Private Healthcare: Leeches on the NHS

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The government's plans for 'independent treatment centres' (ITCs) - privately run units that carry out routine hip, knee and cataract operations for the NHS - have run into trouble.

Under the plans, NHS trusts pay private companies to carry out these operations, often referred to as 'elective surgery' because patients decide whether or not to go ahead with the treatment. Health secretary John Reid has touted the idea as a way of reducing NHS waiting lists. But the bullying way in which the Department of Health is pushing the policy through has provoked a backlash of criticism from the NHS managers who are expected to implement it. And worse still for the government, the row has exposed the real agenda behind their plans.

The government has set a target of 15 percent of the elective operations currently carried out by the NHS to be performed instead by the private sector, with this target to be reached by 2008. Evidence is emerging that ITCs have been given guaranteed volumes of work to ensure that this target is achieved. And as activity is transferred to the private sector, NHS services are being put at risk. Many of the contracts with the private-sector providers are on a 'take or pay' basis. This means that if an NHS trust fails to take up a place in an ITC it still has to pay for the slot. In other words, if a patient opts to be treated by the NHS (as provided for under the new 'patient choice' scheme), the private company still gets paid for the operation. This is destabilising NHS trusts' finances.

On top of this, in many areas, the guarantees given to ITCs far exceed existing demand for such operations. This means that patients are taken away from the NHS, leaving the trusts affected to bear the higher costs involved. This is what lies behind recent newspaper coverage of locked wards in NHS hospitals, as patients are transferred to the private sector.

As if this wasn't bad enough, many NHS trusts are already experiencing financial problems, in part because of the government's new financing arrangements for the NHS. Under these arrangements, known as 'payment by results', hospitals receive a set amount of funding for every patient they treat. This means that, instead of following broad NHS-level agreements for the numbers of patients treated, hospitals are in effect competing with each other for patients, and therefore funding. The new system has contributed to deficits at a large number of trusts.

The privatisation plans, combined with financing arrangements that increase competition between different parts of the health service, are clearly a disaster for the NHS. Far from being about filling gaps in NHS capacity as the government would have us believe, the ITC scheme is really aimed at taking work away from the NHS and boosting the private sector at its expense. And it exposes the reality behind the government's rhetoric about 'patient choice'. Far from increasing public control over the health service, ITCs are a scheme for handing over billions of pounds of public funds to private business interests.

But the row over ITCs shows that the government may be over-reaching themselves. A fightback over pensions - in the NHS and across the public sector - can knock them further off course, and has the potential to feed into a fightback over privatisation itself.