HC Deb 17 January 1989 vol 145 cc310-6 2.16 am
Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

The Prime Minister makes great play of the fact that, in future, we should consider the National Health Service in a completely new light. We are told to look for new partnerships between the Health Service and private medicine, and that we should seek to improve the amount of work that is done in the NHS other than by those who are employed by it full time. It is important that we consider what has happened in the Crewe and Nantwich district health authority, because it gives some indication of what the future is likely to hold. I refer to the private hospital built in the grounds of Leighton district general hospital in my constituency, which will be run by Bioplan Holdings.

I was interested to read in the Health Service Journalof 17 November 1988 an account by the district health authority's current finance director as to how the partnership came about—not least because it is extremely instructive. Addressing a seminar on the need to create deals with the private sector, that finance officer commented that Crewe and Nantwich set out to devise joint ventures only because the amount of money required—£500,000—was not available to the health authority if it had wanted to go ahead alone. He added: We didn't involve the Treasury, or the Department of Health or the region, until it was too late for them to do something. I am not saying it is what everyone should do, but there are a lot of people around who are saying that they wished they had ploughed their own furrow, too. Why is this important? First, NHS hospital land is, without exception, Crown land. How the value of that land is assessed and what deals are entered into with the private sector will be of interest not only to the taxpayer but to the Public Accounts Committee. The value of the leases that are handed out on NHS property will affect the viability of any private unit, and it is therefore important that the taxpayer is protected in all such deals.

One delegate who was concerned tackled Mr. Thomas because Crewe had not put the deal out to tender. How, he asked, did Crewe know the value of the land on the open market? Mr. Thomas said that he was convinced that the company had made a good offer. Another asked whether Crewe had carried out any investigation into Bioplan. Mr. Thomas said that internal audit staff had been unable to find out much because the company was so new.

I can honestly say that after 22 years in the House I have developed a new aspect of my work with which I have never had to deal before. Virtually continuously, I have had someone at Companies house researching the status and background of private companies seeking to enter into deals which concern themselves with state assets. In this instance, Bioplan is no exception. I have in my hand the microfiches relating to the company's records, and I have considerable sympathy with Crewe DHA, because it is very difficult to find out any useful information from those microfiches about the company's financial standing, its overall accounts or the way in which it has been run.

Yet Peter Townsend, who is referred to as the chair of Bioplan Holdings, said when he was talking to the same seminar that having started out with its own private hospitals in 1986 Bioplan decided that its future lay in partnerships. The company concentrated on the acute sector and the care of elderly people. I can find no useful information about Bioplan, and Crewe DHA was manifestly in the same position. It entered into the deal with, presumably, no accurate figure for the cost of the land, and therefore presumably finding it extremely difficult to produce an accurate assessment for the lease; not knowing anything about the company with which it was dealing; and going ahead without having consulted, on the evidence of the finance officer, anyone either at regional or at any other level. It is extremely risky for anyone to enter into a business partnership on that financial basis, yet the pattern could well be followed if the NHS continually seeks to put an estimate on the assets that it has by virtue of being a state authority.

I was extremely concerned about the creation of this private hospital. First, it is extremely small: it has only 20 beds, and in normal circumstances could not conceivably create a viable unit. I was also concerned because it was created at a time when nearly £2 million had been cut from the amount made available for the running of the DHA. Moreover, when the press statements were put out about the Bioplan agreement, we were told that there would be no capital or revenue outlay; Crewe health authority would lease the one-and-a-half-acre site and would generate income of approximately £80,000 a year. A number of services were also listed as being part of the deal. The agreement was that Bioplan would build a new private hospital at a cost of£1.5 million, and that it would also invest a substantial amount in upgrading and improving the X-ray department in Leighton hospital. Other facilities were also promised.

This matter was of particular interest to me, as only last December I received the final answer to a series of letters that I had written to the DHA about a number of cases in which my constituents who were non-urgent cases required straightforward X-rays relating to conditions likely to be of major importance to them, and had been told that there was a wait from 2 September 1988 until 10 March 1989. It was therefore of considerable importance to me to know that there was to be this great investment of extra money and extra teams, which was to make an enormous difference for my NHS patients, because this is what I have been told all the way along: "Of course it will not detract from the National Health Service. It will provide a much better level of care."

