In 2006-07, the NHS in England spent £5.6 billion on care provided by non-NHS providers, but by 2011-12 this figure had soared to £8.7 billion, according to new research.Over the first decade of the 2000s, rapid growth in public health spending was matched by a slowdown in the grown of private health spending. But, at the same time, an increasing volume of publicly-funded care was delivered by the private sector, meaning that the NHS became a major client for many private health care providers, says the report, from the Institute for Fiscal Studies (IFS) and the Nuffield Trust.
Non-NHS providers include private, voluntary and local authority providers, and the services which they provided for the NHS in 2011-12 covered a range of general and acute, mental health, communities and learning difficulties services, it notes.
Between 1997 and 2011, public spending on health in the UK grew more quickly than it had during 1975-99, while in contrast, growth in private health spending slowed significantly during the 2000s, says the report, which notes that while the economic crisis has had an impact on both public and private spending the impact, thus far, has been greater on private spending.
Public spending on health care in the UK increased in both 2008 and 2009, but fell in real terms by 0.7% in 2010 and a further 1.2% in 2001. In contrast, private spending on health began to fall in 2008, and from then to 2011 it declined by almost 6% in real terms.
Accounts data from Primary Care Trusts (PCTs) suggest that the single largest share of secondary care spending on non-NHS providers goes to independent-sector providers, and that this has grown more quickly over the last five years than spending on services provided by the voluntary sector and local authorities. However, greater clarity is needed on how providers are classified to the voluntary and private sectors in these accounts, say the Nuffield and IFS researchers.
Their research also finds that PCT spending on what are defined in the accounts as "independent-sector" providers varies across the country. Between 2006-07 and 2011-12 it increased in all regions, but was highest in Yorkshire and the Humber Strategic Health Authority (SHA) and lowest in the North East HSA.
There is also evidence of some substitution between public and private funding, with people who might previously have paid to go private becoming more likely to use the NHS.
For example, the number of hip and knee replacements funded by the NHS rose 50% between 2003-4 and 2011-12, but during the same period the total number of replacements changed very little. This implies that NHS-funded operations were taking up a growing share of the total, while the number of privately-funded procedures was falling, it says.
More than half the increase in the number of NHS-funded hip and knee replacements is accounted for by procedures conducted by private providers, who performed very few NHS-funded operations in 2003-4 but had, by 2011-12, performed almost 19% of all such publicly-funded replacements.
"The changing pattern of the provision and financing of hip and knee replacements provides a clear example of how the relationship between the NHS and private-sector health care providers has altered over the past decade," said Elaine Kelly, a research economist at the IFS and one of the report's authors.
"In large part, the growth in the number of NHS-funded procedures has been facilitated by using private providers to deliver these operations. For private providers, this increase in demand from the public sector has helped offset declining demand from private patients," she added.
Anita Charlesworth, chief economist at the Nuffield Trust and an author of the report, noted that the public sector's share of total health spending in the UK has grown, reflecting both deliberate policy decisions to increase public funding and a slowdown in private spending.
"Reforms under the last government to promote competition and patient choice have also resulted in a rapid increase in NHS spending on private providers. Whether spending on private providers will continue to increase as NHS spending is essentially frozen is less clear," she said, adding: "there is a need to monitor whether the planned extension of choice into community services leads to an increased involvement of the voluntary sector or whether, in response, the private-sector providers also expand into this area.”
Ana Nicholls, a healthcare analyst at The Economist Intelligence Unit, said the report’s findings "will fuel the debate about creeping privatisation of the NHS."
"In April, Labour opposed the new procurement regulations for GP-led clinical commissioning groups [CCGs] on the basis that they 'let the privatisation genie fully out of the bottle.' The Health Minister, Earl Howe, responded by declaring that there is no government agenda to privatise the NHS. This report makes it clear, however, that non-NHS providers…already account for over 12.3% of NHS-funded secondary care, up from 9% in 2006-07," said Ms Nicholls.