Award Winning Hospitals & Cordon Bleu Food

Catching part of the “Newsnight” debate the other night (29th February 2012) on the BBC, it was interesting to hear Ali Parsa, the Chief Executive of Circle Healthcare, regale Jeremy Paxman, the rest of the contributors and the watching audience about the obvious benefits of his own private healthcare company and particularly their new hospital in Bath. Not only was it said to have been designed by one of the world’s top architects, but had also won international awards because it was so beautifully constructed, with its cafeteria and restaurant offering clients the very best of products, including food produced to a Cordon Bleu standard. On hearing this, Mr Paxman rather jokingly remarked how he would like to visit the hospital and was told by Mr Parsa that he was more than welcome to sample the delights of Circle’s new facility, just as soon as he was sick enough to require hospitalisation.

What a pity then that nobody thought to question the fact that the brand new Circle hospital in Bath can only accommodate 28 patients, virtually all of whom will be attending for privately funded operations, which will be paid for through personal health insurance policies, rather than through the public purse. It tends to make a bit of a difference that, implying that such facilities are commonly available to the rest of us mere mortals, when in fact, they are nothing of the sort, but instead, Circle Bath is a rich mans medical paradise, where a limited number of medical procedures is carried out and that only privately funded patients can enjoy. However, at least this startling revelation will have come as an enormous relief, to those of us who were beginning to wonder just how our poor old NHS hospitals were ever going to compete against such lavish surroundings, because after all, if Circle Healthcare can do it, then why can’t the National Health Service, especially if they’re all working with similar budgets, staff costs and overheads? What a pity then that Jeremy Paxman or one of the other contributor’s to the debate didn’t make that fact clear to the generally uninformed masses who were watching, many of whom will be gutted when they realise that they’re not likely to get such 5 star treatment from the NHS, nor indeed from one of Circle Healthcare’s publicly funded hospitals.

Apparently Circle Healthcare is currently being held up as a model by the government, as the sort of mutual or co-operative healthcare company that we should all aspire to have working alongside our traditional NHS providers. After all we’re told, the company not only represents the largest body of clinicians working together in Europe, but all the medical staff employed by Circle Healthcare are shareholders in the business, ensuring that they too have a stake in helping to make the company one of the best private healthcare providers in England. Sadly, once again though, they fail to mention a rather important piece of information, whilst making their bold claims about the benefits of such shared company ownership. First of all, Circle Healthcare is reportedly a subsidiary of Circle Holdings which in turn is 95% owned by 6 major private shareholders, who despite having no real experience in healthcare per se, are better known within the investment industry generally. The suggested 30 million shareholding owned by clinicians and other staff are not actually in Circle Healthcare itself, but in a second company that only actually accounts for around 49% of the healthcare group, while the remaining 51% of shares (that would be the voting majority) are reported to remain in the hands of other private investors, whose principle interest lies in making a profit from their investments, rather than delivering the best possible healthcare to patients. Consequently, rather than the stake-holding clinical staff members having any sort of control over how the actual business is operated, in terms of profits, investments, running costs, etc, as has been suggested by advocates of this particular private healthcare model, they have no real control over such decision making, which are taken by those people who hold the controlling 51% shareholding, the money men, investors and speculators, including a number of notable Tory party donors and advisers. Most commentators agree that to actually describe Circle Healthcare as a mutual or co-operative is a clear and deliberate misrepresentation of the facts, designed specifically to mislead the general public into believing that the company is something other than a “for profit” money making venture, bought and paid for by outside corporate interests, who are only in it for the money.

