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  • Beware this dangerous "silly season" for the NHS

    Monday 17th August 2015

    Eagle-eyed researcher Richard Grimes and the excellent Our NHS website have flagged up the fact that a newly-appointed Tory Minister for NHS Productivity, Lord Prior, has set up a fresh inquiry into the possibility of funding the NHS through user fees for service.

    The proposal, made apparently informally in the course of a low-profile debate House of Lords, has all the trappings of a stitch-up, since only like-minded peers seem likely to be invited to take part in discussing this zombie idea, which keeps constantly resurfacing, with little if any public involvement.

    It has been swiftly followed by a report from CIPFA - the Chartered Institute for Public Finance and Accountancy - which dismisses the chances of the NHS making the required 22 billion of savings over the next five years. It concludes from this that the government must either come up with more money for the NHS, or reduce services, or "charge users more".

    "To choose none of those is not a realistic option." We can expect an orchestrated campaign of such arguments to grow in the next year or so.

    This raises the possibility of the new government publicly flouting David Cameron's previous explicit insistence that patients would not face charges for treatment or be required to take out health insurance. But we are in a period in which a newly-elected Tory government feels free to ditch its pre-election promises and earlier commitments, and crack on with the policies which will appease the right wing back benchers and the backwoodsmen who fund the Party.

    Meanwhile Monitor, the NHS regulator, has written to cash-strapped trusts facing a massive 2 billion total of deficits this year, telling them in effect to disregard targets for waiting times, and tear up guidance on safe staffing levels, with all financial penalties suspended in a desperate effort to balance the books.

    Monitor, too, is saying there is simply not enough money to maintain NHS services as before - again proving that Cameron's bland pre-election promises of an extra 8 billion for the NHS by 2020 is no guarantee that services will not be slashed to ribbons and the choicest services privatised.

    We are entering a new, dangerous, silly season in politics. That's why the underlying principles of the NHS, as a tax-funded universal system delivering a comprehensive range of health care free at point of use, and free to plan and allocate resources according to need rather than market forces, are again being questioned - and constantly undermined.

    In addition to the fact that it is socially regressive and economically nonsensical, the very idea of introducing user fees for the NHS is also a major electoral liability. Even the recent King's Fund Barker Review weighing up a series of unpalatable "options" rejected the idea of user charges, while suggesting a range of taxes, mainly on the elderly, to help pay for increased investment in the NHS.

    But just because a policy is mad and unpopular does not mean that neoliberals don't aspire to do it.

    The combination of the continued, tightening freeze on NHS budgets, coupled with demands for massive, unprecedented "efficiency savings" and the chaos of the new, dysfunctional system introduced by Andrew Lansley's Health & Social Care Act, also results in all kinds of common language being turned upside down.

    "Devolution" - in Manchester, Cornwall and now increasingly planned for other areas of England - has been transformed from a progressive measure putting health services to some degree under democratic control, into a bureaucratic monster, with imposed mayors and arrogant decision-making by small cabals of self-important councillors.

    Instead of a transfer of real powers to a more local level, budget pressures mean "devolution" is now an exercise in shifting blame for unpopular cutbacks and closures from central government - which since the 2012 Act no longer has any duty to provide health care - to unwitting but ambitious local authorities.

    In countless 'Our Healthier Area' projects and Simon Stevens' Five Year Forward View, 'public health' and 'preventive' measures now no longer mean long-term interventions tackling the social determinants of ill health and designed to make the local public healthier. Instead they have become a magic incantation which is somehow supposed to achieve miraculous short-term reductions in use of hospitals and health services - and generate billions in "savings," irrespective of the 200 million slashed from public health spending in Osborne's budget.

    The mantra of "integration" of health and social care services is also echoed by all the main parliamentary parties. In itself it's a desirable goal - if the objective is to extend the NHS principle to social care and scrap the present means-tested charges.

    But in place of any genuine "integration" we are faced in real life with the disintegration of an under-funded, largely privatised social care system, which will be further torn apart by another five years of cuts under George Osborne's plans for local government.

    The NHS, too is visibly disintegrating: Clinical Commissioning Groups are one after another restricting the range of services they will pay for, capping numbers of treatments, and finding excuses to exclude smokers and overweight patients from treatment, and conniving with local trusts as they flout targets for patients to wait no longer than 18 weeks for treatment.

    Different CCGs are now adopting different, contradictory plans for future services: in Somerset, GPs appear ready to pool part of their primary care budgets with hospital budgets and social care to create a new "outcomes-based" system of commissioning services.

