US Health Companies Are Winning NHS Contracts Despite Dodgy Track Records

‘They’re selling us down the river.’

by Andrew Kersley

2 April 2024

A patient receiving dialysis. Hannah McKay/Reuters

Chronically ill patients and their carers at a London hospital are fighting back against the privatisation of their care, as new data reveals the dire state of NHS commissioning.

The Camberwell Satellite Dialysis Unit cares for dozens of kidney patients, many of whom will spend 12 hours a week getting dialysis. Despite sitting in a dated, metallic building hidden in a small industrial estate with a dodgy water supply, patients told Novara Media that the centre provides excellent care and that the staff are like family to them.

That could all be set to change, however, as the service is set to be outsourced to Diaverum – a global private healthcare giant with a questionable track record.

The revelation that the centre is to be privatised came as a shock to patients. Edmund and Yvonne first found out they were losing their NHS care by accident. 

They asked Novara Media not to share their surnames as some of their friends and family didn’t know they were sick.

As representatives for the centre’s patient advocacy group, they were told in February 2023 that the clinic was set to move to a brand new purpose-built facility. The fact it was to be run privately was not mentioned.

However, in a follow-up meeting in May, the duo were accidentally given access to documents showing that the service was to be outsourced to Diaverum – the information was supposed to be redacted, but tracked changes had been left on for anyone viewing.

By then, the deal had already been struck, with staff and patients only being “consulted” on the idea after it was already agreed.

“What they’re doing is selling us down the river,” Yvonne told Novara Media.

The impact would be huge on NHS nursing staff they’ve grown close to at the facility. Staff would have their employment transferred to Diaverum. While they would initially be protected by TUPE legislation – which stops new companies immediately worsening a privatised workforces’ pay and conditions – it could leave them vulnerable to their relative conditions and pay getting worse in the future.

In February, staff at the clinic issued a collective statement accusing the Guy’s and St Thomas’ NHS Trust of being “myopically focused on Trust savings” and called for a reverse to the decision to “relocate, privatise and transfer” the service to Diaverum.

Yvonne and Edmund say they have been told horror stories of the conditions at Diaverum facilities by staff who moved to the Camberwell facility, having worked for the privateer previously.

Some of the other patients at their clinic are former Diaverum patients too, many of whom originally pushed to be moved to their NHS-run clinic in order to escape Diaverum care. 

“There’s not one patient that isn’t concerned, every single patient is concerned and is resisting this move,” Yvonne says. “They feel like they’re being forced like cattle to go across to Diaverum without any other options.”

“The NHS provided us such an excellent service here for the last 15 years, and now you’re going to give to someone who’s going to base everything on the cost,” said Edmund.

“Many patients are saying we’re happy to stay here in this crumbling building with the service we’re getting from NHS staff rather than move to Diaverum.”

A recent CQC report from April 2023 into one “inadequate” dialysis centre in North Ormesby, Middlesbrough, run by Diaverum – found it had risked disease transmission by not keeping dialysis lines clean, among a litany of other failures. (A spokesperson for Diaverum said they took the CQC’s feedback “extremely seriously” and said it is now “collaborating closely with the CQC and South Tees Trust” to address the issues.)

Should the Camberwell Satellite Dialysis Unit be privatised against the wishes of its staff and patients, it will be sucked into a world of questionable contracting, where firms continue to win contracts from the NHS and government even if they have shoddy track records.

Experts say that the government’s current private outsourcing system is so broken that the government lives in fear of companies suing them if they aren’t awarded contracts.

Diaverum runs a dialysis empire across Europe’s private healthcare systems. But privatisation also opens the NHS up to US health companies. Analysis by Violation Tracker US and reviewed by Novara Media shows that healthcare giants that have been paid out billions of dollars in cases related to corruption, fraud and offering negligent service that killed patients in the US are being paid hundreds of millions of pounds to run NHS kidney care.

The track record of its fellow private dialysis giants aren’t much better.

Take Fresenius, one of the biggest private healthcare companies in this field. In July 2022, the US government announced it was lodging a lawsuit against the company for defrauding the state Medicaid programme, by billing for unnecessary procedures on dialysis patients in order to drive up its revenue and hit internal targets.  

Less than two months after the lawsuit was announced, the firm went on to win a £1m contract to provide dialysis services to NHS hospitals in Bradford. Six months after that, it went on to win a £67m contract to provide NHS dialysis services in Cardiff.

Or there’s Davita, another major American dialysis company. In the past ten years, they’ve been fined hundreds of millions of dollars for the death of patients in their care and settled for almost a billion dollars in a litany of lawsuits where it too was accused of defrauding the US government’s medicaid programme.

All in all, Fresenius, Davita and fellow private healthcare giant Baxter Healthcare have amassed billions in fines and financial penalties in the US collectively since 2000.

Despite these worrying track records, these companies keep winning contracts. The major private dialysis care providers have now won NHS contracts worth upwards of at least £700m in the last decade, mostly in the last three years, according to procurement experts Tussell.

There are many reasons why the system has turned out the way it has, but one of them is down to just how little power the government has to regulate private companies, once the decision to outsource has been made.

The current legal framework around contracting prioritises the “most economically advantageous tender” – basically the most cost-efficient offer – above all else, including past performance. 

That means generally companies with worrying or even illegal track records can still bid and regularly win contracts as commissioners in almost all cases are forbidden from making awards based on the past performance of private companies.

More than that, it means they can, and do, take authorities to court if they lose out on bids.

“The legal risk is the number one thing that’s on people’s minds,” said Dr Gavin Hayman, executive director of the Open Contracting Partnership, a campaign pushing for reform of how the government contracts work to the private sector.

“If you’re a council providing vital services, the last thing you want to do is have those stopped while litigation takes place. So procurement has this box-ticking culture to avoid risk of legal challenge which paralyses authorities, rather than focusing on outcomes.

“But it makes no sense to not take into account past performance in an appropriate, measured and fair way. If you have a past track record of underdelivering why shouldn’t that be taken into account?” he said.

While in theory the government is set to enact new laws to try and reform the procurement process, there’s little certainty that they would actually stop any of this from happening.

“Diaverum taking over our service was a unilateral decision. Even the staff weren’t told initially,” says Yvonne of their fight in Camberwell. “But we don’t feel powerless. We’re still fighting. We’re still campaigning and we feel we can still win this.”

A spokesperson for Diaverum said: “From the onset and with patient care being our greatest priority, we have been diligent in regularly communicating with patients that will transfer to the new unit through a variety of sessions, both virtually and in-person.”

A Guy’s and St Thomas’ Trust spokesperson said that working with Diaverum helped to “create a new state-of-the-art building” and “recruit additional specialist staff” to meet the rapidly growing capacity of dialysis patients they had to to treat each year.

They added that they had held a programme of “patient engagement activities” in recent months and are consulting with staff over the move, and said Diaverum’s other nearby clinics had “high levels of patient and staff satisfaction”.

Fresenius, Davita, Baxter Healthcare and the Department for Health and Social Care all failed to respond to Novara Media’s questions or refused to comment on the findings.

Update, 9 April: An earlier version of this article stated that Diaverum had been fined in the US. In fact Diaverum has never operated in the US. This has been corrected.

Andrew Kersley is a journalist.

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