Memorandum submitted by PatientLine plc
1. COMPANY BACKGROUND
1.1. Patientline commenced operating in 1995
with the sole objective of addressing the absence of personal
televisions and telephones at the bedside in NHS hospitals. Previously
provision was typically limited to trolley- or wall-mounted coin-operated
payphones for outgoing calls only and communal televisions in
day rooms or bays. A few hospitals had individual televisions
that were mounted at, or could be wheeled to, the bed.
1.2 The Company developed an integrated
television (six inch screen), radio and telephone system. Its
preference was to sell these systems to hospitals, but funding
was not available.
1.3 By 2000, the system was operating in
16 hospitals on the basis that the Company funded the capital
investment and operated the systems, generating revenue from charges
to users. £16 million of capital expenditure had been committed
but no profit had been earned. A decision was made to invest in
the development of a new system that would have the capability
of servicing the needs of hospitals as well as those of patients.
This system, which was introduced to coincide with the Patient
Power programme (see below) is effectively a full PC at the bedside
with a 12 inch high definition screen. It is now in its second
version, offering fully digital IPTV and VoIP.
2. PATIENT POWER
2.1 Following research, the Government made
a commitment in the NHS Plan in mid-2000 to provide a personal
bedside television, radio and telephone in major English hospitals
by end 2004, funded by the private sector and paid for by users.
2.2 Tenders were sought for licences to
provide the service. The requirements were for provision at every
bedside (irrespective of expected occupancy and/or use), with
several free services for the NHS (such as patient information
capability) and patients (such as free radio and free television
for children), with limits on the prices charged to patients and
an acceptance of high charges to incoming callers. Strong preference
was expressed for more sophisticated systems that had the capability
to provide a wider range of services for patients and that could
offer access to clinical IT systems and provide other services
to hospitals. The Licence Terms stipulate the terms of the contracts
to be entered into between individual NHS trusts and licensees.
During the licensing process, the NHS acknowledged that the provision
of the required service was likely to involve high charges paid
by incoming callers, relative to the costs of outgoing calls,
taking into account the fact that no aspect of the service was
to be funded by NHS trusts.
2.3 Licences have been granted to 10 companies
since 2000, either provisional or full, of which only two were
still installing when Ofcom announced in July 2005 an own-initiative
investigation into the contracts with the NHS trusts and the level
of incoming call charges. The remainder had either ceased provision,
gone out of business or were not making further investments.
2.4 The programme has had notable success
in disseminating these systems. Some 80,000 bedside terminals
are now operational in around 150 English NHS hospitals, based
on investment by the private sector of some £150 million.
The hospitals with systems represent about two thirds of hospitals
with 200 beds or more, leaving one third unprovided, as well as
virtually all hospitals with less than 200 beds. The demands of
this rapid expansion and technological development have placed
great demands on service quality, but the industry is now entering
a more mature and stable period.
2.5 Patientline has invested a total of
£151 million, including UK hospitals outside England, funded
entirely by equity raised on the London Stock Exchange and bank
borrowings. It has services operating in 157 UK hospitals (see
Appendix 1) and
has achieved a share of about 60% of those hospitals that have
signed contracts. Regrettably it has been necessary to suspend
installation at 14 hospitals where work is not finished because
of the current investigation by Ofcom. Patientline has incurred
losses in each year it has been operating, totalling almost £50
million. Last year's loss was £12 million on turnover of
2.6 Between 10 and 15 million patients and
relatives/friends currently make use of the systems each year.
Response has been very positive, with NHS research conducted in
late 2004i showing 88% of patients satisfied, 70% considering
the systems an improvement over previous provision, 83% considering
the systems easy to use, and 72% assessing the patient services
as good value for money (with lower value ratings for incoming
2.7 The economics of the service involve
a capital commitment of around £1,750-2,000 per bed or almost
£1 million for a typical hospital. There is a requirement
for Patientline staff to be employed on site to service the systems
and help patients, while Patientline also operates a 24 hours
Customer Care Centre.
2.8 Revenue is currently derived almost
entirely from charges for television (to those who pay), outgoing
call charges and the principal share of charges for incoming calls.
