NHS trusts earning hundreds of millions of pounds in private income – study shows increased privatisation

Trusts found to be making as much as 53 per cent of their income from commercial activities in 2021/22

Some NHS trusts are earning hundreds of millions of pounds in commercial income each year, which has risen significantly since 2016-17.

Using six high-profile NHS trusts as case studies, the new peer-reviewed research published in Public Money & Management, provides a fascinating insight into how hospitals are making money commercially.

The NHS trusts were found to be making between 12 and 53 per cent of their total income from commercial activities in 2021/22, with activities generating funds come from treating private patients and running labs and pharmacies to establishing branches abroad.

The study was led by a team of experts from the University of Birmingham and the University of York.

They conclude that there is a “clear direction towards commercialisation” which has been aided by legislation passed by the Coalition government in 2012.

“While hospitals claim they are carrying out commercial work to top-up the funding they need to treat their NHS patients, the demands placed upon them by commercial imperatives could instead shift their focus away from their NHS work,” states lead author Mark Exworthy, Professor of Health Policy and Management, from the Health Services Management Centre at the University of Birmingham.

To determine how much of hospital’s income comes from private, rather than public, the research team analysed publicly available documents from:

• The Christie NHS Foundation Trust
• Great Ormond Street Hospital (GOSH) for Children NHS Foundation Trust
• Guy’s and St Thomas’ NHS Foundation Trust
• Moorfields Eye Hospital (MEH) NHS Foundation Trust
• The Royal Marsden NHS Foundation Trust
• University Hospitals Birmingham NHS Foundation Trust

The “top earner” from commercial income was Guy’s and St Thomas NHS Foundation Trust which made £441 million in 2021-22 (which equates to 16.7 per cent of its overall income). The Royal Marsden NHS Foundation Trust was generating the biggest proportion of income from commercial work – 53 per cent.

The authors conclude that the NHS risks becoming predicated upon commercial logics, thereby undermining public service logics.

Co-author Professor Neil Lunt, from the Department of Social Policy and Social Work at the University of York, adds: “We have identified a shift in language to defend such income and explored how entrepreneurialism has been justified with a public service ethos. Although this was an atypical sample, there is a clear direction towards commercialization through diversifying income sources.”

“While the majority of their funding will still come from public/state sources, NHS organizations are implementing entrepreneurial strategies which are seen as essential to underpin core NHS services.

“In turn, this will re-orient the organizations and their staff with a potentially detrimental effect upon a public service logic. The tension between public service and commercial imperatives has long been apparent but the logic and consequence of them has become more acute recently. The likely intensification of this tension will reveal further the impact (intended or otherwise) of such strategies upon ‘core’ public services.”