Saturday, 30 November 2013

Public opinion is 47-42 against privatisation of NHS

Public opinion is turning against the Tory/LibDem plans to give more and more contracts to private health corporations. Over the last 3 years, those against privatisation have gone up from 36% to 47%, and those who do not care are static at the 41-42% mark.

The amount of taxpayers NHS money that has gone to corporations has risen by 55% in 5 years, from £5.6 billion to £8.7 billion.

So the WGH PB4P campaign now represents majority opinion. Which is nice.

Monday, 25 November 2013

Correspondence with the Trust Development Authority

I have had a reply to these questions that I sent to the Trust Development Authority, the body that will take the final decision on Weston's fate. 

I asked: 
– how can it be more efficient in cash terms for a private contractor to provide a product for the NHS, given the following circumstances:
· The administrative work associated with granting the franchise?
· The fact that a private corporation’s primary responsibility is to make sure that their shareholders get a bigger dividend each year?
· The fact that generous salaries and bonuses must be paid to the directors of the private company?
· The fact that the company is very likely to pay large fees to tax accountants in order to minimize the amount of tax that they will pay in the UK?

The flow of money in the classical NHS model is simple. Money goes from taxpayer to the Treasury to NHS patient services.

The flow of money in the case of a franchise to a private health corporation is from Taxpayer to Treasury to CCG to private corporation, some of which goes to patient services, and some to the corporation's shareholders as dividends and to bonuses, some of which will flow onwards to tax accountants and tax havens.

There is therefore a net outflow of money in the case of private corporations which does not exist in the NHS model.

As a supplementary question, is there any objective evidence that franchising is more efficient than the public service model. For instance in rail services franchising is there any evidence of increased efficiency?


The TDA answer:

Dear Dr Lawson 

Thank you for your correspondence of 17 October 2013 which has been forwarded 
to me from North Somerset Clinical Commissioning Group (CCG) for response. 

You will be aware that, like many other small hospitals, Weston Area Health NHS 
Trust has faced, and continues to fact a number of challenges to ensuring that 
services provided are financially and clinically sustainable. Over the last few years 
Weston has explored all the options to meet these challenges, ranging from 
achieving elite Foundation Trust status to developing an integrated care Trust. None 
of these options could be made to work. The do nothing option is likely to require a 
circa £80 million subsidy over the next five years and this position is clearly not 
sustainable or affordable to the local health economy. This work has, 
understandably, taken considerable administrative and clinical time and effort. 

Starting in October 2012 the Trust and local stakeholders conducted a further option 
appraisal. In March 2013 the Strategic Health Authority together with the Trust 
concluded that after having exhausted all the other possible options, the best 
solution to reduce the need for future financial support was to run a competition to 
find an innovative partner to improve the quality and safety of services and to help 
run services more sustainably. This decision now frees the Trust managers and 
clinicians to focus during the transaction and transition period on the delivery of high 
quality services. 

The procurement process being undertaken is intended to get the best local solution 
for local people. This is why both the NHS and the Independent Sector will be asked 
for their best ideas to run sustainable services. If the project is given authority to 
proceed, the NHS is expected to put forward proposals to acquire the Trust and the 
Independent Sector to manage the hospital and run services. This process will allow 
us to test any proposed franchise model against other models such as an NHS 
acquisition to ensure that the right solution for the Trust and for the patients that it 
serves is identified. 

In the event that the preferred solution is a franchise, it is important to note that any 
Independent Sector provider will not own the hospital. There would be no change of 
ownership or transfer of assets and staff out of the public sector. All staff and assets 
would remain within the NHS. 

