Millions for NHS pay, but little for beds and operations

Click to follow
Indy Lifestyle Online

Even by the standards of the NHS, accustomed to tales of woe, it has been a grim week.

Ministers have faced bleak headlines exposing shortcomings in the finances of the health service and gloomy predictions of the spiralling cost of one of its most high-profile projects.

The 11th-hour doubts raised by ministers about Britain's largest NHS private finance deal highlight the depth of the crisis facing the health service and reflect growing uncertainty in Westminster and Whitehall about how, and where, NHS care will be provided in future.

Patricia Hewitt, the Health Secretary, yesterday defended her decision to order a review of the £1.2bn plan to rebuild St Bartholomew's and the Royal London hospitals on the ground that it had doubled in cost while neighbouring hospitals had had difficulty attracting patients.

To add to the Health Secretary's troubles, a leaked Treasury document spelt out the coming squeeze on NHS funding and warned that it must cut costs, such as the drugs budget, to release extra funds for growth.

Even before that occurs, and despite the extra billions invested over the past five years, one in four NHS trusts is forecasting a deficit, amounting to a combined £948m by the end of this year, and is having to cut services to balance the books. Wards are being closed, operations postponed and appointments cancelled or deferred.

Six years after Tony Blair launched the NHS Plan in July 2000, an ambitious document which contained radical proposals to modernise heart, cancer and other services, backed by the largest sustained funding increase in the NHS's 50-year history, the nightmare that haunted the Prime Minister and successive secretaries of state for health may be coming true.

The spectacular sums invested in the health service look as though they have been swallowed without making a significant impact on the tide of demand. Vast sums have been spent on doctors' and nurses' pay - seen as essential to win their support for reform - and on their pensions. Yet the sums available for new hospital beds and operations, extra services that matter to patients, accounted for only 2.4 per cent of the £5bn extra invested in hospital and community services in 2004, according to an analysis by the King's Fund, the independent NHS think-tank.

There have been successes. The NHS was practically moribund when Labour won power in 1997, but the Blair government delayed for two years before attempting emergency resuscitation. Almost nine years on, its project to save a national health service funded from taxation and free at the point of need has won the support of the Tory leader, David Cameron.

Waiting lists at just under 800,000 are at a record low - 500,000 below their peak in 1998. Hardly anyone now waits longer than four hours in accident and emergency departments. Cancer and heart deaths have fallen by 14 per cent and 31 per cent respectively since 1995-97.

Yet NHS managers know that time is running out. From 2008, annual increases for the NHS are forecast to halve from the current 7 per cent to 3 or 4 per cent. Ministers claim that by then funding will be up to or above the European average, so the large increases of the past will not be necessary. But most NHS managers think that is fantasy.

There are other pressures. The pattern of health care is changing and some hospitals are already having difficulty attracting patients as more care is provided in GP surgeries and treatment centres. A couple of miles west of Barts, the flagship University College Hospital - a 700-bed institution on Euston Road in London, built with £422m of private money, which opened last July - ran up a £17.4m deficit in its first six months, in part because it has been shunned by patients. Its financial problems were disclosed as a second PFI hospital, the Queen Elizabeth at Woolwich, south-east London, admitted that it was technically insolvent and heading for a £29m deficit this year, rising to £100m by 2008-09.

The trend is set to accelerate with the publication of a White Paper in 10 days' time on expanding care outside hospital. The pace of reform is being stepped up with patient choice - from this month all patients can choose from at least four hospitals - and payment by results, under which hospitals are paid according to the number and kind of patients they treat.

The White Paper is expected to usher in a wider range of providers - including private health companies, pharmacies and health professionals - who can offer NHS services closer to people's homes. If patients can get treatment for their chronic condition from their local GP or privately run - but NHS-funded - clinic they are less likely to use expensively funded PFI hospitals. The measures are designed to increase competition and drive change. As a result, some services may falter and hospitals fail. The inevitable consequence is that turbulence will increase.

Soaring rebuilding costs put Barts' future in doubt

St Bartholomew's hospital has stood on the same site in Smithfield delivering care to the patients of east London for more than 800 years but its continued existence has looked increasingly shaky over the past decade.

The last-minute review of the latest plan to save the hospital, the £1.2bn privately financed scheme to rebuild Barts and the Royal London ordered by the Health Secretary Patricia Hewitt, has alarmed doctors who say it could destroy the trust. Ms Hewitt said that the cost of the project had doubled since it was first proposed four years ago, while waiting lists for cardiac care had plummeted.

She said she wanted to be sure that the cardiac and cancer facilities in the plan would represent value for money and would not duplicate facilities in other east London hospitals.

An independent review of the plans will be completed by the end of January.

More than 1,000 doctors at the trust wrote to The Times protesting at the delay. They warned that if cancer and cardiac care were transferred to neighbouring hospitals, Barts could be forced to close and the Royal London could lose its trauma unit, which played a key role in treating victims of the July 7 terrorist bombings in London last year, and helicopter ambulance.

A major A&E unit cannot function without the back-up of specialist services in cancer and cardiac care.

David Oram, a consultant gynaecologist at Barts, said: "The cruel thing is that the Royal London Hospital is an awful, crumbling, dirty, cramped place that is desperate to be flattened.

It is serving a huge population of some of the poorest people in Britain with the highest healthcare needs. The development of the Thames Gateway will add another 300,000 new residents."

The private finance initiative, under which hospitals are built with private money and leased back to the NHS, has given Britain the largest hospital building scheme in Europe, backed by investors attracted by the high rates of interest charged to the NHS for 30-year leases. So far 24 schemes are complete and a further 14 have been approved with a total value of £5.1bn. But schemes worth another £12.1bn are awaiting approval and they could now be in doubt.

Health department officials have warned about inflexible "monuments" that could lock the NHS into inappropriate hospital care for decades to come. At the same time the introduction of patient choice and payment by results will increase competition between hospitals and further undermine the security of their income just as they are about to take on expensive leases under the PFI scheme.

In numbers

Waiting lists:

1997: 1,058,000

2005: 826,300

Cost of the NHS:

1997: £46bn

2005: £94bn

Cost per head of NHS:

1997: £783

2005: £1,567

Average treatment waiting time (outpatients):

1999: 7.7 weeks

2005: 6.6 weeks

Average treatment waiting time (inpatients):

1998: 14.2 weeks

2005: 7.5 weeks

Number of GPs:

1997: 29,389

2004: 34,085

Source: Office of Health Economics

Comments