HEALTH · further round of privatisation and wasteful market-style reforms? New NHS cuts shock A...

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HEALTH Bulletin of Hands Off Our NHS * No.60 * December 2004 E E M M E E R R G G E E N N C C Y Y NHS reforms bring back market chaos! Beds closed, jobs axed, as private sector scoops up windfall contracts New Labours reconstruc- tion of the internal mar- ket has already gone even further than Thatcher ever dreamed: indeed it is increasingly clear that the ambition is to create not an internal but a free market in health care, in which the NHS is only one among many varying providers of services. The National Health Service is set to become little more than a brand name, a cen- tralised fund that commis- sions and pays for patient care, while NHS hospitals compete on ever less favourable terms with private sector companies for a share of the budget and for the staff they need to sus- tain basic services. Beds axed As billions are being fun- nelled into contracts with pri- vate hospitals and health providers, NHS hospital Trusts and PCTs across the country are facing massive deficits, closing beds and cut- ting jobs as they struggle to balance the books. Ministers have made it clear that they want at least 10 per- cent of elective (i.e. non- urgent, waiting list) opera- tions to be carried out by the private sector next year, rising to 15 percent by 2008. By the end of 2005 Primary Care Trusts will now be obliged to offer almost all patients a choice of providers from the time they are first referred including at least one private hospital. GP Fundholding has also returned, under the guise of practice based commission- ing, with GPs encouraged to shop around for waiting list treatment for their patients, with the promise that they can retain half of any unspent funds within their practice. As the new GP contract allows family doctors to opt- out of on-call work and 24- hour responsibility for patient care, private companies are striking deals to fill the gap, some working in liai- son with ambulance Trusts. But ministers have also encouraged the private sector to develop chains of pri- mary care outlets, which could begin to squeeze NHS primary care. Nursing homes Already much con- tinuing care of older people has been priva- tised, with the mass closure of NHS geriatric beds, and an increasing reliance upon pri- vately-run nursing homes and private domiciliary services to deliver care to frail elderly patients. The drive towards increased private provision of all forms of NHS-funded treatment has been reinforced by the intro- duction of a new payment by results system, under which from next April hospitals will begin to receive only a fixed price payment per item of treatment delivered, rather than the previous block con- tracts with local Primary Care Trusts. This scheme was designed to open space for Foundation Trusts to win extra income in competition with other NHS hospitals. Ministers admit it could force the closure of failing NHS Trusts. Indeed it is so disruptive it is being phased in over four years. It threatens the viability of any hospitals which for what- ever reason have costs above the NHS reference cost. It also opens up fresh possi- bilities of switching patient care and the funding that goes with it from NHS to private providers. Payment by results Ironically the payment by results system seems set to have its most serious conse- quences for new hospitals funded under the Private Finance Initiative (PFI) which are saddled with high, fixed overhead costs, while lacking spare beds and capac- ity to take on additional patients. In 1997 Blair warned we had Ten days to save the NHS. But as he prepares to do bat- tle for a third term in office, who will protect this most popular public service from a further round of privatisation and wasteful market-style reforms? New NHS cuts shock A NEW ROUND of cuts in beds, jobs and patient care is rip- ping through the NHS as Tony Blairs modernisation pack- age goes horribly wrong. The NHS budget, at £67 billion, is now double the figure from 1996-97, but relentless govern- ment targets for reduction of waiting lists and waiting times have forced managers to run hospitals and other services at levels well beyond their finan- cial means. The result is massive and growing deficits in Trusts and Primary Care Trusts throughout the NHS. A snapshot survey of Eng- lands Strategic Health Authority websites by London Health Emergency revealed combined deficits in excess of £500 mil- lion by November but the very patchy and late publication of figures means that this figure is likely to be a serious underesti- mate. ! MORE DETAILS: page 3 LHE is on the move Reaffiliate for 2005! SEE BACK PAGE MRI scanners purchased as part of a modernisation of NHS facilities are standing idle in many hospitals, mothballed as a result of the lack of funding for staff to operate them. So says the College of Radiographers, which has protested strongly against the governments more recent decision to commission 12 mobile scanners, to be run by the private sector (Alliance Medical) with a view to reducing waiting lists across the country. According to the College the NHS has bought 42 new MRI scanners, and announced a further £90m programme to replace scanners and CT scanners that are more than ten years old. But the private provision has been decided centrally as an initiative to raise scanning capacity by 16 percent, deliv- ering over 130,000 scans a year. Nobody favours delays and queues for these vital tests: but does John Reids left hand really know what his privatised right hand is doing? MARKET MADNESS BRINGS SCANNER SCANDAL Seasons greetings to all our readers and supporters! ! NHS Treatment Centres fight for life - p4: ! Payment By Results - Back page John Reid: more targets as Trusts and PCTs face record deficits

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Transcript of HEALTH · further round of privatisation and wasteful market-style reforms? New NHS cuts shock A...

  • HEALTHBulletin of Hands Off Our NHS * No.60 * December 2004


    NHS reformsbring back

    market chaos!

    Beds closed, jobs axed, as privatesector scoops up windfall contracts

    New Labours reconstruc-tion of the internal mar-ket has already gone evenfurther than Thatcher everdreamed: indeed it isincreasingly clear that theambition is to create not aninternal but a free marketin health care, in which theNHS is only one amongmany varying providers ofservices.

    The National Health Serviceis set to become little morethan a brand name, a cen-tralised fund that commis-sions and pays for patient care,while NHS hospitals competeon ever less favourable termswith private sector companiesfor a share of the budget andfor the staff they need to sus-tain basic services.

    Beds axedAs billions are being fun-

    nelled into contracts with pri-vate hospitals and healthproviders, NHS hospitalTrusts and PCTs across thecountry are facing massivedeficits, closing beds and cut-ting jobs as they struggle tobalance the books.

    Ministers have made it clearthat they want at least 10 per-cent of elective (i.e. non-urgent, waiting list) opera-tions to be carried out by the

    private sector next year, risingto 15 percent by 2008.

    By the end of 2005 PrimaryCare Trusts will now beobliged to offer almost allpatients a choice ofproviders from the time theyare first referred including atleast one private hospital.

    GP Fundholding has alsoreturned, under the guise ofpractice based commission-ing, with GPs encouraged toshop around for waiting listtreatment for their patients,with the promise that they canretain half of any unspentfunds within their practice.

    As the new GP contractallows family doctors to opt-out of on-call work and 24-

    hour responsibility forpatient care, privatecompanies are strikingdeals to fill the gap,some working in liai-son with ambulanceTrusts.

    But ministers havealso encouraged theprivate sector todevelop chains of pri-mary care outlets,which could begin tosqueeze NHS primarycare.

    Nursing homesAlready much con-

    tinuing care of olderpeople has been priva-

    tised, with the mass closure ofNHS geriatric beds, and anincreasing reliance upon pri-vately-run nursing homes andprivate domiciliary services todeliver care to frail elderlypatients.

    The drive towards increasedprivate provision of all formsof NHS-funded treatment hasbeen reinforced by the intro-duction of a new payment byresults system, under whichfrom next April hospitals willbegin to receive only a fixedprice payment per item oftreatment delivered, ratherthan the previous block con-tracts with local Primary CareTrusts.

    This scheme was designed to

    open space for FoundationTrusts to win extra income incompetition with other NHShospitals.

    Ministers admit it couldforce the closure of failingNHS Trusts.

    Indeed it is so disruptive it isbeing phased in over fouryears.

    It threatens the viability ofany hospitals which for what-ever reason have costs abovethe NHS reference cost.

    It also opens up fresh possi-bilities of switching patientcare and the funding thatgoes with it from NHS toprivate providers.

    Payment by resultsIronically the payment by

    results system seems set tohave its most serious conse-quences for new hospitalsfunded under the PrivateFinance Initiative (PFI) which are saddled with high,fixed overhead costs, whilelacking spare beds and capac-ity to take on additionalpatients.