    But in the North East, a Health Service Journal report reveals Northumberland CCG is proposing a completely different scheme to hand the bulk of its budget and commissioning functions to Northumbria Healthcare Foundation Trust, to be administered by a "provider led Accountable Care Organisation" - not yet established.

    The Trust would deliver emergency and acute services as well as community health, and it already runs a number of GP practices. Other GPs in the area would be encouraged to group together in federations: they too would work under contract with the trust.

    The scheme appears to break down the "purchaser/provider split" that has dominated much of the NHS since Margaret Thatcher's government introduced a costly "internal market" in 1991, later transformed by Tony Blair's government and then the Lansley Act into a full-scale competitive market involving the private sector.

    However the establishment of an Accountable Care Organisation also worryingly copies similar organisational structures in the USA, where ACOs run by private insurers operate in the private sector. This raises obvious fears of a future privatisation - if the private sector could be assured it could make a profit after being stung by a series of losses from NHS contracts to deliver clinical services.

    But while the first NHS ACO is being set up, other CCGs are following different lines. Some are dividing up whole "pathways of care" and groups of services, with each going to "lead providers," many of them private companies. These include Bedfordshire (contracts for Musculoskeletal services and dermatology); Nottinghamshire (who disastrously awarded a dermatology contract to Circle, resulting in the collapse of specialist services in Nottingham as consultants departed rather than work for the company); and Cambridgeshire (where a long wasteful saga of seeking to contract out Older People's services wound up eventually giving the lead provider contract to a consortium led by local trusts).

    The most notorious case is Staffordshire, where the contract for End of Life care seems certain to go to a private provider, while the even more controversial cancer care contract is in chaos after the only Staffordshire trust in the consortium - University Hospitals North Midlands - pulled out of negotiations, arguing that they could not guarantee to treat a rising caseload with the limited funding on offer. Only the Royal Wolverhampton Hospitals Trust is hanging on.

    The Staffordshire CCGs that have been driving the process, shamefully egged on and financed by cancer charity Macmillan, are now left with a lame 'consortium' led by support service provider Interserve, which has no clinical expertise, and now no prospect of being able to offer a viable or accessible service.

    But with so much prestige now at stake for the CCGs, which have defied local opposition to press the scheme through so far, there seems little chance of them seeing sense and scrapping the whole farcical process to negotiate a fresh contract with the trusts.

    It's a crazy, dangerous time for the NHS: the unthinkable is not only being thought, but put into practice by senior managers desperate to balance the books, while the Tory right look for ever more avenues for private sector takeover.

    It's a time for health campaigners, health unions and the growing numbers drawn into progressive politics by Jeremy Corbyn's astonishingly popular challenge for the Labour leadership to get together to build a new, bigger and united challenge to a Tory government with a wafer-thin majority.

    Another NHS is possible - and affordable if the scrounging rich would only pay their share of tax. To reinstate the NHS and protect it we need a movement that is stronger and more powerful than before. While the Tories dream up more unthinkable policies, let's make sure we keep our eyes on the prize - and focus our anger on the enemy in front of us.

  • Hinchingbrooke: the countdown to failure
    John Lister

    Wednesday 18th March 2015

    The disastrous contract for private hospital chain circle to run Hinchingbrooke Hospital in Cambridge has now been branded a "failed experiment" by the Commons Public Accounts Committee. But the MPs have only just woken up to a problem some of us have been warning about for years.

    Almost exactly five years ago, as the shortlist of bids was shaping up in the contest for the 10-year 1 billion franchise to run Hinchingbrooke, health union UNISON warned in a press release "Private firms can't run a general hospital." It took just three years of bitter experience to prove them right.

    In April 2010, the only shortlisted NHS contender, Cambridge University Hospitals Foundation Trust, had just pulled out of the bidding.

    That left Circle Health competing with Ramsay Health Care UK, and Serco for the contract to run Hinchingbrooke, which then had a turnover of 96m, but was lumbered with a 40m historic deficit after falling foul of the government's so-called "payment by results" system as implemented by the inept and insensitive East of England Strategic Health Authority.

    Although it is small in NHS terms, with up to 310 beds, a busy A&E, 25 paediatric beds and 12 SCBU cots on site, and a mix of emergency and elective admissions, Hinchingbrooke hospital was more than six times larger and many times more complicated than the average private hospital in England. It is more than ten times larger than Circle Health's extravagant private hospitals in Bath and Reading - which have scraped through financially only on the strength of treating NHS patients in otherwise empty beds.

