THE PRIVATE SECTOR IN THE NHS
The National Health Service, that pillar of the British Establishment, has long been looked on to provide free healthcare at the point of use, treatment to those who seek it and help for any in need of aid. Since its creation in 1948 it has remained a point of continuity through times of change; an integral institution embodying the principles of social justice and fairness that so characterized the post-war era. In recent years, though, many have looked with increasing worry at Labour’s proposals for foundation hospitals, or the Conservatives’ plans to give people “choice” in funding private sector treatment. Such “creeping privatization” is not a welcome prospect for those keen to safeguard the Welfare State. But any doubters have missed the bus. Private Sector involvement in National Health is already underway, in far more serious ways than many like to imagine - the subtlety of the change eluding many eyes, and only a few in the wilderness voicing opposition. This article will elucidate the ways in which this has happened, and continues to happen. The gravity of the situation is left to the reader to determine.
The first, and least worrying, aspect of private sector involvement in the NHS is the invitation for individuals from the business community to participate in the management and coordination of health services. Health Action Zones were created with the remit to “bring together all those who contribute to the health of the local population and develop a locally agreed strategy for improving the health of local people”. This nice but not particularly informative description has in practice entailed the involvement of many senior businessmen in healthcare: from Vauxhall, SmithKline Beecham, ASDA, several local business chambers, branches of the CBI and elsewhere (1). In his study of local business involvement in Bristol health services Kevin Farnsworth, discovered that, on average, 35% of non-executive seats on boards of health were occupied by senior business people, and that this figure was growing (2). Private Sector managers have also been recruited for key positions in the broader NHS boards (3). There are, it seems, growing numbers of individuals from private interests working to direct our public services.
All this in itself, however, is hardly grounds for concern. A few businessmen here and there, influencing the odd bit of policy in their favour, is not likely to get many angry punters marching outside Downing Street. What might is the Private Finance Initiative. In terms of major healthcare projects, the Private Finance Initiative is really the only available means of finance for health boards at the moment. Under New Labour some 90% of new hospital developments have been carried out under PFI (4); perhaps the former Health Secretary Alan Milburn summed it up when he said “it’s PFI or bust” (5).
The Private Finance Initiative – which many ministers have more recently taken to calling the more quaint “public-private partnership” – is a general policy by which public services are constructed and/or administered by private companies, who in exchange receive payments from the State. This seems quite instep with the views of the Confederation of British Industry, claiming that “publicly funded healthcare in the UK is inefficient” (6); the Business and Industry Advisory Committee seem to share their view, that “there is now little agreement that the private sector must now take on some of the risks that were formerly held to be the reserve of the State…in, for example, the construction and running of hospitals” (7). Now there’d be nothing wrong with that if, as the government argues, mobilization of private capital made services more efficient, and therefore better and cheaper overall. But the view that PFI enables the State to draw into its hands money from private pockets seems in reality to result in private investors taking funds from the public purse. To illustrate this point, that PFI schemes are far more expensive than their public counterparts, I shall give four examples.
To begin with, there were recently plans to build a massive new hospital in West London. This particular case was dropped due to how expensive it became. After spending £14million on lawyers, consultants, architects and miscellaneous money-wasting schemes, the National Health Service discovered that its PFI scheme for Paddington had risen from the projected £360m to £1.1billion, while the number of beds had fallen from 1000 to 800 (8). This is pretty common for PFI. What made this scheme unusual was that it was not in the end adopted.
Elsewhere, the NHS were not so wise as to drop similar plans. Swindon’s Princess Margaret Hospital, built in 1958, was understandably in need of refurbishment by the 1990s. This was estimated to cost £45m, and wouldn’t have been too much trouble as an undertaking. But, as it happened, a £45m renovation was not substantial enough to draw the attention of private investors, and public money was not forthcoming. The government therefore advocated the wholesale demolition of the site, and the construction of a new one on a greenfield site – about as far out of town as it is possible to get without hitting the M4. The New complex, the Great Western Hospital, as it was called, eventually cost £132m to build, for which the local Trust will pay £12.1m a year, index-linked, for 27 years, as well as an additional £5.7m annually for support services. The minimum cost of the building, in other words, will be £327m: 2.5 times the capital cost of the building and significantly more than if the government had loaned the money to the Trust; in addition, the support services will cost a minimum of £146m over the lifetime of the contract. On top of all that, the contract stipulated that the private consortium should be given the land in central Swindon on which the former hospital once stood, and on which developers built 500 houses (9). Doing the maths, it works out that for a hospital complex of some £131m, the State will be paying £327m, plus £146 for support services plus the worth of 500 houses in the centre of town. All this, when all that was needed was a £45m refurbishment!
A third example comes from Scotland. In the case of the new Royal Infirmary, being built on the outskirts of Edinburgh, Scottish taxpayers learnt that the consortium of four companies involved in the venture was to reap £990m from a project that would have cost only £180m were it publicly financed (10). Even this doesn’t reveal the extent of the scandal. The Scottish Sunday Mail uncovered a “secret policy deal” between the companies building the project and the National Health Service (11). Four of Edinburgh’s hospitals were being closed down and their services transferred to a new site. The land that they had occupied was being sold to the very same companies building the new hospitals: this “sweetener”, according to Scottish property experts, was worth £200m, the Scottish Office declining to reveal - or deny - the particulars for matters of “commercial confidentiality”. So in this instance, a hospital that should have cost £180m is costing £990m from private investment, a difference of £810m, plus £200m for land in the city – all money that could have been invested directly for better services.