    In 1997 Blair warned we hadTen days to save the NHS.

    But as he prepares to do bat-tle for a third term in office,who will protect this mostpopular public service from afurther round of privatisationand wasteful market-stylereforms?

    NewNHS cutsshockA NEW ROUND of cuts in beds,jobs and patient care is rip-ping through the NHS as TonyBlairs modernisation pack-age goes horribly wrong.

    The NHS budget, at £67 billion,is now double the figure from1996-97, but relentless govern-ment targets for reduction ofwaiting lists and waiting timeshave forced managers to runhospitals and other services atlevels well beyond their finan-cial means.

    The result is massive andgrowing deficits in Trusts andPrimary Care Trusts throughoutthe NHS.

    A snapshot survey of Eng-lands Strategic Health Authoritywebsites by London HealthEmergency revealed combineddeficits in excess of £500 mil-lion by November but the verypatchy and late publication offigures means that this figure islikely to be a serious underesti-mate.

    ! MORE DETAILS: page 3

    LHE ison themoveReaffiliatefor 2005!SEEBACKPAGE

    MRI scanners purchased aspart of a modernisation ofNHS facilities are standingidle in many hospitals,mothballed as a result ofthe lack of funding for staffto operate them.

    So says the College ofRadiographers, which hasprotested strongly against thegovernments more recentdecision to commission 12mobile scanners, to be run bythe private sector (AllianceMedical) with a view toreducing waiting lists acrossthe country.

    According to the College theNHS has bought 42 new MRIscanners, and announced afurther £90m programme toreplace scanners and CTscanners that are more thanten years old.

    But the private provisionhas been decided centrally asan initiative to raise scanningcapacity by 16 percent, deliv-ering over 130,000 scans ayear.

    Nobody favours delays andqueues for these vital tests:but does John Reids lefthand really know what hisprivatised right hand isdoing?


    Seasonsgreetingsto all ourreaders andsupporters!

    ! NHS Treatment Centres fight for life - p4: ! Payment By Results - Back page

    John Reid: more targets as Trusts and PCTs face record deficits


    THE consultation on theplan that threatens to closeone of two general hospitalsserving a catch-ment populationrising towards700,000 people inMerton, Suttonand Mid Surrey,was a sham fromstart to finish: itrevolved arounda trick questionto which thereis no correctanswer.

    Local peoplewere askedwhere theywould like anew, single site hospital to belocated: but we are not beingasked whether they accept thefundamental assumptionbehind the scheme that thearea could be properly servedby just one, smaller hospital,in place of the two they havenow.

    Unfortunately this trickquestion was not onlyemployed by the local healthservice planners who havetried repeatedly to push peopledown the road of a single hos-

    pital in the area: local politi-cians have taken up more orless the same theme.

    Each of the main politicalpartiesseems tobe tellingits localsupportersthat a singlesite hospitalwould befine aslong as itsin theirpatch.

    This is notonly divisive playing offone localityagainstanother butalso danger-

    ous: because unless the flawedlogic of the NHS planners ischallenged, people arguing forjust one hospital will ensurethat one hospital does close,leaving local people across thewhole area facing longer jour-neys, less choice and greaterrisk.

    A hard-hitting report Gam-bling with Our Lives drafted byLondon Health Emergencyfor UNISON, rejects thenotion that a single site hospi-

    tal would do anything toimprove access to health.

    It argues that the schemeproposed in the consultationdocument would drasticallyreduce the numbers of front-line beds to care for emer-gency admissions at the verypoint emergency admissionsare soaring across the country.

    Ripples of chaosBizarrely, the scheme would

    also result in thousands oflocal patients being forced touse hospitals outside the cur-rent catchment area pilingnew pressure on hospitals likeSt Georges, Kingston, May-day, East Surrey and St Peterswhich are already strugglingto cope.

    Several of these hospitalshave yet to recover from previ-ous closures of surroundinghospitals and A&E units likeQueen Marys Roehamp-ton,Ashford and Crawley.

    The loss of local patientswould drain millions in rev-enue from Epsom & St HelierTrust, but create new problemsbecause surrounding hospitalslack the funds (and staff) tobuild and run new wards totake the additional caseload.

    UNISONs detailed res-

    ponse to the consultation doc-ument also exposes the contra-dictory figures that have beenused by planners and businessconsultants in drawing uptheir plans to switch patientsto local care hospitals andintermediate care, with 70or more to be given intensivesupport in their own homes.

    UNISON notes that not ashred of evidence has beenpublished to convince localpeople that the scheme isproperly worked through,costed, or viable.

    Despite the plans title, theproposals set out in the con-sultation document dont offerBetter healthcare closer tohome: they offer less health-care, longer journeys andgreater risk for patients need-ing urgent treatment.

    Those who endorse theseplans are gambling with localpeoples health care andtheir lives.

    They must be told to go backto the drawing board and startagain with a plan for twogeneral hospitals, and basedon local health needs.

    # For more details on thelocal campaign contact:

    [email protected]

    The shock announcement bySt Georges Hospital that theywill need to take urgent mea-sures, including staff reduc-tions and bed cuts, to clawback a £20 million deficit hasrocked health services acrossthe South West London area.

    And as we went to pressunions at Kingston Hospitalwere warning that staff short-ages were compromising safetyin the maternity unit.

    St Georges man-agers haveclaimed that theiraccumulateddeficit of between£20 - £35 millionresults from yearsof using capital funds to propup day to day expenditure anaccountancy device now out-lawed by the government, forc-ing the Trust to claw back thecost of years of underfunding.

    Initial cuts planned will resultin the loss of 25 front line bedsand 100 jobs, although localunions have warned that thesemeasures will save £2 millionat most, and are likely to be thetip of the iceberg.

    UNISON officer MichaelWalker has already warnedstaff that the Bolingbroke Hos-pital could be next on the hitlist. Battersea and WandsworthTUC are working with unions athospitals across South WestLondon to make sure that thefull extent of the local healthcarve-up is brought to publicattention. That publicity cam-paign will run through Christ-mas and into the New Year.

    Geoff Martin, fromBattersea andWandsworth TUC,said today:

    There is no wayon earth that StGeorges can slash£20 million from

    their budget without having adevastating impact on patientcare.

    That means longer queues inaccident and emergency andgrowing NHS waiting lists rightacross our area. Our demandis that the government step into bridge the financial gap andgive Georges the money itneeds to run services at a levelthat meets patient demand.

    Shock as St Georgesfaces £20 millionhealth cutbacks

    Trick question key toSW London gamble

    THE CIVIL Servants led the way in fight-ing government moves to slash publicsector pensions, with a strong nationalstrike by the PCS in November, andplans for renewed action in the NewYear.

    But news that NHS staff and local gov-ernment employees could also face areduction in their pension entitlements hasbrought an angry response from UNISON

    and other public sector unions. The government proposes to raise the

    normal public sector retirement age from60 to 65, and to increase the age at whichpeople can take early retirement from 50to 55. This will affect many workers whotypically take early retirement before 55due to the stress of their jobs, or whohave accumulated enough benefits fromservice.

    UNISONs Davce Prentis said: What really riles me is the breathtaking

    hypocrisy of MP's who recently votedthemselves the best pension scheme inEurope, but say they can't afford it for any-one else.

    This is a position that UNISON cannotaccept and will oppose. It will lead to con-flict between UNISON and the government,if not this year then next.

