to vast sums of money being drained from the NHS in the form of profits and has left NHS Trusts with huge, crippling debt repayments.

“The mistakes of this fiasco must not be repeated.”