Select Committee on Health Minutes of Evidence

Memorandum by Catalyst Healthcare Management Ltd (PS 49)


  I attended the Committee's oral evidence session earlier today and was heartened by how the debate over the use of the PFI and PPP in the Health Service is moving from the ideological divide towards the practical challenges and opportunities which face both the Health Service and the private sector in implementing the NHS Plan.

  Unlike Norman Rose, I was trained as a cleaner in 1972 and am not a lawyer.

  I noted that the Committee was particularly interested in the innovative ideas which can come through partnership working, and also in details of employment packages and profit margins. I hope to be able, when giving oral evidence to the Committee on 15 November, to come equipped with some useful facts and figures which the Committee may find helpful.


  Catalyst Healthcare Management Limited is a subsidiary of Bovis Lend Lease Limited. It has three functions: to lead and coordinate the PFI bids for Bovis Lend Lease and its consortium partners; to act as agent for the project company investors to manage the project on their behalf, and to facilitate the development of best practice and the transfer of knowledge.


  The Catalyst consortium consists of Bovis Lend Lease, RCO (since acquired by ISS) of which I was managing director, Bank of Scotland and Societe Generale. The project reached financial close in July 1998, and the main new build was completed and patients moved in in April and May 2001. Refurbishment and demolition of old estate will continue until Spring 2002.

  This was one of the early pioneering procurements, beset by affordability issues, an unrealistic Public Sector Comparator, changing NHS requirements and site constraints. We have since learnt that these are fairly common in acute hospital modernisation and reconfiguration projects.

  The Trust had a strong team of managers and clinical representatives who knew what they wanted to achieve in terms of clinical adjacencies and functionality. There was for example a challenging model of care required for the treatment and nursing of mental illness patients in "family clusters" of no greater than six, all in single en suite rooms, providing a non-institutional environment whilst allowing the development of good socialising opportunities—which we delivered. There were health planning and bed capacity assumptions that changed during the course of negotiations which were accommodated, and post signing contract, significant variations between the mix of new build and refurbishment were achieved at marginal cost and that brought big operational and quality of environment benefits.

  Calderdale's objective was to procure an effective new hospital building with minimum outsourced services at lowest cost and as fast as possible. We believe the Trust achieved this.

  There were also some practical examples of where there is a clash of Government policy priorities. For example, green transport policies limit the number of car parking spaces because the aspiration is that people will use alternative forms of transport—but they don't. The site constraints at Calderdale have also meant that many of the car parking spaces will not be available until final demolition works have been completed.


  The same Catalyst consortium as at Calderdale reached financial close for Worcester in March 1999, and patients will move in to the hospital in March 2002.

  This is an outstanding healthcare solution. Worcester's approach was to engage with us to look at new healthcare models that were evolved through a joint design development process involving clinicians and healthcare planners appointed by the Trust to work alongside the Catalyst professionals.

  From the outset, the private sector was to provide all medical equipment and a wide range of non-clinical support services within the PFI.

  I have attached the comments of the Trust's architectural adviser on the approach to the project at Appendix A.


  The consortium comprises Bovis Lend Lease Bank of Scotland.

  This is a small acute hospital serving a large rural area. The Trust went to America to look at similar facilities, and the PFI project allowed them to realise the ideas they found there.

  We were delighted to respond to the enthusiasm of the clinical team to be completely involved in the design process and to assist them to achieve what they wanted.

  Notable points are the triangular ward design, which gives very short walking distances and excellent observation; the efficient and flexible theatre configuration and recovery area, and the incorporation of a Primary Care Centre linked to the main hospital.

  The Trust had decided to retain soft FM services in-house. We wait to see if this is the best long-term policy, but we are supporting its implementation.


  Catalyst is a short-listed bidder for the Havering project, known as the new hospital for Romford.

  From the outset, the Trust wanted an integrated healthcare asset and service solution. The private sector provider will be responsible for all medical equipment and Information Management and Technology Services (IMandT), and soft services.

  The Trust has a strong clinical project team supported by external advisers, and they have re-engineered the clinical practices, with clear separation of emergency services, elective services and rehabilitation. There are integrated care pathway programmes and clearly defined processes linked to the modernisation agenda. The output specifications are clearly defined for the private sector bidders, and the result has been greatly improved clinical adjacencies and efficiencies. This will be a ground-breaking modern IT-dependent new hospital.

  Regardless of the Public Sector Comparator and value for money analysis, there will be a valuable health gain outcome.


  Catalyst is involved in all three pilot schemes. The Retained Employment Model can clearly be made to work, but it may be difficult to demonstrate that it meets the three tests set for it: that the management structure makes sense, that it is value for money, and legal. It will also perpetuate the two-tier workforce, as was highlighted today. The industry is recognising that for good industrial relations and workforce stability, there should be harmonisation of pay and conditions for all employees whether transferred from the NHS or recruited in future. The 30-year nature of a PFI compared to short term contracting is changing the way the industry thinks and values its workforce.


  In our experience and as was highlighted in the oral evidence today, PSC assumptions have varied wildly. They do not seem always to be a realistic basis on which to make planning decisions about the reform of local health economies.

  The PSC measure the cost of inputs. It doesn't measure the benefit or value of the outputs.

  Government policy is to improve the environment for patients and staff, raise the quality of services, introduce new technology and reform and improve terms and conditions of employment for the lowest paid groups of staff. This has a direct cost which would be incurred whether the assets are publicly or privately financed. It is my view that this additional costs of change must be pump-primed by hypothecation.


  The provider of long term finance has a matched alignment with the Public Sector. Both have an interest in the project performing over its whole life to ensure repayment and return on one side and service delivery on the other. The financial return is directly related to the quality of the service achieved as measured through the payment mechanism. The action of private capital is integral to the delivery of PFI/PPP and will underpin the delivery of the NHS Plan.

November 2001

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