KOHIN

Keep Our Hospital in Norwich

Financial Concerns

"Concerns about the potential effects of public-private patrnerships and primary care trusts are not misplaced. The direction of current policy suggests that in the medium term many NHS assets will transfer to private ownership. The question is whether, as with long term care, liquidating public sector assets will be followed by the privatisation of the costs of care."
Pollock AM, Gaffney D.
BMJ 1998; 317: 157-8 http://bmj.com/

Hospital's £1.3bn Rent
Norwich's new district general hopsital at Colney is to cost the tax payer more than £1 billion over the next 60 years, it emerged today.
The annual rental bill will be an average of £22.8 million according to figures revealed today by NHS chiefs.
The news was greeted with shock from opponents of the new hospital although health chiefs insisted it was value for money.
N&N Health Care NHS Trust chief executive Malcolm Stamp said: "Three years ago I said as soon as we concluded negotiations we would release costs in the yearly accounts.
"We have done this.
"The £22.8 million is absolutely value for money and is saving the health service a fortune.
"We could not do a deal if it didn't save money. "The rent includes all services, rent on the building, maintenance, depreciation and information technology. "But at the end of the day this money has to be in perspective as we are a £130 million a year organisation," said Mr Stamp.
Nick Court, spokesman for the NHS Executive, one of the service's ruling bodies, said: "If you look at the bald figures it does look like a considerable sum but it is important to look at it in context.
"The hospital spends a considerable amount each year at the existing site."
June Farrow, of Keep Our Hospital in Norwich campaign, which opposed moving the hospital to Colney from the city centre, said she was horrified at the cost.
"I think people will be appalled at the cost," she said.
"They already have fears about the new hospital and this will make things worse.
"This is certainly too much money to pay. Profit should not be made from health care."
Under the Private Finance Initiative which funded the building of the new £213 million hospital, financiers the Octagon consortium agreed to finance and build the new hospital at Colney as a replacement for the city centre N&N.
In turn the trust agreed to pay back an annual cost to Octagon payable over 60 years - £1.368 billion. (This will be index linked)
Eastern Evening News
28th August 1998 (Comment)

1st October 1998
Dear Mr Stamp,
At the end of August this year you gave the press the figure of £22.8 million as being the average yearly sum to be paid to the private consortium for the new Colney Hospital. It was sated rather vaguely that this covered rent, services, upkeep of buildings etc..

I would be interested in knowing the following:

1. For how many years does this 'average' figure last? Is it for the first two or three years or is it for the full 60 years? Does it include inflation or deflation?
2. What is the situation with the hospital at the end of 60 years? Who owns it? Will it then have been fully paid for and revert to public ownership?
3. Could you let me know exactly what the figure of £22.8 million p.a. includes. The press report gave very little detail and I would like an itemised list of headings of all items which this sum will cover once the new hospital is opened and running.

15th October 1998
Dear Miss Wallace,
Thank you for your letter of 1st October to Malcolm Stamp on whose behalf I am responding.

Taking each of the points raised in turn:

1. The average figure is over the full 60 year period.
2. At the end of the 60 year period the hospital reverts to public ownership.
3. The figure of £22.8m includes the following:
   • grounds maintenence
   • domestics and portering
   • security
   • catering
   • waste disposal
   • laundry
   • car parking
   • non emergency patient transport
   • IT services
   • rent
   • building maintenance

23rd October 1998
Dear Mr Stout,
Thank you for your letter of 15/10/98.
I find it does not contain sufficient information to make the whole hospital funding clear to me as a member of the ordinary public.

1. When you say that £22.8 million is the average figure for a full 60 years, can I understand that the total will be £1,368 million? Or is the sum of £22.8 million to be index linked to yearly inflation?
2. In which financial year will this sum of £22.8 million start being paid out of the N&N Trust's yearly budget? And how much will that be?
3. Am I right in saying that you have been able to make an accurate estimate of funds needed to pay for the services listed in your paragraph 3 of the above referenced letter?
4. When will the whole PFI agreement be available to the public?
5. In paragraph 3 you list that car parking will be covered by the £22.8 million. I therefore understand from this that car parking will be free for the public. I would be pleased to hear that this is so. If not can you say what this payment covers and what are the estimated costs of car parking for visitors and staff during the first 5 years of the opening of the hospital.

2nd November 1998
Dear Mrs Wallace,
Thank you for your letter of 23 October. I am sorry that you found my previous letter did not contain sufficient information to answer your questions, I now respond as follows:-

1. The total amount payable over the 60 year period will be £1368 million. Inflation will be applied annually to the payments.
2. The Trust will start to pay for the facilities and services provided at the new hospital when it starts to use them, this is currently envisaged to be during 2001.
3. Yes.
4. It is unlikely that the whole of the PFI agreement will be made available to the public as sections of the contract are commercial in confidence and may not be disclosed other than to the two parties to the contract.
5. The car parking services included in my list include the cost of maintaining of car park barriers and ticket machines, the landscape and security of the car park. There will be a charge for car parking at the new hospital. The level of car park charges has not yet been decided.

The Politics of the Private Finance Initiative and the new NHS.
Pollack AM, Dunnigan MG, Gaffney D, Price D, Shaoul J.
BMJ 1999; 319: 179-184

• Hospitals funded through the Private Finance Initiative (PFI) are being planned on the basis of financial, not clinical, needs.
• The data used in support of PFI planning do not conform to the Department of Health’s standards and definition.
• Full business cases under the PFI are incomplete with respect to total and speciality bed numbers, the caseload to be treated and the service needs of the population.
• PFI hospitals entail major reductions in the clinical workforce, and service capacity - in direct contradiction of government policy.
• In many areas PFI hospitals will need to generate income from private patients; as a result some hospitals have increased the proportion of private beds.
• The PFI will result in a shrunken NHS, inadequate to meet the needs of the population.

• The PFI does not provide new money for public services as the government claims,
• The high costs of capital under the PFI translates into service and workforce cuts.
• The reduction in public provision of long term care, NHS dentistry, optical services and elective surgical care shows the trajectory for the NHS under the PFI.
• In the NHS, shrinkage in service provision combined with budget constraints could force primary care trusts to redefine entitlement to NHS care and to seek privately funded solutions for those who can afford to pay, leaving a rump service.
• The PFI is a regressive instrument and is likely to increase inequalities in health and wealth.

"It is the people's national health service and we should never forget that."