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Socialized medicine did not, as some predicted, collapse during COVID-19. Britain’s National Health Service was stretched to the limit but never overwhelmed. It’s the current phase of the pandemic that’s proving to be the bigger stress test.

The system is facing gargantuan backlogs across all areas, with the number of people waiting for treatment approaching 6 million. Patients suffering crippling arthritis must wait years for hip replacements or ankle surgeries in some cases. Hospitals are already at peak winter bed occupancy levels. Referrals for cancer screening have dropped worryingly. Burnout rates among Britain’s doctors and nurses have reached emergency levels. And don’t even mention the flu.

So how did the U.K. make it through the past 20 months of COVID-19? One key element needs to be acknowledged: the private sector’s role in delivering publicly funded care.

In a country where the NHS is regarded as a religion, there is something faintly blasphemous about "private” health care. Roughly 10% of Brits have some kind of private insurance, though they tend to be mainly in London or the south. Private hospitals, the caricature goes, serve the wealthy few, rely on doctors trained and employed by taxpayers, and specialize in high-volume, high-margin procedures, leaving the tougher cases to the cost-laden NHS.

This "us versus them” narrative doesn’t serve the country’s health needs or those who provide care. But, whisper it, the pandemic may finally be changing these perceptions. More than ever before, public and private have been working together. That should help with tackling the challenges piling up on the NHS, but it will also lead to some uncomfortable conversations about the terms and limits of that partnership.

Creeping privatization

Ever since the Labour government of the mid-2000s sought to introduce more competition and choice into health care, the NHS has spent a portion of its budget paying private companies to provide mainly routine services, ranging from diagnostics to cataract surgeries to hip replacements. NHS purchasing of acute medical care in the private sector increased nearly sixfold between 2003 and 2019, according to health consultancy LaingBuisson’s estimates in a recent report. NHS hospitals are also providers of private care: The top 10 NHS trusts (administrative bodies) earned more than £428 million ($578 million) from private patient revenue at large NHS hospitals in 2019.

U.K. governments are coy about this trend. Under the vague heading of "non-NHS services,” accounts suggest private provision took just over 7% of the NHS’s £150 billion budget before the pandemic. That almost certainly understates the actual outlay.

The pandemic took this level of outsourcing and put it on steroids. In March 2020, with COVID-19 infections rising and no visibility of how bad things would get, the NHS struck an agreement with independent hospital groups to make 8,000 beds, along with staff and equipment, available to the NHS. In return, the government agreed to pay all operating costs, including rent and interest, regardless of patient numbers.

The arrangement was put in place in a matter of days, but the impact is likely to be long-lasting.

Initially, 100% of private hospital capacity was sequestered for the NHS in a contract that reportedly cost £400 million a month. In August, as the first wave flattened, a new contract allowed providers to resume some privately funded work.

Value of collaboration

When it worked well, this partnership freed highly stretched NHS hospitals to focus on COVID-19 patients and complex surgeries. It was also a financial lifeline to a multibillion-pound private health care sector, which contracted by an estimated 30% during the pandemic as pretty much all elective surgery — things like hip and knee replacements that are often a major focus of private hospitals — stopped and the lucrative overseas market closed.

The private Park Hospital in Nottingham turned itself into a specialist cancer center during the pandemic. Amanda Dorkes, the hospital’s chief executive officer, worked closely with the local NHS trust, which sent in ventilators and staff so vulnerable cancer patients could be treated in a COVID-19-free environment.

"The interaction between us and the trust was unbelievable; it was like nothing I’ve ever seen before. I think it has changed health care forever,” says Dorkes. She hopes the experience will counter "the perception of big, bad private business.” Private hospitals were paid the same rate as the NHS for procedures that were outsourced. "If it hadn’t been for the private sector during the pandemic, there would have been an awful lot of people who didn’t get essential operations,” she says.

But not all trusts forged close ties with private providers. The details of those contracts have also not been made public. And the NHS hasn’t yet published financial data related to its private sector expenditure.

The reality is probably that experiences varied widely. Rachel Eddie, the chief operating officer at the Nottingham University Hospital NHS Trust, which worked with the Park Hospital and covers a population the size of somewhere between Houston’s and Chicago’s, is clear that the arrangement has been a life-saver in the community.

David Furness, policy director at the Independent Healthcare Provider Network, which negotiated with the NHS on behalf of private providers, acknowledges there has been a lot of variability between hospitals and trusts, but he says the arrangement has delivered the needed capacity. The IHPN says more than 3 million procedures were performed by private providers during that time; they also helped more than 2,000 junior doctors undertake training and delivered more than 500,000 diagnostic tests and 1.8 million outpatient appointments.

New model or Band-Aid?

There’s now a palpable sense from providers on both sides that the conversation around publicly funded private health care has changed. The NHS was hardly fighting fit before COVID-19. Waiting lists had grown by 50% between 2015 and 2019, and there were 39,000 nursing vacancies. The number of doctors, hospital beds and CT scanners were already lower than in comparable countries, as was health care spending generally. The pandemic amplified these pressures.

The more the NHS struggles with its wait lists, the more it will need private-sector help. NHS business was more than 31% of private hospital sector revenues in 2019, according to LaingBuisson calculations. Providers such as U.K.-listed Spire Healthcare, Australian Ramsay U.K. Healthcare and the new Cleveland Clinic in London stand to gain from more government spending.

But private hospitals face rising demand from the more profitable out-of-pocket and insurance businesses too. It’s not exactly cataracts versus colorectal surgery, but there will be tough choices to make about how to direct resources.

"There is a national framework in place, but the private hospitals are beginning to revert back to their bread-and-butter business. That supports their business model,” says the Nottingham NHS Trust’s Eddie. "As time goes on, the balance of what we want them to do and what they are prepared to do is not what we need.”

Even where the private sector wants to help, it’s sometimes complicated. The Park Hospital agreed to take on some chemotherapy patients from the local NHS hospital, but Eddie says difficulties in reconciling the drug costs, given the big difference between NHS and private prices, mean few patients have actually been transferred.

The biggest issue by far is the workforce. All but about 4% of independent specialists, known as consultants, are NHS doctors doing private work in their non-NHS hours. More are reducing or leaving the NHS too. Some administrators note that a quirk of pension taxation disincentivizes extra work among senior doctors. Nursing shortages are even more acute. Brexit removed the automatic right of European Union workers to work in the U.K., compounding the problem.

Britain, it’s been said, has a second-rate health care system at the price of a third-rate one. Indeed, the real wonder of the NHS is that it has performed as well as it has given the skimpy resources it has received over the years.

Still, public patience is starting to run low as people struggle to get doctor appointments and treatments. A survey by Consumer Intelligence found that 27% of U.K. respondents said they’d consider paying for their own treatment, up from 15% before the pandemic, which says a lot about trust in the state system.

Private providers are indispensable to Britain’s system of socialized medicine, and vice versa. In the short term, private hospitals will relieve some of the pressure on NHS wait lists. But the limitless demands of a system funded through (limited) taxation remains the big long-term challenge to solve.

Therese Raphael is a columnist for Bloomberg Opinion.

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