PFI- Rip offs- paying 30%
PFI Ripoffs- Health Direct news on Labour’s NHS Private Finance Initiative and other long term fiascos:
NHS spending squeeze to hurt PFI hospitals most
Tue, 16 Feb 2010- NHS hospitals built under the private finance initiative will face a much tougher time making the productivity and efficiency gains that are needed as public spending is squeezed, PFI experts and NHS managers are warning.
BMA cost warning on plan to scrap GP boundaries
Mon, 8 Feb 2010- The British Medical Association has fired a broadside at government plans to give patients a completely free choice of family doctor, warning that the proposals could cost “hundreds of millions of pounds a year”
How labour government squanders £300 billions with PFI schemes
Mon, 1 Feb 2010- On the face of it, PFI schemes does not sound like a good deal- decide what you want, find someone to supply it, then sign a contract that binds you into a legal straitjacket for decades, during which you pay them 37 times what the item is worth.
Fear over quality of care if NHS centralises further
Thu, 28 Jan 2010- There is a real risk that the next government will resort to central control of the NHS, reversing the gains of recent years and damaging patient care, warns the outgoing chairman of Monitor, the independent regulator of the self-governing NHS foundation trusts.
Labours’ only success- wasting taxpayers money
Mon, 18 Jan 2010- Health Direct is appalled at the expensive IT project that is the NPfIT white elephant- and the money that is being wasted in our names.
Decision on new health regulator quango delayed
Fri, 15 Jan 2010- Monitor, the foundation trust regulator, is to be left for months without a permanent chairman or chief executive after the Department of Health announced that it was to re-advertise the post of chairman.
NHS bureaucracy bill soars by £78 million in two years
Wed, 9 Dec 2009- The number of bureaucrats working for the NHS has soared over the past two years, according to a survey.
Hospitals use ploys to beat 4 hour deadline on A&E waiting times targets
Tue, 1 Dec 2009- More than five per cent of emergency patients are being admitted to wards to help hospitals hit waiting time targets.
Fall in proportion of patients who pay for private health care
Tue, 10 Nov 2009- The proportion of patients who pay for their own operations– through private medical insurance or out of their own pocket– has tumbled almost 30 per cent since Labour took power.
NHS offers hospital to private bidders
Fri, 6 Nov 2009- An NHS district general hospital, complete with accident and emergency and maternity services, is being offered up for takeover by the private sector for the first time, alongside bids from other NHS organisations.
Lives put at risk by out of hours GPs, Care Quality Commission reports says
Fri, 10 Oct 2009- Patients’ lives are being put at risk by widespread problems in GP out of hours care, claims a report by the Care Quality Commission, the health care quango regulator.
Couples are still being refused IVF treatment in a postcode lottery
Fri, 28 Aug 2009- Couples are still facing problems getting IVF treatment on the NHS, with some trusts refusing to fund procedures or comply with guidelines, such as a woman’s age.
NHS surgery centres in doubt over £400m bill
Thu, 6 Aug 2009- The future of fast track surgery centres that are run privately was in doubt after it emerged that the NHS faced a £400m bill when their contracts expire during the next two years
PFI projects to stay off the books
Wed, May 20, 2009- Many Private Finance Initiative (PFI) projects are to remain, in effect, off the labour government’s balance sheet.
Mid Staffordshire redundancies under scrutiny
Mon, 20 Apr, 2009- Mid Staffordshire hospital trust paid out £1.3m in redundancy payments between 2006 and 2009, figures disclosed under the Freedom of Information Act have revealed.
Ditherer Brown’s PFI U Turn
Thu, Mar 19, 2009- After a dozen years of wasteful, expensive over spinning and under delivering Stalinist Brown has created a new PFI process.
Credit crunch slows number of PFI deals
Wed, Jan 21, 2009- Fewer deals were signed under the private finance initiative (pfi) last year than at any point since the PFI took off a decade ago, according to an authoritative database.
Patient death sparks review of independent treatment centre
Wed, Jan 14, 2009- The Healthcare Commission has announced a review of services at an independent treatment centre in Yorkshire following the inquest into the death of a patient.
Patient safety at risk as urgent NHS repairs ignored
Wed, Jan 7, 2009- Patients are being put in danger because of a backlog of hundreds of millions of pounds of urgent repairs at hospitals.
Treasury U Turn to ensure taxpayer is no longer the loser in PFI deals
Fri, Oct 24, 2008- The Treasury ordered public bodies doing private finance initiative (PFI) deals to require a much bigger share of any windfall gains from refinancing them in the future- though Health Direct asks why it has taken ditherer Brown 11 years to stop wasting tax payers money.
Only 14 pc of NHS Trusts give value for money
Fri, Oct 10, 2008- The National Health Service has tightened its grip on its finances, the Audit Commission said and is beginning to extract better value for money from its funding, but still has a long way to go.
NHS productivity falls as spending rises by billions under Labour
Tue, Sep 16, 2008- The National Health Service has become less efficient despite Labour pumping millions into its budget.
NHS hospital car parking charges to be abolished in Scotland
Thu, Sep 11, 2008- Health chiefs in England were under pressure to scrap hospital car parking charges after a move by the Scottish government to abolish the charges at 14 NHS hospitals- except PFI hospitals.
NHS cancels more than 100,000 operations in a year
Tue, Aug 26, 2008- More than 100,000 operations have been cancelled by the NHS over the past year because of bed shortages, staffing problems and other non-clinical reasons, new figures released reveal.
Dental NHS copayments total £4.5bn since 1997
Wed, Aug 20, 2008- NHS dental patients have paid £4.5bn in charges since 1997, while 2 million people have “lost” their dentist, the Conservatives have claimed.
Tories plan a bonfire of the NHS targets in bid to save 100,000 lives
Tue, Jul 22, 2008- David Cameron has set out his vision for the health service, with a promise to save 100,000 lives a year by giving patients more information and more power over their own care.
PFI Hospitals run by HSBC pay £200 to fit wall socket
Mon, Jul 14, 2008- Britain’s biggest bank, HSBC, and its investors have made almost £100m from managing National Health Service hospitals where contractors routinely charge taxpayers inflated bills for simple tasks – such as £210 to fit an electrical socket or £200 to install a computer socket
Polyclinics will not improve care, consultants tell BMA
Wed, Jul 9. 2008- Six out of 10 consultants say polyclinics will not improve patient care and 83 per cent fear privatisation of the NHS is detrimental to patient care and the service overall.
