A mixed market triumph for public service provision

This week, private company Circle Healthcare won a 10 year contract worth £10bn to run the financially troubled Hichingbrooke hospital in Huntington, Cambridgeshire. Plenty of individual NHS services are already delivered by independent providers but this is the first time that a private firm has won the right to run an entire hospital.

Before I go on it’s important to clear up one thing first. There are those who believe that the private sector only get involved in public services when they can cream skim and take on the easy jobs in order to achieve a decent margin. In this case, the Hichingbrooke hospital is running a £5m annual deficit and has debts of £40m – so this will be a massive challenge for Circle and they will be providing a tremendous public service if they can succeed.

I’m not applauding this development because I think private is better than public. Both public and private sector providers can do well and can also get into trouble. Too often the debate around public service reform and delivery is approached from the ideological extremes – either the state is best placed to deliver and safeguard services or they should be outsourced wholesale to the independent sector.

It is a mistake to argue that there is a single model of service delivery that is better by default.  Only through a mixed market of different models of provision will balanced service improvement be achieved. By mixed market I don’t just mean some services delivered by the state and others privatised, I mean a genuine mix which also includes substantial numbers of mutuals and social enterprises. Each model has its particular strengths:

• State delivery tends to be free from external financial motives and as such is generally protected from unplanned financial failure (although the hospital in question here proves that this is not always the case!).
• Private provision can create scale, efficiency and system level innovation and can attract much needed external investment.
• Mutuals and social enterprises are usually smaller scale and focused on social value and innovation at a local level.

It shouldn’t be the Government’s job to pick a winning model but it should strive to create a level playing field where a balanced mix of provision can exist and influence each other through their relative strengths. E.g. the existence of state provision in a balanced market place should force the others to have financial safeguards in place, the existence of privately outsourced provision should ensure the others keep improving their efficiency, and the existence of mutuals should put social value (and its measurement) at the top of the others’ agendas.

There was much disappointment recently, which I shared, when the trailblazing public service mutual Central Surrey Health was unsuccessful in bidding for a large contract, which would have enabled them to expand their excellent service. However, Central Surrey Health’s presence in the market as a socially focused competitor would have undoubtedly influenced the proposition put forward by Assure Medical, the private group backed by Virgin Healthcare who ultimately won the contract. This is how a mixed market can work.

When in power Labour saw the benefit of such a mixed market so it’s a shame that they now choose to play politics with this. Although it’s a bit incredible when the person leading the attack on what is essentially the rescue of a hospital is Andy Burnham, the Labour Minister who initiated the process! Our memories aren’t that short Andy!

Andrew Laird is a Director of Mutual Ventures, a social enterprise which supports front -line staff to set up mutuals

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