Although Circle Healthcare are thought to be at the forefront of the emerging privatisation of the National Health Service, if only because they’re the first commercial company to be allowed to run an entire NHS hospital for profit, early indications are that it could be a long time before they ever see a penny in profit from their takeover of the facility. Not only are they having to cope with much larger numbers of patients, but under the rules, they’re also obliged to maintain other vital services like an A & E department, provisions that they don’t have to worry about in their other fully privatised hospitals in Bath, etc. Despite having signed a 10 year contract, worth around £1 billion of public money for running the former NHS hospital unit at Hinchingbrooke, it has been suggested that Circle Healthcare will be very lucky to turn any sort of profit on their first major in-house project. The trouble is that Circle now faces the same sort of problems that their NHS predecessors faced at Hinchingbrooke, providing an almost unknown number of services, procedures and operations to an incalculable number of patients, within a clearly defined budget, a feat that largely escaped the abilities of the NHS managers who used to run the hospital. Early indications suggest that any hopes that Circle Healthcare might have had of finding a “pot of gold” at the end of that particular NHS rainbow will be dashed, sooner or later, as the realities and differences between public or private healthcare begin to bite into their fixed budgets. As some commentators have already remarked, with a relatively fixed amount of money to spend, operators can only make a commercial profit if they can find ways of cutting their overheads. With few savings to be had at the production end of the process (which would be the medical operations, procedures, etc) the only other place to find substantive savings (leading to commercial profits) would be through the costs of productions, including staff, medicines, food, equipment, etc. It is little wonder therefore that most of the major private healthcare companies, currently operating in partnership with the publicly funded NHS have already tended to stick to or “cherry pick” the sorts of medical procedures that are commonplace, easier and ostensibly more profitable, as in the case of cataract operations, as well as with hip and knee replacements, which is said to have seen some £6 billion of public money drain out of the NHS marketplace

Conventional wisdom would tend to suggest that for companies like Circle Healthcare to succeed in England’s health markets they need to do one of two things, either stick to the private healthcare sector or to aggressively expand into the NHS, by taking over more and more supposedly failing publicly owned hospitals. However, given that the privately funded healthcare market is still relatively unpopular with most British people the potential for building even more hospitals, like the one operating in Bath must be limited, thereby leaving expansion into the existing NHS market as the most likely future solution for commercial operators like Circle Healthcare. Unfortunately, as the Hinchingbrooke model seems to suggest, just simply taking over and running a costly and burdensome hospital would not be sufficient to generate a favourable return on the company’s investment. The only way for such operator’s to succeed commercially would be for them to create a dominant or monopolistic position in the marketplace, thus allowing them to fully dictate the terms and costs of health treatment in England, as opposed to such prices being set by nationally independent bodies, which is the case at present. Worryingly perhaps, it has already been suggested that Circle Healthcare and other commercial operators are already vying with one another to take control of up to 20 so-called “failing” NHS hospital trust’s, which offers an indication of the direction such private providers are moving in. Adopting what has been termed a “trojan horse privatisation” of the NHS, the fact that private companies are already beginning to lure vital medical personnel away from the NHS, to work in privately owned businesses is thought to be just one of the most worrying aspects of the creeping inundation by corporate interests into the mainstream health service.

Of course the entire premise that an entirely private healthcare model is much more efficient and therefore more profitable is a fallacy, given that some independent sources believe that the US model (which is almost entirely privately owned and operated) has anything up to 30% of waste in the system (which would represent lost potential profits). Other studies also imply that pound for pound, a publicly funded system is always more cost effective simply because it is based on a highly restricted resource, with no profit motive whereas in a private model, as costs rise exponentially, so insurers (or whoever else is paying the healthcare bills) simply hikes the levels of contribution, perhaps one of the reasons that so many Americans are now without any sort of healthcare insurance or are now having to file for personal bankruptcy, after having been ill for a period of time. It is interesting to note that according to a report in the Observer newspaper, in a document released by Circle Healthcare, the company has freely admitted that there is a small but potential risk that patient care could suffer as a result of its long-term plans to expand its business operations within the English healthcare market, although the company’s owners later played down any such risks as being highly negligible, stating that the admission was merely an outside possibility, rather than any sort of probability.

Logic would dictate that no profit driven healthcare service can be sustained, without the need for increasing amounts of money being pumped into it, a fact that is underpinned by the certainties of increased human longevity and rising public expectations. Even where highly questionable economies of scales are achieved through the actions of the much proclaimed private entrepreneurs who are only now beginning to infest our health service, ultimately if governments are bound and determined to limit spending on healthcare come what may, then something is going to give, be that the number of procedures carried out, types of operations, the standards of care, or some other vitally important piece of the existing medical jigsaw. As things stand in Britain, France and Holland, etc, where central governments control the healthcare markets, then that offers some degree of oversight. But what happens if and when the private contractors eventually take a majority stake in healthcare provision and simply refuse to abide by the rules, regulations and more importantly, the price structures that governments insist that they should charge? Somehow it is hard to imagine that we’ll all be treated in award winning architectural structures, whilst being fed Cordon Bleu food, unless of course that’s because we’ve all been forced to take out private medical insurance, because our national politicians have essentially handed control of our public health service to the private sector on a golden plate.