NHS pays up to 60pc higher prices to cut waiting lists
Wed, Jun 25, 2008- Private hospitals are once again being paid well above the standard National Health Service price in a drive to get waiting times down that has proved only partially successful.
Cancer victim told to pay for his own drugs by NHS
Wed, Jun 18, 2008- A cancer patient who was sent home to die by hospital doctors but then discovered a cocktail of drugs that stabilised his illness has now been told that the NHS will not pay for his medicine.
Chan Wheeler to leave NHS less than one year as commercial director
Fri, June 13, 2008- Chan Wheeler, the health department’s controversial US commercial director, whose pay and conditions package was branded “an eye-watering deal” by the Tories, is resigning to return to the US less than one year into his three year contract.
Hospitals are getting better- but only very, very slowly
Wed, Jun 4, 2008- Patients’ experience of National Health Service hospitals is improving, but painfully slowly, according to findings in the annual survey conducted by the health service inspectorate.
One in five GPs surgeries faces closure in polyclinic plans
Wed, Apr 30, 2008- One in five GP surgeries in England is set to close, threatening to end the era of a family doctor in every neighbourhood, an analysis of NHS plans reveals
Operations halted by unfit equipment
Fri, Apr 25, 2008- Operations are being cancelled because of dirty or broken instruments sent back by private companies employed to clean them, the Royal College of Surgeons (RCS) informed Health Direct.
Private hospitals retreat from NHS
Tue, Apr 08, 2008- A drive to get patients to exercise their right to choose any accredited hospital, public or private, for their routine treatment was launched by labour ministers – just as some of Britain’s biggest private hospital groups said their appetite for work in the National Health Service had diminished sharply.
NHS private service ISTC buyback deal could cost £187m
Wed, Mar 19, 2008- The National Health Service will have to pay out £187m to buy back 14 of the independent sector treatment centres if their five year contracts are not renewed, the Department of Health has acknowledged.
Whitehall clash looms over PFI for NHS hospitals
Mon, Mar 10, 2008- A clash between different accounting standards for private finance initiative projects is threatening to create conflicting incentives within the labour government, with the Treasury continuing to favour PFI while other departments are more circumspect.
Hospital PFI project hit by US monoline credit crunch
Fri, Mar 07, 2008- Reverberations from the crisis in US bond insurers were felt this week in an unlikely corner of the financial markets- Tunbridge Wells.
Private surgeries hurt NHS, say academics
Wed, Feb 27, 2008- Two leading academics claimed the government’s fast track private surgery centres for NHS patients would “contribute to NHS deficits, NHS service closure and staff redundancies”.
PFI wastes £180m finds NAO watchdog
Thu, Feb 14, 2008- Millions of pounds of public money are being wasted because contractors are charging unjustifiably high fees for making changes to active private finance initiative (PFI) projects, according to the National Audit Office (NAO).
Private healthcare study suppressed by Dept of Health
Wed, Feb 06, 2008- The Department of Health has suppressed evidence that axed programmes to buy £750m of private sector care a year for NHS patients had earlier been showing “very good value for money”.
Private sector sees NHS role slashed
Fri 16 Nov 2007- Alan Johnson, the health secretary, yesterday slashed a long planned expansion of the private sector’s role in the National Health Service, in effect confirming that contracts originally meant to be worth about £6bn for surgical treatments and diagnostic services are likely to amount to well under half that sum.
Health efficiency gains data uncertain claim MPs on PAC
Thu 18 Oct 2007- Up to three quarters of the £13.3bn efficiency gains the labour government claims to have made may be based on unreliable and inaccurate estimates, a committee of MPs has found.
Unhealthy signs- Financial Times editorial on Labours NHS actions
Wed 3 Oct 2007- The Financial Times recently reviewed the labour government’s actions towards the NHS and questioned their muddled directions. Health Direct reproduces their Editorial below.
Foundation trusts increase cash as patient care declines
Tue 25 Sep 2007- Foundation trusts, a flagship of the labour government’s National Health Service reforms, are building a growing cash mountain that they appear unable or unwilling to invest in improved services. The sums involved are up by more than £300m from about £1bn at the end of the last financial year to £1.32bn in the first three months of this year.
Labour govt overpays private groups £222m for outsourced NHS treatments
Wed 19 Sep 2007- The Labour government is overpaying private hospital operators by more than £200 million to carry out surgery for NHS patients. In an effort to cut waiting lists, labour launched a programme in 2005 to outsource some routine surgery to the private sector.
Man who helped NHS to spend £46bn says it wasted the money and needs more
Tue 11 Sept 2007- Sir Derek Wanless says billions of pounds poured into the NHS has not made it more efficient. The money poured into the NHS has failed to produce a more efficient service, or to reduce unhealthy lifestyles. As a result even more cash will be needed in the future.
The NHS is a service, not a business
Fri 7 Sept 2007- From the letters section of the Financial Times: Sir, Margaret McCartney’s view would be endorsed by the majority of the medical profession, and shows the hollowness of the labour government’s stated policy of a “patient-led NHS”.
New nurses, doctors and physios left jobless by labours NHS budget squeeze
Thu 23 Aug 07- Thousands of newly qualified nurses are facing unemployment because of labour’s NHS hospital cutbacks, with recruitment vacancies at their lowest for 10 years. New National Health Service figures have revealed how difficult it is for nurses, physiotherapists, scientists and doctors to find jobs.
PFI- Time to set the record straight claims Financial Times
Mon 30 Jul 07- Off balance sheet accounting has a long and often dishonourable history. Just think of Enron. The Treasury now has a chance to fix one of the most inconsistent and problematic examples of its use, in the way the private finance initiative is accounted for, by using the introduction of International Financial Reporting Standards as a chance to bring all PFI projects on to the public balance sheet.
Johnson blocks new wave of private health clinics
Thu 26 Jul 07- The health secretary, Alan Johnson, yesterday vetoed plans for a third wave of independent sector treatment centres to compete with NHS hospitals.
