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King Edward VII Hospital

4 pm

Mr. Andrew Tyrie (Chichester) (Con): I am glad to have secured the debate. It is a tragedy that King Edward VII hospital in Midhurst should have been forced to close; it was a unique, independent, non-profit making charitable foundation. Most independent hospitals like it were victims of Nye Bevan's nationalisation programme in the 1940s. This hospital was one of the few that got away. Its structure should have enabled it to have become a template for how a foundation hospital operates today.

It was genuinely independent and provided very high standards of care at a reasonable cost—mostly at tariff rates for NHS patients. Since nationalisation in 1948, at least a third of the hospital's patients were from the NHS, and they were always treated in exactly the same way as private patients. At the time of its closure, nearly two thirds of the hospital's patients were NHS patients. A former Labour Minister described it to me as a template for foundation hospitals, and it is very sad to see it go. The first big loser of the closure has been the NHS itself.

Anyone who knew King Edward VII hospital knows that it was a fantastic place. There was a strong and caring team ethic, which is always present in good institutions and always missing in bad ones. I knew personally a good number of the people who worked there—the second big losers of the closure—and felt keenly for them when they lost their jobs. They were highly skilled and dedicated professionals, and some of them will not easily find alternative work in a local health care economy in which NHS services are contracting as we speak.

The third big losers are my constituents and the thousands of people from miles around who have used, or might have used, the hospital's excellent facilities. I first secured a Westminster Hall debate on the hospital three years ago, when it was initially threatened with closure. Fourteen MPs from the region came to my support, and I am grateful to see a number of them here today. The closure is not a local, but a regional, issue. Be under no illusion: this closure of capacity will not be fully replaced.

My constituents have lost a lot. The hospital provided very high levels of oncology treatment. It provided radiotherapy treatment with an advanced linear accelerator for 250 cancer patients a year; major cardiac surgery for 300 cases a year; interventional cardiology for a further 900 cases a year; orthopaedic surgery for 1,500 cases a year; major bariatric surgery for 150 cases a year; eye surgery for 200 cases a year; and it treated 14,000 outpatient cases a year.

A former Secretary of State for Health, the right hon. Member for Darlington (Mr. Milburn), once said:

A great chunk of capacity has just been closed. I wish the right hon. Gentleman was still right, because now we have a problem of both cash and capacity.

I should like to make three further points. First, I want briefly to discuss why the hospital closed, although there is not much point in lingering for too long on that,
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given that the milk has been spilt. Secondly, I should like to ask the Minister about the performance of Capio Healthcare UK, the health care provider that withdrew from the deal. Thirdly, I should like to place the hospital's closure in the context of what is going on in the regional health care economy.

Why did the hospital have to close? There were many reasons, and I shall not rehearse them all, especially as many of them were set out in the January 2003 debate that I mentioned. The immediate cause of closure was the decision a few weeks ago of Capio, a large Swedish health care provider, to walk away from a deal in which it had agreed in principle to construct a new hospital on the site.

The argument that terms could not be agreed with the developer, used publicly by Capio's management to explain their decision, has been flatly contradicted by everybody involved with the hospital—the trustees, the senior management, the provisional liquidator and the developer himself. The fact that Capio was not prepared to be frank, and relied instead on a bogus explanation, is important in one respect, of which the Minister should be aware: at the moment, the NHS is doing extensive business with Capio, and its cavalier attitude to frequently made oral and written commitments needs to be borne in mind in future dealings.

That would not be so concerning were it not for widespread allegations that the level of care provided by Capio, under contract to the NHS, may not be adequate. I am not making that allegation; I am not in a position to judge it. However, I strongly advise the Minister to ask the Department to consider the issue and to reassure herself, because Capio has recently been the subject of a number of media investigations.

With that in mind, I have four questions for the Minister. First, what assurances can she give that, given the closure of King Edward VII hospital, Capio will be able fully to perform the spine chain contract with the NHS known as GC4—the Minister will know what I am talking about—to supply the so-called Southampton gap? As she will know, that contract has four years to run and King Edward VII was, until a few weeks ago, doing roughly half the work implied by it.

Secondly, will the Minister undertake a study to provide reassurance that health outcome levels, for those treated as part of the Southampton gap spine chain contract, are at or above the levels for the NHS as a whole? Thirdly, what is the level of repeat surgery for the contracts performed by Capio and for the Southampton gap spine chain contract, and what is the most appropriate general equivalent NHS benchmark? Finally, will the Minister publish the level of repeat surgery, compared with a regional and national benchmark, for that part of the GC4 contract not supplied by King Edward VII hospital?