    UNISON NorthWest LondonHospitals Trust

    Secretary Pat McManusNorthwick Park Hospital

    Watford Road, HarrowMiddlesex, HA1 3UJ

    0208 869 3960

    How to contact stewards, officers and reps inUNISON NW London Hospitals branch

    NAME CONTACT NUMBER TITLEAbeslam Bochdadi 020 8453 2595 NEW STEWARDCarol McSweeney 07762091197 NEW STEWARDCatherine Thomas 020 869 5295 INTERNATIONAL OFFICER Derek Helyar 07740766244 CHAIRMANEdita Pancic NEW STEWARDFrank Conway 07836387268 STEWARDGeorgia Weston 07790024542 H&S REPGerry Mooney 07863386861 STEWARDHannah Flaherty 07976392166/0208 869 3552 NEW STEWARDIrene Nzalle-Mukoro 0208 453 2600/2112 NEW STEWARDJamal Elmessoudi STEWARDJanice Fernand 0208 869 3522 NEW STEWARDLeonie Robertson 0208 453 2595 STEWARDMark Gordon 0208 869 2240 NEW STEWARDMaureen Jarrett 07958317568/ 0208 869 4022 WELFARE/WOMENS OFFICERNathalie Dwyer 0208 869 2060 NEW STEWARDPat McManus 07818064152/ 0208 869 3960 BRANCH SECRETARYPeter Nzekwe 07909556704/ 0208 453 2605 EQUALTIES OFFICER/

    LDR OF BLACK MEMBERSSanjay Patel 07884183671/0208 869 3177 TREASURERSharon Southwood 07753750465/0208 864 3232 MEMBERSHIP SECRETARY/


    Pension threat draws trade union anger



    on thissummers

    TUC demofor



  • With deficits projected toreach unprecedented levelsacross the country as Trustsgrapple with ever-moreambitious government tar-gets, the brakes are nowbeing slammed on in a last-ditch and generallydoomed effort to balancethe books.

    The scope of the cuts that arenow being contemplated isindicated by a Daily Mail tele-phone survey of 72 NHSTrusts in late November,which showed that two thirdswere in deficit, and some wereimplementing major cutbacks.

    ! Leeds Teaching HospitalsTrust, facing a £16m shortfallhad closed 8 wards (250 beds)and four operating theatres

    ! Southampton UniversityHospitals Trust, £11m in thered, and sore from its rejectedbid for foundation status, hadaxed 85 beds, merged twowards, cut out 400 mainlyvacant, jobs and imposed 100redundancies.

    ! Hammersmith Hospitals,£6m in the red, had closed 90beds and limited staff recruit-ment.

    ! Oxford Radcliffe Hospi-tals Trust, seeking to addressan underlying £42m deficit,has made specialist nursingstaff redundant while spend-ing £20m a year on agencystaff. Mail room porters havetaken strike action over cuts intheir overtime.

    ! Bradford Teaching Hospi-tals Trust, the FoundationTrust whose deficit has rock-eted from a projected £4m to£11.3m, has axed five wardsand four operating theatres(see page 7).

    ! St Georges Hospital,South London, facing a deficitof between £20m and £35m,had barely scratched the sur-face with the closure of 24 beds

    and axing of 100 mainlyvacant posts.

    As Trusts contemplate theiroptions to save money withjust four months of the finan-cial year to go, an extra pres-sure compelling them intoaction has been the new rulesthat prevent them spendingmoney from their capitalfunds to bail out the revenueaccount.

    The stock response from theDepartment of Health is thatTrusts can borrow their wayout of trouble by approachingthe NHS bank for a loan.

    Whether some of the mostindebted Trusts would be seenas a secure risk for a loan, andhow they could hope to pay itback while their finances areso massively out of balance isnot so glibly explained.

    No bail-outIndeed Health Secretary

    John Reid has insisted thatministers will not bail outTrusts in financial crisis.

    Replying to the CommonsHealth Committee in Novem-ber, he argued that pumpingextra cash into Trusts facingdeficits just means that some-where else a patient has to waitlonger in pain.

    Our approach is that wemust not undermine or detractfrom the responsibility takenby local management.

    If necessary Trusts facingfinancial problems shouldchange their management,suggested Dr Reid.

    This will come as no greatcomfort to the Trusts facing animpossible combination of tar-gets and cash pressures in thenext few months.

    Nor will it delight many NewLabour candidates who seemlikely to face a fight for re-election amid a barrage of hos-tile press headlines on cutsand chaos in the NHS.


    Wakefield and PontefractHospitals branch

    Health Service,not WealthService!

    Fighting against PFI andcuts in jobs and services

    Trade Union Office, Pinderfields Hospital, Wakefield WF1 4DG

    MidYorksfingeredover£40mshortfallAT THE END of Septemberfinancial watchdog body theAudit Commission issued adramatic public interestreport confirming UNISONswarnings that the Mid York-shire Hospitals Trust financeshad been going from bad toworse.

    The report, produced for theCommission by firm of auditorsappointed to monitor the Trust,pointed to an already accumu-lated deficit of £20.8 million,and projected a shortfall of upto £40m by the end of the cur-rent financial year.

    It warned that this wouldmean the Trust would be inbreach of its statutory duty tobreak even, and has referred itto the Secretary of State.

    Previous warnings by theauditor early this year that theTrust had to draw up andimplement a Recovery Planhad produced no tangibleprogress.

    Indeed the report is no sur-prise: it is if anything slightlymore optimistic than the reportto the previous meeting of theWest Yorkshire Strategic HealthAuthority, which projected ashortfall of £46m by nextMarch, comprising £30m ofdebts carried forward from lastyear, and an additional deficitthis year of £16m.

    In the spring, a potentialdeficit as high as £53m wasrevealed in the WakefieldExpress, alongside proposals tofreeze vacancies and spendingon new developments.

    Senior finance chiefs in theTrust and at SHA level seem tobe living in denial, with plansfor financial balance hanging ona massive programme of CashReleasing Efficiency Savings tothe tune of £46m, and in JuneTrust finance chief Tony Waiteinsisted that it was planningsavings and aiming to restorefinancial balance next year.

    The Mid Yorkshire Trustschronic financial crisis is amajor factor in its relegation tono-star status.

    But as UNISON has warned,savings on this scale can onlymean a wholesale axing of ser-vices and of jobs.

    Whichever way you look atthis, there is more pain in storefor local patients and for NHSstaff, says Branch Chair AdrianOMalley.

    There is no real alternative toinjecting more money: our MPsshould be fighting for moremoney to fund NHS services inWakefield.

    Bigger budgets, bigger deficits

    Beds and jobsaxed as Trustscut back

    Deeper into the red LHEs snapshot survey results, showingactual and projected deficits in latestStrategic Health Authority papers,November 2004SHA DeficitNW London £31mN Central London £19mNE London £12mSE London £15mSW London £32mAvon Gloucs & Wilts £27mBeds and Herts £11mBirmingham & Black Country £11mCheshire & Merseyside £12mCumbria and Lancs £72mGreater Manchester £14mHampshire and IoW £47mLeics, Northants £14mNorfolk, Suffolk & Cambs £54mSW Peninsula £16mSurrey & Sussex £20mThames Valley £37mWest Midlands South £21mWest Yorkshire £33m

    NB: these figures are taken from published SHA papers,some of which date back to the summer: they may seriouslyunderestimate the ill-health of the local health economy.

    Manchesters Mental Health andSocial Care Trust, set up to bridge thedivide between NHS and social servicebudgets, was officially declared a bas-ket case over the summer.

    Auditors warned that its deficit and itshistoric debts of £6.3m raised theprospect of the Trust being the subject ofa public interest report, tantamount to

    a first move to wards bankruptcy.A £2.7m cuts package included

    vacancy freezes, a renegotiation of ser-vice agreements, and an attempt tosqueeze down soaring costs for sup-ported accommodation.

    But even while managers scoured theservice in a hunt for further savings of£2.7m, the Trust has been compelled to

    inject extra resources to tackle staffshortages on mental health wards.

    So dire is its financial plight thatGreater Manchester Strategic HealthAuthority has intervened with an injec-tion of £11m in capital to bail it out of itsinvolvement in the PFI-funded rebuild ofManchester Royal Infirmary, to avoid fur-ther debts building up.

    Manchester mental health mayhem Keep us postedHealth Emergency willbe monitoring andpublicising the latestwave of cuts and clo-sures throughout thewinter and up to theelection.

    It is already clear thatsome cuts can be

    forced back if minis-ters fear an electoralbacklash see page 5.

