Private owners of Hospital say healthcare needs to be run like Toyota

November 23, 2011
Hannah Travis - Solicitor in the Medical Negligence Team

Posted by: Hannah Travis


Although the Health and Social Care Bill is still being debated in the House of Lords, the first NHS Hospital, Hinchingbrooke, has been sold to private investment company Circle Healthcare due to financial difficulty. In a recent interview with The Independent, Ali Parsa, chief executive of Circle Healthcare, commented that “Healthcare needs to be run like a professional services organisation but it also needs to be run like Toyota”. This presents an alarming vision of healthcare where the focus is taken away from the simple goal of helping people get better, with more focus on target driven turnover and immediate results. It also shows a concerning lack of understanding for the care and attention each patient expects and deserves.

The key issue that is being missed in the current debate over how the NHS is run is how large hospitals, integral to the community, are incurring such significant debts? Hinchingbrooke Hospital, as many hospitals are increasingly having to rely on, received funding from a Private Funding initiative (“PFI”) to provide services communities rely on so heavily. Where the government is unwilling to fund development of a Trust’s healthcare services, a private investor essentially provides a loan to the Trust at rates significantly higher than government funding. This system is extremely attractive to politicians as it creates the appearance of improving healthcare provisions, allowing for more hospitals to be built and more wards to be opened. The truth is, the future of the NHS is being mortgaged off for short term gain.

To give an example of the cost to the public purse of PFIs, between 2011 and 2012, the Government as a whole will have to repay 8.6 billion on PFI loans, with repayments staying between 8 and 10 billion until 2030. The Department of Health currently has 115 PFIs in operation, with a further 6 in the pipeline. This means that Trusts are having to pay approximately 1.5 billion per year in PFI repayments. That is the equivalent of 2 to 3 new hospitals being built, every year.

A further example is the new University Hospital of North Staffordshire, which has been funded by a PFI investment of £415.1 million. The total repayments for this PFI? £1.7 billion.

The sad reality is that the privatisation of the NHS has already begun, and patient care will no longer be the most pressing priority.

Posted by: Hannah Travis

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