We in the Crewe district have considerable doubt about the level of management that exists already in the DHA. The chairman has more than once pushed through very important decisions on his casting vote. There is also a history of senior officials leaving the authority. I suppose that I should not have been altogether astonished when the gentleman of whom I am talking, Mr. David Thomas, who had negotiated all of these contracts, very soon afterwards announced that he was leaving Crewe and going elsewhere. My local paper reported on 31 October that Mr. David Thomas, who had served as director of finance for Crewe, had announced plans to quit the post early next year and take up a new role with a private health care company which is currently building a 20-bed non-NHS hospital at Crewe.

There is no other profession in the world where one may leave and set up business immediately on the same premises as those people with whom one was working. I therefore asked the Minister a question about the conditions under which employees can leave the National Health Service, presumably taking with them a great deal of expertise, only to be told by the Minister that this was a matter for the individual DHA.

I remain very concerned. This hospital will have a direct effect on the quality of care within the NHS. It has been set up in such a way that there is no transparency in its financial arrangements, and it has now taken on its staff someone who has detailed knowledge of the running of the NHS. That is very important, because it is money from the NHS that will create the viability of this unit. The company has already been given considerable contracts for providing certain care for NHS patients, and it is the number of people who will be pushed into this unit that will, in the final analysis, make the difference to its economics.

It goes much wider than that, however. There has been an enormous cut imposed upon the ambulances in the area, and when I read the consultation document it suddenly became clear that, to find£47,000, one of the things that had certainly been suggested was that something like 50 per cent. of the travel in the Crewe area was represented by journeys to Leighton hospital. The ambulance service was saying, in effect that, if people did not fully qualify for an ambulance—I do not know how that is justified, because that must imply that people using the ambulances have no right to do so—and if there was a need to make swingeing cuts, one of the things that could be said was that 50 per cent. of ambulance journeys within Crewe town were to Leighton hospital and thus could be abandoned in the name of economy. So it becomes very clear that what happens at Leighton will affect us right across the board. Certainly, the way the establishment is run in relation to the private hospital is affecting us across the board.

I do not expect the Minister to give me detailed answers to what are real problems, but I want to make it clear that if we are to talk within the NHS about partnership, we have to face one basic question. Crown land is not assessed in the normal way in dealing with the creation of a new hospital. That is what has happened here. How those assets are assessed must materially affect the viability of the projects.

Contracts between people working within the NHS and private contractors must carry with them at least some protection for the NHS over a period of years. Most professional organizations—doctors are no exception—insist that written into the contracts of people employed should be undertakings that they will not carry with them into exactly the same area in which they have operated the expertise that they have gained without some protection for their previous employer. It is not good enough for the Department of Health to say only that that is entirely the responsibility of the district health authority.

It is also vital that we have an urgent investigation into the general management of Leighton hospital. There are considerable difficulties with the staff there. There is a great deal of unease. The regrading of the nurses is only one example of the problem of morale, which has been exacerbated, becoming barely tolerable for many staff.

In short, if private companies are to be allowed to go into the NHS, I want to know who investigates their viability, who demonstrates their expertise, who tells us where they have come from and what ability they have. I have already investigated three other companies that were applying for geriatric care within the same health authority, only to find that two of them were directly connected and, even more interestingly, that one of the companies had put in a high tender for the service and one had put in a low one. When I made it clear that I knew the connection between the two companies, strangely enough one of the tenders was withdrawn.

I take a great deal of care about investigating the private firms that are interested in coming into the NHS, but I want a simple assurance from the Minister that there should be no deals with the NHS unless the criteria that apply would be acceptable to the Public Accounts Committee or the House of Commons as being completely open and transparent. We would not accept less in any other area, and I see no reason why we should accept less in the NHS.

The matter of Crown land must be looked at, how it is assessed, how the deals are entered into and what the implications are. Private companies must not come in, milking the NHS for all the facilities that they can lay hands on, using NHS patients to improve their facilities and promising to provide many new services with high-powered equipment, but in fact using the NHS for their own purposes without demonstrating any comparable improvement in facilities for my constituents. It is not good enough to talk about the gain to my district health authority without being able to provide all the relevant facts on the other side of the equation.

