Gordon Brown faces another backlash from Labour MPs, doctors and healthcare unions over plans to allow private companies to take over the management of struggling NHS trusts.

Bringing in commercial companies to run hospitals is one of several options that the Government has drawn up for improving the performance of NHS trusts that fail to meet new standards on quality, finance and care.

The Department of Health said that it would announce the new standards in October and start declaring lists of “underperforming” hospitals and primary care trusts. These will be given nine months to improve before being labelled “challenged” and considered ripe for takeover.

Ben Bradshaw, the Health Minister, said yesterday that in most cases a failing trust would be taken over by other NHS units, most likely foundation trusts or “turnaround teams” of health service staff. But it would be “dogmatic”, he said, to exclude private companies from the process.

“There may be examples where no NHS hospital is interested in taking over a failing hospital, or where local NHS managers think that, in order to have more competition and choice for people locally, bringing in a private manager on a franchise arrangement will be the most sensible idea,” he said.

He said that such takeovers would not amount to privatisation, because “the NHS will retain control of assets and the staff will still be NHS staff”.

Health campaigners and unions accused the Government of opening the door to private companies making “mega-bucks” from the taxpayer. However, many such companies say that they are unlikely to be interested in taking over failing hospitals.

Jonathan Fielden, the chairman of the British Medical Association’s consultants committee, said that doctors would have grave concerns if the private sector took over the management of NHS trusts. “Such a move would effectively see parts of the NHS become privatised.”

He said there was no evidence that the private sector would do a better job than NHS managers. “They would just aim to make a profit rather than the driver being the high-quality care our patients need,” he said.

Mike Jackson, national officer of Unison, the public sector union, welcomed help for hospitals suffering “complex long-term financial and systemic problems”, but said: “It is wrong to suggest that the NHS would be managed more efficiently by the private sector. The NHS has shown that it has the experience and business acumen to do it better.”

Geoff Martin, head of campaigns at Health Emergency, predicted that the move would provoke an “enormous row” within the Labour Party. “This could be the cause of another rebellion in Labour’s ranks. It means firms will be given the chance to make mega-bucks from the taxpayer.”

John McDonnell, Labour MP for Hayes and Harlington, said: “This is the privatisation of the NHS. It goes beyond anything Thatcher even dreamt of [and] will cause grief and anger in the heart of the Labour Party.”

Virgin Healthcare, BUPA, Nuffield Health, Boots, Sainsbury’s and Ram-say Health are among those already providing NHS services or expressing an interest in doing so. But most distanced themselves yesterday from the prospect of taking over large hospitals, saying that they favoured small-scale involvement with GP services or local commissioning. Debts got worse after takeover

Case study: Good Hope Hospital, Birmingham

The “performance regime”, published by the Government yesterday, is a warning to managers who fail to keep their trusts in order. But the first takeover of an insolvent NHS hospital by a private company was a failure — put right only when the NHS regained control.

Good Hope Hospital, which serves 450,000 people in Sutton Coldfield and North Birmingham, had no stars out of a possible three when its board signed a £1.3 million agreement with Secta, a group of health service consultants, in 2003 to oversee the running of the trust.

By 2006 the trust had a deficit approaching £20 million on a turnover of about £100 million. This led to the formal takeover of Good Hope by Heart of Birmingham, one of the Government’s foundation trusts, which have some financial freedoms but are part of the NHS.

Regional health authorities said that it was “timely” to end the Secta contract by mutual agreement and get on board a management team from a neighbouring and successful trust. Yet the formal takeover — as opposed to a hospital merger — marked a further step on the road of the health service operating in a more market-like environment.

Underperformance, superbugs, poor management — and now profit-making companies taking charge of public hospitals. Has the NHS got a place in the 21st century? Have your say below

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