    So if your Trust orPCT are slashing beds,services or axing jobs,make sure you contactus at [email protected], faxus on 020 8960 8636(up to February 1), orring 07774 264112.


    GOVERNMENT determi-nation to forge aheadregardless with a chain ofprivately-run Indepen-dent Treatment Centres topoach elective surgery fromexisting NHS providersremains undiminished,despite the mounting evi-dence that the private unitsare neither needed nor wel-come.

    The case of the private treat-ment centre specialising incataract operations, to befoisted upon OxfordshiresPrimary Care Trusts despitethe evidence that it will cutthe ground from below thewell-established Oxford EyeHospital has achieved nationalnotoriety.

    A report into the affair hasnow vindicated (but not rein-stated) the chair and a non-executive of SW OxfordshirePCT who both resigned ratherthan rubber-stamp the White-hall-driven scheme: but pre-cious few PCT members havebeen prepared to take such astrong stance in defence of theNHS or PCTs own localautonomy.

    Spotting the weakness, min-isters have been cranking upthe pressure to divert an ever-larger share of NHS electivesurgery towards privateproviders.

    In January the governmentwill invite tenders to deliver afurther 250,000 operations ayear, worth an estimated £500million annually: in additionanother £400m worth of X-rays, scans, blood tests andpathology tests will be hivedoff to the private sector.

    These moves will almostdouble the number of privatesector operations to be pur-chased by the NHS, pushingthe governments total spendin the independent sectorup towards £1.5 billion twothirds of the total £2.3 billionturnover of the private medi-cal industry in 2003.

    These latest moves comedespite signs during the sum-

    mer that a planned chain ofprivately-run treatment cen-tres in North London was onthe verge of collapse becauseNHS Trusts had developedplans to deliver the additionaltreatment in-house.

    Barnet & Chase Farm, theRoyal Free and Barking Haver-ing and Redbridge Trusts wereall given the go-ahead whichhad been denied to OxfordEye Hospital to expand NHScapacity, and deliver the addi-tional treatments at a lowerprice than the private sector.

    But while these NHS Trustswill celebrate their opportu-nity to keep the private sectorat bay, the arbitrary conduct ofthese negotiations underlinesthe extent to which decisionsare being taken at nationallevel by Department of Healthbureaucrats, with little or noreference to local people andlocal services.

    Even where public capitalhas already been invested instate of the art NHS-run treat-ment centres there is no long-term guarantee that these willremain viable or operational.Some are already in trouble.

    The blatant bias that is beingshown in favour of privateproviders and against theNHS is exposed by the prob-lems faced by one of the pio-neering NHS-run treatmentcentres, the Ambulatory Careand Diagnostic (ACAD) unit

    at Central Middlesex Hospital.While the privately-run

    treatment centres receivelong-term guaranteed incomeon a play or pay basis, andhave been allowed to chargehigher than NHS referencecosts, not of these conditionsapplies to NHS treatment cen-tres.

    Elsewhere NHS consultantshave been instructed by man-agers to pass over a share oftheir waiting list workload fortreatment in private sectorunits another target, butone which ministers are no sokeen to publicise in the main-stream press. But no suchpressure exists to maintain theflow of patients to NHS units.

    Instead, under the paymentby results system, hospitalswill have a greater incentive tohold on to the largest possibleshare of their own potentialcaseload.

    Already by mid Novemberthe ACAD had spare capacityto treat 3,000 more patients,Hammersmith Hospitals had4,000 spare slots, and the newunit at Kidderminster Hospi-tal had scope to treat 2,000.

    Partly-used NHS facilitiesresult in rising costs and poorproductivity giving minis-ters a ready-made pretext forfavouring an apparentlycheaper and more efficientprivate sector.

    One foundation Trust, Uni-

    versity College London, haswarned that it may have toscale down its treatment cen-tres if the odds remain stackedagainst them: but it seems thatthe governments fixationwith expanding the privatehospital sector could leadthem to ban FoundationTrusts from bidding for theprovision of the next round oftreatment centres in the Jan-uary tendering process.

    Alternatively foundationsmay be encouraged to strikedeals with private healthproviders, in which the Trustwould have only a minoritystake, to submit tenders fortreatment centres.

    All this is designed to ensurethat private firms are given nogrounds to question the gov-ernments commitment to pri-vatising an ever-increasingshare of clinical care.

    Meanwhile many frustratedNHS staff seem to be the onesthat need reassurance that thegovernment is not backing outof its commitments to themand their trade unions.

    Earlier this year there was astand-up row between SWOxfordshire Primary CareTrust and the StrategicHealth Authority over thedecision to endorse a newprivately run independenttreatment centre that couldcut the ground frombeneath Oxford Eye Hospi-tal.

    Non-executive PCT directorJane Hanna and chair Pro-fessor Martin Avis resignedafter being threatened withfines or surcharges byThames Valley StrategicHealth Authority if their oppo-sition to the new ophthalmictreatment centre resulted inthe deal collapsing.

    The back-room bullying byNHS bureaucrats was drivenby Department of Health offi-

    cials, who were determined tomake the deals they haddone with the private sectorappear as local schemes,and to force them throughregardless of the conse-quences for existing local ser-vices.

    Consultants at the Eye Hos-pital had angrily pointed outthat they already had plans inplace to expand NHS capacityto deliver cataract operations

    to meet government targetson waiting times: the new ser-vices, they showed, weremore expensive, unnecessary,and a threat to the continuityof teaching and other special-ist care at the Eye Hospital.

    But as the echoes of theOxford confrontation rumbledon, it emerged in July thattwo north London Trusts, theRoyal Free and Chase Farm,had successfully beaten backplans for a new treatmentcentre in their area byexpanding NHS capacity.

    It seems that while Oxfordsrow may have hit the head-lines, the benefits of theresistance by PCT directorshave been reaped elsewhere.

    Why, then, are Oxfords ser-vices now still being throwninto jeopardy by a centrally-imposed contract that nobodyin Oxford really wants?

    With odds stacked on private providers

    NHS treatment centresseek level playing field

    PRIMARY care, too, couldface the prospect of slices ofits work being hived off to pri-vate sector providers undernew guidelines from theDepartment of Health.

    GPs who may havethought that competi-tion was simply a prob-lem for hospital Trustsmay be shocked to dis-cover plans to create anew market in primarycare, with alternativeprovider medical ser-vices being invited tobid for contracts wherelocal GPs are strug-gling to meet govern-ment targets.

    City and Hackney PCT isamong those that have decidedto advertise for privateproviders to bid for work fillinggaps in local primary care ser-vices.

    One firm which pioneered theprivate provision of GP services

    in Essex, East London andBrighton has publicly consid-ered floating on the stockexchange to raise furtherinvestment capital.

    Many people may wonderwhether the emergence of newcompanies with shareholdersas major providers of primarycare is really a step towardsmodernisation or a giant stepbackwards to the days beforethe NHS.

    NHS SUCCESS in reducingwaiting lists and waitingtimes is having a majorimpact on private medicalcompanies, which are nowlooking for ways to boostflagging numbers of individu-als with health insurance.

    Long waiting lists havealways been the main recruit-ing sergeants for BUPA andother medical insurers, but ifpatients can expect swift treat-ment on the NHS perhapseven in a private hospital then the incentive to fork outhefty premium payments isdrastically reduced.

    Now three of the main privatehospital chains, BUPA, Nuffield

    hospitals and Capio, haveentered into talks with healthinsurer over a plan to reducepremiums by cutting chargesfor treatment.

    Insurers are demanding pricecuts of 20-25 percent to maketheir limited cover packagesmore attractive.

    But with the NHS pumping bil-lions in additional funding intothe private hospitals, there maybe little incentive for the com-panies to play ball with theinsurers.

    Private medicine, with itsexclusion of emergency careand chronic conditions,remains an option for thosewith more money than sense.

