Examination of Witnesses (Question Numbers
300-319)
MR DAVID
MOBBS, MS
RUTH JARRATT
AND MR
STEPHEN LLOYD
8 JULY 2008
Q300 Mr Walker: The real cost of
each seat.
Ms Jarratt: It would be considerably
more than the average price, yes.
Q301 Mr Walker: I am not trying to
be argumentative. I just want to know what the actual cost is
of the per unit product.
Ms Jarratt: You are making the
point perfectly that our prices would be a lot higher if we did
not receive a public subsidy and if we were not in a position
to attract philanthropic money. Basically, the price of every
seat would be at least twice as high, I would say, as it is now.
Q302 Mr Walker: I want to know who
is getting a deal. Where does the deal fit in? Is somebody paying
£120 a ticket being subsidised or are they doing some of
the subsidising? Do you see what I am saying? Where does the subsidy
kick into the tickets? If you knew what the unit cost per seat
was—
Ms Jarratt: That would be quite
complex.
Q303 Mr Walker: Moving on very quickly
to David Mobbs, are all private healthcare providers charities?
Mr Mobbs: No.
Q304 Mr Walker: Is BUPA a charity?
Mr Mobbs: No. BUPA is a provident
association, I believe.
Q305 Mr Walker: What is the difference
between your model and BUPA's model?
Mr Mobbs: Currently BUPA does
not operate any hospitals. They are a care home operator and an
insurer. Essentially the difference is that we are set up for
the public benefit. We have dedicated our assets and property
in perpetuity for the public benefit. We invest everything that
we earn for the public benefit and that is different between us,
BUPA and others.
Q306 Mr Walker: So not all private
hospitals are charities?
Mr Mobbs: No. Only charitable
hospitals are charities.
Q307 Mr Walker: So what is the difference
in price?
Mr Mobbs: What do you mean?
Q308 Mr Walker: Do you understand
what I am saying? There is an assumption that if you are a charitable
hospital, you will be subsidising the treatment that people are
receiving, whereas if you are a private hospital you will just
be charging the maximum fees you can get away with, so you must
be able to compare your price for a hip replacement, say, with
the Cromwell. I do not know if that is a private hospital.
Mr Mobbs: It is one that BUPA
have just bought, actually. The difficulty is that there is no
information available in the market for us to be able to compare
prices, and we certainly cannot have discussions with the other
private hospital operators to be able to say, "Hey, what
is your price on this?", so it is very difficult to compare
prices.
Q309 Chairman: You just phone people
up and say, "How much is the hip operation please?",
do you not?
Mr Mobbs: That is when you get
a rack rate and that would be for self-pay. The other issue is
that most of the prices are determined by the insurers. The insurers
have commercial contracts with each of the hospital operators
which they guard the confidentiality of.
Q310 Mr Walker: You are an experienced,
very successful businessman and probably rightly earning what
you deserve to earn; I have no problems with anybody earning large
sums of money, I wish I did, but you have got to have an idea.
Mr Mobbs: We have an idea that
broadly our prices are lower than the others in the market.
Q311 Mr Walker: Okay. 10%, 20%?
Mr Mobbs: I do not really want
to state broadly how much lower our prices are than others in
the market.
Q312 Mr Walker: But you would be
happy to sustain the view in argument that your prices, because
you are charitable, can be lower than those of a purely private,
profit-making commercial operation?
Mr Mobbs: I would not actually
follow that line of argument. I think broadly our prices are lower
in the market. That is because we have been 50 years in the market.
I do not think it is directly linked to the fact that we are a
charity but broadly we try and keep our prices below the market
rate.
Q313 Mr Walker: My final point to
Mr Lloyd. I was a little concerned at the example you gave of
some poor little private school operating, let us say, in Gloucestershire
being the focus of some sort of campaign of intimidation by the
Charity Commission. I would hope that the Charity Commission would
recognise that this school is causing nobody any particular harm
and it is constrained by its size and actually there are probably
bigger fish to fry in the charitable world than driving this school
into a merger or forcing it to sell its assets. Were you just
trying to be extreme to make an example?
Mr Lloyd: I was not trying to
be extreme. I was pointing out that it is in those areas where
I think there will be quite a lot of discussion on these very
points because it will be those small organisations which find
it difficult to deliver anything tangible over and above the education
that they provide to their pupils for a fee rather than the examples
of public benefit as set out in the Charity Commission's guidance.
What I am saying is that in relation to those small operations,
I think they will struggle harder to comply with this. Whereas
organisations that are better endowed will find it easier. I am
not alone in saying that. A lot of people are saying that.
Q314 Mr Walker: Could you see the
Nuffield being afflicted with that problem?
Mr Lloyd: No.
Q315 Mr Walker: Why not?
Mr Lloyd: Because they are well
resourced.
Q316 Mr Walker: A private school
is offering education to people who can afford to pay for it privately,
but you are saying it is not doing much else.
Mr Lloyd: Yes.
Q317 Mr Walker: Your hospital, and
I am not going to attack it, is offering private healthcare to
people who can afford to pay or have insurance, but not much else.
Mr Lloyd: The difference there
is that they are at the moment doing 10% for the NHS so they can—
Q318 Mr Walker: But the NHS is paying
them.
Mr Lloyd: The NHS is paying but
one of the paradoxes of this whole discussion, I have to say,
if I can just broaden it out a moment, is that a lot of it is
about where the money comes from rather than what you do. The
Charity Commission's guidance has this example of a care home.
It is a care home for old people. If all the patients there are
provided by the local authority that is fine; it is perfectly
charitable. If on the other hand the local authority withdraws
its funding, and people pay for it privately then it ceases to
be a charity; yet it is in charity law terms doing exactly the
same thing—it is looking after old people who need care,
and actually the law has never said that it is only for people
who cannot afford it. It does not stop you being a charity just
because you charge people.
Q319 Mr Walker: The Nuffield Hospital
is doing NHS work and the NHS is paying them to do it, so you
do not have a problem with that. Why cannot the small school in
Gloucestershire turn round to the local comprehensive and say,
"We have got a great idea. We will educate some of your children,
but you will pay us for it"? The local education authority
is probably not going to go for that, is it, but that would create
a comparable situation to the Nuffield situation?
Mr Lloyd: It would.
| 
