Labour catapults NHS into chaos

On 7 March, Sir Nigel Crisp, NHS Chief Executive, announced that he would take early retirement (to the House of Lords) at the age of 54. He took with him pension entitlements worth £3.2m. Over the following three weeks, the NHS reeled with announcements of cuts and redundancies:

  • University Hospital of North Staffordshire NHS Trust announced 1,000 redundancies in an effort to balance its books; 750 will be compulsory. Of these, 370 are expected to be midwifery and nursing posts;
  • The Royal Cornwall NHS Trust is making 300 redundant to sort out a deficit of £8m;
  • In Birmingham, Good Hope Hospital is closing two wards, losing 50 beds and an operating theatre to save £21m;
  • 250 jobs are to go at Coventry’s Walsgrave Hospital;
  • In Manchester, Trafford NHS Trust is closing two in-patient wards in Altrincham hospital;
  • In London, the Royal Free Hospital will lose 480 jobs as it tries to remove a £25m deficit, and Queen Mary’s Sidcup is losing 190 jobs, 103 of which will be in midwifery and nursing.

Overall, according to the Royal College of Nursing, 38% of acute Trusts have closed wards, and 27% are deferring treatment to save money. Meanwhile, the Department of Health has prepared proposals which would end the right of thousands of elderly and disabled patients to free long-term NHS care. Health Secretary Patricia Hewitt is calling for asthma sufferers and those with chronic heart disease to be treated in the community to save costs: care in the community however has been seriously compromised by lack of nurses and funds. This is the inevitable consequence of the re-introduction of an internal NHS market and the accelerating privatisation of services. Hannah Caller and Robert Clough report.

Patricia Hewitt claimed last December that the NHS end-of-year deficit would be £200m; now she admits it will be £630m. In reality it will be greater than £900m. Labour is laying the blame on NHS managers. Gisela Stuart, Labour MP for Birmingham Edgbaston wants Hewitt to take a tough line: ‘I hope she will tell managers they need to live within their means.’ Yet the reality is that much of the increased spending has been on staffing costs, as the number of NHS employees rose by 213,000 between 2000 and 2004, above average pay settlements were offered to various staff groups, and national insurance contributions increased. Between August 2002 and August 2004, average consultant pay rose from £83,700 to £94,700; their numbers rose from 27,070 to 30,650 over the same period. The new GP contract has been a gold-mine, with few GPs now earning less than £100,000; the government underestimated its cost by at least £250m. A King’s Fund report recently showed that 87% of the 2004/05 funding increase went on meeting cost pressures such as these rather than new developments. Overall, the real increase in NHS funding to spend on new facilities or drugs has been about 1% annually over the last three years. Trusts with PFI contracts have been particularly hard hit since they are not able to reduce or defer onerous repayments.

Behind this there has been a constant process of reorganisation, euphemistically dubbed ‘reform’. In April 2003, Health Authorities were replaced by 380 Primary Care Trusts (PCTs) and 28 Strategic Health Authorities (SHAs). Now, three years later, the number of PCTs is to be reduced to about 120, and SHAs to nine. Hundreds of staff will be made redundant during 2006/07 with a view to saving £200m. Commissioning of hospital services will pass to GPs in a return to the GP fund-holding system of ten years ago. That they neither wish nor are equipped to undertake this role is not considered important: the point is to make NHS services fit for privatisation. The sale of two GP practices in Derbyshire to US healthcare giant United Health is a foretaste: North Eastern Derbyshire PCT refused to shortlist proposals from local GPs to run the practices.

The chaos will continue. New accountancy rules mean that trusts with deficits at the end of the year will simply have the equivalent removed from their budget in 2006/07. The NHS has banned the brokerage system whereby NHS organisations can lend cash free to each other to tide over immediate problems. Instead, they have to lend the money at commercial rates with definite repayment periods. The system of tariff payments for each hospital operation will be extended to cover emergency as well as non-emergency activity. These new rules have one purpose: to remove the efficiencies of a nationalised state system of health provision in order to establish a ‘level playing field’ for private health care providers. In the place of regional planning, hundreds of organisations will be forced to compete. The overheads are enormous: the cost of running the tariff system runs into hundreds of millions of pounds. Marketing will become a crucial part of NHS Trust operations; their finance departments will expand to ensure they recover as much income from their purchasers as possible. Legal contracts will govern their relationships.

Private sector providers are set to extend their operations. Back in 1997, the government promised it would never privatise clinical services. Then it set up Independent Sector Treatment Centres (ISTCs) which, unlike NHS trusts, had contracts guaranteeing volumes of operations and consequent income. PCTs were forced to buy operations from them even if they didn’t need to. These ISTCs were supposed to add extra capacity and reduce waiting lists. Of course, what happened was that they took over the straightforward treatments which have minimal clinical risk. Like parasites they sucked away income from NHS hospitals. If there were clinical problems – as there have been with hip replacements – then the NHS would bail them out just as it has done with the problems of private hospitals. Now an ISTC in Southampton University Hospitals NHS Trust will start up in a year’s time, operating from NHS premises and using NHS staff and support. According to Trust Chief Executive Mark Hackett ‘it is projected that up to 7,500 procedures will be performed there that were previously provided by Southampton University Hospitals’. The ISTC will replace, not augment NHS capacity: it is a sign of the times.