Hopes fade over private sector role in NHS
Wed 4 Jul 07- Private sector hopes of a sustainable role in delivering National Health Service care are receding, judging by a study commissioned by the NHS commercial directorate. The 2004 study estimated the NHS needed to buy 450,000-500,000 procedures a year if the market that has attracted overseas health groups as well as UK operators such as Bupa and Nuffield was not to “stagnate and ultimately collapse”.
NHS service cuts urged at non PFI hospitals
Mon 18 Jun 07- Primary care trusts wanting to reconfigure services were given a stark message in an economic analysis prepared for the NHS in London: financially, it will make sense to cut beds and services at non private finance initiative (PFI) hospitals.
Call for scrutiny of PFI equity sales says MPs’ Public Accounts Committee
Mon 21 May 07- The market for sales of equity in Private Finance Initiative (PFI) deals should be closely watched by the Treasury, parliament’s public spending watchdog said, as it raised fears that they might not be in the public interest.
Labour rewards failure as NHS pays private companies for failed PFI bids
Tue, 8 May 07- Private companies that fail to win hospital building contracts are set to pocket millions of pounds in “compensation” from the NHS. Hospitals negotiating private finance initiative (PFI) schemes could be forced to pay almost 2 per cent of the total contract costs to short-listed private companies which fail to secure deals, under proposals being discussed by the Department of Health (DoH).
Setback for NHS on treatment centres as one in five PFI projects unprofitable
Thu 26 Apr 07- Nuffield Hospitals, the not-for-profit private hospital operator, has pulled out of negotiations to provide operations for NHS patients using mobile operating theatres in the West Midlands. The news comes at the same time that new research shows that almost one in five private finance initiative projects are still not making their owners money, a survey of almost 100 of them has shown.
Mixed wards- another broken labour promise as new PFI projects continue the scandal
Tue 10 Apr 07- A spell in a hospital in England is likely to mean being placed on a ward with people of the opposite sex. But in Europe and the US this would be unthinkable. Health Direct reports on a pledge the government has yet to keep.
Patients feel pain as PFI Patientline deal backfires with hospital phone charges up 160%
Mon 9 Apr 07- Patientline, provider of hospital bedside telephone and television units, said it is to increase by 160 per cent charges to NHS patients for outgoing calls. The company was criticised by medical providers for the emergency measure, taken to compensate it for deepening losses incurred since it signed a 2002 private finance initiative deal with the Department of Health.
Takeover of first NHS hospital- Good Hope in Birmingham becomes the Heart of England
Tue 3 Apr 07- The first takeover of an insolvent National Health Service hospital by one of Labour’s flagship foundation trusts will formally take effect next Sunday, the health service announced at the weekend – paving the way for similar solutions for a number of other, effectively bankrupt, NHS institutions.
NHS crisis is forcing cuts to maternity care, charity warns
Tue 27 Mar 07- Support for pregnant women is being cut because of the NHS’s financial troubles, a healthcare charity has warned. The National Childbirth Trust (NCT) says it is receiving “increasing reports” that NHS antenatal classes, breastfeeding services and postnatal visits are being cancelled.
Seven more PFI hospitals to go ahead
Tue 27 Feb 07- Seven more private finance initiative (PFI) hospitals, with a capital value of almost £1.5bn, were finally given the go-ahead yesterday but amid growing frustration among PFI providers at the time it is taking for the Department of Health to adjust hospital building plans to the new, more competitive, NHS market.
MPs want greater scrutiny of PFI hospitals to prevent more waste
Tue 30 Jan 07- Hospitals built under the Private Finance Initiative (PFI) must be subject to much “closer and sustained scrutiny” if millions more pounds are not to be wasted, the Public Accounts Committee said. Estimated capital costs for 17 PFI schemes approved by the end of 2005 have more than doubled – up by some £4bn to £13bn.
PFI firms make £23bn profits from NHS
Mon 22 Jan 07- The private sector will make £23bn in profits and interest over the next 30 years by building NHS hospitals, campaigners have calculated. Under the private finance initiative, a company builds a hospital and then gets “rent” from the NHS for a set term. A report by the Keep Our NHS Public claims the Labour government is carrying out “patchwork privatisation” of the NHS.
Brother Brown can’t cure this paralysed NHS, so he plans to privatise it
Tue 16 Jan 07- The former Granada boss Sir Gerry Robinson recently spent six months trying to reform Rotherham general hospital. The result was shown in three hours of fly on the wall television on BBC2 last week. It was rightly put after the watershed: as politics it was certificate 18. At the end of each day Robinson could be seen slumped in the back of his car, his face buried in his hands. A tycoon sobbing in a limousine is the perfect icon of Labour’s health service.
Labour’s unsustainable NHS resource account and budgeting (RAB) rules to stay
Thu 14 Dec 06– The health department has postponed a decision to scrap a set of accounting rules- that have plunged some NHS trusts into potentially irrecoverable financial deficit. The NHS Confederation, which represents health authorities and trusts, said yesterday that it was disappointed at the decision which came despite the health department accepting that the application of the rules to individual NHS trusts “will become increasingly unsustainable”.
Leaked paper reveals Labour fears on NHS cutbacks as 50 Accident and Emergency centers will be downgraded
Wed 6 Dec 06- Patricia Hewitt and other ministers have privately conceded that the government is in real difficulty over its efforts to sell controversial health reforms, a minute of a private briefing reveals. At a brainstorming on the future of the NHS between the health secretary and ministers last Thursday, some raised anxieties about the way the reforms were being presented to the public. “Too often the debate on public service reforms seemed to pitch the government against frontline staff,” said the minute, which was marked restricted.
DoH reveals true extent of NHS management consultant costs- which will exceed the total deficit
Fri 1 Dec 06- The imposition of turnaround teams on cash-strapped trusts has cost the NHS more than £22m, new Labour figures reveal. And the report showed that the DoH spent a massive £133m on management consultants last year -more than the £94m projected net deficit for the NHS next year.
First NHS hospital privatisation– 60 more may follow
Mon 2 Oct 06- A foundation hospital trust is planning to “takeover” a smaller cash strapped NHS hospital in what is thought to be the first privatisation of its kind. The Heart of England NHS Foundation Trust in Birmingham hopes to acquire Good Hope Hospital, which is £15m in debt.