Those questions are detailed, and I do not expect the Minister to have the answers at her fingertips. She has a difficult job. If she gives me a clear pledge that she will consider my questions carefully, personally assure herself that there is no cause for concern and publish the detailed material for which I have asked, I will be happy. I should be grateful if she came back to me in writing. As she knows, I have already tabled a number of
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parliamentary questions on related issues. I also think that she should ask the Healthcare Commission to examine Capio's performance.

I want to leave the Minister with plenty of time to respond, and a number of colleagues have mentioned that they would like to say a few words.

Mr. Roger Gale (in the Chair): Order. I am grateful to the hon. Gentleman for mentioning that; it occurred to me that other hon. Members might wish to participate. If they seek to do so during a half-hour Adjournment debate such as this, they must have the permission of the Member who secured the debate and of the Minister.

Mr. Tyrie : Thank you, Mr. Gale. They certainly have my permission.

On the effect of the closure on the regional health care economy, the plain and simple truth is that the standard of care in my constituency and the general area around it will fall and waiting times will rise. I have received a number of letters from doctors and a large number from patients telling me that exactly that is happening right now.

The closure comes at a time of unprecedented stress in the regional health care economy. The NHS is closing capacity at a significant rate while demand is rising sharply. Budgets are being cut sharply to deal with the burgeoning deficit both at my local hospital of St. Richard's in Chichester and throughout the Surrey and Sussex strategic health authority, which has a deficit of £140 million.

Now is not the time to rehearse all the arguments about the absurd accounting that leads to the so-called deficit numbers, to which I just referred; nor is it the time to elaborate on the fact that cash is being drained away from my constituency as a consequence of ludicrous shortcomings in the weighting applied to the capitation formula.

The NHS is currently subject to cuts in services in many ways in my constituency, not only as a consequence of the two points that I just mentioned. As a result of the cuts, hundreds of letters were sent from St. Richard's hospital, even before the closure of the King Edward VII hospital, telling patients that they would have to wait longer for treatment. We are talking about sick, elderly people, who are often in pain, being told to wait.

Tim Loughton (East Worthing and Shoreham) (Con): I pay tribute to the assiduous, long-standing campaign that my hon. Friend has led in his constituency for this jewel in the crown of the local health economy, and to the enormous amount of work he has done on the local health economy. I visited the hospital, which some of my constituents use. Does he think that, at a time when we are losing capacity hand over fist, the loss to the local health economy of such an institution is a tragedy? The majority of its patients since the war have been NHS patients. The work has been done at an economic rate and the hospital is exceedingly popular with local people. The only implication of its closure must be longer waiting times and longer distances to travel to less popular hospitals for all of our constituents.

Mr. Tyrie : My hon. Friend is right. That is exactly what is going on right now. It is an appalling tragedy.
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We are not talking about just any hospital, but about one that was part of the local community and was held in enormous esteem in the medical community, way beyond the local or even the regional health care economy, as was shown in the response when it first got into difficulties. That happened when the local health care economy withdrew a number of contracts, some would say deliberately and with the intention of trying to get it to close, because it was the sort of institution that the NHS found did not fit into its plans for the trend towards super-hospitals. We seem to be driving towards them inexorably against the wishes of our constituents in so many areas.

Mr. Andrew Turner (Isle of Wight) (Con): Does my hon. Friend agree that there was a tendency in the early part of the Labour party's Administration to look down on the private sector, but that more recently they have been more favourable towards provision from that sector? It is not only among the medical establishment that the hospital was well regarded, but among users and patients, including those from my constituency.

Mr. Tyrie : That is right. The rhetoric that we have heard from the Government and a succession of Ministers is that we should want to develop exactly this type of institution: one that takes the best from the private sector and enables those skills to be translated into the public sector, with an organic and healthy relationship between the two. I made that point at the beginning of my remarks. That is why a former Minister—I did not ask permission to quote him, so I shall not name him—told me that this is exactly the sort of hospital that should serve as a template for what foundation hospital status means.

I have just described the appalling cuts in capacity that have been taking place in health care in my area. My constituents will put up with a lot, but their credulity is stretched when they turn on the television and hear the Secretary of State for Health saying:

Such statements do not do the NHS, patients or politicians any good.

The closure of the hospital is only one symptom of a burgeoning health care crisis that is developing throughout the region, and dealing with it will not be easy. The Government have spent a huge amount of money without working out how to make it work productively. I warned that that would happen shortly after the Chancellor abandoned "Miss Prudence" and hitched up with Mr. Wanless, in 1999–2000. The Chancellor made a colossal mistake, announcing massive increases in health spending, having scarcely thought through how that the money could be translated into productivity gains. We are now reaping the consequences. A lot of taxpayers' money has been wasted.

