The £700m privatisation of the NHS agency that delivers food and medicines to hospitals across Britain is to be announced by the government tomorrow, despite one of the firms involved being investigated by the US Senate.
The American medical supply company Novation is part of a consortium which will take over NHS Logistics Authority, the non-profit body that takes products, ranging from food and blankets to medical equipment, to hundreds of hospitals and clinics every day.
Novation is the subject of a Senate investigation for alleged anti-competitive behaviour. The inquiry, which began in 2002, centres on medical supply companies that use a complex system of rebates and discounts to supply US hospitals. It is alleged that the federal-funded programme Medicare is being charged more than hospitals are actually spending. Smaller suppliers have claimed the company is so powerful it can squeeze them out of the market, even if the quality of their goods is better. Novation denies that it has violated any US regulations.
Nevertheless, ministers have given the go-ahead to the deal, apparently persuaded that a private contract is likely to deliver more value for money for the NHS at a time when it is under serious financial pressures.
The details of the contract have yet to be finalised. But the consortium, which also includes Exel Logistics, part of the German delivery giant DHL, will be expected to use its market muscle to drive down prices for everything from telephones to medical supplies.
There are fears, however, that getting vital supplies to hospitals on time will be too demanding for a private company, raising the risk that services will be disrupted. Last month, there was consternation when vital oxygen cylinders failed to reach patients in their homes, resulting in a number of deaths of elderly people. The long delivery delays happened after the government had privatised the supplies of oxygen.
The government started to look last November at privatising four service agencies, the Dental Practice Board, NHS Logistics, the Prescription Pricing Authority and the NHS Pensions Agency, claiming this could save taxpayers £36m a year. It is understood the sell-off decision was made last week.
The outsourced companies will be overseen by a new NHS Business Services Authority. The NHS Logistics Authority makes around 1,200 deliveries each day to 600 hospitals and clinics from six depots around the country. Its turnover last year was £777m.
Unison, the largest health union, condemned the privatisation as 'risky and premature' and said it might consider industrial action.
Karen Jennings, Unison's head of health, said: 'I am shocked and angry at the hasty decision to privatise NHS Logistics, which has a well deserved reputation for delivering a world-class service. Why the government wants to hand over such a successful organisation to DHL is beyond me.
'The NHS has been able to share in NHS Logistics' success. Last year, £3m was returned to NHS trusts as a value rebate - I am sure that DHL shareholders will not want be so generous in sharing their profits with the NHS.'