    Now privatehospitals feelthe squeeze

    Oxford ophthalmic treatment centre row

    Back-room bullying exposed

    Companies bid tomake primary care their business

    Who is really getting stitched up in new Treatment Centre deals?

    The new flagship £420m PFI-funded UCLH is not yet open, but already the Trust is facing losses on its NHS Treatment Centre


    The recent Report on Pub-lic Sector Productivityissued by the Office ofNational Statistics onOctober 18 has been widelyreported as revealing aslump in productivity inthe National Health Ser-vice.

    The Financial Times (October19) headlined its front pageNHS fails all tests onimproved efficiency: the arti-cle was based on a press releasefrom the ONS, and it has sub-sequently emerged that somejournalists seeking the fullreport on which this pressrelease was based were told itwas not available.

    For those looking to stickthe boot into NHS staff itseemed too good a story tomiss. Tory Shadow ChancellorOliver Letwin claimed thatthe figures were damning,and that they pointed tohealth inflation, waste andinefficiency, with spendingon hospitals rising five timesas fast as the number of hospi-tal treatments.

    Although Health SecretaryJohn Reid branded the figuresabsurd and pointed out (asthe ONS specifically admit)that they have excluded anymeasurement of quality ofcare, he did not challenge theassertion that somehow NHSstaff even while workingunder more pressure than everbefore have somehow fallenback in productivity.

    But a closer look at the ONSreport reveals that the under-lying cause of the healthinflation is not NHS staff, butthe many and various privatesector suppliers of goods, ser-vices and even some electivehealth care: they now make upa majority and a steadily risingshare of NHS spending.

    Page 13 of the ONS Reportshows (in Table 2) a break-down of NHS spendingbetween Labour, Intermedi-ate consumption [i.e. pro-curement of goods and ser-vices from the private sector,including services from pri-vate sector health providers],and capital consumption.

    BureaucracyAnd the shock finding for

    those seeking to provebureaucracy or flagging pro-ductivity among NHS staff isthat while in 1995 labour costsamounted to 57% of NHSspending, and Intermediateconsumption just 40%, by2003 this picture had com-pletely changed: then only46% of spending was on labourand 52% on Intermediate

    consumption.Comparing the rate of

    growth of spending in thesetwo categories shows the situa-tion even more clearly: from1995-2003, spending on labourwent up just 44% (from £22billion to £32 bn), in a periodin which the NHS workforce,again according to the ONSreport, increased by 22% (aswhole time equivalents, p15).

    By contrast spending onIntermediate procurementrose by a massive 133% from£16 billion to £37 bn.

    50 percentincrease

    In other words for every £1spent on staff in 1995 just 71pwas spent on goods and ser-vices from the private sector,but by 2003, for every £1 spenton staff £1.14 was spent onprocurement an increase of50%.

    Over this same period capitalconsumption as a share ofNHS spending fell back from2.8% to 2.2%, but NHS output(ignoring factors which mightbe argued as improving thequality of care) increased by28% according to the ONS.

    Since the key factor inexpanding health care capac-ity, and the most frequentcauses of bed and ward clo-sures, delays and shortages inhealth care revolve numbers ofstaff, it is clear that the effortsof the NHS workforce are thekey to the real gains in output

    and quality of care that thegovernment has been keento highlight.

    Perhaps just as shockingis the ONS admission thatits statistics make no dis-tinction between the dif-ferent skill levels of theNHS workforce and theircontribution to patientcare: everyone becomesreduced to an abstractnumber of hours worked.The October documentadmits the standard man-ual on measuring produc-tivity stresses that:

    an hour worked by ahighly experienced sur-

    geon and an hour worked by anewly hired teenager at a fastfood restaurant should be dif-ferentiated for productivityanalysis, but although desir-able, this is difficult.

    Without such a breakdown itbecomes very difficult to workout where the increasedspending on staff has gone,and whether, as the Tory lead-ership claim, too much is stillbeing frittered away onbureaucracy as New Labourrecreates the same wastefulmarket-style system thatThatcher began in 1989-90.

    But the figures do suggestthat any search for efficienciesshould begin with a more rig-orous scrutiny of the costs andprofit margins of NHS suppli-ers, and the inflated sumsbeing paid to purchase treat-ment from private sectorproviders.

    Significantly these aspects ofthe figures are ignored by theONS document, its pressrelease and its conclusions,and few, if any, of the journal-ists who have covered thestory have had the wit orcuriosity to check further..

    Perhaps we should be callingfor an independent audit ofthe ONS, its agenda and itsmethods?

    # The full report is availablevia the ONS website, at

    Private sector costinflation exposedas NHS staff workharder than ever

    ONS Report skews NHSproductivity statistics

    By the end of next year Pri-mary Care Trusts will becompelled to offer patients achoice of treatment by pri-vate sector providers as wellas alternative NHS hospi-tals.

    Guidance from the Depart-ment of Health instructs thePCTs that regardless oftheir local circumstances orof patients wishes theymust include at least one pri-vate provider out of a menuof four or five alternatives forfive of the ten most commonelective procedures.

    Among the companies hop-ing to cash in on this newbias in favour of privatisationare Swedish private healthfirm Capio and Nuffield hos-pitals.

    PCT choices will berestricted to which of the ten

    most common proceduresshould offer patients theoption to use a private hospi-tal.

    But it is clear that in someareas, especially those whereprivate hospitals are few andfar between, PCTs could findthemselves obliged to meettheir targets for private sectorreferrals by effectively deny-ing patients the option ofNHS care.

    Critics are also warning thatif large numbers of individu-als are encouraged to opt for aprivate sector provider theycould trigger the financialcollapse and even closure oflocal health services or evenwhole NHS hospitals eventhose which are doing wellunder the current system.

    Hospitals which lose a sliceof their elective care will seetheir unit costs go up, asexisting capacity is used byfewer patients, and as theyare left to deal with the moreexpensive, more complex andchronic cases which the pri-vate sector does not wish tooffer.

    The BMA, which seems tohave been extremely slow torecognise the scale of theproblem in the latest changes,has warned that even hospi-tals losing less than 10 per-cent of their patients to pri-vate sector or other NHSTrusts could be forced toclose.

    Private choices thatcould bankrupt localNHS Trusts

    MinisterthreatensclosuresHealth Minister John Huttonhas insisted that the govern-ment will not bottle out oftough decisions to closehospital which fail as aresult of patient choice.

    While claiming that this didnot mean hospitals would beclosed at the first sign of diffi-culty, and that efforts wouldbe made to revive and sup-port the stragglers, he madeclear that the ultimate sanc-tion could and would be used,and that failing hospitalscould be sacrificed to forcethrough New Labours visionof a market system in health.

    We are going to be toughabout it. A lot of people thinkwe will bottle it at the lastminute. We wont. It will be avery different NHS, he told afringe meeting at Labour Con-ference.

    CONTROVERSIAL plans torationalise and cut backmaternity services in NorthLondon have been put on theback burner until after theGeneral Election.

    Under the proposals, backedby local Primary Care Trustsover the summer, paediatric,neonatal and maternity serviceswere to be moved from theRoyal Free Hospital in Hamp-stead to the Whittington Hospi-tal in Islington: but the plan wasimmediately denounced by con-sultants at the Royal Free, whowent public with their protests.

    As the boat rocked danger-ously in full public view, theproject director was forced towarn that negative publicityprior to the election could incurthe wrath of the Department ofHealth.

    But in December the HealthService Journal reported thatconsultation on the entirescheme had been put back untilthe summer of 2005.

    Consultants at the Royal Freeargue that this leaves them andtheir services in limbo, and thatthe postponement seems morelike a stay of execution than areprieve.

    Meanwhile a similar delay hasbeen adopted on a consultationon reorganisation in the cash-strapped Barnet and ChaseFarm Trust.# The pace for electorally-con-scious retreats was set duringthe summer with the Hartlepoolby-election, in which NewLabour was challenged by cam-paigners fighting to save thelocal hospital. John Reidpromptly ruled that the hospitalshould remain open presum-ably at least until after the votesare counted.