Payback of investment is slow and is substantially affected by
the level of bed occupancy and the types of patients in hospital.
So far, Patientline has earned no profits and no return on its
2.9 The Patient Power programme is unique
in the western world and has achieved the deployment of much larger
numbers of sophisticated PC-based multi-user systems in a shorter
time than in any other country, and without the use of NHS funds.
Most other countries have personal televisions and telephones
at the bedside, but these generally use conventional televisions
and do not offer the wider range of patient or hospital services.
Because the less sophisticated systems cost less than the UK Patient
Power systems (typically less than a quarter of the capital cost),
are not always provided at every bed and, in many cases, are wholly
or partially funded by the hospitals, charges to patients and
incoming callers are generally lower than in the UK, and in some
cases television and local calls are free. This clearly results
in much wider usage and greater benefit to patients.
3. ARE CHARGES
3.1 Charges need to be viewed against the
financial experience of licensees described in 2.3 above and the
losses incurred to date by Patientline of almost £50 million.
3.2 The terms of the NHS licence severely
limit Patientline's pricing flexibility, so that it is forced
to set high charges for incoming calls in order to minimise its
losses, partly because its licence requires charges for outgoing
calls to be kept at a lower level and partly because of the provision
of free services and the facilities to enable services to be provided
to NHS trusts, which have not been taken up. The associated costs
have had to be passed on through incoming call charges. As already
mentioned, the terms of Patientline's licence and contracts provide
for no financial contribution from NHS trusts. Any reduction in
charges for existing services without compensating payment by
the NHS would make some or all of the remaining licensees non-viable
and cause the termination of the service in many hospitals. This
is evidenced by the fact that Patientline is the only licensee
to have been successful in raising all of the required finance
for the systems.
3.3 Nevertheless, most patients are very
supportive of the systems and consider the services good value
for money (see 2.6). There is a strong undercurrent of feeling
that some services, such as television, should be paid for by
the NHS, especially as NHS trusts derive significant benefits
from the availability of the systems.
3.4 Current Patientline charges to patients
are set out in Appendix 2. Within the economic constraints set
by the NHS, considerable effort is made to cater for those with
special needs, including free television for children 16 or under,
half price television for those 60 or over and longer stay patients,
and a facility for nurses to grant free television to those they
judge to be in need. Outgoing call charges are restricted to 10
pence per minute for local and national calls. It is believed
that these provisions go a long way to avoiding hardship and achieving
3.5 Incoming call charges, which are paid
by the caller, are significantly higher (39 pence per minute off-peak
and 49 pence peak from UK fixed lines), the majority of which
is received by Patientline and is used to finance the provision
of the sophisticated integrated technology at every bed and the
free services provided to the NHS and patients.
4. WHAT IS
4.1 To maximise benefit for patients and
their families and friends, it would be ideal if terrestrial television
channels could also be made available free to patients and charges
for both outgoing and incoming call charges could be set at the
level normally obtaining from fixed domestic lines. Free terrestrial
television was initially proposed in establishing the framework
for the Patient Power programme but was dropped by ministers because
it would have required NHS funding, given the substantial expense
of installing the integrated systems at every bedside. (One Patientline
hospital chose to adopt this approach, but experience has shown
that it is costly and not a high priority.)
4.2 Given competing demands for NHS funds,
the charges currently made for television and outgoing calls could
be considered a reasonable and equitable compromise, even though
there are important therapeutic benefits in ensuring patients
have access to entertainment, news and mental stimulation. It
would clearly be desirable to develop additional revenue streams
from the provision of additional services to NHS trusts so as
to allow a reduction in the level of charges to incoming callers.
Otherwise the costs of maintaining the necessary facilities to
provide such services to NHS trusts will have to continue to be
passed on to incoming callers through high incoming call charges.
5. WHETHER THE
5.1 Patientline invests considerable effort
in ensuring that charges are fully displayed and apparent to users.
Charges are set out in the instruction card attached to each bedside
unit, in the introductory instructional video, on information
screens on its current generation systems, on its website, in
leaflets and, for incoming calls, in a message at the beginning
of each call. Staff both in hospital and in the 24 hour Customer
Care Centre also have full information on charges.