Any potential partner would not be able to make a profit at the expense of NHS 
patients. In a franchise arrangement, any franchisee would only be paid as the Trust 
is currently paid for services ie at NHS prices. National and local service quality 
standards currently required of services would continue to be demanded and 
monitored by the CCG and NHS TDA as is currently the case. It is therefore for any 
potential franchise bidder to determine how, through the introduction of innovation in 
service delivery, they will meet any shareholder requirements whilst ensuring that 
service targets and standards and patient and staff safety are maintained to the 
required standards. Any franchise arrangement will make clear that a franchisee will 
only be paid if the contract is delivered; unlike the current Independent Sector 
Treatment Centre arrangements, the contract would give no guarantee of funding. 

Clearly, the same standards and requirement to deliver to contract would be placed 
on any NHS acquirer should this be the preferred solution. Clear failure regime 
arrangements would be put in place to ensure that if any potential partner is not 
delivering, there would be safeguards to ensure that patients do not suffer and to 
ensure the continuance of essential services. 

Any Independent sector organisation will only pay tax on any surplus they deliver. It 
is recognised that for any organisation, NHS or Independent Sector, the ability to 
generate a surplus will require significant innovation and service delivery 
transformation and will be incredibly difficult to achieve in the current fiscal 

With regard to your final point, there is evidence that franchising is more efficient 
than the public service model both in the NHS and in rail services. 

Hinchingbrooke represented the first franchise arrangement in the NHS. The 
Hinchingbrooke process suggested that without the procurement process the local 
NHS would have needed an £80 million subsidy or services would have had to close 
Whilst it is clear that lessons can be learned from both the transaction process and 
the contractual arrangements established, and that the financial position is taking 
longer to improve than would have been hoped for, is clear that financial 
improvements will take place over the course of the franchise agreement and that 
significant improvements in clinical quality have been achieved. 

There is also research evidence that franchising in the rail services is more efficient 
than a public service model. 

The important point to emphasise however is that by exploring both an acquisition 
and franchise model, we can consider the skill, creativity and the flexibility of other 
organisations to innovate, meet patient expectations and keep costs down and so 
ensure that we find the right partner organisation to manage the services at Weston 
Area Health NHS Trust. 

I hope that this answers the questions that you have raised. 

Yours sincerely 

Director of Delivery and Development South 

My answer today:
Monday, November 25, 2013

Dear Dr Dunn

Thank you for your letter of 15th November. Your letter raises a number of interesting questions, but in this letter I will focus on your belief that “franchising is more efficient than the public service model … in the NHS”.

Efficiency is a term that needs close definition. For instance, Weston General Hospital provides training for medical students and nurses. If this provision is deleted from any emerging contract with a private company, the costs will not be comparable.

You offer the Hinchingbrooke franchise as evidence of increased efficiency. It is doubtful that a robust claim of success can be made 21 months into a 10 year contract. While it is true that welcome improvements have been made in A&E waiting times and orthopaedic inpatient times, and consultants have been prevailed upon to start their day on time, there have also been costs and failures. You accept that the financial situation has taken longer to settle than was hoped for, since Circle had to apply for a £4.1 million capital loan a few months in to the contract. It is noteworthy that the House of Commons Public Accounts Committee described Circle’s savings plan as ‘over ambitious’ and ‘unachievable’. It seems that Circle’s plan is to make savings by reducing staff, but this runs counter to the Government’s recent plan to make hospitals publish ward staff numbers in order to correct under-staffing. Of particular concern is the news that cleaning staff numbers have been cut.

Another cost is seen in terms of lower staff morale which is appearing at Hinchingbrooke.

Also the patient satisfaction ratings for Hinchingbrooke fell each month from May to October 2012.

It seems that the financial contract will be different in the case of a public or a private provider. My understanding is that it is still the case that if a public provider has a surplus at the end of a financial year, that surplus is lost, and may even result in less funding next year. I have witnessed rushed, unnecessary and ill-considered purchasing actions taking place as a result of this policy. In the case of a private contractor, from what you have written, they will be able to retain some of the surplus as profit, and plough the rest back in to the organisation. If I am not misinformed, then is it not the case that we are comparing apples and oranges, and that the private companies benefit from a more efficient funding model?