    Pre-electionpressure forcesretreat on closures

    NHS staff are working harder

    NHS Trusts like St Georges could be pushed over the edge of bankruptcy by Patient Choice


    PFI Hospital projectsworth £4 billion were giventhe go-ahead by HealthSecretary John Reid duringthe summer, many of themreflecting the massive costinflation of PFI chemessince the first wave wasrubber-stamped back in1998.

    The new projects include:# Bedfordshire and Hert-

    fordshire (£880m) A majoracute service reconfigurationin the Hertfordshire area,including plans for redevelop-ment and expansion at Wat-ford and a new hospital at Hat-field, incorporating a new can-cer centre for Bedfordshire &Hertfordshire.

    # North Bristol and SouthGloucestershire (£310m) Options include the relocationof specialist acute servicesonto a single site in NorthBristol / South Gloucester-shire, complemented by a net-work of new community facil-ities and community hospitals.

    # Papworth Hospital NHSTrust (£148m) Options includeredeveloping the existing Pap-worth site or co-locating with

    Addenbrookes on the Cam-bridge Biomedical Campus.

    # Sandwell and West Birm-ingham Acute Trust (£591m) -New acute sector facilitiesincluding development ofcommunity based alternativesto hospital care.

    # Maternity and ChildrensHospital in Leeds (£204m) -Key to the Trusts strategy oflocating acute services onto asingle main hospital site.

    # Hillingdon Hospital rede-velopment (£271m)

    # North Mersey FutureHealthcare Project (£1,008m) -The North Mersey FutureHealthcare Project involves :

    ! the redevelopment offacilities at the Royal Liver-pool Childrens Hospitalincorporating the concept of aChildrens Health Park,

    ! the redevelopment of theRoyal Liverpool University

    Hospital (at a cost of £499m), ! an elective care centre and

    additional ward facilities atUniversity Hospital Aintree

    ! and the further andimproved provision of mentalhealth facilities.

    # Northwick Park and StMarks (£305m) - The projectwill redevelop the site to createa state-of the art 600 bedacute hospital. A NEW book by outspoken

    academic AllysonPollock lifts the lidon the scale andpace of the govern-ments privatisa-tion of a growingshare of the NHS.

    Professor Pol-lock, whoseSchool of PublicPolicy at Univer-sity College Lon-don has been prominent inchallenging the Private FinanceInitiative and the more recentpolicy of Foundation Hospitals,opens up the book with a hard-hitting Whos Who of the big-hitters from the private sectorwho have been welcomed in to

    key policy roles and around theNHS by Tony Blair and his min-isters.

    Chapters deal with the mar-ket-style policies introducedfirst by the Tories and nowagain by New Labour, theextent of the privatisation ofservices including almost all

    long-term careof older people,and the inroadsthat have beenmade into pri-mary care.Its a fascinating

    read if a littledepressing for tradeunionists who havebeen on the receiv-ing end of so many

    of the attacks.At least LHE has consistently

    been on the right side of thearguments on PFI and Founda-tion Trusts: and we will fight onagainst cuts, closures and anyfurther privatisation.

    BOOKSHELFThe must-readbook for all NHScampaignersNHS plc, The Privati-sation of Our HealthCare, by Allyson MPollock, Verso£15.99.

    By Jean Brett, Chair,Heart of HarefieldCampaignFOUR YEARS after it was hardsold as being up and runningby 2006, the Paddington HealthCampus lacks both an OutlineBusiness Case and OutlinePlanning Permission, despitehaving drawn up and submittedboth in 2000.

    How could such a flagshipscheme have regressed this far?

    The answer lies in the basicflaws in the original businessplan, the unwise choice of a con-strained inner London site for thedevelopment, and the inefficiencyof the projects management.

    Nor can the buck be passed onthis occasion to a PFI partner:no such partner exists, nor hasone yet been advertised for.

    Yet despite this track record offailure and the damning findingsof an independent review inSeptember, there have been noresignations. This is, after all theworld of business, not the NHS.

    The September 2004 review ofthe project was conducted jointlyby the National Audit Office, theTreasury, and the Department ofHealth.

    It was triggered by the rise incost from an initial estimate of£360 million to £800 million. Thereview was charged with findingthe reasons for this huge discrep-ancy in the figures, and the pro-cess by which it had arisen.

    On September 6, Sir JohnBourn, the Auditor General, wrote

    to the MP who had raised con-cerns over Paddingtons soaringcosts and gross mismanage-ment, saying that there hadindeed been shortcomings in theway the Paddington Health Cam-pus scheme has been run.

    Among the review findingswere:

    # The scheme was not deliver-able for the price set out in theoriginal Outline Business Case.

    # The project team could nolonger be certain that the pre-ferred option in the original Out-line Business Case remained bestvalue for money.

    # There was no definition ofan affordability envelope withinwhich the scheme had to remain.This contributed to the schemehaving a lack of focus and per-mitted cost drift.

    # The project as reviewed bythe team in February 2004 wasprobably not affordable as it didnot have the required definitionnor the clear support of the local

    health community.# The annual revenue gap for

    the reviewed project was £48million.

    This is an extraordinary cata-logue of errors in an NHSscheme which employed a Pro-ject Manager on a high salary,backed up by an in-house team.

    Added to this was £6m of pub-lic money spent on external con-sultants and the close interestwhich the Chief Executives of theTrusts concerned were supposedto be taking in the project.

    Yet despite a barrage of badpublicity from informed quarters,it took a 3-pronged externalreview to uncover what efficientmanagement should have pre-vented happening.

    Three months after the publica-tion of the independent reviewreport, the necessary new OutlineBusiness Case for the PaddingtonCampus is still awaited.

    This is despite Julian Nettel, theChief Executive of St Marys

    Trust, working on it full time.The crux of the problem has

    always been the lack of space onthe Paddington site to accommo-date not only St Marys, but alsothe Royal Brompton and HarefieldHospitals. Disgracefully, thebreaking up of the Western EyeHospital, part of St Marys, is stillbeing considered as one way toease the space problems on theselected site.

    While chasing the fantasy of ahuge hospital complex, NHSmanagement ignored the fact thatHarefield Hospital could not andwould not be moved into London.

    It was always better thatresources should be focused onthe priority of rebuilding StMarys, the district general hospi-tal for Paddington.

    Until there is any accountabilityin the NHS, public money willcontinue to be squandered onprojects like the Paddington Cam-pus, which from the outset lackviability.

    Even the independent reportclearly lacks any teeth to force achange, leaving the much-criti-cised management intent uponthe same path, rather than learn-ing from past blunders.

    The tragedy with the Paddingtonproject is that it raises such seri-ous questions over the calibre ofthe most senior NHS manage-ment who have been involved inthe last four years of fiasco.!! Contact Heart of HarefieldCampaign c/o 12 High St,Harefield, UB9 6BU. Phone01895 824689.

    CARLISLEs troubled Cumber-land Infirmary was too smallwhen it was built, and will needto be redesigned its TrustChief Executive has now admit-ted.

    Unions and campaignersargued long and loud that theproject would create chaos forlack of beds and would make itimpossible to fund expended ser-vices in the community.

    But the £87m project forged

    ahead regardless, and opened in2001 as the first PFI hospital inEngland.

    It is not the first in which man-agement have been forced toadmit their predecessors got itwrong: Durhams Dryburn Hospi-tal has also been admitted as aplanning foul-up, and BishopAucklands PFI Hospital hassince been subject of repeateddebates on how it can be down-graded to play a role in the local

    health service.Despite the fact that it stands

    next to a former hospital blockwhich could be refurbished rela-tively cheaply to supply the miss-ing 100 or so beds that shouldhave been included from thestart, the Carlisle hospital nowseems likely to be supplementedby a new hospital in Whitehaven,also to be funded through PFI.

    Whether this will be any betterplanned remains to be seen.