New ONS PFI figures are a ‘step forward in a murky area’
Thu 21 Sep 06- The Labour government has long been accused of finessing the public finances by favouring private finance initiative deals for capital investment projects, such as schools and hospitals, because the debt did not show up on the government’s books. Now, after pondering the problem for five years, the Office for National Statistics has put a £4.95bn figure on the value of the debt of PFI and public-private partnership deals, which it has added to public sector net debt. Its estimate represents what it thinks the government would have to borrow today to buy back a PFI asset for the remainder of its PFI contract.
Pensioner strikes blow against reforms of family doctor services
Thu 24 Aug 06- A pensioner has struck a blow against government health reforms after she won a legal battle to stop a US-owned company from taking over family doctor services in part of Derbyshire. The Court of Appeal yesterday ruled that the North Eastern Derbyshire Primary Care Trust had failed properly to consult the residents of two former mining villages before provisionally awarding UnitedHealth Europe a contract to run GP surgeries in the area.
PFI profits exposed by Channel 4 as greater than credit card companies
Wed 16 Aug 06- In Public Service, Private Profit, Liam Halligan revealed how the private funding of state schools and hospitals is draining hundreds of millions of pounds from frontline services, while creating a £4 billion-a-year industry and a new elite of publicly-unaccountable PFI professionals.
Postcode lottery for cancer, hearts and mental health King’s Fund reports
Wed 9 Aug 06- Wide variations in NHS spending may be denying patients fair access to drugs and treatment, a study says. The King’s Fund think tank found that some English trusts spent four times as much on certain diseases than others. The research, compiled from government data from 2003-4 to 2004-5, also showed mental health got the most cash, followed by heart disease and cancer.
Anger over ‘legality’ of NHS cuts
Tues 18 July 2006- A Cornish district council boss is questioning the legality of an NHS trust’s plans to cut health services after the proposals for the closure of St Michael’s Hospital were leaked to the media. Penwith Council chief executive Jim McKenna has written to the Royal Cornwall Hospitals Trust over proposals for hospitals in Hayle and Penzance.
BMA reports that the NHS does not provide choice claims public
Tue 27 Jun 2006- More than half the people in a general public survey on patient choice in the health service believe the NHS does not offer choice. The British Medical Association commissioned the survey and is publishing the findings on the eve of its annual meeting.
Foundation hospitals- Labour’s PFI promise will “fall short”- Monitor regulator warns
Thur 1 Jun 2006– Tony Bliar’s promise that every NHS hospital in England will be ready to break free from Whitehall control by 2008 will not be honoured, papers of the foundation trust watchdog revealed yesterday. The board minutes of the regulator, Monitor, note that William Moyes, its chairman, has warned the Department of Health that well under 50% of trusts are set to achieve foundation status by April 2008. Others may be held back for years by their inability to break even and by the cost of hospital building schemes under private finance initiatives.
DoH orders £200m cuts to scheme to stay within Treasury guidelines
Tue 23 May 2006- The Department of Health has trimmed back another major private finance initiative scheme, forcing a trust to abandon plans for new buildings on the site of one of the three hospitals involved. The DoH has instructed University Hospitals of Leicester trust to cut just under £200m from its £761m plans to revamp and reconfigure services at Leicester’s General, Royal Infirmary and Glenfield hospitals.
PFI profits from secondary market creates storm over unacceptable gains
Thu 4 May 2006– Some of the biggest operators in the private finance initiative were condemned this week for making gains that are “unacceptable, even for an early PFI deal” from the refinancing of Norfolk and Norwich hospital. Even as that row erupted, the focus on how money is being made out of PFI contracts is shifting to the newer secondary market in PFI – the sale of the equity investments in them. Last month the National Audit Office raised concerns about how transparent those deals are.
Watchdog brands 60 per cent profits on PFI scheme as unacceptable
Wed 3 May 2006– Some of Britain’s biggest investors in the Private Finance Initiative were yesterday condemned as “the unacceptable face of capitalism” by parliament’s public spending watchdog. John Laing, Innisfree, 3i, Barclays Infrastructure and Serco were accused of taking gains “unacceptable even for an early PFI deal” from a refinancing of the £158m Norfolk and Norwich Hospital.
D Day for Dentists- 1,000 dentists expected to quit NHS in contract row
Sat 1 Apr2006 – Unfortunately, not an April Fool: an exodus of about 1,000 dentists from the NHS in England was predicted last night by the chief executives of primary care trusts, who take over untried and untested management of the service from today. The NHS Confederation provided the first hard evidence of how patients will be affected by a dentists’ contract that came into effect at midnight.
Patient care is suffering in NHS cash cuts
Fri 31 Mar 2006- Forcing trusts to break even too quickly will compromise patient care, chief executives have warned this week. Speaking in parliament in January, health secretary Patricia Hewitt told MPs that actions to deliver organisational turnaround will ‘never compromise patient care’. But chief executives said they could not make the savings demanded of them for 2006-07 without an impact on the quality of care delivered.
One CEO when asked whether a demand to break even would affect patient care, he admitted ‘Of course it will. I cannot see how we can take a sum like that out without it affecting services. It is about minimising the impact on patient care.”
Mon 13 Mar 2006– The new consultants’ contract in Scotland cost almost four times more than originally estimated, Audit Scotland found, with no clear evidence it has yet improved patient care. The deal for hospital specialists was a UK-wide one and despite some distinct features of the Scottish health service, National Health Service auditors said there was no reason the picture should be any different in England, Wales or Northern Ireland.
Sat 4 Mar 2006– Health managers have reacted with disbelief and fury after the Department of Health withdrew the national tariff for Payment by Results (PbR) and admitted that the sums behind it did not add up. Last week the DoH withdrew the tariff – due to go live in April – admitting that ‘underlying errors in the calculation’ had been identified.
Tue 28 Feb 2006– The National Health Service is heading for a record overspend at a time of record growth, according to the latest returns from hospitals and health authorities. Senior executives said yesterday the service in England was heading for a £790m overspend at the end of January – up from the £620m that was forecast in only December.
Thu 23 Feb 2006– Doubts are being raised about the future of new PFI hospitals which are being built using private money. Billions of pounds have been spent on PFI projects to date, but many more are still in the pipeline. Are Labour’s bad habits of moving the goal posts in the middle of a game about to score a spectacular own goal by Ministers making the future financing of the all of the proposed new NHS capital building projects too risky for potential financiers? Which would effectively stop the whole new NHS building programme.
