PFI

  • PFI/PPP Buyouts, Bailouts, Terminations and Major Problem Contracts

    Further reading: Prof Allyson Pollock and David Price: "PFI and the National Health Service in England" June 2013

     

    https://www.european-services-strategy.org.uk/wp-content/uploads/2017/02/pfi-ppp-buyouts-bailouts-and-terminations.pdf

    ESSU Research Report No 9, Dexter Whitfield - Published February 2017

    Details 11 buyouts, 20 terminations and 43 projects with major problems, plus many bailouts, accounting for 28% of PFI/PPP contracts by capital value. The public cost of buyouts, bailouts, terminations and major problem contracts is £27,902m, when combined with the additional cost of private finance, interest rate swaps and higher PFI transaction costs. This could have built 1,520 new secondary schools for 1,975,000 pupils, 64% of 11-17 year old pupils in England. The UK’s 6.8% ratio of buyout and terminated contracts is higher than the 5.4% average of World Bank projects in developing countries for terminated contracts. This ESSU Research Report explains the causes and fundamental flaws in the PFI/PPP model.

    Databases of buyouts, terminations and major problem contracts.

    "Neoliberalism and the state-business partnership: the PFI/PPP model

    PFI/PPP projects are a product of neoliberalism. The Design, Build, Finance and Operate (DBFO) model has increased the commodification and financialisation of public infrastructure to provide new opportunities for accumulation; created new markets for finance capital, construction and facilities management companies, consultants and lawyers; reduced the role of the state; and ultimately widened the potential for privatisation of buildings, transport and utility networks and public services.

    Incomplete and complex contracts

    A large and complex contract is at the centre of every PFI/PPP project. A standard draft contract is amended and developed as procurement proceeds up to the point of financial closure. The final contract or project agreement can range from a few hundred to several thousand pages. But no matter how comprehensive they are, virtually all contracts are incomplete in practice (Hart, 2003), because they cannot predict future events and changing economic and social needs. Tirole (1999) identifies three reasons for incomplete contracts:

  • Hugely successful demonstration by NHS campaigners in central London on 4th March 2017

    They came from all over the country united in their concern for the present state of the NHS and their fears for its future. Different sources estimate attendance from "tens of thousands" to 250,000.

    Three women dress in white medical suits and hold placards reading 'Slash Trash Privatise', 'Don't be a Silent Witness' and 'Death Closer to Home' near Russel Square today. The protesters are set to be rallied by Bernie Sanders's brother

    From "Save Our Services Cumbria" (Whitehaven Hospital), to "Hands off Huddersfield Royal Infirmary", to "Calderdale 999Call for the NHS" (above), to "Defend our NHS York", to "Bristol Protect our NHS", to "Sussex Defend the NHS", all were protesting about planned or actual A&E, acute units or whole hospitals closures. Health Campaigns Together  and the People's Assembly had done a superb job calling together dozens of NHS campaign groups and organizing the biggest NHS demonstration in central London in decades.

  • This is the biggest change to the NHS you've never heard of: "STP"s

    The NHS has lost over 50 percent of its bed capacity in the past 25 years. Our bed to population ratios are now below Eastern European countries. Further hospital closures will simply be disastrous.

     

    The government's Sustainability & Transformation Plans (STP) have been shrouded in secrecy. Despite being the biggest change to the NHS since the Health & Social Care Act 2012, they will not be voted on in parliament.

    So what exactly are the STPs? The NHS will be divided up into 44 footprints, but you need a glossary to translate these terms. Sustainability means cuts. This is part of the drive towards £22bn in cuts by 2020 – bearing in mind that we've already had £15bn in NHS cuts in the last parliament generating a manufactured crisis. Cuts mean a massive programme of hospital closures across the country and it will also lead to mergers and permanently selling off the NHS estate of land and assets.

    The bogus narrative around unsustainability and unaffordability has been spun by the private healthcare and insurance industry, captured politicians and the media. In truth, we spend much less on healthcare than other advanced economies.

