PFI hospitals and saving the NHS

Robin McAlpine

NL Build Hospitals

Two projects Common Weal is working on come together this week. On the one hand we are working furiously through our Health Policy Group to create a plan for saving the NHS, while on the other we are at the late stages of developing a campaign in a coalition to end private finance in public buildings. Here's the story of each and here's how they come together.

Health first. The problems in the NHS all clearly trace back to capacity. There aren't enough places to treat patients (let's call them beds, though it's also treatment rooms, spaces for physiotherapy and all the rest). And there aren't really enough staff to treat patients properly in the beds that there are, never mind deal with expanded beds.

The beds were cut by the Scottish Government because it is committed to a top-down, management-led NHS. This management-led NHS became obsessed with performance indicators such as bed occupancy. It is also ideologically committed to centralised procurement, spends a fortune on legal fees and all the other things management-led services do.

The outcome was that they sought to push 'efficiency' by pushing occupancy rates up. The plan to get the best value for money was basically to try and have every bed full all the time and then get patients back out the door faster.

That's not entirely illegitimate as a strategy, if it's actually a strategy. Some better-performing health services do this (Denmark for example), but with giant caveats. You need a lot of home- or locally-based follow-up support, you need first-rate social and care services, you need a proper system of supporting old people who need longer recoveries, you need to not be sending people back to damp and otherwise substandard housing and so on.

What we did in Scotland was to try to push total capacity in the NHS down (therefore increasing efficiency through higher occupancy rates) but without increasing the social capacity necessary to make that work. The outcome has been a disaster.

First, you have so-called 'bed-blocking' where you have lots of (particularly) older people who no longer need to be in an acute hospital but are not ready for unassisted home living and there is no care capacity for them. Then you crunch up against the reality that 95 per cent capacity in June means you have zero chance of coping with January. Humans don't get sick in regular patterns.

And this then becomes where the downward spiral really kicks in – the failure in capacity is address by pushing the impacts of the failure onto the health service workforce. Staff were left to work in conditions which became more and more strained. More was expected out of staff to make up for the lower capacity.

This created increasingly intolerable working conditions. That led to people leaving the NHS (people who could take early retirement did, nursing staff went to agencies where they could better control their working hours, others simply left to pursue other careers). 

And now we're in the spiral – those left behind have then to work even harder. It's still not enough so staff are increasingly brought in from agencies where the NHS is paying an awful lot more than they were when they were employing the same people directly, squeezing budgets further.

There is much we need to do to repair all of this. The hardest part is increasing the workforce quickly. The easiest part would be to build new capacity – you can buy pre-fab hospital wards and have them erected in existing health estates in a couple of months. Existing non-medical buildings are easily adaptable for a range of health services.

This leaves two problems – how do we pay for this new capacity and how then do we staff it? Since the latter is the more complicated question to answer, let's start there. The single best way to increase the NHS workforce quickly is to make the job attractive again by removing the incredible pressures. 

A national campaign to persuade people that there is a plan to resolve the capacity crisis would start to make working in the NHS look like a career to enjoy again. Reversing centralisation and localising provision makes it much easier for people to work without long commutes. There are all kinds of perks that could be added to incentivise people to return to the NHS.

There are then loads of steps that begin to address the problem in the longer term through better workforce planning and creating new (and faster) paths into the profession. But none of this is likely to be enough to address current problems.

This is where we get to subsidiarity. As indicated above, we have patients in acute wards (which need much higher ratios of medics to patients) who don't need to be there but who are not ready to return home. So we should build Convalescent Hospitals. Once a patient is stabilised and no longer in need of acute services, they would be transferred to a facility closer to home where their recovery can be supported prior to being fully discharged.

Even fairly large facilities of this sort will need only one house doctor – the primary purpose of the place is to ensure people are supported as they recover naturally (in our on-demand-24-hour world we really have forgotten how important time is for proper recovery). They need to be made comfortable, supported by nursing, physiotherapy and auxiliary staff until they are ready to go home.

This is also the case with precautionary hospitalisation where the purpose is observation to ensure more acute care isn't needed (much of the hospitalisation during Covid was for observation and this need not have been done in acute hospitals, as the ill-fated Louisa Jordan hospital demonstrates).

There is also a need for proper local hospitals – community hospitals which offer accident and injury clinics, technology-supported decentralisation of some acute services (perhaps getting your x-ray locally and then having it assessed remotely so that if is routine you can get a cast put on right there) and the kind of observational support proposed above.

This all creates capacity through subsidiarity and, along with regional acute hospitals (the ones we have) and national centres of excellence dedicated to conveyor belt-like deliver of single specialisms (like hip operations at the Golden Jubilee Hospital) you build a health service where specialisms are more centralised but everything else is more localised. As it should be.

But how? Budgets are stripped to the bone just now and the Scottish Government can't borrow. How does it build this capacity? That's where getting rid of private finance in public buildings comes in. It is seldom spoken about but in England and Wales they have effectively abolished PFI/PPP – but we still use it in Scotland (that's what the Scottish Futures Trust does).

It's been rebranded as 'Non-Profit Distributing' but this is an incredibly misleading title because not only is it profit distributing but its still a giant financial wheeze where hospitals are traded on financial markets as speculative assets (there are all kinds of ways to 'sell a hospital' and bank notional future profits from it).

Under this model the Scottish Government will find it difficult to build hospital capacity. The reason the UK has scrapped PFI/PPP is because the Office for National Statistics required that PFI debt goes on the books so it counts against your national debt.

But if we get rid of that idiotic system we can replace it with a different model. One aspect of that model is what is known as Public-Public Partnerships. The Scottish Government can't borrow to expand capacity – but local authorities can. So long as the NHS pays the local authority to use the hospital (i.e. repays the finance costs) there is nothing stopping the local authority building capacity.

Now we have locally-based and locally-owned hospitals where the building is owned by local authorities but the services in them are provided by the NHS. With this system it is possible to build the new hospital capacity we need inside the constraints we have – without the whole thing being owned in an off-shore tax haven by a dodgy financial vehicle set up only to extract private profit.

To make this possible the first thing is we need to abolish the use of private finance in Scottish public sector infrastructure. To do that YOU need to go and sign this petition in the Scottish Parliament (there will be much more on this campaign soon). Then we need a coherent plan for the NHS which does not assume that the only solution is to throw more money into the management-led system that got us here in the first place.

If we are going to save our NHS broadly as we know it now we are going to have to address capacity. If there is a baseline number of patients (i.e. how many you have at a low point where there are no other factors increasing demand) then you really want that to be no more than 70 per cent capacity (lower even) so that the system can deal with the regular spikes.

The only thing that matters in government is everything you do. The failure to get rid of PFI and the nature of the management-led NHS are both symptoms of the private sector ideology which dominates public services in Scotland. One prevents us doing the right thing in the other. We need to design a system that works, not just keep patching over a failing one.