    Rocketing cost as Reidagrees more PFI projects

    Carlisle confession:PFI design a cock-up

    Paddington: four longyears of PFI failure

    Exclusive 20% web discountfor Health Emergency Readers

    Nurses andPoliticsThe Impact of Power and PoliticsChris HartPublished by Palgrave MacmillanOctober 2003 Paperback 0-333-71006-1

    £14.99 £11.99

    Chris Hart's book tells you the real story behind key challengesto health workers, such as Agenda for Change, PFI, low pay,staffing shortages, the government's relationship with theunions and a host of other up to date issues.

    This book is a book that describes the experience of working inthe NHS - and it's one you genuinely won't want to put down onceyou start reading it.To claim your exclusive discount, visit the web discount code NPHE04

    Offer valid until 21/01/05

    Is there a doctor in theorganisation?LHEs Information DirectorJohn Lister has been awardeda PhD at Coventry University.

    His 120,000-word thesis onmarket-style reforms in healthcare systems around the worldwas written over 5 years in col-laboration with LHE.

    Readers will be relieved toknow that Health Emergencyhas decided NOT to serialise itin the next 25 issues

    Coming soon: thesearchable HE archiveThe promised CD-ROM carrying a searchable backfile of all 60 issues of Health Emergency goingback to 1984 has been delayed in production, but will beavailable in the New Year. The price will be £25 to affiliatesand supporters, and £75 to other organisations and individuals.

    Lister disguised as parrot

  • Epsom & St Helier Health Branch

    Campaigning with LondonHealth Emergency todefend our twolocal hospitals,and keep ourpublic servicespublic!ANNIE HOLNESS, ChairKEVIN OBRIEN Secretary


    A firm of hard-nosed NewYork-based business trou-ble-shooters has beenbrought in to sort out thegrowing financial crisis inthe first failing FoundationTrust.

    Bradford Teaching HospitalsNHS Foundation Trust hadalready run up a growing cashshortfall, and was predicting a£4 million deficit after just sixmonths as one of the very firstFoundation Trusts to get thego-ahead from the indepen-dent regulator (the officeestablished to scrutinise therunning of foundation trusts,now known as Monitor).

    Despite the fact that thislevel of deficit is modest com-pared with many NHS Trusts,Monitor decided to step in.

    The company, Alvarez &Marsal (A&M), was chosenand called in by Monitor: butthe costs of flying in a team ofturnaround managementconsultants will have to bepaid by the Bradford Trust.

    Monitor claimed there wereadvantages in bringing inadvice from outside the NHS:but staff in the Bradford Trustare likely to see it differently.

    Certainly A&M are well out-side the NHS: their own web-site says their approach cen-tres on helping to stabilisefinancial and operational per-formance by developing andimplementing comprehensiveprofitability and working cap-ital [sic!].

    A&Ms involvement reas-sures creditors that the com-pany is taking important stepsto address its problems andmaximise its value.

    Insofar as this jargon makesany sense, it underlines theconcerns of campaigners whofought against Blairs govern-ment ramming through theestablishment of FoundationTrusts.

    The policy scraped a wafer-thin majority in the Com-

    mons last year, with 62Labour MPs voting against.Among the arguments raisedagainst Foundations was thatnot only would they gainadditional freedoms deniedto other Trusts, creating a 2-tier NHS, but they would beencouraged to act like normalbusinesses.

    In particular they would befree to pick and choose whichservices to provide and whichto withdraw; and free toembark on asset-stripping and, if all went horriblywrong, there was a real chancethat some could go bust.

    As if to underline preciselythese fears, A&M go on toitemise some of the policies inwhich they specialise, whichinclude:

    # Implementing cash con-servation guidelines and con-trols

    # Identification and dis-posal of non-core assets

    # Development and reviewof cost-reduction initiatives

    Bradford bosses will nodoubt be encouraged to learnthat the firm will also help outwith pre-bankruptcy plan-ning.

    But while the regulator has

    seen fit to intervene so pub-licly and dramatically, Minis-ters are predictably washingtheir hands of the whole busi-ness.

    The Department of Healthtold the BBC it was all a mat-ter for Monitor, while in theCommons Health SecretaryJohn Reid has issued a state-ment refusing to answer par-liamentary questions on anyfoundation trusts, declaringthat:

    Ministers are no longer in aposition to comment on, orprovide information about,the detail of operational man-agement within such Trusts.Any such questions will bereferred to the relevant Trustchairman.

    While the level of Founda-tion Trust autonomy has beenquestioned by the rapid Mon-itor intervention, Founda-tions are also far from locallyaccountable.

    Indeed while Ministers lookthe other way as soon asthings go pear-shaped, theelections to the BradfordTrusts Board mobilised apuny 541 people far short ofone percent of the local popu-lation to elect its 17 Gover-nors.

    Meanwhile the problemsthat have tripped up the Brad-ford Trust are set to trigger awave of cash crises amongfront-line hospital Trustsacross the country from nextApril.

    As the trouble-shooters startmeasuring up assets for dis-posal, recommending whichservices the Trust shoulddrop, and sizing up the work-force for redundancies, it isworth noting that Bradfordsproblems today will be thoseof many more Foundationsand other Trusts in themonths and years ahead.

    If Blair comes back for athird term, he is committed topressing all Trusts to becomeFoundations.

    Accountantsflown in tosalvage firstflounderingFoundation

    MASSIVE windfall profitscoined in by PFI consortiafrom refinancing and sell-ing on their stake in com-pleted projects are to beinvestigated by theNational Audit Office.

    The so-called secondarymarket in PFI-built hospi-tals, roads, prisons, schoolsand other projects hasexpanded as the number ofcompleted projects come onstream.

    Latest estimates suggest thataround £32 billion worth ofschemes are now operational,and the Financial Times hasargued that this could open upa market of as much as £6 bil-lion worth of equity shares(up-front investment by PFIcompanies), carrying guaran-teed, index-linked revenuefrom these projects, to bebought and sold.

    So far at least £700m worthof deals are known to havetaken place, most of them inthe last two years.

    And while straightforwardrefinancing schemes for PFIprojects are now obliged toshare some of the proceedswith the public sector, thisdoes not apply to the boomingmarket in equity hence the

    NAO investigation.The equity stakes are a rela-

    tively small component of aPFI investment (normallyaround 10 percent): but theycan be very lucrative. Caril-lion, which sold on its stakeDartfords Darent Valley PFIhospital quadrupled its £4minvestment in six years, gener-ating a clear profit of £11m.

    Investors expect to recouparound 10 percent each yearon their stake in operationalPFI schemes, while new pro-

    jects commonly offer a rate ofup to 15 percent three timesthe level of return from con-ventional long-term invest-ments.

    And with minimal risk andthe government/taxpayer foot-ing the bill, it seems that therunaway costs of the nextround of PFI hospitalschemes will be putting asmile on the face of city slick-ers and shareholders for a gen-eration to come.

    MANAGEMENT have renegedon a pledge to keep excludenon clinical services from the£340m project for a new hos-pital in Plymouth, the largestscheme in the South West.

    The plan is to build a new 280-bed elective care centre, andrefurbish the existing DerrifordHospital.

    But the GMB has protestedthat management plans to bringprivatised support staff back in-house had been dumped withoutconsultation.

    Trust bosses responded thatsince the staff had been priva-tised for ten years, they wouldnot be affected by the new pro-ject.

    But since the scheme faces amassive £10m a year affordabil-ity gap, it is clear that privatesector bidders are being giventhe nod and the wink to cutcosts by 20 percent to bridgethat shortfall and this couldonly be done at the expense ofsupport staff and the quality ofthe services they deliver.

    Plymouth anger overbroken PFI promise

    Auditors toprobe PFIwindfallprofits




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    ����������������������������������������������������������������� ����������������������������������������������������������������������������������������������������������������������� ��!��������"�������!���������!�������!�!�����������������������!��������������"���������������������#$%&�$'�&��������������������������������������!����"����������������������������!����������������������������������"����������������������!��!����������������������������������!�!��������������������������������������������������"��#$%&�$�����(���������!��"�!�������������������������������!�����)�������������������������������������������������������(����������������������������������������������!���(����!�!��������������������������������!�����������������������������������


    have alwaysseen profit


    in PFI deals

    Seeing stars?Government determination topress-gang the remainingTrusts into Foundation status isleading to a fresh volley ofreforms to the already bruisedNHS.

