NHS hospitals could soon be run by non-British firms. Photograph: Dominic Lipinski/PA

Powered by Guardian.co.ukThis article titled “German company involved in talks to take over NHS hospitals” was written by Randeep Ramesh, social affairs editor, for The Guardian on Sunday 4th September 2011 20.44 Europe/London

A German company has been in talks to take over NHS hospitals, the first tangible evidence that foreign multinationals will be able to run state-owned acute services, a market worth £8bn, the Guardian can reveal.

On the eve of the last Commons vote on the government’s bill before it heads to the Lords this week, freedom of information requests reveal a series of meetings focused on “potential opportunities in London” between officials from the Department of Health, the NHS, the management consultant McKinsey and one of the largest German private hospital chains, Helios.

Once EU competition law applies to the health service there would be no barrier to handing over the running of NHS hospitals to non-British firms. Helios has a record of turning around failing hospitals, largely by cutting staff or wage levels. Local politicians have accused it of being motivated more by revenues than by patient care.

The news came as key Lib Dems broke cover with a series of amendments designed to defang the government’s radical pro-market health bill. The vote has the potential to cause a major rift between the coalition partners and comes before a crunch meeting between Nick Clegg and his parliamentary party. The Lib Dem leader will seek to persuade potential rebels that there cannot be any more changes to the bill.

Sources close to Clegg said the leadership had already “used up a lot of political capital” by halting and then recasting the bill earlier this year. “We expect MPs to vote with the government. Otherwise we won’t last very long [in power].”

Evan Harris, a former Lib Dem MP and grassroots activist, warned the leadership it risked a revolt over the issue. He said the amendments showed “the bill in its current form does not have Lib Dem support and unless the necessary concessions are made it will fare extremely badly at the party conference and in the Lords”.

Key rebels – such as the Lib Dem MP Andrew George and John Pugh, co-chairman of the Lib Dem backbench health committee – have tabled a dozen changes to the bill, almost all seeking to roll back the “competition and choice” agenda of the health secretary, Andrew Lansley.

George calls for the restoration of the health secretary’s “duty to provide or secure” services, to elevate GPs’ duties to tackle health inequalities above those that promote choice, remove “all references to promoting competition directly or indirectly” from the remit of the regulator Monitor and to keep the cap limiting the proportion of total income hospitals can earn from the paying sick.

George said: “We are on the slippery slope in the direction of a US-style insurance system and have to stop patient choice being used a crowbar to lever in the marketisation of the NHS.”

Pugh’s amendments would also close a loophole that would allow private companies to “wholly or mainly” run the new GP commissioning groups set up to buy treatments for patients.

However, there is evidence that market reforms are taking root. Documents obtained by campaigners at Spinwatch show the Department of Health secretly plans to hand over the running of up to 20 NHS hospitals to foreign firms, despite the prime minister’s pledge that there will be “no privatisation of the NHS”.

In the papers McKinsey warned the department not to bundle off all the hospitals to the private sector at once – and instead start “from a mindset [of] one at a time”. The consultants told officials to be mindful of the “various political constraints” associated with privatisation.

The documents lay bare what “international hospital provider groups” consider as a minimum for running NHS hospitals. “International players can do an initiative if [£]500 million revenue [is] on the table.” They also need to have “a free hand on staff management”. The NHS would be allowed to “keep real estate and pensions”.

So far the department has only given approval for one NHS hospital, Hinchingbrooke in Cambridgeshire, to be handed over to a private company, Circle Health, which is backed by two Tory donors – financiers Paul Ruddock and Crispin Odey.

Another three hospital trusts, Trafford Healthcare NHS trust, the Royal National Orthopaedic hospital and the Whiston hospital in St Helens have publicly said they would consider a private takeover. The Department of Health identified 32 NHS trusts that were “underperforming”, raising the prospect of private firms being put in charge of £8bn of NHS money.

Managers at Imperial College Healthcare NHS Trust are considering a proposal to shut St Mary’s in Paddington and sell off the site to property developers according to today’s Independent.

Helios’s plans were revealed in a meeting last December where McKinsey organised a workshop at NHS London’s offices. Attending were Ian Dalton, head of provider development at the department of health, Ruth Carnall, chief executive of NHS London, and Helios’ representatives.The workshop was to discuss “how international hospital provider groups may help to tackle the performance improvement of UK hospitals”. The agenda details a discussion with Helios over “potential opportunities in London”. The company gave a presentation on “what an international player would suggest”. Helioswas given an update on the “situation for NHS hospitals” and the “specific situation in London”. The meeting also included discussions on “requirements for policy”.

The workshop was held a month before Lansley published his NHS bill. Just after the bill was published a representative from McKinsey was invited to the department to talk about the Helios bid.

John Healey, Labour’s health spokesman, called on Lib Dems to “join with Labour this week to put a stop to David Cameron’s damaging plans for the NHS”. He said it looked like there was “a well-worked secret plan for privatising hospitals”.

“Cameron promises one thing on NHS privatisation in public, while at the same time his government attends secret meetings with those ready to take advantage of the prime minister’s market-driven plans for our health service.”

A Department of Health spokesperson said: “It is not unusual for the Department of Health to hold meetings with external organisations. Any decisions to involve outside organisations, such as the independent sector or foundation trusts, in running the management of NHS hospitals would be led by the NHS locally and in all cases NHS staff and assets would remain wholly owned by the NHS.”

Health Secretary Andrew Lansley said: “Claims that we aim to privatise the NHS amount to nothing more than ludicrous scaremongering. We have made it crystal clear, time and again, that we will never, ever, privatise the NHS.

“The reality is that we’re giving more power and choice to patients over how they get treated, keeping waiting times low and cutting bureaucracy so more cash gets to the front line. We will not allow these lies to block the progress we want to achieve for patients.

“Under this government, the NHS will be available to all, a comprehensive quality service, free at the point of use, based on need, not ability to pay. NHS providers such as Foundation Trusts will continue as publicly accountable bodies. The Bill makes thisabsolutely clear.”

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