Above all, I ask that the management and the immediate past management should be investigated urgently so that never again will people who negotiate financial deals suddenly reappear on the other side for the private company concerned, working within the Crewe district health authority. That is offensive, and I have considerable doubts about the professionalism or the responsibility of companies that allow that to happen.

2.33 am
The Parliamentary Under-Secretary of State for Health (Mr. Roger Freeman)

I congratulate the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) on obtaining this Adjournment debate and presenting her arguments so clearly. I shall spend a short time on the general subject of private hospitals in the NHS and then deal with some of the points that the hon. Lady has raised. She has kindly said that she does not expect me to answer all the points that she has raised tonight. I shall try to answer as many as possible, but if I cannot answer them all in the time available I shall read the Official Report carefully with my officials and write to her.

The Government very much welcome the contribution of the private sector to the totality of provision for health care. Such a contribution should be regarded as adding to the total resources devoted to health care and offering flexibility to health authorities in the delivery of services. Government policy, therefore, is to encourage partnership between the National Health Service and the private health sector when this is a cost-effective way of providing or extending services. Many constructive arrangements already operate to the benefit of NHS patients, but there is scope for much more. Innovative approaches from private organisations are welcome, particularly where they accord with overall policy objectives. If a profit-making organisations can give the NHS better value for money there is no reason to put artificial barriers in the way. Equally if the NHS generates income by selling services to the private sector it should be given every encouragement, always provided, of course, that there is no detriment to the NHS.

I must take issue with the hon. Lady. She, perhaps, did not mean to imply that all partnership arrangements between the private sector and the NHS could be typified as milking the NHS or using it for private profit. I assume that she was making her criticisms specifically in relation to the transaction at Crewe.

Mrs. Dunwoody

Does the Minister think that people enter into agreements with the NHS to make money for themselves or to provide a service on the generous basis of wishing to serve humanity?

Mr. Freeman

Private companies enter into partnerships with the NHS not only to make money—which is the nature of private companies—but to do so in co-operation with the NHS. That broadens the choice available to patients and enhances total patient care. In my judgment, the two are not incompatible.

Against this background, individual health authorities must decide for themselves whether to enter into contractual arrangements with private health care organisations and establishments. To answer the first of the hon. Lady's points, it is the responsibility of the local health authority—in this case the district health authority to satisfy itself about the credibility, reputation and standing of any organisation with which it wishes to do business. That is where the responsibility should be exercised. It is not my responsibility to pass judgment on each transaction. In coming to such a decision—that is the partnership between the private company and the NHS—health authorities will need to take a great many factors into account in determining the feasibility of such arrangements in the light of local needs and priorities. Cost will, of course, be an important consideration but by no means the only one. Ultimately, it is all done for the benefit of patients.

I shall now turn to the particular circumstances of Crewe and the questions that the hon. Lady put to me. I shall deal first with the financial arrangements. In June 1988, Crewe DHA and Bioplan Holdings plc signed an agreement that would enable Bioplan to build a new private hospital in the grounds of the existing Leighton hospital at Crewe. The development—known as the South Cheshire private hospital—is now under construction on a site leased to Bioplan by Crewe health authority on terms agreed by the district valuer of the Inland Revenue. The terms of the lease were on the basis of advice that was provided by the district valuer.

I understand that the new private hospital with 20 beds should be ready for patient use in April 1989. The development does not involve any capital or revenue outlay by Crewe health authority—on the contrary, the agreement is expected to generate additional financial resources. I understand that the press release—of which the hon. Lady probably has a copy—that was issued at the time of the announcement of the transaction referred to amounts of up to£140,000 per annum. Those are additional financial resources that are available to Crewe health authority. That additional funding will be reinvested in Leighton hospital to improve services for NHS patients. Crewe health authority anticipates that the NHS and the private sector will flourish side by side to the mutual benefit of all concerned and, in particular, the patients. The net result of the transaction is to provide incremental resources to the local district health authority.

I want to deal briefly with the comments that the hon. Lady made about Mr. David Thomas. The hon. Lady has particularly referred to the part played in negotiating the agreement with Bioplan by Mr. David Thomas, who resigned as director of finance with Crewe health authority with effect from 16 December 1988 following his appointment as Bioplan's operational manager for the new private hospital in Crewe. In view of the concern expressed by the hon. Lady, I shall briefly explain the position as I understand it. Bioplan Holdings initiated discussions in August 1987 with Crewe health authority through consultant staff, then in turn with the chairman, Mr. John Taylor. As I have said already, dealings between the company and the authority were carried out on a proper, formal basis.