Wed 1 Feb 2006– The National Health Service’s £12bn hospital building programme in England under the private finance initiative faces a cut of up to 40 per cent, according to leaked documents. Although the department has repeatedly denied there is a review or moratorium on new PFI hospitals under way, it has now admitted to a “reappraisal”.
Tue 24 Jan 2006– The financial crisis gripping the NHS is deepening and hitting patient services, with operations cancelled, appointments deferred and wards closed, according to two reports. NHS managers are struggling to reduce ballooning deficits that have swelled to £1.2bn. Managers have been freezing jobs, cancelling training and cutting up to 4,000 posts, the Royal College of Nursing says. A separate survey of NHS chief executives found three-quarters believe patient care is suffering as a result of cuts that are imposed to balance the books.
Fri 20 Jan 2006– A Treasury presentation leaked to the Financial Times reveals vividly how the National Health Service threatens the government’s other competing priorities with its huge demand for cash. The spending review that concludes next year will present Gordon Brown, whether he is prime minister or still chancellor by then, with some very hard choices.
Tue 27 Dec 2005– Billions of pounds worth of hospital projects to be built under the private finance initiative have been put in doubt by health department concerns over the cost of the biggest – the £1.1bn rebuilding of St Bartholomew’s and Royal London hospitals. The department has challenged the project’s affordability and has even suggested the Bart’s part of the 1,250-bed scheme should be reconsidered– raising again the question of whether England’s oldest hospital, founded in 1123, could yet close.
Fri 23 Dec– Health Direct notes the contradiction at Christmas time that more expectant parents are being denied a choice of where they can have their baby, campaigners have warned. The National Childbirth Trust says at least 10 birth centres across the UK are now considering closing, or are definitely set to do so. Some “temporary” closures over Christmas may become permanent due to a lack of funds, the NCT says.
Wed 14 Dec– A controversial scheme to divert patients away from Surrey and Sussex Healthcare trust is to end – after sending them elsewhere turned out to be more expensive. Routine inpatients are shortly to return to the cash- strapped trust, following a four- month period when local primary care trusts sent them to other providers.
Tue 6 Dec- The NHS is heading for a deficit of more than £600 million this year, the Government said yesterday. Predictions of a deficit this early in the financial year are unprecedented, indicating how serious the situation has become. Patricia Hewitt, the Health Secretary, said: I have made the decision to publish the data because I want to make it clear that inefficiency and poor financial management are not acceptable.
Fri 1 Dec– Almost a third of all primary care trusts ended the last financial year in deficit, accounts for the Department of Health reveal. Of the 303 PCTs in England, 91 overspent in the year 2004-05. The overspends contributed to the overall NHS deficit of £250m last year.
Fri 28 Oct– The private finance initiative PFI- “has had its day” as a way of building hospitals, at least in its current form, the NHS Confederation, which represents health authorities and trusts, said yesterday. Following a survey of 13 completed schemes, the confederation said the 30-year contracts were too inflexible to cope with rapidly changing healthcare, particularly as more care was likely to be delivered outside hospitals.
Thu 20 Oct– A review of National Health Service regulation – soon to become a £100bn-a-year business – was launched by the Department of Health, while a leading regulator said the department’s role should be that of a giant “insurance company”.
Fri 14 Oct– The introduction of payment by results- the funding mechanism that underpins Labour’s new NHS market- represented “real dangers” for the NHS in the short term the Audit Commission has warned. Even amongst the first foundation trusts, which in theory were amongst the best equipped to cope, the new payment mechanism had exposed real financial problems at Bradford and elswehere.
Thu 5 Oct– Surrey and Sussex Healthcare trust would be bankrupt if it was a company, trust chair Roy Davies has admitted. Mr Davies, speaking at the trust’s annual general meeting, painted a bleak picture of the trust’s financial position, saying the battle was just to live within its income and it did not ‘have a hope in hell’ of paying back its £30m deficit.
Tue 27 Sep– The National Health Service is poised to spend £4.5bn a year – approaching 6 per cent of its budget – on privately provided clinical care and facilities management as the second wave of independent treatment centres and new diagnostic facilities come on stream.
Fri 23 Sep– NHS trusts are £250m in the red despite record increases in government investment, according to the Department of Health which has published individual trust accounts for the first time. In a stark warning, chief executive Sir Nigel Crisp told trust managers that it was ‘not acceptable for any NHS organisation to spend more resources than it has been allocated or received in income’
Fri 26 Aug– The NHS is failing to use thousands of extra diagnostic scans bought by the Department of Health from the private sector last year. More than half of the MRI (magnetic resonance imaging) scans – almost 70,000 – that the DoH bought on behalf of the NHS from Alliance Medical last year have yet to be used.
Fri 12 Aug– Organisations that fail to comply with a new code of conduct on payment by results will be penalised using a ‘range of mechanisms’ depending on the severity of the breach, the government has warned. And the Department of Health has said protracted disputes between commissioners and providers will be seen as a ‘failure’. Details of the disagreements – including the sum concerned – will be made public.
Tue 2 Aug– In the 12 weeks since the general election, cash-starved hospitals and primary care trusts have earmarked more than 1,000 beds for closure. An investigation by The Sunday Telegraph has revealed that trusts around Britain have drawn up plans to close beds, wards and entire community hospitals.
Fri 29 July– The collapsed £1 billion Paddington health campus will be subjected to a two-pronged review in an attempt to improve the quality of future private finance initiative schemes in the NHS.
Tue 5 July- Tony Blair’s commitment to radical reform of the public services is set to be tested this week when a flagship group of NHS hospitals demands more freedom to borrow for investment.
Thu 30 June- Ill-equipped to compete in the increasingly cut-throat healthcare market, the NHS is now £140m in the red. A government that has done everything it can to expand the role of the private sector in the NHS is unlikely to bail hospitals out this time, and so this deficit will translate into hundreds of lost beds, and ward closures up and down the country.
Mon 13 June- PFI building company Octagon made a 60% return on investment refinancing the Norfolk & Norwich PFI Hospital says the National Audit Office.
Wed 25 May– The huge cost of employing agency nurses has been repeatedly blamed for sending the NHS into debt.
Sat- April 16– Auditors sound alarm bells in Surrey and Sussex cash crisis- the government must hand over millions of pounds to crisis-stricken Surrey and Sussex Healthcare trust to prevent effective bankruptcy, according to its auditors PricewaterhouseCoopers.