    UNISON's Eastern Region Head of Health Tracey Lambert said "We are shocked to find that none of the shortlisted firms has any experience of running clinical care in a medium-sized hospital. Surely that should be a basic requirement?

    "We can't understand how these three companies got through to this stage of the tendering process: they should have been ruled out from the beginning as completely unsuitable to run a busy general hospital."

    But the bids weren't thrown out: instead the bidding became even more fiercely competitive, winding up with Serco and Circle each trying to outbid the other with implausible promises to generate huge cash savings - and restore the fortunes of the hospital.

    East of England SHA was already notorious for its eagerness to promote private sector solutions, and Dr Stephen Dunn, its Director of Strategy, seemed determined to force through a franchise deal to put a profit-seeking company at the helm at Hinchingbrooke, despite the only, grim, precedent.

    Seven years earlier, in a reckless experiment, private contractors (Secta) had been the first company to be put in charge of an NHS hospital (Good Hope Hospital in Solihull). This adventure wound up as a predictable, costly failure, with the Trust even deeper in debt, the contract prematurely terminated, and the management taken over by a neighbouring Foundation Trust.

    Learning nothing from this past fiasco, Dr Dunn and his chums were all too keen to let Circle have a go, and even more enthusiastic when in a final round of bidding, Circle offered the biggest (albeit completely baseless) promise to generate savings, claiming a staggering 311 million could be saved over ten years.

    This outbid the equally tenuous Serco proposition, so the implausible deal, which meant Circle's profits would not begin until they had got Hinchingbrooke's finances into surplus, was rubber stamped by NHS East of England, and by the new Tory-led coalition, already pushing their own plans to split up much of the NHS into bite-sized chunks for private bids. The contract was signed in November 2011, to take effect from the following February.

    Everyone involved seemed to be happy: Dr Dunn said:"This is a momentous day. Circle secured this operating franchise following an open competition. They outshone the best of the best from the NHS and independent sectors. This will usher in a new era, unleashing innovation into the NHS, with staff and patients firmly at the centre."

    The private sector were delighted and grateful: even before the deal had been signed, Dr Dunn had been awarded prizes by Healthinvestor magazine for his efforts to create this franchising experiment.

    Tory ministers and the media embarked on a wild love affair with Circle, the private company that claimed to be a 'partnership' offering 'shares' to its staff - with allusions to the successful John Lewis Partnership - but was run by city slickers and owned by hedge funds.

    Ali Parsa, a former Goldman Sachs director, was the mercurial driving force of Circle, beloved by the media despite his cavalier disregard for facts, and kept popping up, most frequently on the BBC, but also in the Daily Mail and even the health trade press.

    But things quickly started to go wrong. Ten months later, in November 2012 a National Audit Office report on The Franchising of Hinchingbrooke Health Care Trust was published, as the financial performance and patient satisfaction ratings of the hospital took a sharp turn for the worse.

    The NAO criticised NHS East of England's lack of rigour in the scrutiny of the final contract and noted that the Circle contract was based on "assumptions that were not directly informed by previous experience" (page 7). It warned of the franchising out of management: "This approach is untested in the NHS and it is too early to establish and understand the outcome." (page 40)

    The NAO went on to question the central tenet of the contract - the huge commitment to cash savings:

    "Circle's projected savings of 311 million over ten years are unprecedented as a percentage of annual turnover in the NHS. If delivered, Circle's proposal will make savings of over 5 per cent recurrently each year over the ten-year life of the contract.[] However, Circle's bid did not fully specify how it would achieve these savings." (NAO page 8)

    There was also a brutal bottom line if the company failed to deliver: it would get paid nothing, and could lose up to 7m before escaping if the contract goes seriously wrong:

    "Circle only receives payment when the Trust generates an in-year surplus. If the Trust does not generate a surplus in a given year, Circle must cover up to 5 million of the shortfall from its own resources. If the 5 million threshold is breached, either Circle or the Trust board, with the Authority's approval, have the option to terminate the franchise." (NAO page 29)

    The NAO report did not see that Circle was already expecting to miss its first year 9.9m savings target by almost a quarter. Indeed during the summer of 2012 the company itself was propped up by raising another 47m from its astonishingly patient but as yet unrewarded investors.