Mr. David Thomas left the employment of the authority on 16 December 1988. As I understand it, Mr. Thomas played no part in the initial approaches by Bioplan. As the exercise progressed, he took no independent decisions whatever in relation to Bioplan. All decisions were taken by Crewe health authority members at formal meetings of the authority. All valuations were conducted through the district valuer, with revenue detail being based on Crewe's actual accounts. The legal documentation was conducted through the Mersey regional legal adviser. The general approach was discussed with the officers of the regional health authority. The siting of the new private hospital was dealt with by Crewe health authority's director of estates. I give this factual information in the hope that it will alleviate some of the hon. Lady's concerns by showing that a significant number of people were involved in the exercise and that the proper procedures were followed at all stages.

The hon. Lady asked whether it is proper for someone leaving the district health authority immediately to go to work for a private company that has financial relations or dealings with that authority. The hon. Lady knows that the current position is that it is for the employing health authorities, which are statutorily independent bodies, to decide whether to introduce into individual contracts of employment any restrictive clauses of the type that I have outlined. That policy is consistent with the views of the Royal Commission on standards of conduct in public life, which concluded in 1976 that it should be left to local authorities and other public bodies to appraise their own needs in this respect.

Mrs. Dunwoody

I remind the Minister of the quotation from Mr. Thomas: We didn't involve the Treasury, or the Department of Health or the region until it was too late for them to do something. I ask the Minister to look again at what I have said. I understand what his brief says, but I am asking him to look at the facts and then to tell me if he is still satisfied.

Mr. Freeman

I fully understand what the hon. Lady says, and, as I said at the outset, I shall do just that.

Finally, let me deal with the question of waiting lists and the use of Bioplan by Crewe health authority to perform surgery on about 300 patients. The hon. Lady did not refer in detail to this aspect but perhaps I may put the arrangements on the record. It is necessary briefly to rehearse the background to the matter. Crewe health authority has been among those with the most serious waiting times for surgery. To improve that situation it has set itself specific targets in agreement with the Mersey regional health authority—first, that all patients waiting for surgery for two years or more should receive their operations by 31 March 1989 and then successively to reduce waiting time to a maximum of one year by 31 March 1990. This might be termed a war on waiting times. To achieve the first objective, Crewe health authority has adopted a number of measures. These include extra sessions at Leighton hospital, referral to other NHS hospitals in Mersey region and the use of a Ministry of Defence hospital in Swindon.

Even after all those actions, some 300 patients across four specialties will remain to be treated by 31 March. These will be dealt with under a contract with Bioplan Holdings. The work will start on 6 February and patients will be treated in ward and operating theatre accommodation at Leighton hospital. This accommodation has been closed for routine work for four years as the hon. Lady probably knows. Bioplan will provide nursing, theatre and medical staff who have been recruited in advance of the opening of the new South Cheshire private hospital in April. The arrangement that has been negotiated allows Bioplan to cover expenses only and provides for no profit. In other words, during the build-up of staff pending their full employment when the new private hospital is opened, they will be attacking the waiting lists at Leighton hospital, which will benefit all the patients in the district health authority area. The average cost per case in the Bioplan scheme is way below that available locally in the private sector. Another private sector hospital was approached. The total cost would be considerably higher if Crewe health authority itself attempted to deal with the 300 cases, mainly because agency rates used for the staff groups required on a short-term basis are considerably higher than those quoted by Bioplan.

To sum up, the Government believe that private hospitals can work in partnership with NHS hospitals for the greater good of the community and without diminishing NHS care. I hope that I have dealt with the hon. Lady's concerns about arrangements. As I said at the outset, she has raised a number of points and I shall read the record and reply to her. I hope that she and I are at least agreed about one thing: that what counts above all is care of patients, whether they are treated in the private or NHS hospital in Leighton in Crewe district health authority. I pay tribute to the work of all those who work in the Leighton hospital.

Question put and agreed to.

Adjourned accordingly at fifteen minutes to Three o'clock.