5.2 Patientline believes that these arrangements
provide a high level of awareness of charges but is always interested
in considering potential improvements.
6. WHAT CRITERIA
6.1 In an ideal world charges would be set
at a level that allowed an adequate return and did not require
6.2 As long as this is not possible, Patientline
believes that recognition should be given to age (both children
and the elderly) and a combination of ability to pay and clinical
need. Only hospital staff are in a position to judge the latter
factors, which need to be considered on an individual basis. As
indicated in 3.4 above, Patientline operates a system whereby
nurses are able to grant free television to those they judge to
be in need.
7. HOW SHOULD
7.1 The discounts are published as described
in 5.1. In addition, all patients registering on the system through
the Customer Care Centre are asked whether they are 60 or over
to ensure that those qualifying receive the discounted television
charges. Children in children's wards are automatically given
free television. Patientline believes that this approach is generally
effective in making patients aware of the discounts available.
7.2 Patientline invests time in briefing
nursing staff so that they are aware of the ability to grant free
8. WHETHER THE
8.1 While abolition of charges, even just
for free to air television, would be advantageous to patients,
it is unlikely to be a top priority for use of NHS funds, which
would be required to finance the resulting shortfall in revenues.
8.2 Patientline does, however, believe that
there would be considerable public benefit in reducing charges
for incoming calls, which are currently the subject of an Ofcom
investigation. However, as it has set out in submissions to the
Department of Health and to Ofcom, this could only be achieved
by an appropriate financial contribution from the NHS or the NHS
trusts to reflect the facilities made available to the NHS trusts
by these systems and the cost of the free services provided to
patients. Such an approach would achieve considerable benefits
and value for money for the NHS trusts through uses such as:
8.2.1 Access to the new electronic patient
care records by clinicians at the bedside to improve the accuracy
of data capture and access, increase patient involvement and save
clinician time. This can be extended to electronic prescribing
and drug administration at the bedside to accelerate drug delivery
and reduce the number of adverse drug events.
8.2.2 Food ordering at the bedside to reduce
food wastage, enhance food service and save costs.
8.2.3 Patient surveys either by the Healthcare
Commission or the hospital.
8.2.4 Provision of patient educational material.
8.3 All of the above uses are currently
in operation in one or more hospitals in the UK, but regrettably
are now being adopted rapidly only in countries other than the
UK. In the US, where hospitals compete for both patients and clinical
staff, the principal motives for purchasing the systems are increased
patient satisfaction and choice, better clinical outcomes and
increased staff effectiveness. There is an established link between
the provision of good quality entertainment and the reduced usage
of painkillers as well as faster recovery.
9.1 The Patient Power programme has achieved
a major improvement in conditions for patients in NHS hospitals,
the majority of whom were previously deprived of the basic telephone
communication facilities and entertainment that they normally
9.2 Abolition of charges, while desirable
in principle on the basis that the service would be funded by
the NHS, would not be feasible in practice.
9.3 Some change is desirable to make the
services more accessible and to reduce the high charges payable
by incoming callers that are currently required to finance the
integrated systems, which include many free services to the NHS
and patients. The options include:
9.3.1 Provision of free to air television
at no charge if sufficient NHS funding were available.
9.3.2 Reduced charges for incoming calls.
This could be achieved by introducing payment by the NHS for the
integrated facilities that are currently provided by the licensees
without receiving any revenue, including free radio and television
for some patients and the capabilities of the systems to carry
clinical services for hospitals.
9.4 Patientline has been pressing the Department
of Health for action to encourage the wider use of these systems
by the NHS trusts, both to improve the service offered by NHS
acute hospitals and to permit a reduction in incoming call charges.
Regrettably work on this project has been suspended by the Department
of Health because of the Ofcom investigation and Health Committee
enquiry, but should be resumed without delay.
9.5 Patientline believes that the introduction
of a payment by the NHS for benefits that it currently receives
at no cost and the wider use of the systems by the NHS offers
great potential to assist the NHS while increasing benefits and
value for money for patients and their relatives and friends.
Patientline recommends that this approach be pursued with urgency.
9.6 Patientline would welcome the opportunity
to amplify on these views by providing oral evidence.
7 December 2005
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