Select Committee on Health Minutes of Evidence

Examination of Witnesses (Questions 500 - 519)



  500. Even though your PFI was value-for-money you had to make it smaller because—?
  (Ms Herbert) That would be an over statement. All I am saying is there is more pressure in the system to reduce beds if you have a PFI scheme. I am by no means saying it is the driving factor, that would be totally incorrect.

  501. If it had been a public sector scheme would it have been a bigger scheme?
  (Ms Herbert) I could not say that either. I would just say there is more pressure to get the scheme affordable, in my view, if it is a PFI.

  502. Why is there more pressure if it is supposedly value-for-money?
  (Ms Herbert) The value-for-money issue, I would suggest, is quite marginal, it is based on a number of assumptions, including risk transfer, and the other things we have mentioned.

  503. Is it because you were not offered smoothing monies early enough?
  (Ms Herbert) No. I would say that we were always going to be under pressure at the time that we did our PFI to reduce bed numbers and to make the scheme affordable in the sense that it actually cost the health economy less after the reconfiguration than before. I am also saying there was, to some extent, more pressure on us, I could not quantify it, maybe 10 per cent more pressure because of the PFI, because of the front loading of the cost despite smoothing monies to help that along.
  (Mr Deegan) It is a slightly different position in Central Manchester, and demonstrates the difference between PFI schemes which were up and running prior to the major expansionist philosophy from the NHS Plan and those planned in the last year. In our scheme we are looking at how we can meet all of the access targets in the NHS Plan, the demand of the National Service Frameworks, so we are sitting down with our staff and PCTs and other colleagues to work that through. In our written memorandum of evidence we said there would be an extra 100 beds; there is acutally 190 extra beds and ten extra theatres.

  504. Would there have been even more if you were looking at a public sector scheme?
  (Mr Deegan) It would be the same analysis.


  505. Professor Pollock, you have argued very strongly about the future of PFI, have you any comment on the comments you heard from your colleagues to your right?
  (Professor Pollock) I think there is absolutely no doubt that the affordability problems drove this, especially when you look at the planning and the full business cases of many of the trusts. I think also there is no doubt that since the National Bed Inquiry the government has realised the political significance of beds, there has been a massive reversal in policy. You have seen that in the policy that was published following the National Bed Inquiry a year ago last June. It should be no surprise that we are looking at a situation. Beds are still closing, even this year NHS beds closed, this time it was only 300 or 400 hundred beds.

Julia Drown

  506. Are you saying that because of the change of policy PFI is now producing more beds?
  (Professor Pollock) No. I am saying two things, one is that the implication of debt finance and capital charges put a massive pressure on trusts and led to bed closures. This was compounded and exacerbated by the fact that trusts got into PFI deals, I think South Manchester confirms that. That was revealed both in the business cases and also when we talked to people you could see that very clearly. The government is now clearly very sensitive to this issue and is taking steps to try and remedy it, although I think in Carlisle there is a private hospital being built in the grounds at the moment.

Dr Naysmith

  507. It is very, very important and crucial to our argument that there is no doubt there is a correlation in time between the reduction in bed numbers in all hospitals, whether they are new ones or old ones or ones that are about to be built, and it was so early in the days of this government as well when there was pressure to reduce the number of beds. People were told they had to increase efficiency and throughput and get 98 per cent efficiency, and things like. This was happening at the same time as PFI was, new schemes were coming in. What you are saying is that PFI reduced the bed numbers more, because there were PFI schemes, than similar hospitals elsewhere were doing. We know that PFI was unpopular, if you go around and ask people in the health community they are immediately going to look for a reason why bed numbers are going down. Is that PFI that is doing it? You know as well as I do you can correlate all sorts of things with all sorts of things, what is important is establishing some type of causal relationship, and that is what is really missing. We went to Durham, where you say it is very clear that that is what happened, and the people at Durham did not necessarily agree with that.

Julia Drown

  508. With the exception of UNISON and the Hospital Consultants Association, who have been advised by your union, the health managers were saying it would have been the same as anybody else.
  (Professor Pollock) And they are being advised by the DOH.

Dr Naysmith

  509. There is a correlation in time between the reduction in bed numbers, the time we are talking about when PFI was beginning to get up and off the ground and starting, that is obvious, but is there a causal relationship between the two? That is what we really want, real evidence to say that that is true.
  (Professor Pollock) You have to remember that formally before 1991 planning for new hospitals was taking place at regions and health authorities. The planning tiers were stripped out and the expertise was lost, and that is really regrettable, because they did it on the basis of needs assessment. Anybody that looked at the regional planning will be so impressed by the rigour.

  510. I think it was a great mistake to reduce the bed numbers.
  (Professor Pollock) The second thing that happened was the planning function, along with the responsibility for investment, was devolved to trust. Trust did not have the capability, all they wanted was to secure a PFI to guarantee their future. What they did was they went out to management consultants. From our look at the full business cases many of those management consultants were not competent to do proper planning. There are two problems, some of the trusts, like Carlisle, did not even have planning of beds and proper estimates of case load. In others like Norfolk and Norwich the planning went so badly wrong that they had to revisit those schemes twice. The planning was pretty abysmal. There is no doubt there was a complete dislocation of planning from the needs of the population. The financial issues drove everything, the issue of affordability and the main thing for the trust was to get a hospital assigned to secure their future for 30 years. Even in my trust I saw ridiculous performance targets, length of stay, day case assumptions being made in other to rachet down the case load to fit with the number of beds they could provide. Time and time again, and clinicians will tell you, these processes arise. I think the full business case together with the financial material provides very, very good data and the evidence of the downsizing and the NHS.
  (Ms Herbert) Can I say, what you are saying certainly does not feel to me like what happened in our trust. I would say that we planned this to the nth degree in terms of patient flows and we worked very hard to make sure that what we were planning was underpinned sensibly on the basis of population, population needs and the usage of beds. I would say that NHS professional managers, by and large, were extremely keen to make sure that they had new hospitals but for very good reasons, to address issues of risk in patient care, in our case, by trying to manage two hospitals miles apart and having to move patients or critical clinical staff around the place to make sure we could deliver safe clinical care. What we were doing was something that I believe was important in terms of improving the service to patients and it was certainly properly planned.
  (Mr Deegan) Just to follow on from the last contribution, again a very similar position in Central Manchester, there was a great deal of planning, 12 clinical user groups were actually involved in the detailed specifications. Also, the key indicators around bed numbers, theatre numbers, occupancy rates and projected length of stays they have all been signed up by the clinicians in those particular areas.

