Is Health Reform In England Delivering Value For Money?
Parliamentary BriefingOctober 2006 |
Is Health Reform In England Delivering Value For Money?
What is NHS Together?
NHS Together brings every health service union and staff association with the TUC into an unprecedented alliance to express growing staff concern at developments in the NHS.
NHS Together celebrates the very real progress made in recent years by the NHS, and supports further changes that benefit patients, but is alarmed at the lack of consultation with staff. Particular concerns include the handling of current financial difficulties; the pace and untested nature of much of the 'reform' agenda; and the fragmentation and 'marketisation' of the NHS.
In July we produced a substantial briefing for all MPs. The Minister of State for NHS Reform, Lord Warner's response suggested that current plans were securing 'better value for money' and making 'the best use of taxpayers' funds.'
NHS staff also want to see the best possible use of public funds, but the current reform agenda does not deliver this. This brief explains why.
Independent Sector Treatment Centres (ISTCs)
At a cost of £5 billion, 21 ISTCs have been set up so far for private companies to carry out surgery such as hip operations, and ear, nose and throat treatment. The House of Commons Health Select Committee said in July 2006 that investing this in the NHS may have been a cheaper and more efficient option.
- o Many centres are working at less than 50% capacity, but still get paid the full contract price. By the Government's own figures, overall the centres are only providing 87% of the procedures for which they have been paid.
- o Trusts in the North West paid £1.7m to Greater Manchester Surgical Centre, run by South African company Netcare, for operations that never took place.
- o Some PCTs have been forced to sign up to contracts, even in places where there is spare NHS capacity going to waste.
- o There has been no impact analysis of the ISTC programme on local NHS Services
Management consultancy costs
Vast sums of money are being spent on paying management consultants to advise trusts or to help 'turn around' trusts with financial problems. Money is leaving the NHS at a time when debts and deficits are affecting a substantial minority of trusts. An authoritative estimate is that across the country trusts will spend a total of £172 million on private management consultants in 2006:
- o Maidstone & Tunbridge Wells NHS Trust expects to spend £3.5 million on consultants despite a £16 million deficit.
- o United Lincolnshire Hospitals NHS Trust is set to spend £2.7 million on consultants despite an £11 million deficit.
- o Leeds Teaching Hospitals NHS Trust paid advisers from Price Waterhouse Coopers £100,000 to help the trust save money.
Private Finance Initiative (PFI)
There are 58 NHS PFI hospitals already open with another 30 under construction. PFI projects across all sectors in the UK have a total capital value of £47 billion, and yet repayments on this amount will be £148 billion until 2030, more than three times the capital cost.
- o Trusts such as the Queen Elizabeth Hospital in Woolwich face insolvency because PFI is costing an additional £9 million per year compared with conventional procurement.
- o PFI companies typically make as much as 15% annual returns on their investments in PFI. Refinancing their loans makes even more.
- o At Norfolk & Norwich University Hospitals Trust, Octagon picked up £115m and increased the rate of return to investors to 60%. The new deal left the hospital with a longer contract and greater potential liabilities of up to £273 million if the contract had to be terminated early.
Staff and training
The Department of Health has invested welcome millions in new pay structures such as Agenda for Change and on training the health professionals needed to provide a world-class system. But the current financial problems have led to redundancies, with the skills of well-qualified staff going to waste. Many have completed their training but can't find a job. Local training budgets, designed to ensure that staff maintain and enhance their skills are being targetted for quick-fix cuts.
A very specific case of the waste that accompanies continuous system change is the example of the Public Health Director for the South West who has had to reapply for the same job seven times since 1994 due to reorganisations.
Information technology
The National Programme for IT (NPfIT) is being delivered by the NHS Connecting for Health agency at a cost of £6.2 billion, although the eventual cost could rise to as much as £31 billion. There were 110 technical breakdowns between May and September 2006, including some of the NHS's biggest ever IT failures. Only eight out of the planned 120 acute hospitals have installed any records systems under the programme. The electronic records system is at least two years behind schedule; the booking system, Choose and Book, a year behind. A number of trusts have become so disillusioned with the NPfIT that they have opted out, forgoing millions of pounds of state funding in favour of selecting their own. The Department of Health admits bailing out the struggling NHS software-developing firm iSoft with upfront payments of £58m in 2005 and £23.8m in 2006.
Conclusions
The NHS Together alliance is not opposed to change. There have been big reforms in the NHS designed to ensure that extra health spending produces better patient care that have had the full backing and involvement of staff. NHS staff fully support future change that makes the NHS better able to serve patients, but we believe this can only be achieved if NHS staff are fully consulted and involved with change and that reforms do not break up or undermine the unique ethos of the NHS.
NHS staff are tax payers too, and want to see efficient use of public funds. But contrary to Government claims many recent reforms are not providing patients or the public with value for money. In order for staff to effect change in the health service, we need to be able to bring the public with us and demonstrate to them that change is making the best use of their money. There have been massive strides forward in patient care since 1997 and our concern is that these achievements are being jeopardised by investment being wasted on laying off well-trained health professionals, and siphoned off to multinational healthcare companies, PFI consortia or management consultants.
NHS Together will be holding a Parliamentary lobby on 1 November to work with MPs to call on Government to change direction and listen more. See www.nhstogether.org.uk for more information on the campaign.
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