In 2019/20, NHS organisations in England (Trusts, Clinical Commissioning Groups and Commissioning Support Units) spent £29.5Bn with private sector suppliers. Whilst the fact that a large proportion of this (65.5%) was spent on health-related services is unlikely to come as much of a surprise, it still leaves a significant amount of money – over £10Bn – being spent on other services.
Below, we take a look at how the next most significant NHS private sector markets fared in 2019/20:
NHS organisations spent £5.9Bn on private sector buildings-related services in 2019/20. Around 40.5% of this (2.37Bn) was through Hospital & Health PFI contracts, while spend on all-encompassing Facilities Management services reached £795.16M. Property Construction spend totalled £547.15M. The 2018/19 Financial Year had seen an increase in spend with private sector Buildings services providers of 8.5% when compared to 2017/18, which in turn had seen an increase of almost 10% on the year before. However, 2019/20 signalled a slowing of this rate of increase, with spend rising by just under 2%.
ICT and Business Process Outsourcing (BPO)
NHS organisations spent £2Bn on private sector ICT and BPO services in 2019/20. The vast majority of this was spent on Software Applications, Development & Support and ICT Support Services/Systems Integration, however a large increase was seen in spend on outsourced back office/administration services, with the £255.04M spent on these representing an increase of almost 57% on the previous financial year. 2019/20 saw the sustained increase in spend on private sector ICT & BPO services seen over recent years continue, with this figure having risen by between 16% and 18% each year since 2016/17.
NHS organisations spent £906.5M on private sector Corporate services in 2019/20. Over 67% of this spend was with Recruitment/Temp agencies, with spend in this area increasing by over 20% to reach new heights after remaining fairly steady since its previous high point of 2015/16. The next largest spend categories within this market were Postage & Couriers (£46.95M) and Printing & Publishing (£46.43M). The increase in spend with Recruitment/Temp agencies was largely responsible for NHS spend in the Corporate Services market as a whole reaching its highest ever level in 2019/20.
Legal & Financial
Despite representing less than 2% of NHS organisations’ private sector spend in 2019/20, this market is far from insignificant, with spend for the financial year totalling £577.3M. 33.26% of this was on Financial Services (expenditure relating to banks and financial service providers), however the most noticeable change in this market was a fall of almost 23% in spend on Management & Transformation-Related Consultancy services (to £155.5M) after this category had held firm at around £207M for the previous two years. Although NHS spend in the Legal & Financial market as a whole remained at around the same level as 2018/19, rising by just over a quarter of a percent, this does represent the highest ever level of spend seen in this market.
Although the amount being spent by NHS organisations with the Private Sector across all markets clearly remains significant, 2019/20 did signal a noticeable slowing of the rate at which this amount has been increasing year-on-year, as shown by the chart below:
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