FRFI 213 February / March 2010

The NHS faces a cash squeeze estimated to be between £8bn and £20bn by 2017. But while services suffer and patients lose out, consultancy companies are doing very well. One such company, McKinsey, a US-based firm which charges over £2,000 a day, is reaping massive profits. In September 2009 it produced a report for the Department of Health which proposed cutting 137,000 jobs in the NHS to save £2.4bn a year. It also proposes reducing medical school places. It doesn’t mention, however, what Primary Care Trusts (PCTs) – local arms of the Department of Health (DoH) – spend on management consultants to support ‘World Class Commissioning’ and other such privatisation gimmicks – estimated to be an average of over £1.2 million in 2008/09 compared to £360,000 in 2006/07.

London

Within London, the McKinsey report assumes that PCTs will face a funding gap of £5.1bn by 2017 and that even if tariffs paid to providers were reduced by 3-4% per year, they would still be £2bn short. Hospitals will also face a funding gap of £2.9-3.4bn. However, a British Medical Association report from November 2009 published in mid-January, London’s NHS on the brink, said McKinsey’s report had not been made available to PCTs, and that there was little evidence that NHS and Foundation Trust board meetings had had access to the full report. The DoH has withheld publication of the document, and NHS London Strategic Health Authority has refused to release it despite Freedom of Information requests. Trusts have had to rely on key points leaked via the Health Service Journal and a summary of the conclusions that NHS London has deigned to put out.

NHS London’s response to McKinsey is to press on with the 2007 Ara Darzi proposals, Healthcare for London: a Framework for Action. This includes reducing health care costs by £1.5bn per year, introducing polyclinics and differentiating hospitals in terms of the services they should provide. Darzi however failed to address key points that NHS London continue to overlook. These include the fact that when you remove services from Foundation Hospitals, which receive money through payment by results, their costs do not fall as fast as their income; and the fact that moving services to polyclinics at the level proposed requires huge numbers of additional doctors, nurses and other support staff, which are not accounted for in the document let alone in post.

NHS London has also decided to downgrade and close many district general hospitals, shut A&E departments, and close up to a third of the capital’s beds. Services such as A&E and trauma will be concentrated in specialist hospitals, with the overall aim of delivering most care through the 100 planned polyclinics and GP practices. By 2017, it is hoped that polyclinic attendances will account for approximately 75% of hospital A&E visits and 50% of out-patient visits. NHS London assistant director of strategy Sam Higginson said ‘no change is not an option’, conceding that some hospitals will close altogether and others will become polyclinics. He hasn’t worked out how many will be changed, but said that ‘we [in London] have too many beds already’. But since 2005, London has lost 25.5% of its elderly care beds and 21% of its NHS mental health beds. Private mental health facilities now cost the NHS over £860 million a year because of the inpatient bed shortage, and many acute hospital trusts report that bed occupancy rates are consistently over the target of 85%, and near to 100%. Meanwhile London’s PCTs and Trust Boards are reporting increases in A&E attendances and emergency admissions. The figures do not add up!

Private Finance Initiative (PFI)

London has 20 PFI hospital building schemes costing £2.6bn. Repayments however will cost the NHS in London £16.7bn, more than six times the basic cost. London’s PFI payments will rise from almost £250 million in 2009 to more than £400 million in 2014. One example is Queen’s Hospital in Romford, east London: £238 million to build, Barking, Havering and Redbridge Trust (BHRT) which runs the hospital will have to pay £2.28bn by 2042 when the contract ends – more than nine times the building cost. The index-linked unitary charge the Trust has to pay was £43.5 million in 2009; it will be over £90 million in the last few years of the contract. These escalating costs are contractually binding irrespective of the financial situation of the trust. BHRT currently has a cumulative deficit of £105 million. The new building has never been fully opened or fully staffed for financial reasons. This absurd situation is repeated in PFI schemes across the capital. Bromley’s Princess Royal University Hospital Trust in southeast London will end up paying £788 million for a building which initially cost £118 million; the scheme at Barts and the London NHS Trust in east London, the largest PFI deal in the NHS, costs £1bn, a fraction of 35 years of index-linked repayments which will start at £96 million in 2013.

Selling off community services

Transforming Community Services is the government plan to privatise services provided by about 400,000 community health professionals (district nurses, speech therapists, health visitors, etc) and 200,000 support workers employed by PCTs. There are three options: become a Community Foundation Trust, or a direct provider organisation like a hospital trust, or set up as a ‘social enterprise’ with the loss of NHS terms and conditions, pensions, and so on. A ‘social enterprise’ will be given a three-year contract after which its services will be put out to tender in competition with health industry multinationals running the proposed polyclinics.

When the major political parties say that they will protect frontline services from cuts in state spending after the election, they are lying. The financial squeeze hasn’t even started yet and already the NHS is facing crisis. The private sector is allowed to pick and choose the most profitable areas to buy, while the existing primary care infrastructure will not be able to cater for the proposed switch from hospital to community provision. Private companies will compete to run polyclinics for profit and patients will lose the continuity of care essential for good quality primary care. People’s health will suffer.

Hannah Caller