    A Health Service Journal report based on an unredacted copy of Circle's business plan, revealed a planned 20% cut in workforce - 320 jobs, 130 of them clinical posts. (HSJ November 8 2012:13)

    Less than a month later Circle's founder, front man and chief executive Ali Parsa stepped down unexpectedly as Chief Executive, with a 400,000 pay-off. Days later a highly critical Commons Public Accounts Committee was told by Sir Neil McKay, chief executive of the SHA at the time of the contract, that there was no real plan B if Circle walked away: there was only a token, 3-person Trust Board in place.

    Somehow in 2013 the company managed to wriggle free of such critical scrutiny, but outside of the limelight the management regime at Hinchingbrooke was a far cry from the carefully-spun public image of Circle Health as a "John Lewis-style partnership," owned by its staff.

    The 2013 NHS staff survey revealed a very different picture, of a Trust that scored worse than average on 19 of 28 key measures, and in the worst 20% on almost half the questions. Despite the talk about "partnership" Hinchingbrooke staff reported above average rates of bullying - and just 27% of staff felt there were enough staff for them to do their job properly.

    Staff didn't feel empowered, but exploited. Circle time and again refused to meet with staff unions. Staff were required to wear new uniforms sporting 'Circle Hinchingbrooke' in place of any NHS logo. The company would not even allow staff time to attend their "partnership" meetings. Vacancy levels grew, as did the bills for more costly agency staff to keep services running.

    In the summer of 2014 Hinchingbrooke was one of just 19 to be referred by the Audit Commission to the attention of Health Secretary Jeremy Hunt because of its chronic financial problems. The level of company subsidy to the Trust was rising towards the 5 million threshold that could allow Circle to cut its losses and walk away. The position of the Trust was undermined further by policy decisions of local health commissioners: Circle were not getting the special treatment they had pinned their hopes on.

    Meanwhile behind the scenes Circle as a company wound up its much-vaunted Virgin Islands-based "Circle Partnership", through which staff had been given worthless shares which gave them no power, paid no dividends, and they could not sell.

    Circle - based in the tax haven of Jersey - decided that staff would now to be given undefined numbers of "free" shares making up less than 10% of the restructured company: so they would still have no voice in the running of either Circle or Hinchingbrooke Hospital.

    The main company, Circle Holdings, which took all the decisions, is almost entirely owned by hedge funds, many of whose top bosses are long-time donors to the Conservative Party. The company has never made a profit, and would have collapsed already without extensive patronage from the NHS (which accounts for 93% of Circle's income) and repeated cash handouts from its wealthy owners.

    Things began to unravel faster towards the end of 2014, with the imminent publication of a highly critical report on standards of care from the Care Quality Commission, a collapse of support from the "Friends and Family" survey which Circle had once boasted about, a deteriorating financial position, worsened by a continued exodus of staff and soaring costs of agency staff.

    Papers for the Trust Board's October meeting listed the dangers of "contract penalties and deductions" for poor performance could add up to a massive 1.6 million - with another 800,000 at risk if the trust lost out on validation of some of its invoices.

    Early in November 2014 Hinchingbrooke's Finance Director Jenny Raine left her post, amid growing signs of chaos. The company's half-year report showed Circle's "support payments" to the Trust had reached 4.85m - just 115,000 short of the 5 million figure that could allow Circle to escape from the contract, or demand a renegotiation.

    UNISON called for Circle to be sacked; but it was not until January, just before the publication of the critical CQC report, that the long-expected announcement was made that Circle was pulling out. Deficits had already exceeded 7 million, allowing the firm to walk away without additional payment - leaving the NHS to clear up the mess they had left behind. The Trust has now called for a 9.6m bail-out from the NHS.

    The Circle era at Hinchingbrooke was a triumph of spin over substance, of clever PR over performance. Even as the company announced its departure it briefly threatened to take legal action to overturn the damning CQC report, and whipped up a short-lived media frenzy over an absurd allegation of a Labour party "plot" to unseat Circle. The Daily Mail did its best to keep this lame horse running, but as the date for its departure loomed, Circle dropped its challenge to the CQC findings - quite possibly to avoid further exposure of its failings as the company bids for other NHS contracts elsewhere.

    So UNISON and the campaigners were right all along: private firms can't run a general hospital. Whenever spurious calls are made to bring in private "expertise", the grim lessons of Circle's failure should be a reminder of how it can go wrong. Hinchingbrooke now looks like the Good Hope scenario all over again, as an NHS Foundation trust could be the best hope for getting the Trust back on track. If the private sector seems to be the answer, you are asking the wrong question.

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