Fri, April 8– Monitor has warned hospital trusts that a breach of one of 10 tough new financial rules could provoke intervention. Under the independent regulator’s compliance framework foundation trusts will receive three scores: ‘traffic light’ ratings on governance and the provision of mandatory services; and a score from one to five on financial strength.
Wed, March 16– A whistleblower in the NHS is threatening to lift the lid on alleged falling standards and hidden costs at Britain’s first Private Finance Initiative (PFI) hospital.
Thursday, February 24, – Speaking at the conference of Honorary Secretaries of BMA Divisions in Edinburgh, Dr Sam Everington, Deputy Chairman of the BMA (UK) warned that the Westminster Government’s continuing push for private sector involvement in the provision of NHS services could spread to the other countries of the UK.”
Tuesday, February 22, – Senior lenders on Jarvis’s former private finance initiative construction projects are understood to be withholding cash needed to complete work on schools and hospitals because they want to satisfy themselves that they are getting value for money.
– Wednesday, February 15,- A hospital set up three years ago as a blueprint for cutting NHS waiting times is facing closure after failing to attract patients and running into multimillion- pound debt. Doctors’ leaders said that the hospital’s problems were symptomatic of fundamental flaws in the policy: wasting money and destabilising existing hospitals.
Politicians call credit card companies usurers for charging 30% interest rates- yet this very same Labour government is paying 30% annaul costs for building PFI hospitals. Don’t take my word for it- it’s the ACCA- the Association of Chartered Certified Accountants who have calculated these charges:
Evaluating the operation of PFI in roads and hospitals
By the ACCA Research Report No. 84
Pam Edwards, Jean Shaoul, Anne Stafford and Lorna Arblaster, 2004
Partnerships are one of the keystones of the Government’s reform of the public services. They have both macro-level and micro-level objectives. At the macro level, the intention is to lever in the private finance that the Government cannot afford. In some sectors such as roads, a parallel macro objective has been to create private sector capability. At the micro level, partnership objectives embrace value for money (VFM), a concept that includes the transfer to the private sector of risk and the associated costs that would otherwise be borne by the public sector and the greater expertise, efficiency and innovation that the private sector is assumed to possess.
The introduction of partnership working, known as the Private Finance Initiative (PFI), was heralded with much enthusiasm by the then Conservative Government in the early 1990s and was later adopted with similar enthusiasm as a cornerstone of the incoming Labour Government’s policy for improving infrastructure and public services. The Labour Government re-branded the policy as public private partnerships (PPP), widened it to include several different forms of which the PFI is but one, and has, confusingly, used the terms PPP and PFI interchangeably. Under the PFI, the public sector procures a capital asset and non-core services from the private sector on a long-term contract, typically at least 30 years, in return for an annual payment.
Subsequently ministers, Government officials and others with financial interests in the PFI policy have claimed much success for projects. However, numerous IT PFI projects have failed. Several PFI/PPP projects have had to be bailed out, some have been scrapped and others have been the subject of widespread criticism. The National Audit Office (NAO), the Public Accounts Committee (PAC), the Audit Commission and Accounts Commission have been circumspect about the levels of success, and identified various lessons to be learned. Despite the welcome investment in public services, the policy remains unpopular with the public at large and the relevant trade unions.
So far, most research has focused on the decision-making processes that led up to the signing of a partnership contract or examined the benefits and costs from an a priori perspective. The NAO’s studies of some of the early roads projects report that the payment mechanism created additional risks for the public sector that raise questions about the value of risk actually transferred to the private sector (National Audit Office 1998, 1999). In the context of hospitals, a considerable body of evidence challenges both the macro and the micro-economic arguments (Pollock et al. 2002), raising questions about service provision and the conflict between policy promotion and regulation (Froud and Shaoul 2001). Several studies have examined the business cases supporting the use of private finance for new hospital builds, and question the ability of the methodology to measure VFM in an unbiased way, the degree to which the business cases demonstrate VFM and the higher cost of PFI over conventional procurement (Gaffney and Pollock 1999; Price et al. 1999; Pollock et al. 2000; Froud and Shaoul 2001; Shaoul 2005). Their evidence shows that the VFM case rests upon risk transfer. The credit ratings agency, Standard and Poor’s, in its report for the capital markets (Standard and Poor’s 2003), states that the PFI companies carry little effective risk. Other work shows that the high costs of PFI projects lead to affordability problems, an issue that the emphasis on VFM downplays, and lead to hospital downsizing in order to bridge the affordability gap (Hodges and Mellett 1999; Gaffney and Pollock 1999; 1999b; Gaffney et al. 1999a; 1999b; 1999c; Pollock et al. 1999).
By way of contrast, this research study focuses on the actual performance in two sectors, roads and hospitals, which have substantial commitments to partnership financing and projects that have been in place for some years. In roads, where PFI projects are known as design, build, finance and operate (DBFO), the eight projects signed in 1996 represented about 35% of all new construction in the roads sector between 1996 and 2001 (DTI 2002). In the Government’s 10-year national plan, 25% of the £21 billion allocated for the strategic highway network will involve private finance (DETR 2000). In the health sector, there has been a continuous expansion of private finance since the first health contract was signed in 1997 and by April 4th 2003 some 117 schemes had been approved by the Department of Health with a value of £3.2 billion (HM Treasury 2003c). These two sectors offer contrasting environments, in terms of the relationship between central government and the procuring entity, and previous experience of contracting with the private sector.
Our report is in three parts. First, we examine the advice from official bodies about how PFI should be evaluated. We examine the literature as it relates to the available evidence about the nature of post-implementation reviews of PFI projects and the methodology and process issues that constrain such evaluative research.
Secondly, we identify the origins, development, nature and scale of PFI in roads and hospitals. Our study focuses on the first eight DBFO projects in England managed by the Highways Agency and the first 13 PFI hospitals (12 in England and one in Scotland). We then analyse the reported financial performance of both the public and the private sector partners using information obtained directly from the Highways Agency and the hospital trusts, and Companies House respectively. Thus we have focused on information that is in the public domain, supplemented by contextual information provided by staff at headquarters level in both sectors. We also examine the costs and affordability of these PFI projects in terms of their impact on the budget of the relevant procurer. Our emphasis is on costs to the public sector, returns to the private sector, the effective cost of private finance and its affordability to the public purse.
