The Duchy hospital and the future of our NHS

You are in your GP’s consulting room and he is explaining the treatment options available under patient choice with regard to elective surgery on your knee. Following the consultation you explore these options in more detail through the NHS e-referral service. It quickly becomes clear that of the three hospitals that can carry out the surgery -Treliske hospital, St Michael’s and the Duchy – the waiting time for the Duchy is shorter and fits in with your work and family commitments.

You’ve heard good things about the Duchy. “It’s a cut above your normal NHS” you remember a friend saying, with its carpeted floors, ensuite rooms and a la carte menu, “like staying at a hotel.” What’s not to like?

Except that the Duchy is not an NHS hospital. It is a private, profit making company subcontracted by the NHS to offer a range of health services for NHS patients. You might think that’s a bonus given the relentless bad news about the NHS and the broader narrative portrayed by the right wing press and government ministers,    which compares the creaking, poorly run public services with lean, efficient private sector provision.

Look closer however  and there is cause for concern on a number of fronts – not so much  with the performance of Duchy  hospital , for it has been consistently well  reviewed by the Care Quality Commission[1] –  but with its questionable relationship  to  the publicly funded NHS, one that  is not untypical of other private health care providers.  Here’s why:

The first is that many of Duchy’s highly qualified staff are those whose recruitment and other HR related costs have already been paid for by the NHS, specifically the Royal Cornwall Hospital Trust. By avoiding these costs their profit margin is boosted. Why is the NHS supporting a private business in this way? It has little choice as it has to meet waiting list targets to avoid financial penalties with limited bed availability for elective surgery due to increasing pressure and high numbers of ‘bed blockers’.

The second is those hours spent by health staff for private remuneration at the Duchy deprives the NHS of the doctors it needs and lengthens patient waiting time for the rest of us.

The third follows on from the above two – the potentially serious conflict of interest when public servants work for private gain.  As reported in the Telegraph,   some NHS doctors may be deliberately driving up waiting times to attract more private patients.  John Dean, a consultant cardiologist at Royal Devon and Exeter NHS Foundation Trust Hospital, talks of a ‘perverse incentive’ for doctors to increase NHS waiting times so that patients will decide to go private to jump the queue”, a practice he described as ‘the greedy preying on the needy.[2] There is also the added financial incentive to recommend treatment that may not be necessary. (nb see comment below by health professional who questions this)

Fourthly, there is the tendency of private hospitals such as the Duchy to  ‘cherry pick’ the most profitable referrals  while rejecting patients who require  more prolonged, complex and costly medical care  that cuts into their profit margin – for example those patients requiring  cancer care, accidents and emergencies, long-term rehabilitation and care.  That leaves Treliske hospital  to deal with  the cohort of patients that the Duchy don’t want or can’t take, a more costly case mix of patients with an increased length of stay in hospital which in turn drives up waiting lists while bumping up the average costs per patient[3].  The issue of cherry-picking is thrown into sharp relief when it is known that The Duchy, along with most private hospitals will never take on A&E.  A well-resourced A & E can be the difference between immediate treatment and care or waiting on a trolley in a hospital corridor for hours. Yet every time we choose the Duchy, Bodmin Treatment Centre or any other private provider, scarce public money leaks out into private coffers.  When we need emergency treatment we need to know that the A & E department is well resourced. No good regretting it when we are on a trolley awaiting treatment for a heart attack.

To the casual observer, Treliske (or any publicly run hospital) looks more costly, slower to address patient need and poorer value for money.  In reality, cherry picking allows the private sector to drain much needed money that would otherwise have been reinvested back into the NHS; particularly in local NHS bodies in Cornwall that already suffer depleted funding through an unfair allocation system. Cornwall also suffers from having a substantial use by the high number of holiday makers of both acute hospital services and particularly use of our A & E services. Retrospective payment from other NHS authorities occur only if there is an overnight stay in the following year.nhs

Both the Andrew George, former Liberal Democrat MP for St Ives and West Cornwall Healthwatch have expressed concerns about how public money is diverted into the private and voluntary sector in this way.

Mr George has said:  “Some private health companies want to ‘cherry pick’ more profitable routine health work.  But every patient who chooses a private company over core NHS hospitals runs the risk of eroding the future of our local NHS hospitals.” This has been the case for a long time under both governments as an increasing minority have private health insurance through their employer or are wealthy enough to afford it themselves.

In effect the private sector piggy backs on the NHS, undermines its values, and drains it of the financial and human resources we so desperately need to maintain it as a public service, free at the point of need for all.