The resulting problems are borne most heavily by my constituents and those in constituencies like mine. We must now find a way of making the books balance after huge sums have been spent needlessly. What is required now is the cash that has been, at least partly, wasted.

To his enormous credit, a previous Secretary of State—the right hon. Member for Darlington—listened carefully to the representations made by a number of us
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on the capacity constraints in the area three years ago. He showed more than just sympathy and understanding. I later reliably found out that he quietly took action. He did something to assuage those capacity constraints. I hope that the Minister can persuade her Secretary of State to follow in his footsteps.

I want to end by itemising in outline what such action will mean. It will mean restoring common sense to NHS accounting by abandoning the absurdity of the so-called RAB—resource accounting and budgeting—which double-counts a deficit, and moving towards the accounting practice that we would find were the institution in the private sector. It will also mean that the early introduction of payment by results has been indefinitely delayed. Why has that happened? It is because Labour knows that for every winner from the introduction of full PBR—the full tariff rate—there will be a loser. Where will the loser be? It will be a hospital or trust that is currently in surplus but is relatively inefficient, and those are often in Labour areas.

The action to which I was referring would entail a fundamental review of the capitation formula, which is a scandal if ever there was one. The formula is now hopelessly inadequate for the task of adjusting for health need across the country. It would also entail a genuine devolution of control to cost centres at the local level in a manner that rewards success and penalises failure. We currently have a system that has rewarded failure and is penalising success.

St. Richard's hospital has been identified by all the relevant independent studies as one of the most efficient hospitals in the country. It also provides very high levels of care. Yet it is in the process of being forced to contract. No other organisation in the world would tell a hospital that had been identified as one of the three best in the country by the Dr. Foster hospital guide immediately to start contracting services. In any ordinary, rational organisation, a successful institution is rewarded for success by being given more work, which St. Richard's is well capable of doing and wants to do.

There is a serious incentive failure and misalignment at the heart of the NHS—a managerial failure that runs straight to the Department. Its basis is not local effort and initiative; it is not failure at the local level. We are talking about a failure centrally, which, above all, must be addressed by the Minister and the Government.

4.19 pm

The Parliamentary Under-Secretary of State for Health (Caroline Flint) : I am afraid that I was not informed that other hon. Members wanted to speak. I am unsure whether that would be helpful, as this is a short debate and I have not been able to consider some of the issues arising in their areas. However, I shall try to deal with most of the points made by the hon. Member for Chichester (Mr. Tyrie), whom I congratulate on securing the debate. He raised concerns, particularly to do with Capio, that I hope to write to him about in detail.

I understand that the matter is of great concern to the hon. Gentleman and his constituents. The King Edward VII hospital was established in 1906, and it is much loved in the local community. I will check in Hansard what the hon. Gentleman said, but I hope I did not hear him correctly, because he seemed to suggest that Nye
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Bevan, the architect of our national health service, had somehow got the development of it wrong. I think his comment was that the hospital was saved from the thrust of what Nye Bevan was trying to achieve in developing the health service.

Mr. Tyrie : Does the Minister think that the remaining independent hospitals in the country should be closed down?

Caroline Flint : I am not suggesting that. I was just making the point that the hon. Gentleman seemed to take the opportunity to attack the basis on which the Labour party, and particularly Nye Bevan, established the national health service. There is no doubt that in establishing the NHS, Nye Bevan had to deal with a number of competing interests. He had to deal with the existence of a variety of buildings that had been established as different sorts of organisations—as private hospitals, charitable hospitals and so forth—as well as with the way in which health professionals worked at that time. I am sure my party colleagues would agree that he had to make some compromises in doing what we think was the right thing to do—establishing the national health service.

Having said that, I should add that the national health service has long supported the King Edward VII hospital. I understand from colleagues working in health locally that some 30 per cent. of funding for that independent hospital came from the NHS. I think it is fair to say that the NHS supported the hospital in a number of ways in terms of the services it provided.

Prior to 2002, the hospital had encountered serious financial difficulties. Following the breakdown of negotiations with a large American health care provider, Hospital Corporation of America—HCA—the hospital went into provisional liquidation in December 2002. The NHS did not turn its back on the hospital. In January 2003, it announced that it would provide a further £900,000 of taxpayers' money to enable the hospital to remain fully operational while the liquidator negotiated with a prospective purchaser, Lincoln Holdings plc, and its partner, Capio Healthcare UK, on a deal to develop a new hospital facility. However, as the hon. Gentleman knows, Capio and Lincoln Holdings were unable to agree a deal to develop a new facility and, unfortunately, that led to the closure of the King Edward VII hospital, which was announced on 9 March 2006.