The Department of Health proposals to deny access to free long-term NHS care for elderly and disabled people show that it will be the working class and poor who will suffer the consequences of NHS meltdown. Because the present rules are so unclear, tens of thousands of patients are having to pay for means-tested ‘social care’ when in fact they should receive free NHS care. Patients who want their entitlement are having to take legal action to get it. Now the Department wants to basically end any eligibility to free long-term NHS care. In a test of the new proposals on 20 elderly patients in West London currently entitled to free long-term care, only two met the criteria. When the proposals were tested against 13 severely disabled patients, only four were able to maintain their entitlement, and then only just. As one social services spokesperson said, ‘this would effectively be the end of the NHS for older and severely disabled people’. This is the necessary consequence of NHS privatisation.

Private Finance Initiative

On 8 March, the Department of Health finally approved the PFI scheme to redevelop St Bartholomew’s and the Royal London Hospitals in East London. Originally due to cost £1.1 bn, Health Secretary Hewitt put the scheme on hold in January, at a cost of £600,000 per day to the hospital. If the deal with Skanska Innisfree had been shelved, £100m would have been lost at that point. Hewitt announced that £650m has been saved by a cut in interest rates and the annual mortgage bill to Skanska from £116m to £96m. Barts and the London will have to guarantee payments for 35 years for a project due to be completed in 2016; to cut costs, three floors will remain empty, reducing the planned 1,248 beds by 300. In addition, the Trust will have to find £22m in savings to bridge the gap between what it can afford to pay and the actual cost of the scheme.

Foundation status, stars and money

The Homerton Hospital in East London, a flagship Foundation Trust, is struggling in the run-up to the end of the financial year. With staff working flat out it is still unable to meet the waiting time target set for A&E (98% of all patients to be seen and discharged within four hours). All the stops are being pulled out in the last two weeks up to 5 April; if the Trust does not meet the target, it will lose its star rating, and may even lose its foundation status. Extra nurses and doctors are begin pulled in – but for the 3-4 weeks only. This is the warped logic that targets encourage.

The incompetence of the private sector

Running hospitals: The Good Hope hospital was the first to be taken over by a private company. Consultancy firm Secta won a three-year contract to run the hospital in August 2003. They had to be removed within eight months as the level of debt soared at the rate of £1m per month.

Doing hip operations: Writing in the British Medical Journal, Professor Angus Wallace, an orthopaedic consultant in Nottingham, says that ‘the number of patients [from ISTCs] we are seeing with problems resulting from poor surgery – incorrectly inserted prostheses, technical errors and infected joint replacements – is too great’. Some ISTCs have a 20% failure rate, compared to the NHS average of 1-1.5%.

Referral management schemes

These schemes, which vary widely across the country, have been set up to vet referrals from GPs to hospital doctors, allegedly to help ensure the patient sees the right specialist. However, in some extreme cases, Trusts are using clerks to make decisions on whether referrals are appropriate or not. Hamish Meldrum, chair of the British Medical Association’s General Practitioners Committee, says ‘in some areas of the country they are essentially mismanagement schemes where the primary concern is to delay treatment to balance the books and ride roughshod over patient choice. As more and more trusts feel the financial pinch they are jumping on the bandwagon’.

Pilot project for patients not entitled to NHS treatment

From 1 February, the Homerton Hospital in the East End of London has employed a person to vet the eligibility of patients to receive free NHS treatment. Starting with the antenatal clinics, the work has been extended to include ward admissions from A&E.

This follows the publication in April 2004 by the Department of Health of Implementing the overseas visitors hospital charging regulation – guidance for NHS Trust hospitals in England. The foreword by John Hutton, then Minister of State for Health says ‘The NHS is first and foremost for the benefit of people who live in the UK’.

However, the Homerton Hospital’s scheme shows that it is not simply about living in Britain, it is about immigration status. The worker on the pilot has direct access to Home Office information if necessary. People admitted to the Homerton Hospital are now being asked not just to confirm their GP details, but also what countries they have lived in during the past year. If they do not satisfy the interviewer, they may be asked to provide proof of their right to NHS care. Without this, they will be billed for their treatment. Vulnerable asylum seekers and refugees, who may have fled violence and torture, are now being actively denied free treatment on the NHS. Since they do not even have the right to work in Britain, they clearly do not have the means to pay. In the meantime, Médécins du Monde, a health charity which sets up health clinics in war zones, has opened its first centre in Whitechapel, East London.

FRFI 190 April / May 2006


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