IN 2020 the NHS signed a £2 billion deal with the big private hospital chains to get extra help during the Covid pandemic. Matt Hancock described the deal as “great news” for the NHS and the “hospitals and staff doing everything they can to combat coronavirus.”

But it turned out to be mostly great news for private health businesses, who were paid for all their beds but only used about half for the NHS. They had all their costs met by the public sector but carried on doing paid-for private operations with the other half of their now completely subsidised capacity. This is one of the biggest private-sector Covid rip-offs.

In March 2020 the NHS signed a deal negotiated with the Independent Healthcare Providers Network, paying around £2bn for the entire capacity of England’s 200 private hospitals to help with the Covid pandemic.

The deal involved 27 private hospital businesses, buying the entire capacity of 200 private hospitals, including 8,000 private beds, 1,200 ventilators, 700 doctors, and 10,000 nurses, to help the NHS care for patients with Covid-19 or needing urgent operations.

But the deal “was massively underused in many areas of Britain during the pandemic,” leaving private hospitals to continue making money from private operations.

The plan was that private hospitals would help out the NHS, which was overstretched by the pandemic. The private hospitals would help the NHS waiting list by dealing with regular operations and urgent care which NHS hospitals couldn’t cover because they were busy with Covid cases.

But even though the NHS was funding all the private hospitals’ costs, they only gave back 51 per cent of their work to the NHS. They still did 49 per cent of their work privately. In effect, the NHS paid for all the private hospital work, but the private hospitals cheated the NHS out of about half this “capacity.”

The figures appear in an exhaustive investigation by Esther Oxford for the British Medical Journal published in February. The investigation relied on Freedom of Information requests by the Centre for Health and the Public Interest, which NHS England finally answered at the end of last year.

The deal was wildly generous to private hospitals. The hospitals weren’t paid by operation. Instead, they were just given a block fee for “capacity.” But despite being paid their full costs, they were allowed to carry on private work.

The hospitals were supposed to give some of the money back from the private work they continued doing to the NHS — but only some of it. The deal was that the private hospitals could retain between 15 and 40 per cent of the money they made from private operations and procedures, giving the rest back to the NHS.

This is what is called a “perverse incentive” — all the private hospital’s costs were covered, with no targets for how many NHS operations they needed to do. They could also make up to an extra 40 per cent by doing more private procedures. The contract encouraged them to do private operations rather than help the NHS.

There is no evidence about how much money they did finally give back to the NHS for their NHS-subsidised private operations — was it 85 per cent, 60 per cent, or less? The government won’t release this figure. The private providers say that their services were available, but the NHS chose not to use them fully.

The NHS already contracts out many operations to private hospitals, thanks to New Labour privatisations. But the Covid contract was on even worse terms for the NHS.

The rushed decision to abolish local contracts with the private sector and strike a national deal with the private hospital companies and their lobbyists over Covid allowed these companies to dictate highly favourable terms to the government

The initial deal, signed in March 2020, was supposed to use the private hospitals to directly treat Covid patients, but just 30 of the 200 private hospitals treated Covid-19 patients from the start of the contract until April 30, some taking less than a handful.

From May 2020 the contract was switched more to tackling elective care that had been put on hold by NHS trusts swamped by patients with Covid-19 — but thanks to “perverse incentives” this didn’t happen either.

Two of the biggest hospital groups on the contract treated more private inpatients than NHS patients, despite NHS England agreeing to pay for nearly all their operating costs: Nuffield Health’s 29 hospitals did 64 per cent of their “care episodes” for private patients in the first year of the pandemic.

Spire did 62 per cent of its care in their 36 hospitals for private patients in the same year. Meanwhile, 44 per cent of episodes of inpatient care at Circle’s 47 private hospitals were private patients; at Ramsay’s 31 hospitals, nearly 27 per cent of episodes were private.

Together Nuffield, Circle, Ramsay, and Spire Health’s 143 private hospitals delivered just 51 per cent of their total episodes of inpatient care to NHS patients in the first year of the pandemic.

The pandemic should have been a chance to strengthen the NHS. Instead, the government subsidised private health firms. This rip-off should be a warning about future promises to pay the private sector to “help” the NHS — like the promises Labour’s Wes Streeting is making.

What happens is NHS money is taken from the NHS to “help” the private hospital firms build their businesses. However, Streeting may ignore these warnings because the attraction of getting close to private health firms is too strong.

Take Circle Health. They are a subsidiary of US health giant Centene. Circle has a £1bn turnover from running private hospitals across Britain. They make money from an increasing number of private patients chased from the NHS by long waiting lists, and from selling operations to the NHS.

They use this money to hire the most politically influential directors. John Hutton, or Baron Hutton, was a New Labour minister under Tony Blair, just as Streeting will be a minister under Keir Starmer. Since 2017 Hutton has worked for Circle Health, with a comfortable, well-paid seat on their board.

Follow Solomon Hughes on Twitter at @SolHughesWriter.