  511. Finally I wanted to ask Professor Pollock, without accepting that bed numbers reduced because of PFI historically, is there anything in the system now that is still contributing to reductions in schemes funded by PFI?
  (Professor Pollock) I have not looked at any recent schemes but I think the whole issue comes down to affordibility. When you see the cost of capital rising from 9 per cent to 20 per cent something has to give, it has to be staff and it has to be services, that is the bottom line, unless you are going to expand your budget massively in order to accommodate that, and there is no sign of that happening.

  512. That will make things much more open. If the cost of property is removed from the equation you are then faced in the trust if you have a new initiative that you want to follow up you cannot say, we do not have the money let us not paint the wards or fix the roof this year. You have to make the decision either to get more money or change something else.
  (Professor Pollock) You are asking a question about how trusts deal with maintenance.

  513. I was responding to what you said, I forget how you actually put it.
  (Professor Pollock) There is no flexibility left. You have gone from 9 per cent to 20 per cent—

  514. That is exactly my point, there is no flexibility left in terms of not deciding to do maintenance and you are then faced with a choice, and there are all sorts of ways of getting round that, like putting taxes up and various other ways, you are faced with a choice, you have an honest choice to make.
  (Professor Pollock) I do not think it is terribly honest because the way trusts are now configured is they only have financial duties, they only have to break even to please the government. I do not think it is honest because it is not explicit the extent to which services are being cut and needs will not be met.

John Austin

  515. As somebody who comes from an area which suffered probably more bed loses than anywhere else in the United Kingdom as a result of the Bottomley Initiative, having looked at the various private finance schemes that we have seen I accept that most of that massive reduction in beds came about before the levelling of the PFI contracts. In almost all of the ones we have seen there has been a further reduction in beds between the publication of the outlined business case plan and the final bed numbers. Whenever we have asked questions about that it has come back to the fact it has been driven by affordability. There has also been, I think, a greater pressure within some of the newer hospitals because it was then argued that you can get those greater efficiencies, throughputs and shorter stays etc, all of the myths that lead to Mrs Bottomley's disastrous policy in the first place. Having recognised that we do have too few beds, as the National Beds Inquiry has shown very clearly, how much easier is it or economic would it be to redress that by increasing the capacity, coming back to flexibility, within a PFI scheme than it would have been under an efficiently managed and professionally financed operation? How much easier would it be to reopen and re-staff those wards that were closed?
  (Ms Jackson) We have not approached planning for our scheme as a private finance scheme or a publicly funded scheme in terms of its capacity. All of the planning was done on the basis of demand and activity levels. We have also tried, as Julia Drown suggested, to reorganise the way the services are provided so we can provide the services more efficiently. We have not only increased the number of beds to take account of the large increase in case load but we have also changed the way the services are provided by using some of those beds a lot more efficiently to provide dedicated day case and short stay facilities.


  516. I became quite unpopular in my own area for a number reasons, one of them was when we made the outline bid for a capital scheme there was a big debate in my area about beds and I was arguing very strongly that current assumptions on beds are based on the fact that we do not have any proper planning preparations in relation to the connection between the Health Service and local government, the other was because we have two separate organisations, one is health and one is social care and we have this nonsense that wherever we go we find people in hospital beds who do not need to be there. It is very interesting that when we went to both Durham and Carlisle the one big point they made to us about lessons to be learned was there needs to be a whole systems approach to planning PFI schemes. In a sense, it sort of reinforced my view that when we argue about bed numbers you have not just to look at the acute sector you have to look at your whole local health economy and social care. What is the experience in Manchester? You must hear better from there than your colleagues to your left. I do not know the detail, I do know your area a little bit, of the difference in hospitals, what connection was there to ensure there was planning about the wider of use of intermediate care provisions, et cetera?
  (Ms Herbert) There was a very big contrast about four years ago when the social services and the acute trusts were really at loggerheads and not working together. At that time we had large numbers of individuals in acute beds who did not need to be there. The situation has completely changed and there is now extremely good joint working between social services and certainly our trust.

  517. Were they involved in your capital project?
  (Ms Herbert) No.

  518. That is very interesting. Why not?
  (Ms Herbert) Pass. I do not think we thought of it.
  (Mr Deegan) On our Strategic Board are the Primary Care Trust and the City Council. It is the Manchester Health Authority that has the responsibility to align the plans around the acute beds, the point you make, plus the intermediate care beds. It is their responsibility to look at the National Bed Inquiry recommendations across the whole piece. There will be expansion in certain areas, there has been investment in rehab beds and sub acute beds as well.

  519. In terms of your project team for your scheme are the social services engaged with you?
  (Mr Deegan) At City Council level but not from within the director of social services team.

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