Therefore, the Hinchingbrooke case cannot be put forward as evidence that private provision is more efficient than public provision.

On the other hand, your belief is contradicted by Pritchard C, Wallace MS. Comparing the USA, UK and 17 Western countries' efficiency and effectiveness in reducing mortality. JRSM Short Rep 2011;2:60. They found by comparing GDP expenditure with mortality rate outcomes 1979-2005 that “the USA healthcare system was one of the least cost-effective in reducing mortality rates whereas the UK was one of the most cost-effective over the period”.

Unless you have further evidence, it is clear that that privately funded health services are less efficient than the NHS, and therefore it is in the interests of the population served by Weston General Hospital that the partnering organisation to be chosen should be one of the NHS Trusts who are interested.


Richard Lawson


My further response, on the subject of rail privatisation:

Tuesday, December 03, 2013
Dr Stephen P Dunn
Director of Delivery and Development South
Trust Development Authority

Dear Dr Dunn

Efficiency of rail privatisation

In your letter of 15th November you assert that “There is also research evidence that franchising in the rail services is more efficient than a public service model”.

This is debatable. The McNulty Review found that there were excessive costs from privatisation arising from fragmentation and complexity of the 1994 rail reforms. Pre-privatisation costs were £2.4 bn/y, and post privatisation they have risen to £5.4 billion/yr. Fares have also increased, so that we have the highest fares in Europe.

The “Rebuilding Rail” Report (June 2012) builds on this finding. Its bottom line is that a programme of taking rail back into public ownership, gradually, as each franchise fails or comes to an end, could ultimately save the taxpayer £1 billion  per annum.

The increased costs are the result of
· higher private interest rates for debts
· fragmentation, which leads to higher administration and management costs to cover duplication and interfacing.
· Complexity, with tiers of contractors and sub-contractors, each with their profit margin to apply
· Dividends to investors

These costs add up to at least £1.2 bn/yr.

Rail manufacturing in the UK has also plummeted due to low investment and absent unifying guidance. This stands in contrast to the situation on the continent.

On the basis of this evidence, your belief that NHS privatisation can model itself on the success of rail privatisation is not justified.


Richard Lawson

[to be continued...]

[Health Service Journal briefing on hinchingbrooke]

Sunday, 10 November 2013

Petition to Keep Weston General Hospital our of Private Health Company Hands

In 2012 the coalition government passed the Health and Social Care Act which effectively opened up the NHS to private health companies from across the world. 

The Weston General Hospital Campaign represents a large group of North Somerset's residents who are very concerned about the damage this could cause for the future of their hospital. 

Weston General is too small to become an NHS Foundation Trust Hospital under the new rules and must either be taken under the wing of a Foundation Trust like University Hospitals Bristol Trust or be run by a private health corporation which could reduce or run poorer services as it will put profit before patients. 

The decision on the future of Weston General will not be taken by the hospital's management, but by a national body, the Trust Development Authority, which reports directly to the Secretary of State for Health - the Rt Hon Jeremy Hunt.  To add to the confusion, North Somerset's Clinical Commissioning Group will decide which services should be run at the hospital.

The petition we are asking you to sign will be presented to the Trust Development Authority in  London on behalf of the people of North Somerset and will call on it to allow Weston General Hospital to become part of an existing NHS Foundation Trust Hospital and for the continuation of a 24/7 Accident and Emergency Department at the hospital.

Sign the petition now:

Patients Before Profit

How much power does a hospital board really have?

Weston General Hospital
24.10.13 - 10:00hrs

Meeting between:
Chief Executive of Weston Area Health Authority - WAHT
Project Director for Procurement Process
Weston General Hospital Campaign.

The background to the meeting is that the coalition government had, as part of the 2012 Health and Social Care Act, laid out the financial constraints by which hospitals qualify as Foundation Trusts. Weston General (WGH) is too small to qualify and, therefore, has either to be acquired by  an existing NHS Foundation Trust or franchise the running of the hospital to an NHS Trust or a private health company.

