- Professor of Health Policy Peter Bradshaw on the South London Healthcare Trust going into administration – the thin end of very thick wedge?
A substantial political row has erupted over the legacy of a Public Finance Initiative (PFI) for the health service in general and for one hospital trust particularly, the South London Healthcare Trust that is facing insolvency.
NHS debt emanates from three sources:
• historic debt
• low patient throughput that limits income
• failure to contain costs
All three apply to South London Healthcare, which has been put on warning by Secretary of State Lansley that it could be declared bankrupt. The trust was cobbled together from three hospitals in 2009; the Princess Royal in Orpington, Queen Mary’s in Sidcup and Queen Elizabeth in Woolwich. By this point their combined annual debt was £21m, something which has hurtled to £60m.
So what is the PFI in the NHS? Private finance initiatives are financial contracts between private companies and NHS organisations to build NHS hospitals. Historically, the Treasury provided the resource whereas a PFI offers a way of funding major capital investments, without immediate recourse to the public purse. Borrowed money does not appear in Governments accounts and as such provides an economic ‘slight of hand’. Rather the debt appears on the balance sheet of the particular NHS Trust and this debt has to be serviced at patients’ expense. The trust has in effect, a mortgage lasting a minimum of 30 years with all the incumbent interest charges involved and repays the private company under a system of annual fees. So what in fact was an ‘interest free’ Treasury-funded initiative has become a magnet for private profiteers to exploit the innocent taxpayer.
And what will be Secretary of State Andrew Lansley’s likely solution? There are 20 similar Trusts to South London and this is manna from heaven for Mr Lansley. It resonates totally with his NHS and Social Care Bill and makes him in terms of traditional Tory dogma, look Messianic. His formula will be predictably simplistic:
• Blame local management and ignore the reality of the impossible job they inherited
• Shame the Trust Board by putting it into administration
• Seek a private provider to take on the lucrative and profitable parts of the Trust’s work with inevitable service reductions for patients
• Leave the unprofitable tasks for the taxpayer to fund
Such is Mr Lansley’s right wing boldness on this one; it could save him his job in the Cabinet. And his covert maxim to us by the way is – ‘sod the patient and sod the taxpayer’ – who lose all ends up!
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