A vision that could save the NHS

Published by The Daily Mail (9th January, 2012)

At the heart of the decision to let the first private firm manage an NHS hospital was the sensible idea that doctors and nurses should run the service – not bureaucrats.

It was meant to be a model for how medical services could be improved for patients while making financial savings. Yet as well as being a refreshingly simple idea when it was introduced six years ago by the then Labour government, it was also a highly controversial one.

At first, Hinchingbrooke (which had been a failing hospital) flourished and its success seemed to confirm that radical ideas could get rid of those inefficiencies in the way the NHS delivered health care. Mortality levels, waiting lists and treatment times dropped. Patient and staff satisfaction levels rose.

When I visited the Cambridgeshire hospital, many employees told me how liberating the new regime was after years of stifling public sector inertia. Typical was Sue Richards, an experienced ward sister who said staff had previously been frustrated by the failure of managers to listen to their ideas.

Like so many NHS staff, she was passionate about delivering the best care – but had been forced to watch elderly people treated for hip and knee replacements, for example, suffer needless pain because suggested improvements were ignored.

But yesterday’s decision by Circle to pull out of this pioneering deal – which was initially driven by Labour’s then Health Secretary Andy Burnham, now an arch-critic of ‘privatisation’ – is a big blow. For it risks shattering the faith that private providers can play a key role in ensuring the survival of the NHS amid rising costs and soaring demand.

The news is particularly unwelcome at a time, in the run-up to the general election, when Labour leaders talk in private of ‘weaponising’ the health debate to take the spotlight off the unpopular Ed Miliband and the party’s poor economic record.

Yet the ultimate tragedy is that as unions and politicians delight in the failure of a bold experiment, the wrong lessons will be learned and innovation stalled at a time when it has never been needed more desperately.

So what went wrong? Hinchingbrooke is a small hospital that for many years struggled for survival – infamously described by one health minister as ‘a clinical and financial basket case’.

When Circle took over, it had debts of £40million, rising by £10million annually with spending of £330,000 a month on locums. One department had been suspended following the suspicious deaths of some patients and its under-performing cancer and casualty units were under notice of closure.

Amid pressure to shut it down and transfer services elsewhere, the health authority courageously handed control to Circle in defiance of the unions. The company’s business plan envisaged unprecedented levels of savings of £311million over its ten-year franchise. Things began well. Managers were able to strip out £11million in waste in the first two years – £3million saved by ordering the hospital’s own supplies rather than relying on unified NHS bulk purchasing.

Key posts were also filled, the locum bill slashed, waiting lists were reduced, cancer targets hit and suspended services restored. The troubled A&E unit was ranked among the UK’s best and patient feedback improved, even winning a national award.

But despite such successes, I fear the experiment was probably doomed from the start, given all the financial constraints.

Circle claims to have saved taxpayers £23million in total but appears to have been defeated by the surge in A&E demand, higher levels of bed-blocking and cuts in funding. These include four per cent efficiency savings being imposed on all hospitals, plus an extra six per cent cut from the local health commissioning group, which Circle suspects was influenced by its local opponents.

I am told it faced the same sort of bovine opposition that Michael Gove faced in his fight as education secretary to reform the country’s schools. One person said: ‘These people resist any new way of doing things in the health service.’

Similar resistance can be seen elsewhere. In Bedfordshire, Circle won a five-year contract to provide integrated musculoskeletal care but the local hospital refuses to work with it for fear of losing patients.

As for Hinchingbrooke, the end of the experiment has been looming for months, even if yesterday’s damning Care Quality Commission report proved to be the final nail in the coffin.

Under the terms of its contract, if Circle accumulated losses at the hospital of £5million, a ‘break clause’ could trigger a renegotiation. By the end of last year, losses were £4.8million, with the financial prospects worsening.

Not surprisingly, this setback is being exploited by critics to fuel the fear that private firms put profits before patients – although the fact that most GPs are private contractors and many consultants earn small fortunes from private work is overlooked.

Some six per cent of the NHS budget now goes to private outfits – one per cent more than under the last Labour government. However, we will almost certainly fail to learn the right lessons from this experiment. Instead, there will shroud-waving, using Hinchingbrooke to highlight the supposed perils of privatisation.

Yet the really shocking aspect is that the savings Hinchingbrooke needed to make are – in percentage terms – not much less than the entire NHS must find. The alternative to savings is unsustainably big tax rises.

Meanwhile, NHS costs are rising along with our ageing population. Indeed, an extra 400,000 operations are needed each year, A&E services are at breaking point and social care already fails too many vulnerable people.

Neither the public nor private sector holds all the answers. But without more experimentation, more innovation and, yes, more private sector involvement, the NHS is doomed – and we will all suffer the consequences.

Categorised in: Health, home page, Public policy