Plans to turn a 28-bed NHS ward into a 15-bed private ward at the Chelsea and Westminster hospital have been given the go-ahead by health officials, despite claims that taxpayers are footing the pounds 8.6m cost.
Michael Portillo, writing as Chief Secretary to the Treasury before yesterday's Cabinet reshuffle, stated it was 'clearly unacceptable for a public sector body to compete unfairly.
North Thames Regional Health Authority agreed to the change of use at a meeting this week, but because it is so contentious the proposal will have to go to the Secretary of State for Health, Virginia Bottomley, for final agreement
Opposition has come from all quarters, including private hospitals, who have joined in an unlikely alliance with the community health council and local Labour MPs to fight the plans.
Barry Hassell, chief executive of the Independent Health Care Association, claims the hospital's private ward will undercut private hospitals because the building costs, which have been met from NHS funds, will not be costed into the price of each bed.
He also fears the hospital will not be able to account properly for costs such as X-rays and tests which will be shared with the NHS.
Mr Portillo's intervention came in a reply to a letter from the association expressing its concerns.
Opponents to the plan claim each bed in the hospital has cost pounds 300,000 to build. By converting 28 of those NHS beds into 15 private ones, the capital cost of each private bed rises to pounds 575,000. That effectively means the general public will be footing a pounds 8,625,000 bill for the capital cost of the private ward, taken as a proportion of the entire building cost.
'I find it a very strange strategy,' said Mr Hassell. 'It is NHS money which should not be invested in private facilities.
'You have a flagship NHS hospital with spare capacity, while London is covered in Victorian hospitals. Why aren't we using high-tech NHS facilities for NHS patients rather than playing around with private work.'
He also argued that London already has more than enough private beds and that with such high capital costs per bed the hospital cannot possibly make money out of the venture. Most private hospitals would only consider paying a maximum of pounds 150,000 capital costs per bed, he said.
Sue Towns, chief executive of Riverside community health council, argues the NHS will be subsidising private beds while NHS patients continue to remain on long waiting lists for certain treatments. 'Obviously we would like to see this costly NHS hospital filled with NHS patients,' she said.
Clive Soley, Labour MP for neighbouring Hammersmith, also condemned the proposals:
'I'm fed up with the NHS taking second place all the time. Why does a ward have to be converted to the private sector in a hospital which cost pounds 200 million to build? We are really just building something for the private sector.'
He wants to know how much these hidden capital costs would be subsidising private patients using the hospital and intends to write to Mrs Bottomley to ask her to justify what is happening.
But David Highton, the hospital's chief executive, defended the plans: 'We don't think we will need the beds for NHS patients. This is a ward that is never likely to open and in the meantime it will generate a surplus of pounds 350,000 a year which is being ploughed back into the NHS.'
And he challenged the assumption they had an unfair advantage over private hospitals by disguising their costs in NHS overhead charges.
'The private sector are competing in the NHS market. We have no compunction competing in theirs.'
The cost of converting the existing 28-bed ward into larger individual private rooms will be met from hospital trustees, rather than NHS funds, he said.
This is the latest twist in a long running saga about the cost of the hospital, which has been dogged with problems since it opened in 1993.