    First it was announced thatthe bar would be lowered toallow 2-star Trusts to apply tobecome Foundations, instead ofrestricting it to the 3-star elite.

    But then came an even boldermove to sweep away the starratings systm altogether, andbring in an even more complexsystem that nobody really under-stands.

    That way EVERY Trust can beforced on board, no matter howbad their finances

  • Published by Hands Off Our NHS, c/o Unit 6, Ivebury Court, 325 Latimer Rd, London W10 6RA. Printed by Scottish County Press Ltd, Bonnyrigg Midlothian

    H E A L T H E M E R G E N C Y


    Health Emergency,launched in 1983, has remained in

    the forefront of the fight to defend the NationalHealth Service against cuts and privatisation.

    We work with local campaigns and health union branches and regions all over England,Wales and Scotland, helping to draft responses to plans for cuts and closures, analyselocal HA policies, design newspapers and flyers, and popularisethe campaigning response. The campaigning resources of Health Emergency depend uponaffiliations and donations from organisations and individuals. If you have not already done so, affiliate your organisation for2005: the annual fee is still the same as 1983 £15 basic and£25 for larger organisations (over 500 members). Affiliates receive bundles (35 copies)

    of each issue of HealthEmergency and other mail-ings. Additional copies ofHealth Emergency areavailable: bundles of 75for £10 per year, and 150for £20.Affiliated organisationsalso get a generous dis-count on LHE publicityand consultancy services.

    Send to LHE at Unit 6, Ivebury Court, 325 Latimer Rd, London W10 6RAPHONE 020-8960-8002. FAX 020-8960-8636. [email protected]


    PLEASE AFFILIATE our organisation to HealthEmergency. I enclose £15 ❏ £25 ❏ £I also enclose £10 ❏ £20 ❏ for extra copies of

    the paper, and a donation of £ Total value ofcheque £ NAME .............................................................ADDRESS (for mailing) ...........................................................................................................ORGANISATION ..............................................Position held ................(All cheques payable to LHE)


    London Health Emergencywill be uprooting from itsWhite City offices at the endof January, and heading forHeathrow.The lease on our present

    office expires in February,meaning that we have tomove or pay substantiallyhigher rent and council taxcharges. And with fewerstaff working for LHE, itseems sensible to go for asmaller place, to hold downthe overhead costs, so thatthe greatest possible shareof affiliation fees and dona-tions can be used to keepaffiliates and supporters andthe media informed.After exploring a number of

    options, we have PaulKenny, London regional Sec-retary of the GMB, to thankfor the help in securing anew premises in West Lon-don.Our new office will be in

    Hayes, not far from the air-port, but in easy striking dis-tance of the M4, M40, M25and therefore the rest ofthe capital.So from February 1 our

    contact address will be 213 Church Road,

    Hayes, Middlesex, UB32LG. Our phone number willbe 020 8573 6667. A faxnumber will be notified.Email and websites will be

    unchanged.Meanwhile we are urging

    all trade union branches,organisations and individu-als who have been affiliatedto LHE and kept it alive dur-ing the long hard yearssince 1983 to reaffiliate in2005, and help us keep upthe pressure.If anyone felt that LHE has

    no further role to play inkeeping activists and cam-paigners informed, just takea look at the content of thisissue. Who else will keepyou up to date on:

    # PFI# Payment by Results# Patient Choice# Foundation Trusts# Cuts, closures and job

    losses# Rationalisation# Changes in Primary

    Care# Campaigns and strug-

    gles around the country.What other organisation

    offers its affiliates # A tabloid newspaper

    (now in fullcolour)

    # Researchservices

    # Help draft-ing responsesand promotingyour case

    # Publicityservices, includ-ing Branch

    newspapers and newsletters# Campaigning assistance# Speakers for your meet-

    ings and events.LHE is still the only source

    offering this on a nationallevel, and with 20 yearsexperience in supportingcampaigns to defend theNHS and fight privatisation.We no longer have any

    council funding to supportus: all our resources comefrom affilliations, donationsand commissioned projectsfrom trade unions. We do need and value

    your support. Our affiliationfee is just £25 per year.Make a resolution to reaf-filiate in 2005, and if pos-sible send a donation tohelp us take forward thefight.2005 is expected to be an

    election year: so whicheverparty you want to win, makesure you take the opportu-nity to push the NHS to thetop of the political agenda.



    LHE offices to relocateWere going west but were goingstrong into 2005!

    The controversial new sys-tem of Payment by Results(PBR) for Trusts will bephased in to the NHS overfour years to 2009.

    The slow take-off is nodoubt linked to the prospectof a General Election in thespring of 2005, since it threat-ens to be destabilising, and itsconsequences still are notclear for many Trusts and Pri-mary Care Trusts, some ofwhich stand to gain, and oth-ers lose.

    Trusts whose costs are cur-rently above the new fixedprices that they will be able tocharge for treatments theydeliver under PBR stand tolose out heavily: unless theycan find ways to slash backcosts, or closing down loss-making departments, theyface the prospect of losingmoney on every patient theytreat.

    PCTs in these areas willrecoup a windfall gain, payingout less for the same level ofhospital care. But in someareas they will need toincrease cash allocations tomatch the new fixed prices inTrusts which have been oper-ating at below this level ofcosts.

    Here Trusts stand to makewindfall gains, at the expenseof other Trusts and the widerhealth care economy.

    PBR will initially apply onlyto acute hospital care, leavingout mental health where stan-dardising costs has provedeven more problematic: but italready seems set to trigger afresh stand-off between pri-mary care and the hospitalsector, since Trusts will begiven a fresh incentive to treatpatients in hospital in order toclaim the funding, while GPs

    will potentially be able toretain more funding for pri-mary and community care ifthey keep larger numbers ofpatients out of hospital.

    This new market-style sys-tem makes no reference tosocial and other inequalities,and runs the risk of funnellingan ever-larger share of theNHS budget to the best-resourced and largest Trustsand GP practices at the

    expense of those struggling tocope in more deprived areas.

    But the new system also rep-resents the end of 30 years ofefforts to equalise allocationsof NHS spending on the basisof population and local healthneeds.

    Now PCTs in areas whereTrusts are currently deliveringservices below the new NHSreference costs will requireextra cash to pay an increasedfee which will become asurplus for the Trust.

    Conversely PCTs whoseTrusts currently deliver rela-tively high-cost treatment willsee their cash allocationsreduced.

    None of this bears any rela-tion to social deprivation, theage profile or relative health ofthe population: the new mar-ket system emerges as theenemy of equality.

    Some specialist services but not all of them may be givenspecial exemption from the full rigours of PBR, Health MinisterJohn Hutton has told the Health Service Journal.

    The additional costs associated with specialist medicine could bemoved off tariff. Some treatments may attract top-up payments.

    Hutton has also hinted that PFI hospitals, carrying high fixed andindex-linked overheads, could also be given extra concessions toavert major problems.

    The first wave of PFI hospitals contained dramatically fewer bedsthat the services they replaced, but have been obliged to pay out alarger share of their budget to secure use of the new buildings: thisputs them at a double disadvantage in delivering care at the samecosts as other NHS Trusts.

    But while Hutton was evasive on what concessions might bemade to accommodate PFI hospitals, he was adamant that thereshould be no limit on the windfall profits that could be racked up byTrusts which deliver services at below the new tariff rate.

    We wont be putting a cap on aspiration, and we wont beputting a cap on ambition, and we wont be putting a cap on profitsto be reinvested in better services, he told the HSJ.

    PBR could KOhigh-cost Trusts

    Special deal for PFI

    20 years on: part of the LHE archive


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