Revealed: NHS spent more than £2bn on private mental health hospitals last year

The NHS spent more than £2bn on sending patients to private psychiatric units last year, following decades of cuts to beds, new analysis reveals.

The huge sum spent on private mental health hospitals in 2023 was a £279m increase on the year before.

A report by healthcare consultants Laingbuisson, shared exclusively with The Independent, said the lack of beds within the NHS is a major driver of spending on private hospitals, warning healthcare leaders are “stuck between a rock and a hard place”.

The two biggest private providers, Priory Group and Cygnet Health Care, generated £509m and £560m in revenue last year. They account for more than 68 per cent of the market, according to the report.

Almost £200m was spent on private children’s hospitals by the NHS in the same year, figures show.

The news follows a series of reports by The Independent exposing abuse within private hospitals such as those run by Cygnet Health Care and the former Huntercombe Group.

Tim Read, author of the report, said private mental health hospitals face stable conditions despite the move to more community care due to the “limited capacity” in NHS beds.

“Despite being a policy priority, it is clear the system is struggling to get a grip on out-of-area placements. With NHS Mental Health Trusts seeing occupancy rates climb to nearly 90 per cent, commissioners are stuck between a rock and hard place – either admit locally to an overcrowded ward or place a vulnerable person a long way from the local support networks.

“The NHS has seen its own bed capacity dwindle over decades and with significant re-investment unlikely given other priorities, the way that local areas engage collaboratively with the independent sector on how to best meet local need becomes ever more important.”

The majority of the private hospital sector’s profit has come from NHS patients, with £2.13bn spent by the NHS in 2023 – equating to 13.3 per cent of the NHS’s total spend on mental health. This compares to £3.5bn spent on in-house NHS beds.

On average, 89 per cent of NHS beds were full in 2023, fuelling the use of private hospitals, the report states.

Laingbuisson, which supplies data to the Office for National Statistics, found the NHS can spend as much as £786 per day per patient for a private bed in a secure unit – equating to more than £286,000 a year.

The report reflects that NHS mental health and learning disability bed supply has been declining for 40 years, going from 72,000 in 1993 to 22,000 in 2024.

There are 253 private mental health hospitals in the UK with 9,422 beds. This compares to 22,059 NHS mental health and learning disability beds. Over the same period, private hospitals have grown from 4,200 to 9,200.

While the NHS’s spend on private hospital beds continued to increase, so did the spend on community care. Investment in talking therapies is up from £446m in 2017-18 to a projected £950m in 2024-25.

A Department of Health and Social Care spokesperson said: “The NHS is broken, with patients waiting too long for treatment.

“As part of the government’s Plan for Change, we have set an ambitious target to cut waiting times so that people can expect to be treated within 18 weeks.

“The NHS has always worked with the independent sector to deliver services, and where there is spare capacity in this sector to treat patients and cut waiting lists, we will use it.”

An NHS spokesperson said: “We have invested an additional £2.3bn in community mental health services and are treating a record number of patients, with more than five million people in contact with our services last year.“

“NHS trusts and other providers across the country are developing plans to make sure inpatient care best meets the needs of the communities they serve over the coming three years, ensuring that every pound spent represents best value.”

This story was updated on the day of publication. It originally said that Priory Group and Cygnet Healthcare took £509m and £560m in profits last year respectively. That was inaccurate. The figures represent their revenue and not profit.