Our concern is with the extent to which the financial reporting by all the parties involved in PFI provides accountability to the public. The concept of accountability in the context of public expenditure on essential public services implies first that citizens, or at least their political representatives, the media, trade unions, academics, etc, can see how society’s resources are being used and, secondly, that no members of that society are seen to have an explicitly sanctioned unfair advantage over others in relation to how those resources are used.
Thirdly, as well as a sectoral analysis of roads and hospitals, we examine two projects in greater detail, one each from the road and hospital sectors. We chose projects that had been implemented for at least three years and in which the construction phase was complete so that, unlike previous work, our focus is on the operation and maintenance phase. We used semi-structured interviews with a range of personnel from various parties to the projects. Given that PFI emphasises the nature of the long-term service agreements, we describe and evaluate the systems that were put in place to monitor the operational phase of projects, ensure that risk transfer operates in the way expected by the contract and thereby obtain VFM.
The research findings may be summarised under three interrelated headings: partnership and managing the contract; VFM and risk transfer; and financial reporting and accountability.
Partnership and Managing the Contract
* Partnership is an ideal to be aspired to rather than a description of the actual working relationship between public and private contracting parties and has implications for monitoring and accountability relationships.
* Planning of the performance monitoring systems is poor and leads to an increased workload in the management of the projects.
* Self-monitoring systems require high levels of trust, which is not always present, and public sector partners are conducting more monitoring activities than expected.
* Outcomes that are subjective in nature, eg hospital cleaning, are difficult to write in contractually effective ways and cause monitoring difficulties.
* While contingency plans should be prepared at least in outline for all major PFIs against the possibility of default by the private sector, none are evident.
Value for Money and Risk Transfer
* Soft project objectives may not be evaluated and user opinions about service are not always sought.
* It is impossible to compare the actual costs of PFI and thus VFM (one of the justifications for PFI) against the original public sector comparator (PSC) as the PSC quickly becomes out of date.
* Additional monitoring costs have increased the public sector’s costs and thus reduced VFM compared with the original expectations.
* Where risk is shared between partners its allocation may be unclear and therefore its transfer – so central to PFI – is uncertain.
In relation to roads, we find that:
* Demand risk is held by the private sector but this may create a new source of risk because the private sector cannot manage this demand.
* The Government guarantees the Highways Agency’s payments to the DBFO companies, which reduces the risk to the private sector.
* We calculate that the Highways Agency paid a premium of some 25% of construction cost on the first four DBFO roads to ensure the project was built on time and to budget.
* In just three years the Highways Agency paid £618 m for the first eight projects, more than the initial capital cost of £590 m, which refutes one of the Government’s justifications for DBFO. This means that the remaining payments on the 30-year contracts (worth about £6 billion) are for risk transfer, operation and maintenance.
* Because the full business cases are not in the public domain, there has been little external financial scrutiny of the deals and post implementation it is unclear how the actual cost of DBFO compares with the expected costs. Our evidence suggests that DBFO has turned out to be more expensive than expected. But how this affects the Highways Agency’s ability to fund other maintenance projects is unclear.
* The special purpose vehicles (SPVs) report an operating profit before interest and tax of about two thirds of their receipts from the Highways Agency and this is after subcontracting to sister companies. This operating profit (less tax) is the effective cost of capital.
* About 35% of the SPVs’ income from the Highways Agency is paid to their operations and maintenance subcontractors, typically sister companies, including an unidentifiable profit element for the subcontractor. Given that the contracts are still in their early years, the payments to the subcontractors are likely to represent operations rather than maintenance.
* Subcontracting in this way means that it is difficult to isolate the costs of operations and maintenance in DBFO contracts since the subcontractor may have multiple contracts elsewhere. The absence of such information makes it difficult for the public sector to benchmark costs when it comes to amending the contracts and negotiating new ones.
* Although the amount of tax payable by the SPVs is only 7% of operating profits, even this overstates the actual tax paid since this includes an element of deferred tax. This low tax rate, in the early years at least, challenges an important part of the Treasury’s new appraisal methodology for PFI which assumes that tax payable will be about 22%, which will in turn distort the VFM analysis in favour of PFI.
* The SPVs’ interest rate of 11% in 2001 and 9% in 2002 and the high level of debt, which is greater than the construction costs, means that the DBFO contracts are considerably more expensive than the cost of conventional procurement using Treasury gilts at the current rate of 4.5%.
* The seven SPVs’ post-tax returns on shareholders’ funds are high and higher than elsewhere in the industry.
* The seven SPVs’ total effective cost of capital was about 11% in 2002. While the NAO believes that this additional cost of private finance (six percentage points above Treasury stock) represents the cost of risk transfer (about £56 m), it is difficult to see what risks the companies actually bore since their payments were guaranteed by the Government and based on shadow tolls. In the context of rising traffic, this means that they were insulated from downside risk at the Highways Agency’s expense.
* In practice, the shadow tolls have led to a front loading of the payment flows to cover the future cost of maintenance, and hence the SPVs’ profits. But in the absence of arrangements to ring fence the post-tax profits, should the DBFOs fail for whatever reason later in the contract, the Highways Agency could find that it has to bear the remaining and higher cost of private capital and the maintenance costs that it thought it had already paid for.
In conclusion, the road projects appear to be costing more than expected as reflected in net present costs that are higher than those identified by the Highways Agency (Haynes and Roden 1999), due to rising traffic and contract changes. It is however impossible to know at this point whether or not VFM has been or is indeed likely to be achieved because the expensive element of the service contract relates to maintenance that generally will not be required for many years.
In relation to hospitals, we find that:
* The annual cost of capital for trusts rises with PFI by at least £45 m over and above the cost of a new hospital financed under the Government’s capital charging regime, even though the hospitals are considerably smaller than the ones they replace. This underestimates the additional cost of PFI, since the construction costs of PFI include an amount of up to 30% to cover the cost of private finance, transaction costs, etc.
* Conservatively estimated, the trusts appear to be paying a risk premium of about 30% of the total construction costs, just to get the hospitals built to time and budget, a sum that considerably exceeds the evidence about past cost overruns. Nine of the trusts report off balance sheet schemes, as the Treasury had originally intended, implying that most of the ownership risks have been transferred to their private sector partners. But as none of the corresponding SPVs report their hospitals on balance sheet either, this creates uncertainty as to who has ultimate responsibility.