The local picture mirrors the national

What is happening at the local level is mirrored nationally as private health providers continue to make inroads into the NHS. The NHS Support Federation campaign group shows that private firms won £3.54bn of £9.628bn worth of deals awarded in England in 2014 – a win rate of 36.8%, far more than the official government figure of 6%.

In response to public concern over cherry-picking,  the government originally announced proposals to level the playing   by replacing set rate payments with a reduced payment system based on complexity of patient need – but dropped the proposal soon after the passing of the Health and Social Care Bill in 2012[1].

The acceleration of privatisation also touches on another little known role played by the Duchy Hospital – or rather its owners Ramsay Healthcare – which deserves a special mention.

 

Ramsay Healthcare, which also owns Bodmin Treatment Centre, is a multinational corporation with a tax haven in the Cayman Islands and has the greatest number of healthcare provision contracts in the NHS[4].

Its activities are cause for concern in two respects:

The first is its lobbying activities

Ramsay Healthcare, the owners of the Duchy hospital, is one of five leading members of a powerful lobby group called H5 or H5 Private Hospitals alliance which has now morphed into the Association of Independent Healthcare Organisations .  These five account for 80% of the country’s private hospitals and 85% of all private hospital beds and their combined corporate might has inevitably extended to Downing Street.  A leaked document uncovered by the Guardian, which consists of slides from a presentation ,shows that  the lobbying firm Crosby Textor founded by  the Conservatives chief election strategist Lynton Crosby, advised the H5 Private Healthcare Alliance on strategic opportunities to exploit perceived “failings” in the NHS. As this allegation is apparently still the subject of a legal complaint made by Lynton Crosby, not much more can be written here – see Guardian article and the slide presentation by H5 here>>

We need to also consider that over 70 MPs and Lords from all parties have been involved with private health care companies (see Social Investigations>> )

Strategic opportunities for private investment (and takeover) are all too evident in the current deepening funding crisis currently facing eight in ten trusts . There are 241 Trusts in all, running hospital, mental health, ambulance and some community services. We are halfway through the financial year for 2015-6 and the overspend is  already £1.6 billion –  nearly double what it was for the entire 2014-15 financial year[5] – a situation the regulators have described as the “worst for a generation”.

In this context, George Osborne’s recent cash injection of £3.8billion is a reprieve rather than a solution. The money is of course  welcome but squeezing until the NHS  faces meltdown and then rushing to avoid the consequences of the cuts is no way to plan a system. As Dr Clive Peedell says:

“When Osborne is intent on reducing public spending to 35% GDP, it’s no surprise %GDP spent on NHS is falling year on year” (@cpeedell)

The two graphs below support his point, with the lower graph showing that we spend the least on our healthcare compared to other developed nations.

NHSshareGDP

UKcompareOtherCountries

 

The second concern with regard to Ramsay Healthcare is its tax affairs touched on earlier.

These go to the heart of its relationship with the publicly funded NHS for it is hard to avoid the suspicion that the Association of Independent Healthcare organisations, of which it is a leading member, exists   to promote the privatisation of the NHS in all but name.

You will not find so blatant a statement in any public document, website or business plan. On the contrary Ramsay Healthcare’s website couches the aims of AIHO in the most reasonable and reassuring terms, as follows:

“[AIHO] is an alliance to better healthcare for Britons through private hospitals playing their part complementing the NHS. The Association of Independent Healthcare Organisations aims to engage constructively with the government and regulators to develop new ways in which the public and private sectors can work together for the benefit of all patients”

Note the phrase complementing the NHS

But what do all this fine words mean when all five leading members, including Ramsay Healthcare, have been involved in the widespread use of tax havens to avoid paying corporate tax?

To put it another way: how do you work with the public sector when at the same time you do all you can to starve it of the cash it needs to exist?

One key means of minimising tax is using company debt to write off corporate tax you would otherwise have to pay.  According to an investigation by Corporate Watch, all five leading companies carry “significant levels of debt after their owners financed their acquisitions through borrowing. The interest being paid to banks and bondholders   is also serving to reduce taxable profits”[6].

In the case of Ramsay UK, it borrowed £57m in 2010 from RHC Finance Ltd, a subsidiary of its Australian parent registered in the Caymans, to finance the acquisition of a 57% share of the Proclif Group, re-branded as Ramsay Sante, a leading French private healthcare company. This led to £1m leaving the UK for the Cayman Islands in interest payments. As Corporate Watch comments “Why the company routed the financing for its investment through the Caymans is unclear as RHC Finance’s accounts are not made public”.

When asked, Ramsay UK claimed to hold no information about RHC’s operations, even though it had borrowed £57million from it.

Such wholly unconvincing answers do nothing to enhance the credibility of a company receiving NHS money for our healthcare.