The hon. Gentleman asked detailed questions about Capio, and I will look into them and write to him. All I shall say at this stage is that the Department has had no direct involvement in the deal. That was not a matter for the NHS. However, given how things were progressing, we were surprised to hear that it had fallen through. I understand that Capio has been in conversation with the hon. Gentleman, and a letter detailing why the deal has not gone ahead was sent to him by the chief executive of Capio Healthcare UK.

However, I hope the hon. Gentleman will join me in congratulating the local NHS on the way in which it has responded to the difficulties presented by the closure of the hospital. It has demonstrated not only the resilience
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of the NHS, but its flexibility. In difficult circumstances for both staff and patients, it has shown that it has the ability to co-ordinate a response that ensures, as far as possible, continuity of patient care. For instance, Western Sussex primary care trust has ensured continuity of care for patients needing palliative care, and it has used the situation as an opportunity to address modernising its palliative care service by providing it in patients' homes. I understand that there is an innovative consultant locally, Peter Hargreaves, who is working with both the PCT and Macmillan Cancer Relief to look into how to develop hospice-at-home care.

I also understand that the Royal West Sussex NHS Trust has been able to provide treatment to patients who were previously receiving, or expecting to receive, treatment at the Kind Edward VII hospital. The Surrey and Sussex strategic health authority has worked with the local NHS to co-ordinate arrangements to secure treatment for all patients affected by the unexpected closure of this independent sector provider. Patients transferred from the King Edward VII hospital to other NHS providers are all scheduled to be treated within national standards, and I understand that there have been no problems in identifying NHS capacity to treat patients affected by the closure.

The local NHS has also been able to offer employment to a number of staff to fill critical clinical vacancies, and others have joined the nursing bank. I understand that a number of the doctors at the Kind Edward VII hospital already worked in other parts of the NHS elsewhere in the area, and that has helped. Also, 25 members of staff have joined the Royal West Sussex NHS Trust bank. As well as offering them employment opportunities and keeping their skills in the local community, that has supported the trust's strategy, which is linked to its financial situation, to reduce its spending on agency staff and use its own bank instead. We are taking action to deal with the Royal West Sussex NHS Trust deficit, and a turnaround team is working with the trust.

Patients without appointments are being contacted to advise them where their treatment will take place. The Surrey and Sussex SHA has advised officials that it is confident that all patients will be treated within the national waiting time standards.

Mr. Tyrie : Is it the case that a number of treatments that were being given at the Kind Edward VII hospital at the full tariff rate are now to be conducted at St. Richard's hospital at below tariff?

Caroline Flint : I will look into that and get back to the hon. Gentleman with more detail.

All the independent sector treatment centre patients are expected to be treated at the Capio New Hall hospital facility, and Capio has confirmed that it expects to be able to undertake the full case mix there. As I said, Surrey and Sussex SHA has advised us that the joint human resources team from Western Sussex PCT and the Royal West Sussex NHS Trust is working to help staff find vacancies. I also understand that the consultant and community specialist palliative care team has been transferred to the PCT to ensure that those specialist skills and that service is not lost to NHS patients in the area.
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The hon. Gentleman raised some issues on clinical governance. I will deal with some of them now, and write to him on others. Providers are obliged through their Healthcare Commission registration to have clear, workable clinical governance frameworks in place, and they have a contractual responsibility to ensure that those frameworks reflect good clinical practice. Independent sector treatment centres are subject to rigorous contractual obligations called performance indicators, which stipulate the quality and cost of contracted procedures, and performance is monitored throughout the course of the provider's contract.

The hon. Gentleman raised concerns, which I am sure his party colleagues who are present share, about funding in the Surrey and Sussex SHA and the Hampshire and Isle of Wight strategic health authority areas, and the funding stream for the King Edward VII hospital. It must be noted that the SHAs are responsible for delivering overall financial balance for their local health communities. However, the NHS as a whole is in receipt of record resources because of this Government's policy of funding the NHS.

Nick Herbert (Arundel and South Downs) (Con): Does the Minister recognise that a disproportionate number of the deficits around the country are in West Sussex? The hospital served my constituents as well, and was much loved by them. Public confidence in the NHS locally has been seriously undermined by what is happening. Does the Minister accept that when the SHA consults on its plans to deal with those deficits, it is essential that the public are fully involved in that consultation and understand what is really being proposed for local NHS services, where the deficits are so serious?

Caroline Flint : There is a very good question to ask about why in some parts of the country people are experiencing deficits despite record investment, and others are not.

Finally, I have been provided with information that will be helpful. The Royal West Sussex NHS Trust will be paid the full tariff for the extra work it has offered to undertake resulting from the closure of the King Edward VII hospital. That is a good example of how the NHS, even when dealing with an independent hospital, is doing the business.

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