A final example should suffice to hammer home the point that these privately funded projects do not offer value for money. In similar circumstances to those previously noted in Swindon, the Coventry Health Trust asked for £30m in order to renovate its Walsgrave Hospital on the outskirts of town. Due to government policy – Milburn’s peremptory statement that “it’s PFI or bust” – the public purse was sealed tight, and again, private investors failed to see the attraction in a £30m renovation deal. Thus the eventual deal involved not only the full-scale demolition of the Walsgrave site, but also of the second hospital in the centre of Coventry and the granting of the land of this latter site to the private consortium for whatever purpose they pleased. The hospital being built will cost the taxpayer £36m a year for decades to come, and so the necessary work to the cost of £30m will come to cost the taxpayer £330m – not to mention one less hospital overall (12). It says a lot that whilst, by 2000, Labour had commissioned 34 hospitals at an estimated cost of £3.5bn, the six publicly financed developments in the same period cost just £217m.
There is only one way to match this siphoning of funds into the hands of private investors, and that is by cutting services. If the hospitals did deliver more or better services, perhaps this gross profligacy might be justifiable. But this simply is not the case. Take the Walsgrave hospital mentioned above, for instance: it resulted in 25% fewer all-purpose beds and 20% fewer staff than the two hospitals it replaced (13). The developments in Edinburgh, similarly, led to 200 fewer beds and 890 fewer staff (14). According to projections made by the British Medical Association, health trusts running the first fourteen hospitals to be built under the PFI will lose a total of 3,700 beds (15). Another report by the British Medical Journal found that bed numbers will decline by a average of 31% in privately financed hospitals.(16); in Durham, by as much as 50% (17). Even the Government’s own consultants have calculated that every £200m spent on Private Finance Initiative Hospitals leads to the loss of 1,000 doctors and nurses (18). As to the quality of the hospital building’s themselves, their workers’ words say it all: “I used to work in the building trade and I have to say that this hospital has been built as cheaply and as nastily as possible”; “We can wait up to four hours for a bed to be made”; “They built an operating theatre, but with no lights: they weren’t in the specification. ‘If you want lights you’ll have to pay extra!’” (19). Evidently, the quality of these privately financed hospital leaves much to be desired.
Yet it doesn’t stop there. Quite apart from the construction and maintenance of new hospitals, according to UNISON “The private sector has penetrated 35% of the total NHS market in ‘soft’ facilities management services” – areas such as cleaning, security, reception catering and grounds maintenance (20). UNISON further claim that as a result of the government’s recent Local Improvement Finance Trust – or LIFT - schemes “for the first time, corporate and multinational enterprises will have the opportunity to become involved in primary care in this country” (21). The private sector is actually already being contracted out for new Diagnostic and Treatment Centres, the first such instance being the Redwood Hospital in Surrey, managed by BUPA (22). Even more worrying, in 2002 Alan Milburn went so far as to announce that private health companies will be able to bid, along with other NHS bodies, to run failing hospitals. In the first such take-over, the not very aptly named Good Hope NHS hospital in Sutton Coldfield was taken over by SECTA in August 2003 (23).
So those worried about future privatization in the NHS should focus their attention to matters in the present. The private sector very much has its claws in our health service already, and ignoring or denying this fact only serves to encourage the change. We have a situation where growing numbers of private companies are invited to serve on health boards; where our hospitals are being built for inordinate costs and to lower quality and size via the Private Finance Initiative; where our local health services are coming under the gaze and influence of the private sector; and where hospitals are actually beginning to be taken over by corporations. This is not a situation we should allow to continue.
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1. Whitfield. D. Public Services or Corporate Welfare: rethinking the nation state in the global economy, p106-7
2. Farnsworth. K. Corporate Power and Social Policy in a Global Economy, p132
3. Carvel. J. “Headhunt For NHS Boardrooms”, Guardian, 3 March 2003
4. Ruane. S. Public-private partnerships: the case of PFI, p201.
5. Guardian, 4 July, 1997
6. CBI, Business and Healthcare for the 21st century, p1, 2001
7. BIAC, Business-government forum on health insurance for the modern welfare state, p2, 1998
8. Gould. M and Carvel. J. Plan for super-hospital scrapped after eight years and £14m, Guardian, 15th June 2005.
9. UNISON, Not So Great – Voices from the front-line at the Great Western PFI hospital in Swindon.
10. The Herald, 19 Jan 1999
11. Scottish Sunday Mail 10 Jan, 1999
12. Monbiot. G. Captive State, Chapter 2.
13. Monbiot. G. Private Affluence, Public Rip-off, The Spectator 10th March 2002.
14. Monbiot. G. Captive State, Chapter 2.
15. Pollock. A, Notes on PFI, commissioned by the BMA, June 1998.
16. BMJ, vol.319, 17 July 1999.
17. Gaffney. D and Pollock. A, Downsizing for the 21st Century: A report to UNISON Northern Region on PFI Hospitals scheme, 1999.
18. Monbiot. G. The NHS is being privatized, 21st December 2002, Guardian
19. UNISON, The PFI experience – voices from the front line, March 2003.
20. UNISON, NHS Market Report, April 2003.
21. UNISON, The Local Improvement Finance Trust: a briefing for non experts, 2003.
22. UNISON, Carving up the NHS – Private sector diagnostic and treatment centres, September 2003.
23. James. A, Private firms could run NHS hospitals, 19th December 2003, Guardian.