Private firms providing services to NHS made £1.6bn profit in two years, research finds

Private firms providing services to the NHS including healthcare and consultancy have made £1.6bn in profits over the last two years, research reveals.

The findings – on the basis of contracts worth £12bn – have prompted claims of “scandalous” profiteering, concern that the health service is being “taken for a ride” and calls for ministers to impose a cap on maximum profit levels.

The £1.6bn in profits made in 2023-24 and 2024-25 would have been enough to pay for 9,178 doctors or 19,428 nurses during that time, according to the Centre for Health and the Public Interest.

Its findings are based on analysis of NHS contracts in England, with 760 private firms providing services including diagnostic tests such as CT scans to patients, and treatments including hip and knee replacements, and for skin problems and mental health conditions.

The thinktank found:

- £2bn of the £12bn of contracts went to firms with owners based outside the UK.

- £533m of that £2bn went to companies owned by people living in tax havens such as Jersey and the Cayman Islands.

- Firms, especially those owned by private equity outfits, used £353m of their £12bn NHS income to pay interest on debts.

Helen Morgan, the Liberal Democrats’ health spokesperson, said: “Private companies making super-profits from our NHS is an unacceptable waste. This money should be going on frontline services, not fattened profits for big corporations.

“The NHS should be able to benefit from economies of scale and use its power as a major buyer to drive down prices. I’m afraid it looks like our health service is being taken for a ride.”

The CHPI analysed contracts issued by the NHS’s 42 integrated care boards and NHS England, which oversees the service as a whole and directly commissions some specialist services, including for care, of which the NHS cannot provide enough.

The thinktank did not name the 760 companies, but separate research it has undertaken shows that 28 firms earn more than £5m a year from the NHS, make profits of at least 17% and have received £4.1bn between them over the last two years.

The 28 firms include large private healthcare providers such as Spire and Circle, and consultancy firms including PricewaterhouseCoopers and PA Consulting. They also include five firms that treat eyesight problems; one, InHealth, that provides diagnostic tests; four technology and IT companies; and two electronic patient record specialists.

The Labour MP Stella Creasy said: “It’s frankly scandalous that while patients wait for operations, taxpayer money is leaking out to offshore tax havens and the pockets of private equity companies through these excessive profits. We need an urgent cap on this rent-seeking and profiteering, and total transparency on where this money ends up.”

She said the NHS was not getting value for money with contracts like those the CHPI analysed because firms were making such high profit margins on them.

David Rowland, the CHPI’s director, urged ministers to bring in a cap on the profits firms that provide services to the NHS can make, modelled on the 8% limit the government is legislating to introduce for children’s social care providers after similar concerns were made about providers in that sector.

He said the fact that the government already capped profits that drug and defence firms that won public sector contracts could make showed that a similar system for NHS contracts was viable.

The Independent Healthcare Providers Network, which represents non-NHS healthcare operators, voiced doubts about the CHPI’s conclusions.

“Headline figures like this risk oversimplifying a complex picture,” a spokesperson said. “The analysis appears to combine a wide range of companies contracted by the NHS, not just those delivering patient care, and uses a very crude approach to estimating ‘profit’ based on company-wide figures that don’t distinguish between NHS and private work.

“Independent healthcare providers play a vital role in delivering care to millions of NHS patients every year and are paid on the same basis … Any surplus reflects productivity and efficiency, enabling further investment in staff, facilities and services for the benefit of patients, as well as helping to reduce waiting times.”

The Department of Health and Social Care defended the NHS’s use of private firms. A spokesperson said: “The independent sector has a role to play in tackling the waiting list backlog and building a more sustainable health system. However, in working with independent providers, we will neither tolerate ‘gaming’ the national payment tariff to cherrypick the simplest, most profitable cases, nor any quality shortcomings. Any care commissioned from independent sector providers must meet NHS standards.”