Tax avoidance is widely practised throughout the corporate sector and legal. Yet together with tax evasion (illegal) and unpaid taxes by businesses both large and small, the combined effect is having a devastating impact on tax revenue, with one estimate putting the tax gap in 2014 at over £119 billion [7]–  more than the total  UK budget for Health. And as diminishing tax revenue displaces the tax burden onto wage earners, public pressure to reduce personal tax pushes us to vote for parties who promise just that.

But it doesn’t stop there: the use of ‘commercial confidentiality’ renders private companies unaccountable on how they spend tax payers money

The opaque nature of the tax affairs of leading private sector providers  in and outside the NHS extends to how they use tax payers money and  the use of ‘commercial confidentiality’    to block access to information that mainstream public services are obliged to give. With regard to private healthcare provision,  private hospitals such as the Duchy  are under no obligation to make data on patient outcomes available to the general public, except for those NHS patients they treats.

Concern about the lack of accountability by private hospitals is shared by a number of bodies:

  • The Competition and Markets Authority has commented that “Information on the performance of private healthcare facilities has been poor in the past and below the standard of the information available on NHS hospitals[8]”.
  • The Care Quality Commission has stated that it “currently has access to relatively little information that relates to private healthcare”.[9]
  • The Centre for Health and the Public Interest in its report on patient safety in private hospitals makes a  point which is worth quoting in full:

 “Little is known about the quality and safety of care provided to these patients due to a dearth of independently verifiable performance data. The lack of reliable data means that regulators are unable to assess the risk of harm posed to patients in these hospitals.”

And later:

“They [private hospitals] rely on the NHS to treat many of those who develop complications whilst being treated in private hospitals. Around 6,000 patients a year are admitted to the NHS from private hospitals, although we have not been able to establish the reasons for these admissions, nor the cost to the NHS”.[10] (My emphasis) That’s why most private hospitals are close to acute NHS hospitals with ICUs. It is inevitable that a small number of private patients will have serious complications post surgery that necessitates time spent in Intensive Care with the NHS paying.. It is wrong that private patients and their insurers are able to avoid paying for this as would be the case in the US.

The points made above about patient outcomes and patient care are general to the private health care sector rather than specific to the Duchy, and to repeat,  the CQC for the Duchy is ‘good’ in all measures but a question mark remains about full accountability, access to all data  and the use of commercial confidentiality,

The case for Cornwall and the creation of the shadow state

And this brings us to another related   issue: under the guise of ‘commercial confidentiality’ is a growing ‘shadow state’ in which a small number of companies have large and complex stakes in public service markets, and a great deal of control over how they work – but without the transparency and genuine accountability that normal public departments and agencies are subject to[11]. All this is happening through stealth and largely unreported by the mainstream media. As the report by Social Enterprise UK entitled the Shadow State says

The drive towards localism is stopped in its tracks where local authorities can only buy from multi-nationals that funnel money out of an area and out of the country[12]”.

What applies to local authorities also applies to any commissioning agency including Kernow Clinical Commissioning Group.

The whole issue accountability and the power to question and challenge private service providers assumes a pressing urgency when we ask what real powers Cornwall acquires through Kernow Devo. Cornwall has yet to work through another £200 million cuts over the next four years . How can devolution work without proper funding, unless it becomes another exercise in ‘handing down the axe’?

More broadly   what real meaning does devolution  and local democracy have as the relentless pace of globalisation is overwhelmingly characterised as  an ever greater concentration of corporate power?  While David Cameron talks of “a major shift for the people…. in Cornwall – putting power in their hands”[13] he is preparing to sign away   important elements of our national sovereignty  to major corporations by committing us to  TTIP, the Transatlantic Trade and Investment Partnership which allows major corporations to sue any future British government should it seek to pass legislation it perceives as threatening its profits. That includes our ability to protect the NHS from being sold to major American private healthcare companies, for David Cameron has so far refused to exempt the NHS from the new trade rules now being introduced[14].

When corporations can tell nation states what to do, what chance do small, impoverished local authorities have in negotiating a fair deal for outsourced public services?    Some indications of the scale of this problem can be found in Cornwall Council’s legal wrangle with British Telecom to end its £260 million contract due to alleged failings in performance and jobs[15].If it loses the case, not only will Cornwall have to retain it as its main IT services but the judge may also order the council to pay BT’s legal costs.  So much for local democracy and public accountability.

Concluding remarks

None of this is ever going to figure in a consultation with your GP as he sets out the options available under ‘patient choice’.  Yet what has just been outlined forms the over-arching backdrop and the broad systems and structures that underpin the ‘internal market’ that the NHS is tied to.