* Within a few years of financial close, PFI charges are in some cases much higher than anticipated. This raises questions about the reliability and validity of the VFM case that was used to justify the decision to use private finance.
* The high cost of PFI means that about 26% of the increase in income in 2003 since 2000 is going to pay for PFI charges for new hospitals. About half of the income that the SPVs receive from the trusts relates to the cost of capital.
* About half of the income the SPVs receive from the trusts is paid to the SPVs’ subcontractors (typically sister companies) for construction, maintenance and services. Subcontracting in this way makes it difficult to isolate the cost of services in PFI contracts since subcontractors are likely to have multiple sources of income. This puts the public sector at a disadvantage when it tests the market some years into the contract.
* The SPVs were paying an effective cost of capital of 10% in 2002, about five points higher than the public sector’s cost of borrowing. The SPVs’ high effective cost of capital means that PFI contracts are considerably more expensive than the conventional procurement.
* The SPVs made a post-tax return on shareholders’ funds of more than 100% in each of the three years 2000–02, higher than elsewhere in the industry and which, in the case of the Meridian Hospital Company Plc, was more than expected.
* This financial analysis is likely to underestimate the total returns to the parent companies because the SPVs subcontract to their sister companies and some of these subcontractors benefit from additional income via user charges for car parks, canteen charges, etc.
* £123 m or 51% of the private sector’s receipts from the trusts are attributable to the cost of capital. Since this is about five percentage points above the cost of Treasury debt, then the extra cost of private finance constitutes the cost of transferring risk, the risk premium. The risk premium was approximately £62 m in 2002. It is unclear whether this is money well spent.
* Six out of the 13 trusts we analysed are in deficit, and four of the nine trusts with off balance sheet PFI projects had significant net deficits after paying for the cost of capital.
* Assuming that the financial performance of trusts is a proxy for affordability, then the fact that hospitals with PFI contracts were more likely to be in deficit than the national average in the period 2002–03 suggests that PFI is not affordable. This has potentially serious implications for service provision and access to healthcare.
* As well as the cost to the trusts, PFI creates additional costs at Treasury level since the capital charges that would normally be recycled within the healthcare economy ‘leak’ out of the system. We estimate conservatively that this is costing about £125 m a year.
Taken together, this financial analysis shows first, that in some cases PFI has turned out to be less economical than expected, and secondly, since these are all long-term projects, it is impossible to know whether they will deliver VFM over the full term of the contract. In so far as they are costing more than expected, this has an impact on the individual trusts and the wider NHS budget that must affect both staff and patients.
Financial Reporting and Accountability
* Despite annual costs in each sector of about £210 m for just these initial projects, there is little information available to the public as taxpayers and users.
* Financial information about PFI is opaque, partly because of Government-imposed confidentiality. In the roads sector in particular, this restricts access to the Highways Agency’s full business cases used to support the case for using private finance. The lack of information in the public domain makes it difficult to estimate the exact extent of the commitments incurred by the Highways Agency and the Department of Transport (DoT) and therefore provides little accountability to the public. In the NHS, disclosure is generally better than in central or local government.
* Private sector organisations use complex structures that involve close company status. Therefore related party transactions are not disclosed. The result is that returns on PFI projects are spread between these various entities and thus are disguised.
* Not only is there a lack of explanation for the treatment of PFI assets/liabilities and income/expenditure in both sectors, neither the treatments nor the amounts match across the public and private sectors. Some PFI projects are accounted for on balance sheet but others are off balance sheet and there has been a change in accounting policy in relation to some projects.
The net result of all this is that while risk transfer is the central element in justifying VFM and thus PFI, our analysis shows that risk does not appear to have been transferred to the party best able to manage it. Indeed, rather than transferring risk to the private sector, in the case of roads DBFO has created additional costs and risks to the public agency, and to the public sector as a whole, through tax concessions that must increase costs to the taxpayer and/or reduce service provision. In the case of hospitals, PFI has generated extra costs to hospital users, both staff and patients, and to the Treasury through the leakage of the capital charge element in the NHS budget. In both roads and hospitals these costs and risks are neither transparent nor quantifiable. This means that it is impossible to demonstrate whether or not VFM has been, or indeed can be, achieved in these or any other projects.
While the Government’s case rests upon value for money, including the cost of transferring risk, our research suggests that PFI may lead to a loss of benefits in kind and a redistribution of income, from the public to the corporate sector. It has boosted the construction industry, many of whose PFI subsidiaries are now the most profitable parts of their enterprises, and led to a significant expansion of the facilities management sector. But the main beneficiaries are likely to be the financial institutions whose loans are effectively underwritten by the taxpayers, as evidenced by the renegotiation of the Royal Armouries PFI (NAO 2001a).
Our study has identified a number of areas for future research including longitudinal case studies that track the long-term relationships between contracting parties; an investigation into the technical accounting issues that surround accounting for the assets involved in PFI; a comparison of the financial performance of trust hospitals with PFIs against those without PFIs; and an examination both of the impact on public expenditure and the financial performance and viability of both public and private sector partners.
In conclusion, as we state earlier, our concept of accountability in the context of public expenditure on essential public services implies first that citizens, or at least their political representatives, the media, trade unions, academics, etc, can see how society’s resources are being used and, secondly, that no members of that society are seen to have an explicitly sanctioned unfair advantage over others in relation to how those resources are used. With respect to the first point, the difficulties experienced by the research team in obtaining and interpreting the financial statements of the relevant parties do not generate much hope that patients, road users, taxpayers and other citizens can see how society’s resources are being used. It is significant that more information is made available both by the companies and the Government to the capital markets than to the public at large. Within the financial statements there is little information about the impact of PFI contracts on the performance of the procurer, and there is a build-up of commitments and implicit guarantees within very long-term contracts about which there is little transparency. With respect to the second point, our analysis suggests that PFI is an expensive way of financing and delivering public services that may, where public expenditure is constrained, lead to cuts in public services and/or tax rises. In contrast, we suggest that the chief beneficiaries are the providers of finance and some, but not necessarily all of the private sector service providers rather than the public sector.
The above article was reproduced from the ACCA’s own website at:
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