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Private hospitals get mega-bailout from the NHS

The privateers facing a huge loss of business because of Covid-19 were happy to snaffle up a ‘cash positive’ deal thanks to block booking of beds, whether they were used or not, writes SOLOMON HUGHES

WHEN talking about the danger of NHS privatisation, we should remember how much NHS privatisation has already taken place.

Both “New” Labour and Tory ministers had a simple but crude way of hiding NHS privatisation: they treated the NHS as a “brand” and stuck the big blue-and-white NHS logo on the front of private health companies.  

So many operations people think are run by the publicly owned National Health Service are actually handed over to private firms.

This simple trick worked so well on politics that you find out more about it by looking through company accounts than parliamentary debates.

Take the latest accounts of Ramsay Healthcare UK, published at the start of September.  

It is the British arm of an Australian-based firm that calls itself “one of the largest and most diverse private healthcare companies in the world.”

It is pretty big in Britain. Ramsay UK had a £502.9 million turnover in 2019. 

It runs around 30 private UK hospitals with some 6,100 staff. So private healthcare is booming in Britain.

Except it isn’t. 

The accounts say that “NHS volumes were consistent year on year and represented 79 per cent of admissions.”

So the bulk of Ramsay UK’s half-a-billion quid turnover comes out of the NHS. 

Thanks to New Labour and Conservative government policies which force the NHS to buy operations from private hospitals — instead of investing in expanding public hospitals — Ramsay is a “private” UK health firm largely reliant on the public sector.

When it comes to traditional private medicine, Ramsay says: “Private volumes saw a downward trend in the year, due to falling numbers of members in private medical insurance schemes, and in particular outside major UK cities.” 

So the number of privately funded operations only counts for a fifth of the firm’s business, and is falling.

Ramsay might do the work for the NHS, but it doesn’t act like the NHS. The firm made a £7.8m profit, so it is taking money away from the health service for its shareholders.

Ramsay’s highest-paid director — most likely chief executive Andy Jones — was given £616,000 in 2019.  

That actually represents a pay cut, as in 2018, the highest-paid Ramsay Healthcare UK director was given a £1m salary. 

The accounts don’t make it clear, but I suspect that huge sum went to Jones’s predecessor, former Ramsay chief exec Mark Page. 

Either way, these “fat-cat” salaries are coming out of the NHS and into the bank accounts of private health bosses.

The accounts cover the pre-Covid-19 period, but they do also discuss what happened in the pandemic, under the heading “Subsequent Event.” 

On March 11 the NHS block-bought pretty much all the private health beds in the UK, including from Ramsay. 

The private hospitals were used to cover vital non-Covid treatments, such as cancer, that were displaced from the NHS by Covid-19.

The firm says that “under the contract, Ramsay receives operating cost recovery for the costs incurred in providing this support, plus an amount relating to infrastructure cost equal to 8.6 per cent of the qualifying costs that are reimbursed.” 

Ramsay says that “the current NHS Covid support contract may reduce profitability in the early part of the year,” which makes it sound like the firm is making a sacrifice. 

However, the directors agreed to the deal “because of the cash positive nature of the arrangement.” 

What this means is that the Covid-19 pandemic stopped almost all private “elective” surgery — a fifth of Ramsay’s work. 

It would have also seriously disrupted most of Ramsay’s NHS work. So the very regular payments from the NHS — what they call the “cash positive” deal — actually bailed Ramsay out of a hole.

So David Rowland, director of the Centre for Health and Public Interest, told the Financial Times that the deal would come as a relief to the private sector at a time of massive uncertainty because it would have suffered if all non-urgent operations had been cancelled and consultants redeployed.

Mobilising all the private hospitals to support the NHS during the Covid-19 crisis was undoubtedly the right thing to do — and no doubt Ramsay’s nurses, doctors and support staff did great work. But there is a sting in the tail.

Not only was the deal a help to struggling private health corporations, it was also written in such a way that many of the beds went unused.

BBC health editor Ben Pym said: “This block booking has cost an estimated £400 million a month, whether or not the facilities were used.” 

By August there were moves to go back to paying per operation rather than block booking for all beds, whether filled or empty. 

According to Pym, the change “will certainly save money and the Treasury will have pushed for a more effective use of resources.”

Or to put it another way, the block booking wasted millions of pounds of NHS cash, and was an ineffective use of resources. 

The private hospitals that faced a huge loss of business because of Covid-19 got a big bailout — where the NHS paid for actual operations, but also paid for a whole load of empty beds.

Throughout the Covid-19 crisis, Boris Johnson has preferred to waste money on privatised programmes rather than expanding the NHS or strengthening local authorities. 

They haven’t worked well, but they have enriched the corporations the Tories favour: so the “cash positive” deal for empty beds in private hospitals sits with Serco’s test and trace, the privatised “drive through” testing centres and the privately run “Lighthouse Labs” as one more part of our bad Covid-19 response. 

The government is spending billions on what look like poor anti-pandemic measures which are actually strong bailouts for corporations. 

It is weak virus control, but strong stimulus to their corporate friends.

Follow Solomon Hughes @SolHughesWriter.

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