    In order for these footprints to receive funds, there are strings attached. The footprints will have to sign up to transformation, which basically means privatisation. The footprints will have to adopt unproven models of care.

    The bigger picture here is integrated healthcare. It sounds great but it's imported from the US. The NHS five year plan – the Five Year Forward View – specifically states that the NHS should emulate US style integrated or accountable care. Integrated care organisations are springing up all over the place.

    This is all being sold as care in the community, but there are no extra resources for GP and community services.

    In fact, we already have a major bed crisis. The NHS has lost over 50 per cent of its bed capacity in the past 25 years. Our bed to population ratios are now below Eastern European countries. Further hospital closures will simply be disastrous.

  • "How to Dismantle the NHS in 10 Easy Steps" by Dr Youssef El-Gingihy, an East London GP. 978-1-78535-045-0 Zero Books

     

     

    In 70 pages this slim volume sets out in 10 chapters the legislative changes and the 30-years history of creeping privatization which are crippling our NHS.

    The main points are:


    - In the 1980s the NHS internal market was introduced: Primary Care Trusts as "purchasers" and NHS hospitals trusts as "providers". The politicians wanted "competition" despite all medics saying that what you really need in healthcare is collaboration rather than competition.

    - At about the same time John Major introduced PFI deals for new hospitals, there which makes the final bill for a new hospital at least 7 times the original cost (and sometimes up to 50 times!) And it comes with strings for expensive "facilities management" (maintenance).

    - Corporate takeover:
    Primary Care Trusts could commission care from Alternative Providers of Medical Services, i.e. companies employing salaried GPs (e.g . United Healthcare, Atos and Virgin). Out-of-Hours care contracts were won by Harmoni, Serco and Take Care Now.

    - From 2003 hospital trusts could become "Foundation Trusts": this meant that they became financially free-standing, independent businesses. But with that came intense pressure to cut costs, leading to dangerously low staffing levels at Mid Staffs.

    - A "Payments by results" - a national tariff of fixed prices - was introduced. Since 2010 the Gov has reduced (by 3% year on year), not increased, the prices paid for each completed treatment despite the increase in population and the average age of the population. Revenue to hospitals could only increase if hospital doctors completed more and more treatments. And of course admin costs soared. Hospitals and doctors were working harder and harder to push more patients through.

    - The reduced tariffs and the freeze on all medical salaries for 5 years has produced "efficiency gains" - but at the cost of exhausted and frightened medical and management teams, and dangerously unstable finances (collapse of South London hospitals trust and the near-loss of Lewisham hospital).

    - To plug the gaps in staffing hospitals trusts have paid through the nose to agencies for temporary staff.

    - What incentive is there for even the most dedicated registrar to stay in a system which is demonstrably financially unstable?

    - In an attempt to meet the targets and understand the new environment, hospitals trusts have employed expensive management consultants to guide them - draining even more money out of their budgets.

    - In a move related to uncontrolled immigration not to NHS problems, the Home Office is refusing to renew visas of non-EU nurses if they are not earning at least £35K after 3 years. More fees to agencies.....

    - It seems very likely that "personal health budgets" for social care will be extended into medical care, and then "co-funding", and then... private medical insurance will be essential to ensure adequate medical care. "Free NHS care at the point of delivery" will have finally gone!!!

     

    I would add some other points:

    - There is ample evidence that Jeremy Hunt, Virginia Bottomley, Stephen Dorrell, Patricia Hewett and many members of present and past Conservative and Labour governments have had or still have financial links to private providers to the NHS. The "revolving door" between a senior cabinet appointment and directorship in the private health sector is active. The present CEO of the NHS, Simon Stevens, is a life-long health manager, but he spent 10 years working in CEO roles for United Health Group companies in the US.

    - It also seems very likely that the new and very complex contracts with private companies will provide plenty of opportunities for healthcare fraud at the expense of the patient. Fraud is difficult to detect and expensive to prosecute.