Hospital friends and foes

Public sector finance: The prognosis is poor for NHS volunteer shops. By Paul Gosling

The endearing but amateur tradition of hospital shops and trolleys run by charities may be drawing to an end. Growing commercial pressures are leading NHS trusts to seek the best financial deal when awarding contracts for services provided on hospital premises.

The National Association of Leagues of Hospital Friends, whose members run many of the retail services using volunteers, says it is a misguided approach. Profits from Leagues go to the hospitals, contributing towards improved patient facilities such as books and televisions, and even helping to pay for scanners and other vital medical equipment.

"Commercialisation within the NHS is beginning to bite hard," says Andree Koval, development manager for the association. "Leagues are facing uncompromising pressure to increase their scale of operations, turnover and profitability - or face downgrading or even closure. Some have fought and won battles with their trusts. There are serious consequences for the complacent League with a trolley shop or tea bar."

But it is easy to understand why trusts are reviewing their relationships with charity shops. Commercial retailers recognise the potential for shops on hospital sites, which have local monopolies, and are willing to pay market rents. Trusts have to balance that rent against the donations from Leagues, which can be as much as pounds 50,000 per year.

Doubt over the future of charity shops is just one of many symptoms of the drive towards a more business- orientated approach from trusts. Some trusts are even dispensing with chaplaincy services to cut costs, with remaining chaplains forming themselves into discrete business units, focused on cost-cutting and performance - or "measurable outcomes" as one chaplain refers to it.

Trusts are also examining their property portfolios with a view to selling surplus assets and contracting out the management of nursing and doctors' homes. The review has been driven not only by cost factors, but also by a sequence of reports criticising the NHS for owning too many empty properties, thereby depriving the health service of either capital receipts or income, while leaving some people unnecessarily homeless.

In the North Thames region some of the small cottage hospitals have been sold for use as private nursing homes. Other surplus units are sold to charities and consortia for day care facilities, and for care in the community uses.

Nursing and doctors' homes are a special priority. Many are dowdy, and, after the ending of Crown Immunity, required considerable outlays to meet fire regulations. The homes often have shared bathrooms and kitchens, when staff want fully self-contained flats. The cost of converting blocks of shared homes into flats is substantial.

"The stock had been run down, and the capital investment requirement made trusts shudder," says John Mills, managing director of West London Health Estates, an arm's length agency of the Ealing, Hammersmith and Hounslow Health Authority.

"Sales were made not so much to draw capital for use elsewhere - though if that happened it was a useful bonus - but to find capital from elsewhere to improve our staff accommodation. Our big problem was attracting staff, and why should a nurse work for us, and live in poor accommodation?" asks Mr Mills.

Increasingly, staff accommodation within a campus is managed by a housing association on behalf of the trust. Rental income goes to the trust, with a management fee deducted. Homes that are off-site are more likely to be sold to a housing association, but with the trust retaining nomination rights. The now commonly held view among trusts is that they should concentrate on the thing they do best, offering health care, and allow housing specialists to provide housing.

Last month the Kensington Housing Trust bought 403 accommodation units from the Kensington and Chelsea and Westminster Health Authority, and agreed to provide a further 461 bed spaces, having borrowed pounds 8m from CLF Municipal Bank for the purchase and subsequent development. Staff from the health authority who managed the properties have been transferred to the housing trust.

At Ashford, not only is the trust involved in selling homes and leasing them back, but it has also sold 10 acres on the edge of the hospital complex to Tesco for a superstore. The capital receipts paid for the desperately needed refurbishment of a hospital, built 150 years ago as a workhouse infirmary, with overspill wards in wartime huts.

When hospitals have been forced to cope in such unsuitable premises it is difficult to criticise trusts for taking radical steps to bring health care into the modern world. But many patients and visitors will feel a touch of nostalgia for the old world of the charity trolley and the chaplain on his ward round.