There is now an established, formal process to be followed for this, much of which is outside the hospital's control. Project Director reported that lessons have been learnt from Hinchingbrook (now run by Circle and much criticised by the National Audit Office etc - there is also a debate on competition in The Health Service Journal - and the George Eliot Hospital which has been going through the process ahead of WGH. There is no clear timescale for the WGH process and she does not want to release too much information into the public domain until this is clear. This is so that there is no risk of being open to misinterpretation.

Chief Executive described their roles as running the hospital until the procurement solution is delivered. Although he sits on the Project Board he is not responsible for the process. The body responsible for delivering the solution is the national body, the Trust Development Authority (TDA) which answers to the Secretary of State. Bronwen Bishop is the board director directly responsible to the TDA for the project and works to get the best outcome for the hospital. The board makes recommendations to the TDA which makes the final decision.

Project Director reported that, after consulting staff and stakeholders, they had decided that the right way to ensure the best future for the hospital was to test the whole market although they could have opted to pursue an NHS only solution, but there were 3 NHS Trusts interested. George Eliot looked for a joint NHS/Private approach.

WGH Campaign raised the issue of contract weaknesses, citing the Emerson's Green Treatment Centre's underspend as an example and asking why there was not a swingeing 'fit and proper person clause'. They emphasised that some of the private companies which have expressed interest in WGH have particularly obscure accounts, utilise off shore tax havens and are heavily leveraged to their Private Equity owners. Project Director noted these concerns and stated that the contracts were now being standardised nationally.

She reported that the George Eliot procurement process had gone to the stage beyond Expressions of Interest. She also emphasised that whatever solution was agreed for Weston, the hospital would remain as an NHS entity and staff would remain employed as such.

Once the TDA approves the Outline Business Case there will be an evaluation stage of the bidders to see if they are technically able to deliver on their bid promises and then short listing will take place.

WGH Campaign felt that the 'Outline Business Case' for the hospital had been too critical of the current management and that she cannot believe a new management team can come in and do anything about the £5 million deficit. Project Director reiterated that WGH has to find a solution and the process is about achieving this.

WGH Campaign raised the issue of the future of a full A&E service at the hospital. Chief Executive responded that this was an issue for the North Somerset Clinical Commissioning Group (CCG). WAHT has to ensure quality of delivery but it is up to the CCG what they commission. The WAHT board would inform the CCG if they were unable to provide services from within their resources.

WGH Campaign asked about the conflicts of interest involving John Underwood and Kathy Headdon. Project Director explained that Underwood had been brought in to give strategic advice and as the process moved to operational requirements his input would no longer be required as frequently. She explained that there is a requirement for a range of experience in roles such as Kathy Headdon's and that in the event of conflicts of interest due to prior or existing roles, they would be obliged to absent themselves from the process. WGH Campaign pointed out that the public perception of her role with Capita Symonds and position on the Stakeholder committee would be very negative.  Chief Executive disagreed with WGH Campaign’s ethical position on conflicts of interest. Project Director stated that terms of reference for committees would soon be up for review and they would continue to ensure proper governance arrangements were in place.

She wanted to reassure WGH Campaign that if the procurement process goes ahead that there will be a wide range of people evaluating the bids including clinical and nursing staff. The TDA will evaluate the financial information in the bids. She also said she is considering asking the short listed bidders to write a short statement, which will be included in a magazine for the public.

WGH Campaign mentioned that the Social Value Act now allows public sector bodies to look at how the social, economic and environmental well being of an area can be improved through a procurement contract.

WGH Campaign thanked Chief Executive and Project Director for their time and for clarifying so many issues for them

Thursday, 7 November 2013

Victory in Lewisham

The people can defeat the Government. Take a look at this link about the victory in Lewisham.