The reforms to healthcare services contained in the Health and Social Care Act 2012 introduce profound changes to healthcare commissioning. Clinical Commissioning Groups (CCGs) will be given a new flexibility in selecting healthcare providers which could, and some argue will, result in a shift in the market balance between NHS and private healthcare providers.


The Act provides for the creation of CCGs, which will be formed from groups of GP practices. CCGs will be in place by April 2013, when they will replace Primary Care Trusts and Strategic Health Authorities. The CCGs will gradually assume control of £60 billion of the health service budget. All GP practices are required to form or join a CCG, and all will be involved in commissioning to some degree, while continuing to serve their patients.  

Commissioning of healthcare services will be driven by the CCGs, the theory being that GPs will have a greater understanding of patient needs, and so should be able to allocate budgets more effectively when procuring services. “Any willing provider” will now be able to offer services to CCGs, including private healthcare providers.

Public to private?

Some private healthcare providers have seen this as an opportunity to increase their involvement in the healthcare market, albeit incrementally. The NHS Partners Network, which represents independent healthcare providers, has said that it thinks it most likely that private providers will provide additional capacity to the state sector, as there is an ever increasing need for healthcare services. Some commentators have gone as far as to predict that some NHS service providers will not be able to compete at all, and will eventually become obsolete, to be replaced by private providers.

It does seem likely that some CCGs will also look to the private sector for support services, as well as for clinical care. Health insurance providers could offer the management and administrative support that will be needed to operate commissioning, although it is not clear how much of this work will be met by ex-PCT groups or staff. Interestingly, the US health insurer Humana does not seem to have expected a regular flow of work from this source; announcing its withdrawal from the UK market it said:

“the market [for private sector commissioning support] is unlikely to develop dramatically in the next year or so”.

Despite the uncertainty, the likely effects on the market should not be overestimated. GPs have had the power to refer patients to private hospitals since the early 1990s. This has not, as yet, provided a threat to NHS providers. Some commentators have expressed concern that having an increased number of providers will result in increased costs and fragmented care, whilst others argue that increased competition should drive costs down, while greater choice ought to improve the quality of care patients receive. GPs will not be compelled to choose any particular provider, but may choose to do so based, in theory, on the quality of services on offer.

Cost concerns

Concern has been expressed that selection by CCGs will inevitably be based on price, thereby giving private healthcare providers an advantage in what is bound to become a “race to the bottom”. CCGs will put contracts out to tender, and providers will be permitted to tender at below cost price, which should benefit large private healthcare providers. It is possible that private providers could take on the most lucrative contracts, leaving the NHS to provide complex, costly care such as emergency services.  

Conflicts of interest

Another area of concern has been GPs who own or hold shares in private healthcare companies (for example, groups providing local out of hours cover) which may give rise to conflicts of interest. The Department of Health argues that procedures and policies have been put in place to ensure it is clear that GPs are care providers first, and that commissioning responsibilities come second. Steps will be taken to ensure GPs are not involved in decisions which might result in a company in which they hold a stake being awarded a contract, and GPs will have to publish a list of potential conflicts of interest.


Some private healthcare companies have suggested ideas on how to profit from the reforms. It was possible that a company could be both a provider and purchaser of healthcare – and so could have been allocated a CCG budget, profiting from any savings made. Some CCGs were found to have been set up as private or social enterprises, seemingly with such a purpose in mind. The Department of Health, however, announced that from April 2013 CCGs will only be allowed to continue as statutory bodies. Savings from the budget cannot be pocketed, but must be used exclusively for patient care.  


In the current financial climate, costs are obviously of great concern and it is difficult to see how this will not have a huge influence on commissioning decisions. Private providers could see their share of the healthcare market increase, due to the ability to offer greater discounts than NHS providers – and may be able to cherry-pick the services they provide.

There is concern, as outlined above, that budgets will detract GPs from focusing on medical care. There is also a risk that faith in GPs will be undermined by a perceived cost concern, or conflicts of interest.

The reforms could be an opportunity for private providers to increase their share of the healthcare market in the UK, whether by offering increased capacity where the NHS is lacking, providing support services, or by offering more competitive prices when contracts are put to tender. It will be interesting to see what effect the changes have.