Patient choice and patient consultation cloaks us in a false sense of empowerment and acts as a cover for the market levers we unwittingly pull every time we make a decision about our healthcare. Choose private and public money is converted into private wealth.  Every decision you make is a vote for the future of our healthcare system: one with the NHS at its centre or one without.

What goes for the NHS also goes for every national and local government agency legally obliged to contract its services out to ‘qualified provider’. For the ultimate aim of this most lethal of right wing governments is the removal of the welfare net and the expansion of the market to include almost every aspect of our lives from housing, health and education to social care and incarceration.  What matters is The Market and everything has its price tag. Whether you can afford to pay or not is very much another matter-and your responsibility alone.

 

Supporting resources including slideshow

click on headings below

Does your MP represent you?

WriteToThem

Letter to your GP

Slideshow – see below

View, download and edit for your own purposes. However I suggest you keep references to sources

 

References

[1] Financial Times  quoted in NHS For Sale ‘cherrypicking’

[1] Care Quality Commission: latest CQC Inspection report 2013

[2] British Medical Journal 6 May 2015: Private Practice “so venal, it bordered on criminal”

[3] LSE Centre for Economic Performance discussion paper

[4] Corporate Watch: An unhealthy business: major healthcare companies use tax havens to avoid millions in UK tax

[5] BBC News 20 Nov. 15: NHS trusts’ overspend hits £1.6bn

[6] Corporate Watch 17-March 2012: An unhealthy business. major healthcare companies use tax havens to avoid millions in UK tax

 

[7] Tax Research UK : The Tax Gap (pub 2014)

[8] Competition and Markets Authority: Private health care market investigation (pub 2014)

[9] Centre for Health and the Public Interest: patient safety in private hospitals, the known and unknown risks

[10] Centre for Health and the Public Interest: patient safety in private hospitals, the known and unknown risks

[11] Social Enterprise UK 2012: The Growing Shadow State, a report about outsourcing of public services

[12] Social Enterprise UK 2012: The Growing Shadow State, a report about outsourcing of public services

[13] BBC news 16 July 2015: Cornwall devolution: First county with new powers

 

[14] The Independent 26-Oct-2015: TTIP: Jeremy Corbyn, Nigel Farage, Nicola Sturgeon and Natalie Bennett sign appeal to exempt NHS from trade deal

 

[15] BBC news 1 September 2015: Cornwall Council fights to end £260m BT contract

 

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4 comments

  1. comment by anonymous health professional:

    A couple of thoughts.

    The NHS is being deliberately starved of resources to open the door to more privatisation.

    I am surprised by the articles explanation with regard waiting lists. These are not soley determined by consultants and patients and their GPs are able to shop around for other NHS providers.

    I do think that it has been overstated particularly for hospitals outside of large cities. However, Dr Dean was brave to speak out on this topic and has had a lot of flak from other medics. Locally with the Duchy( referred to as the Golden Nugget) there has been some abuse in that consultants might turn up late for their NHS clinics as they may need to visit a Duchy patient first as there are no junior staff to cover them there. Compared to when I first worked in Cornwall in mid 1970s there were only one or two consultants in each speciality whereas now there are 5 or 6 or in the case of orthopaedic surgeons 14 or more. GP’s often had preference for particular consultants for referring their NHS patients based on their earlier hospital careers. However, these days data on waiting lists is readily available for each consultant locally and further afield( eg Derriford). In addition many specialities now have consultants ranked for successful clinical outcomes. This could impact on their ability to attract private patients. It may also account for why some surgeons are reluctant to operate on NHS patients who are smokers or overweight(ie need to stop smoking or lose weight) as they have much poorer outcomes. Whether they would apply the same criteria to their private patients I’m not so sure as outcome figures are not monitored in the private sector.

    NHS waiting lists were unacceptably long in the 1970s/80s encouraging a lot of private work. Labour addressed this by primarily throwing a lot of money at the private sector including the DTCs, some of which was wasted, but it did considerably reduce the waiting lists. The CCGs now have the unenviable task in rationing healthcare. With demands for spending more on mental health and cancer, waiting lists for many procedures are bound to go up with insufficient funding. The latest mega re-organisation with its internal market has diverted billions away from frontline services. The annual PFI interests also take out a further £2 billion. As Dr Dean says if you are likely to have a serious illness you want to be seen in the NHS. I have seen the odd delayed serious diagnosis going to the Duchy. Plush surrounds and haute cuisine are no compensation for a poor outcome.

    For modern medicine to function well for the patient requires good multi-disciplinary team interactions and is rarely available in the private sector.

    Like

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